DNB : 12.07.2017 - More savings and lower losses

Trust is essential for DNB and other banks in an ever more open and digitalised competitive climate. During the second quarter, an increasing number of customers placed their trust in DNB, which contributed to a high level of activity.

Banking operations show stable and healthy growth. Home mortgages and other loans to personal customers have increased by 5.5 per cent over the past year, while lending to small and medium-sized enterprises has risen by more than 7 per cent. A high level of customer activity within real estate broking, asset management and transaction advice also made a positive contribution to DNB's performance in the second quarter.

'There is profitable growth in all customer segments, and our customers make sure that we have lots to do across the board. We regard this as a vote of confidence. Combined with low impairment losses during the quarter, this makes us satisfied with our second quarter performance,' says Rune Bjerke, group chief executive.

Saving like never before

DNB has also launched a number of innovative digital services to make everyday life easier for its customers.

The Vipps app has been expanded from person-to-person payments to include in-store payments. The new product VippsGO gives all sports clubs, shops and companies the opportunity to set up their own mobile shop in less than 30 minutes. Some 6 000 customers have already taken the service into use.

'Spare'is an app where customers can find their bank savings, equities, mutual funds and pensions in one and the same place. It will help give them a better overview of their savings and make it easier to establish good savings habits. 'Spare' was launched in May, and more than 180 000 Norwegians have already started using the app. Savings targets for more than NOK 2 billion have also been established.

'Spare is additional proof that our customers want simple and straightforward services. We will be at the forefront of this development and inspire customers to make smart and sensible choices. Four of ten Norwegians still do not save on a regular basis, but in a more random manner, though it is gratifying to see that the trend is going in the right direction. Our customers established a total of 84 000 savings agreements during the second quarter,' says Bjerke.

Lower losses

DNB recorded an increase in net interest income of NOK 487 million from the second quarter of 2016, mainly reflecting higher loan and deposit volumes, as well as lower funding costs.

Net other operating income was down NOK 970 million in consequence of extraordinary income stemming from the sale of Visa Norge's holdings in Visa Europe in the second quarter of 2016. Excluding this non-recurring item, net operating income increased by NOK 158 million from the second quarter of 2016.

Impairment losses on loans and guarantees totalled NOK 597 million in the second quarter, a significant reduction from NOK 2 321 million in the second quarter of 2016. The main factor behind the decrease was successful restructuring of portfolios within oil, offshore and shipping. The majority of non-performing loans still stem from the same sectors, and the bank thus far sees no signs of spill-over effects to other industries.

'Nor are we worried that we will record losses on home mortgages. Interest rates will remain low for a long time, as will the level of unemployment in Norway, and these are the main factors we are focusing on. It is positive that the housing market is levelling off after several years of unsustainable price increases,' says Bjerke.

Operating expenses rose by NOK 230 million, reflecting a higher level of activity and the marketing of digitalisation projects. The financial activities tax, which was introduced in 2017, also gave a rise in expenses.

Financial key figures for the second quarter of 2017

• Pre-tax operating profit before impairment was NOK 7.4 billion (8.1)
• Profit for the period was NOK 5.2 billion (4.6)
• Earnings per share were NOK 3.07 (2.74)
• Return on equity was 10.4 per cent (9.9)
• The cost/income ratio was 43.1 per cent (39.9)
• The common equity Tier 1 capital ratio (transitional rules) was 15.8 per cent (15.2)

Comparable figures for the second quarter of 2016 in parentheses.

This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.

Contact persons:

Thomas Midteide, group executive vice president, Corporate Communications, tel.: + 47 962 32 017

Rune Helland, head of Investor Relations, tel: +47 977 13 250

The quarterly report, presentation and Fact Book can be downloaded from
www.dnb.no/investor-relations