DNB Bank ASA

Earnings Release • Jul 11, 2024

Results DNB Group

Second quarter 2024

Kjerstin R. Braathen (CEO)

Strong performance – all-time high net commissions and fees

Return on equity of 16.6 per cent in the quarter

Solid result with high and increasing activity across customer segments and product areas.

Net commissions and fees up 22.0 per cent from 2Q23 Strong performance across all product areas. All-time high result within investment banking services.

Solid asset quality and low impairment provisions 99.2 per cent of portfolio in stages 1 and 2. Impairment provisions of NOK 560 million in the quarter.

19.0 Robust capital position Share buy-back programme of 1.0 per cent initiated. Earnings per share of NOK 6.83 in the quarter (YTD NOK 13.31).

Norwegian economy remains resilient – likely to further delay key policy rate cuts

• Growth in mainland economy expected to pick up through the forecasting period
• Continued gradual reduction in inflation levels
• Markets expect first cut in key policy rate in March 2025

Sources: Statistics Norway, DNB Markets, Norges Bank (Norwegian central bank).

Purchasing power strengthening during the year

• Robust economic activity expected to support low unemployment rates
• Increased household real wages expected to enhance spending capacity
• Residential property prices expected to show strong positive development, driven by increased purchasing power and shortage of new builds

Sources: Statistics Norway, DNB Markets, Norges Bank (Norwegian central bank), NAV (Norwegian Labour and Welfare Administration).

Personal customers – increasing activity during the quarter

Highlights of the quarter Pre-tax operating profit

• NOK million Stable loan volumes and 2.9 per cent growth in deposits
  • Other income up 15.7 per cent from 1Q24, mainly driven by DNB Eiendom increasing activity in residential property market
  • Continued strong momentum in savings, net inflow of ~NOK 5 billion in 2Q24
  • DNB's Private Banking segment market leader in Norway

Corporate customers – high activity level and strong performance

Highlights of the quarter Pre-tax operating profit

• NOK million Loans up 1.1 per cent and deposits down 1.2 per cent, currency-adjusted (YoY loans up 1.7 and YoY deposit up 5.7 per cent)
  • Strong performance in other income, up 35.4 per cent from 1Q24
  • Solid asset quality and well-diversified portfolio
  • All-time high income from Markets products, up 31.0 per cent from 2Q23

Income from Markets products

NOK million

Before impairment provisions

Volumes affected by increased customer activity

• Currency-adjusted loan growth of 0.6 per cent in the quarter
  • ‒ up 1.1 per cent in Corporate customers and stable in Personal customers
• Currency-adjusted deposit growth of 0.4 per cent in the quarter
  • ‒ up 2.9 per cent in Personal customers and down 1.2 per cent in Corporate customers

Net interest margin remains strong

1 Total net interest income relative to average loans and deposits in the customer segments.

2 The principles relating to calculation of margins on short-term deposits were revised in the second quarter. Adjusted for this change, combined spreads were stable from 1Q24.

Net interest income up 1.9 per cent from 1Q24

1 Effects of repricings, portfolio development and change in product mix.

All-time high commissions and fees – up 22.0 per cent from 2Q23

1 DCM: debt capital market – ECM: equity capital market – AUM: assets under management.

Operating expenses reflecting seasonally high activity level

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Robust and well-diversified portfolio – 99.2 per cent in stages 1 and 2

• Personal customer portfolio continued strong credit quality
• Corporate customer portfolio stage 3 impairment provisions relating to customer-specific events in both large corporates and small and mediumsized enterprises

Impairment of financial instruments by customer segment NOK million
	2Q24	1Q24	2Q23
Total	(560)	(323)	(871)
Of which:
Personal customers
- Stages 1 and 2	20	(23)	(5)
- Stage 3	(101)	(44)	(99)
Corporate customers
- Stages 1 and 2	(20)	(51)	(632)
- Stage 3	(460)	(204)	(133)

Strong capital position

• CET1 capital ratio stable from 1Q24 at 19.0 per cent, ~210 basis-point (bps) headroom to Financial Supervisory Authority's (FSA's) expectation
  • ‒ Solid profit generation increased CET1 capital ratio by 33 bps, offset by new share buy-back programme of 1.0 per cent (-29 bps)
  • ‒ Portfolio growth in the quarter offset by positive migration and currency effects

1 The FSA's current expectation: 16.9 per cent.

2 The FSA's current requirement: 15.6 per cent.

Strong second quarter result

Appendix

Income statement

NOK million	2Q24	1Q24	2Q23	Change from 1Q24	Change from 2Q23
Net interest income	15 817	15 526	15 232	290	585
Other operating income	5 756	4 872	4 971	884	785
Total income	21 572	20 398	20 203	1 174	1 369
Operating expenses	(7 505)	(7 284)	(7 083)	(221)	(422)
Pre-tax operating profit before impairment	14 067	13 113	13 120	953	947
Impairment of loans and guarantees and gains on assets	(562)	(324)	(856)	(238)	294
Pre-tax operating profit	13 504	12 789	12 263	715	1 241
Tax expense	(2 701)	(2 558)	(2 821)	(143)	120
Profit from operations held for sale, after taxes	(37)	(29)	19	(9)	(56)
Profit for the period	10 766	10 203	9 462	564	1 305
Portion attributable to shareholders	10 271	9 789	9 149	482	1 122

Other operating income

NOK million	2Q24	1Q24	2Q23	Change from 1Q24	Change from 2Q23
Net commissions and fees	3 439	2 702	2 819	737	621
Customer revenues in DNB Markets	851	715	771	136	80
Trading revenues in DNB Markets	225	227	401	(2)	(176)
Hedging of defined-benefit pension scheme	39	99	48	(60)	(9)
Credit spreads on bonds	57	87	27	(30)	30
Credit spreads on fixed-rate loans	110	54	58	56	51
CVA/DVA/FVA	42	42	36	(0)	6
Other mark-to-market adjustments	55	(344)	(326)	399	381
Basis swaps	(290)	(240)	53	(50)	(342)
Exchange rate effects related to additional Tier 1 capital	(79)	543	209	(623)	(288)
Net gains on financial instruments at fair value	1 010	1 183	1 277	(174)	(268)
Net life insurance result	433	203	338	230	95
Profit from investments accounted for by the equity method	258	188	76	70	182
Other	615	595	460	20	155
Net other operating income, total	5 756	4 872	4 971	884	785

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The statements contained in this presentation may include forward-looking statements, such as statements of future expectations. These statements are based on the management's current views and assumptions and involve both known and unknown risks and uncertainties.

Although DNB believes that the expectations implied in any such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be correct.

Actual results, performance or events may differ materially from those set out or implied in the forward-looking statements. Important factors that may cause such a difference include, but are not limited to: (i) general economic conditions, (ii) performance of financial markets, including market volatility and liquidity, (iii) the extent of credit defaults, (iv) interest rate levels, (v) currency exchange rates, (vi) changes in the competitive climate, (vii) changes in laws and regulations, (viii) changes in the policies of central banks and/or foreign governments, or supranational entities.

DNB assumes no obligation to update any forward-looking statement.

This presentation contains alternative performance measures, or non-IFRS financial measures. Definitions and calculations are presented on ir.dnb.no.

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