OSLO: DNB Boligkreditt AS, the covered bond subsidiary of DNB Bank ASA, posted a second-quarter profit of NOK 918 million, a substantial rise from NOK 592 million in the same period last year, driven by stronger net interest income and expanded lending volumes.
Total income for the quarter reached NOK 1.49 billion, up from NOK 715 million a year earlier. Net interest income climbed to NOK 1.64 billion, supported by wider lending spreads and increased loan origination. However, net other operating income remained negative at NOK -155 million, as unrealized losses on financial instruments persisted amid market volatility.
Operating expenses came in at NOK 313 million, primarily due to a NOK 279 million management fee paid to DNB Bank under a servicing agreement based on lending volume and margins. The fee marked a reversal from the negative NOK 96 million posted in Q2 2024.
Loans to customers rose to NOK 734.8 billion as of June 30, 2025, up from NOK 697.7 billion a year earlier. Covered bond issuance surged during the period, with NOK 13.4 billion raised in Q2 alone, pushing total debt securities issued to NOK 497.2 billion.
The company’s capital adequacy remained robust, with a common equity Tier 1 (CET1) ratio of 21.2% and a total capital ratio of 25.5%, well above regulatory requirements. The Norwegian Ministry of Finance’s decision to raise mortgage risk weight floors led DNB Boligkreditt to issue NOK 3.5 billion in additional Tier 1 (AT1) capital instruments in June.
Despite geopolitical tensions and tariff uncertainty impacting global markets, Norwegian covered bonds remained attractive. DNB Boligkreditt reported low credit losses and maintained its AAA ratings from Moody’s and Standard & Poor’s.
The Oslo-based firm expects lending growth between 3% and 4% annually, and noted that upcoming changes to EU and Norwegian regulations could revive securitisation markets.