DNB Bank ASA

Investor Presentation • Nov 20, 2019

CAPITAL MARKETS DAY 2019

Felles mal for CMD 2019

NB: illustrasjoner under oppdatering

20 November 2019

DNB Capital Markets Day 2019

DNB towards 2022 Kjerstin R. Braathen

Achieving financial ambitions Ottar Ertzeid

High quality portfolio and increased profitability Harald Serck-Hanssen

Delivering more with less Ingjerd Blekeli Spiten

The unique combination of mobile wallet, eID and payment scheme Rune Garborg

DNB towards 2022

• Financial ambitions
• The Norwegian economy
• DNB well positioned to deliver on financial ambitions

DNB continues the long track record of delivering in line with stated ambitions

Financial ambitions 2019–2022

Norwegian macro provides a solid backdrop for continued delivery on financial ambitions

• Solid GDP growth and activity
• Low volatility

– Resilient economy with flexibility to smooth out cycles

Solid growth in GDP on the basis of a stable investment outlook, with the petroleum sector's use of resources gradually decreasing

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Low volatility in the Norwegian economy underpinned by flexible labour force

Average real GDP – standard deviation Historical, year-on-year, 1990–2018, per cent

Employment flexibility Score 0–100, higher score reflects more flexible labour regulations

Fiscal policy: Allows room for flexibility in smoothing out cycles

Sources: Norges Bank, National Budget, OECD

1) The fiscal rule states that transfers over time from the Norwegian Government Global Pension Fund to the annual budget should not be higher than the expected real return of the fund, estimated to 3 per cent p.a. (reduced from 4 per cent in 2017)

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Monetary policy: Increased interest rates provide room to manoeuvre

Floating currency: Provides a natural hedge

Sources: Teknisk beregningsutvalg/DNB Markets, Norges Bank 1) Relative to EU member states

DNB well positioned to deliver on financial ambitions

• ROE >12 per cent continues to be our most important financial ambition
• Strong foundation for continued delivery

ROE >12 per cent continues to be our most important financial ambition

DNB's ability to generate earnings has been resilient through various cycles

Delivering on ROE generates capital both for profitable growth and rising nominal dividends

• 50 per cent cash dividend and increase in nominal dividend per share per year

• Distribution of excess capital through nominal increase in cash dividends and share buybacks
• Share buybacks a flexible tool for optimising capital position

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Maintaining trust and meeting customer expectations is increasingly important

Meeting customer expectations in a responsible way Rock-solid balance sheet

• DNB's reputation is at an all-time high level1)
• Customers have the highest level of trust in established banks with regards to delivering financial services in Norway, with trust levels increasing since 2017

Banks are more trusted to deliver financial services in Norway2)

• DNB is among the most solid and best-capitalised banks in Europe, further confirmed by EU-wide bank stress tests
• Equity base is 2.5x the level it was before the financial crisis

1) According to RepTrak, score over 70 equals well-liked. DNB has scored above 70 for more than a year.

2) According to Ipsos' Future Banking report. Question asked: "Who do you trust the most to deliver your financial services in the future?". Multiple answers allowed.

3) Based on reported 3Q19 numbers

Integrating ESG in our business

• ESG integrated in credit processes
• In the process of integrating ESG in all our equity research
• Since 2016, carbon footprint has been measured in all our mutual funds
• DNB requires specific ESG requirements to be met by suppliers

Leveraging growth opportunities Four core ambitions for our sustainability work

DNB fights financial crime and promotes a safe, digital economy

DNB is a driving force for equality and diversity

DNB provides loans and investments for sustainable growth

DNB helps its customers manage and understand their own finances

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Continuously developing our technology platform

• Stable and secure operations
• Untangling our core and building API layers

• Seeking to utilise cost-efficient and flexible technology to handle legacy systems

• Increased efficiency of our self-service solutions, our chatbot handles 60 per cent of chat requests

• Leveraging highly digital Norwegian public infrastructure for more automated processes

Modernising our core Increasing efficiency Strategic customer channels

• IT integrated with business units for improved productivity and efficient resource allocation
• Developing customer channels in the cloud, allowing for faster time-to-market and reduced risk

Total income per FTE1)

Scaling activity and innovation through partnerships

Partnerships to increase scale and innovation power Developing our solutions together with partners

Joint venture with SpareBank 1 to build a strong non-life insurance company

Joint venture with Nordea to build scale, strengthen market position and attract investors

Open Banking API capabilities

Modular core banking technology

OCR AI technology to validate and extract data from invoices and receipts

AI virtual agent that increases efficiency in customer service

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Monetising cooperation and execution across the Group

83 708 434 498

• Built position within defined-contribution pensions by leveraging distribution capabilities in the LCI and SME segment, now gathered in Corporate Banking
• Business units across customer segments working towards common goals, yielding results

Strong corporate culture Well positioned for expected growth in savings

• Norwegian household savings rate expected to increase to 7.3 per cent in 2022 from today's level of 6.4 per cent
• Spare is the number one savings app in Norway
• Responsibility for pension savings gradually transitioning from employers to individuals

Capital (NOK billion) Members

173 2003 3Q19

Sources: Finance Norway, Statistics Norway, DNB Markets, Norwegian Mutual Fund Association

1) Retail market, equity funds

2) Corporate market

DNB towards 2022

• Financial ambitions
• The Norwegian economy
• DNB well positioned to deliver on financial ambitions

Achieving financial ambitions

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- KEY PERFORMANCE INDICATOR: Cost/income ratio <40 per cent

– OVERRIDING TARGET: Return on equity >12 per cent – CAPITAL LEVEL: CET1 capital ratio ~17.9 per cent – DIVIDEND POLICY: Payout ratio >50 per cent

Achieving financial ambitions 2019–2022

Positive jaws and efficient use of capital to deliver on financial ambitions

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Repricing and further volume growth ensures increase in net interest income

Return Equity >12%

Overriding target: Growth in NII

Solid foundation for profitable growth in commissions and fees

Commissions and fees NOK million

Guarantee commissions

• Real estate broking
• Investment banking services
• Asset management and custodial services
• Money transfer and banking services

Sale of insurance products

Strong position in all product areas

• Ambition: ~4–5 per cent annual growth
• Delivered solid results despite turbulence in the markets
• Lower income from self-service products compensated by reduced production costs and improved pricing

Leading position within investment banking and asset management

Investment banking services Asset management

• Increased Originate-and-Distribute activity
• Growth opportunities available

• The market is growing stimulated by government incentives and increased wealth accumulation
• Unique position in the Norwegian retail market – close to 60 per cent of net sales YTD

Market share (per cent)

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Return Equity >12%

Overriding target: Growth in C&F

Continued growth in insurance products through leveraging our distribution model Return Equity >12%

Defined-contribution pensions Non-life insurance

• Strong growth supported by existing agreements
• Competitive investment returns
• One pension account

• Strategic partnership increases market share within non-life insurance in the personal customer segment
• Cost synergies and strong distribution power

Market share personal customers (per cent)¹⁾

Overriding target: Growth in C&F

Our ambition of a cost/income ratio <40 per cent stands

Stable cost level – positive jaws Committed to delivering on cost control

• Solid investments in technology and compliance largely covered by efficiency gains
• Changes in organisation initiated to increase efficiency
• Cost initiatives implemented to contain wage growth and other cost inflation
• IT: Our strategy stands: evolving – not replacing – the core

Continuing strong cost control – still potential for cost savings

Structural changes Automation Distribution IT Gross cost reduction towards 2022 300-400 300-400 500-700 400-500 ~1 500 – 2 000 Effect in 2020 Effect in 2021 Effect in 2022

Accumulated cost reduction 2020–2022

NOK million, not adjusted for inflation Examples of cost initiatives

STRUCTURAL CHANGES:

• New organisation
• Simplification of legal structure outside Norway

AUTOMATION:

• Credit processes
• Real estate broking

DISTRIBUTION:

• Artificial intelligence
• Office network

IT – NEW WAYS OF WORKING:

• IT integrated into business
• Offshoring

Return Equity >12%

Overriding target: Cost initiatives

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Healthy asset quality reduces cost of risk

0.00 50.00 100.00 150.00 200.00

Development in high-risk and stage 3 exposures¹⁾

Impairment losses 1997–2019

Reduced risk

• Strong Norwegian macro
• Solid and diversified portfolio
• Reduced exposure to cyclical industries
• Quarterly fluctuations, but expecting lower impairment losses than 1997-2019 average

More tools available for increased capital efficiency with CRD IV/CRR

Positive jaws and efficient use of capital to deliver on financial ambitions

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Update on CRD IV/CRR and draft proposal from the Ministry of Finance

1) Pillar 2 capital floor of NOK 19.4 billion introduced, implying an increased capital requirement at end 2019 of ~0.1 percentage point based on RWA at end-September

2) Countercyclical buffer (CCyB) – based on DNB's exposure and relevant local CCyB rates (already adopted, with effect from end of 2019)

3) Based on the Ministry of Finance's proposal for amendment of capital requirements published on 25 June 2019, with effect from end of 2019

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Well positioned for future capital requirements

Snapshot from EBA 2018-Q2 Quantitative Impact Study (QIS)

Estimated effect on RWA

• Norwegian banks are well capitalised with a limited effect of ~5 per cent increase in RWA with completion of Basel III
• Nordic peers ~40–55 per cent increase

Sources: EBA 2018-Q2 QIS data and EBA calculations.

SA – standardised approach to credit risk; IRB – internal ratings-based approach to credit risk; CCP – central counterparty; SEC – securitisation; MKT – market risk; OP – operational risk; CVA – credit valuation adjustment; LR – leverage ratio; OF – output floor.

Capital level

Dividend capacity in DNB Livsforsikring

Strong development in dividends and payout ratio

2017:

• Ordinary dividend NOK 1.5 billion (75%)

2018:

• Ordinary dividend NOK 1.4 billion (100%)
• Extraordinary dividend NOK 1.5 billion

2019:

• Ordinary dividend expected

2020:

• DNB Livsforsikring recognises a gain of NOK 1.2 billion in second part of Fremtind transaction
• DNB Group expects to book a gain of ~NOK 750 million

Dividend policy

Profitability and solid capital position enables delivery on our dividend policy

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Dividend per share (DPS) and payout ratio Additional share buy-back of 0.5 per cent

• Our dividend policy stands: Excess capital will be distributed through dividends or share buybacks
• Dividend policy: Payout ratio >50 per cent
• Ambition of annual increase in DPS
• Share buy-back programme of 0.5 per cent announced on 24 October to be completed in November
• Additional share buy-back of 0.5 per cent announced today

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Delivering on financial ambitions

1) CET1 capital ratio without transitional rules 2) Proposed requirement incl. management buffer 31 Dec. 2019

Achieving financial ambitions

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- KEY PERFORMANCE INDICATOR: Cost/income ratio <40 per cent

– OVERRIDING TARGET: Return on equity >12 per cent – CAPITAL LEVEL: CET1 capital ratio ~17.9 per cent – DIVIDEND POLICY: Payout ratio >50 per cent

High-quality portfolio and increased profitability

• Corporate Banking has a high-quality portfolio both domestically and internationally
• Strong track record in the SME segment, which is set to continue
• Substantial positive synergies and potential for uplift in income in new Corporate Banking

Diversified portfolio and strong improvement on all key parameters

Key industries Corporate Banking (EAD) Key industries Corporate Banking (EAD)1) Key figures Corporate Banking

Commercial real estate (18%) Other (14%)

• Manufacturing (7%) Shipping (6%)
• Credit institutions (6%) Services (6%)
• Fishing, fish farming and farming (5%) Healthcare (4%)
• Technology, media and telecom (4%)
• Residential property (10%) Oil, gas and offshore (10%)
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• Retail (5%) Power and renewables (5%)
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Pre-tax operating profit before impairment (YTD 3Q19) NOK 14.6 billion

+13.0% from YTD 3Q17

No. of FTEs (per 3Q19)1) 2 265 -1% from 3Q17

Cost/income ratio (YTD 3Q19) 36.7% -4.4 percentage points from 3Q17

Return on allocated capital (YTD 3Q19) 13.2% +3.4 percentage points from YTD 3Q17

Substantial positive synergies and potential for uplift in income

Externally Stronger customer experience

• Leverage industry expertise
• Reduce time-to-market for digital solutions
• Create consistent customer experiences across customer segments

Internally Better utilisation of finite resources

• Standardise processes and streamlined operations across customer segments
• Increase pace and quality of compliance efforts
• Increase efficiency and tighter alignment of IT development and resources

Cost synergies: 6–7% reduction in FTEs, including ongoing reductions internationally

Strong track record in the SME segment, which is set to continue

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Revenue growth and strong cost control resulting in a 5.8 percentage point improvement in C/I Strong increase in profitability

Return on Allocated Capital (per cent)

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The SME segment's scalable distribution model is a platform for further growth

Scalable, flexible and cost-efficient distribution model

• 65% of all SME customers served digitally
• Digital credit solution available to >80% of SMEs
• Transformation of customer service has reduced inbound traffic and increased sales

Proven distribution power as a competitive advantage

• Market-leading position within pension

• 50% conversion rate on non-life insurance

• 23% uplift in income from DNB Markets from last CMD (3Q17)

Expanding digital distribution and increasing customer engagement

• DNB Puls developed as a platform for distribution and digital advice
• Launched integrated accounting software
• Onboarding time reduced from ~30 days to ~5 minutes through digitalisation

SME portfolio

Corporate Banking has a high-quality portfolio both domestically and internationally

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Share of low-risk exposure in the Corporate Banking portfolio EAD, per cent

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CB portfolio

Reduced geographic exposure and limited concentration risk within international industries with a selective scope

Concentration risk within selective international industries is under control EAD per 3Q19, NOK billion2)

1) Large Corporate and International portfolio

2) Exposure outside the Nordics in these four industries represents 7% of Corporate Banking's total Exposure at Default (EAD). Probability of Default (PD) of exposure outside the Nordics by industry: Healthcare 0.32%, TMT 0.55%, Manufacturing Industries 0.79%, Service Industries 1.30%.

CB portfolio

Reductions in shipping and oil-related industries and increased focus on ESG

ESG is an integrated part of our business

• ESG is integrated in all industry strategies and credit rules throughout the organisation
• Joined industry-specific initiatives including Poseidon Principles and Responsible Ship Recycling
• Arrange NOK 450 billion in financing to renewable energy and infrastructure1)
• NOK 130 billion in green real estate loans and NOK 200 million in growth loans
• DNB has arranged Sustainable Bond volumes totalling EUR 3.3 billion in 2019 (per 3Q)

Developed a framework for green products in DNB

CB portfolio

High-quality portfolio and increased profitability

• Corporate Banking has a high-quality portfolio both domestically and internationally
• Strong track record in the SME segment, which is set to continue
• Substantial positive synergies and potential for uplift in income in new Corporate Banking

Delivering more with less

• The market and DNB's competitive position
• Leveraging our distribution power
• Maximising efficiencies in use of existing resources

Market position

Leading the way in the Norwegian market

Market share in deposits Portfolio ~4x as large as the second largest bank Market share in lending Portfolio ~2x as large as the second largest bank Peer 3 DNB 24% Peer 2 Peer 3 DNB 29% Peer 2

High quality and profitable growth in mortgage portfolio

Market position

We will continue to improve our world-class efficiency in lending

• Fully automated secured lending with excellent quality
• Speed is essential in a well-functioning real estate market
• 70 per cent of mortgage applications submitted digitally
• Process time per application significantly reduced
• Further potential to capitalise on the solution

Market position

76% increase in savings agreements from #girlsinvest

Sale of savings agreements1) change in weekly average

Before After Before After

High growth in a profitable deposits and savings portfolio

Strong platform in a growing market

NOK billion Bank of choice for personal savings

• ~30 per cent market share in current accounts
• Current accounts: the gateway to short-term deposits and long-term savings
• Norwegian government announces changes in pension regime from 1 January 2021
• Focused sales strategy
  • Grow the overall market
  • Develop attractive products and services
  • Preferred bank for wealthy customers

Market position

Insurance merger starting to pay off

Increasing written premiums1) Volume in NOK million

Positive results across the board

• Better risk-based pricing model showing profitability effects
• Increased sales volume and high conversion rate on given offers
• Streamlining our distribution to boost sales efficiency
• Digital channels important sales contributor from 2021
• Ambition to increase growth rate in written premiums by 50 per cent in 2020

World-class digital distribution channels to boost future sales

Dominant digital platforms across all segments Well positioned for digital distribution

• Cloud architecture ensures flexibility and speed in development efforts
• Increasing customer traffic gives valuable customer data and sales opportunities
• Strong digital distribution power boosts efficiency and customer satisfaction
• 96 per cent of saving agreements sold digitally
• Untapped potential for insurance and unsecured credit

Starting to monetise data investments by using our customer insight data

Experimenting to reduce churn Very promising results

Using churn leads for contacting customers with high probability of churning

Test results: 40 per cent reduced churn in the group that was contacted

Contacted customers buy one extra product on average

Monetising CRM and customer insight has a high strategic priority

Investing in customer service pays off

Greater efficiency with machine learning and improved solutions Inquiries • Delivering more with less people

• More than 60 per cent seek answers online
• Strong focus on improving service solutions
• About 60 per cent of chats answered by the chatbot
• Machine learning makes communication more precise
• Aiming to solve the majority of all requests in first point of contact
• ~10 per cent reduction in FTEs in call centre

Delivering more with less

• Positioned to deliver profitable growth going forward
• Leveraging our distribution power across all product areas
• Maximising efficiencies in use of existing resources

The unique combination of mobile wallet, eID and payment scheme

The indisputable no. 1 mobile wallet, eID and payment scheme in Norway

...8.5 million interactions every day

1) Users aged 13 and over

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Total gross transaction income 2019e NOK 1.1 billion

Vipps wallet – 72% increase in fee income from 2018 to 2019e

Vipps eCom – close to 15% market share by year-end (run-rate)

1 081 +107% YoY in Oct

Oct-18 Jan-19 Apr-19 Jul-19 Oct-19

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Volume in NOK million – per month over the last 12 months Increasing market share and new products

• Total eCom market in 2019: approx. NOK 105 bn from Norwegian webshops
• Annual market growth at ~15 per cent compared with Vipps growth above 100 per cent
• Strong growth in transaction-based fees

Vipps eCom Vipps eInvoice New products

eInvoices – growth from 0.3 to 1.3 million paid each month

Source: Nets

Million invoices paid in Vipps – per month over the last 12 months Removing paper invoices in Norway

• Approx. 400 million invoices each year in Norway, and still 160–180 million on paper
• With Vipps' customer base, we have increased the number of digitised recipients from 1.2 to 3.2 million
• We will digitise more than 30 million paper invoices this year alone, which is the same number as in the last 10 years
• 75 per cent of the new, digital traffic goes to the banks

New products

Vipps eCom Vipps eInvoice

Newly launched products: Login with Vipps – removing passwords

Login with Vipps – enabled by BankID + Vipps Removing passwords in Norway

• Overall objective to remove the hassle of passwords and creating user profiles
• Combining signup, login and checkout and enriching user data
• The ease and convenience will further increase our growth in eCommerce

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New products

Vipps eCom Vipps eInvoice

Newly launched products: Deferred invoices in Vipps

Deferred invoices – launch in November New market solution for deferred invoices

• New payment option called "Cover for me" which defers the payment against a small user fee
• Further expansion with the banks' credit lines as payment options and other use cases like eCom checkout

Vipps eCom Vipps eInvoice New products

New products for launch: Vipps inStore – one unified solution with QR Vipps eCom Vipps eInvoice New products

Criteria for success

Positioned for continued growth in 2020 and higher fee income

In position to capitalise on deferred payments in more use cases in 2020

The unique combination of mobile wallet, eID and payment scheme

CAPITAL MARKETS DAY 2019

Felles mal for CMD 2019

NB: illustrasjoner under oppdatering

20 November 2019