Norway's DNB reported net profit of NOK9.84 billion for the third quarter, down 7.9% from NOK10.68 billion a year earlier. The result nevertheless exceeded the NOK9.06 billion average estimate in a company-compiled analyst poll. Net interest income fell to NOK15.50 billion from NOK15.99 billion and was slightly below expectations. The bank said lending competition continued to weigh on profitability.
DNB's profit after tax was NOK9.8 billion on the rounded figures used in its results release. Average lending spreads widened by three basis points from the previous quarter to 1.33%, while net interest income rose 2.5% sequentially. The bank attributed the quarterly improvement to repricing, higher interest on equity and one additional interest day. Norway's central bank had raised its policy rate to 4.50% in September as inflation remained persistent.
LENDING GREW AS SAVINGS FLOWS STRENGTHENED
Personal-customer lending volumes increased 1.3% year on year to NOK989 billion, while deposits rose 3.8% to NOK653 billion. DNB said it achieved profitable lending growth across its businesses even as pricing remained competitive. The group reported a 14.5% return on equity, down from 15.8% a year earlier. Its cost-to-income ratio increased to 39.8% from 37.4%.
Asset-management activity provided a stronger counterweight. Assets in DNB mutual-fund solutions reached NOK1.849 trillion, up NOK67.6 billion from the previous quarter, and net mutual-fund inflows reached a record NOK54.5 billion. Annual saving through fixed mutual-fund schemes rose 14% so far this year to NOK12.6 billion. The bank said the average fund holding per customer had doubled over five years to more than NOK500,000.
CARNEGIE INTEGRATION SUPPORTED FEE INCOME
DNB Carnegie generated NOK2.8 billion of customer income, a 25% increase, as activity strengthened across the Nordic region. Investment-banking income rose 44% year on year to NOK1.1 billion, its strongest third quarter, supported by larger mandates in mergers, loans and bonds. Chief executive Kjerstin Braathen said the Carnegie integration was proceeding to plan. The operation has broadened DNB's advisory and financing capacity across Nordic markets.
The common equity Tier 1 ratio was 17.3%, compared with 17.9% a year earlier, leaving the bank with a substantial capital buffer. The main near-term issue is whether higher Norwegian rates support asset yields enough to offset pressure on lending spreads and funding costs. DNB will also need to show that Carnegie's fee growth can persist after an active quarter. Its fourth-quarter results will provide the next detailed test of those trends.