OSLO, NORWAY: DNB, Norway’s premier financial institution, has disclosed its financial outcomes for the first quarter of 2024. The bank’s profit was reported at NOK 10.2 billion, a slight decrease of 2.6 percent or NOK 0.3 billion from the same period last year.
Despite this minor dip, the results are indicative of a strong performance, particularly in the corporate sector, both domestically and internationally. In fact, a significant portion of the bank’s revenue, about a quarter, was attributed to its global operations.
The Norwegian economy has exhibited remarkable resilience amidst rising interest rates, which has positively influenced DNB’s financial results. Kjerstin Braathen, the CEO of DNB, commented on the economic situation, stating, “A stronger than expected start to the year adds weight to the belief that the Norwegian economy is heading for a soft landing.”
She highlighted Norway’s success in maintaining employment and controlling inflation in a measured way. Moreover, she anticipates 2024 to be a year marked by real wage growth, which she regards as positive news.
The housing market has also seen unexpected developments, with prices climbing higher than anticipated at the beginning of the year. DNB Markets predicts a 3 percent increase in housing prices for the current year and a 6 percent rise the following year.
There has been a noticeable decline in the number of applications for interest-only periods and extended loan terms compared to last year. Additionally, there has been a significant uptick in the number of applications for pre-qualification letters since the year’s start, a trend that is expected to persist, according to Braathen.
However, the mortgage customer market remains highly competitive. Braathen notes that Norwegian bank customers are the most proactive in the Nordic region, which compels DNB to consistently deliver top-notch services and advice that customers cannot find elsewhere.
DNB’s net interest income for the quarter stood at NOK 15.5 billion, marking a 2.9 percent decrease from the previous quarter. This stabilization aligns with the peak of the key policy rate and a reduction in debt growth among Norwegian households to the lowest level since the millennium’s turn. The bank’s lending portfolio has remained stable through the hikes in the key policy rate, affecting both personal and corporate markets. For the first quarter, DNB set aside impairment provisions amounting to NOK 323 million.
A noteworthy achievement for DNB this quarter was the income from customer activities other than lending and deposits, such as commissions and fees, which totaled NOK 2.7 billion. This represents a 2.6 percent increase from the same quarter last year and is the highest ever recorded for a first quarter. A significant contributor to this growth was the robust increase in income from savings and investment activities. DNB Asset Management, being the largest private asset manager in Norway, now oversees assets exceeding NOK 1,000 billion for its mutual fund clients.
“The fact that we have achieved this milestone can partly be ascribed to our customers having a greater focus on saving in mutual funds. We see this in the way that our popular savings app Spare is gaining more and more users, and through the #huninvesterer (#girlsinvest) campaign, which is now in its fifth year. More and more people are setting up monthly savings schemes,” says Braathen.
An important milestone this quarter was the integration of Sbanken’s customer data into DNB’s technical platform, finalizing the technical and legal merger between the two entities. Despite recent hurdles, Sbanken has maintained a robust position, with an increase in loan customers and lending volumes since the acquisition announcement in April 2021.
The financial key figures for DNB in the first quarter of 2024 are as follows: a pre-tax operating profit before impairment of NOK 13.1 billion, earnings per share of NOK 6.48, a return on equity of 15.6 percent, a cost/income ratio of 35.7 percent, and a Common equity Tier 1 (CET 1) capital ratio of 19.0 percent. These figures reflect a slight decrease from the corresponding quarter in 2023 but still demonstrate the bank’s solid financial standing.
“The move itself went well, and we’re very pleased about that. At the same time, we understand that our customers haven’t asked for these changes, and we’re taking their feedback on board. Now, we’ll do everything we can to show that Sbanken is still a contender in the Norwegian banking market – with user -friendly services and good prices,” says Braathen.
