DNB Bank ASA — Earnings Release 2018

Jul 12, 2018

DNB Group Results

Rune Bjerke (CEO) Kjerstin Braathen (CFO)

Approaching ROE >12 per cent

Return on equity 11.8 per cent in 2Q18 On track to target

Earnings per share NOK 3.65 Up from NOK 3.07 in 2Q17

Strong growth in loans to customers Annualised growth of 5.7 per cent in first half 2018 1)

Continued improvement in asset quality Net impairment reversals of NOK 54 million

Increased revenue from commissions and fees High IBD activity and income from money transfers

Personal customers – steady loan growth

Pre-tax operating profit

Financial highlights

• Lending growth of 1.4 per cent in 2Q18 and 4.1 per cent over the last six months, annualised
• NII negatively affected by increased money market rates in 2Q18
• Sound cost control

Growth in loans to personal customers

NOK billion

Small and medium-sized enterprises – all-time high profits in 2Q18

Pre-tax operating profit

Financial highlights

• Pre-tax operating profit up 28 per cent from 2Q17
• Profit positively affected by increased money market rates, volume growth, high IBD activity and low impairment losses
• Lending growth of 1.7 per cent in 2Q18 and 6.4 per cent over the last six months, annualised

Positive development in cost/income ratio

Per cent

Large corporates and international customers – improved profitability

Pre-tax operating profit

Financial highlights

• 8.7 per cent improvement in net interest income from 1Q18
• Reversal of impairment losses
• Activity level up in prioritised segments; lending growth of 2.0 per cent in 2Q18 and 6.6 per cent over the last six months, annualised and currency-adjusted

Loans to customers and return on allocated capital

Return on equity positively affected by rebalancing

Strategic positioning for the future

Continued growth in core business areas

• Increase in loans to all customer segments over the last six months; 5.7 per cent annualised and currency-adjusted
• Annualised growth in deposits of 6.2 per cent in the last six months

Stable net interest margin

• Combined spreads negatively affected by increased money market rates in 2Q18 and changes in the product mix
• Net interest margin affected by reduced net interest income from money market activities

Stable net interest income

Growth in commissions and fees

Commissions and fees NOK million

Real estate broking

Seasonally high level of activity; stable income compared with 2Q17

Investment banking services

High activity in all areas; strong pipeline

Asset management and custodial services

Increased sales in the personal customers segment were offset by lower performance fees recognised in 2Q18 compared to 2Q17 due to the implementation of IFRS 15

Guarantee commissions

Reclassified from net gains on financial instruments at fair value due to IFRS 9 reporting requirements. Stable underlying development

Money transfer and banking services

Positive trend, up 5.4 per cent from 2Q17 due to improved pricing and lower costs

Life insurance products

Increasing volumes and revenues from new products more than offset the reduction in pensions with guarantees in 2Q18

Increased expenses driven by higher activity level in all segments

Asset quality continued to improve

• Net impairment losses had a positive impact on the income statement of NOK 54 million in the period
• Overall, the most significant macroeconomic drivers (Norway and oil industry) were stable in the quarter

Impairment of financial instruments per customer segment, P&L Amounts in NOK million
	2Q18	1Q18
Personal customers	(101)	(53)
Small and medium-sized enterprises	(33)	(215)
Large corporates and international customers	189	598
Total (net reversals)	54	330

Profit and ROE affected by reversal of impairment

• Profit for the period up 16 per cent from the same quarter last year
• Cost/income ratio 42.2 per cent, adjusted for mark-to-market (basis swaps and AT1)

Strong capital position – new share buy-back programme launched

• New buy-back programme of 1.5 per cent expected to reduce equity by approx. NOK 3.8 billion
• CET1 capital ratio reduced by 37 basis points due to new share buy-back programme
• Dividend from DNB Livsforsikring contributed positively to the CET1 capital ratio with 14 basis points

APPENDIX

Positive macroeconomic development in Norway

Source: Statistics Norway, Eiendomsverdi, Real Estate Norway, Finance Norway, Datastream/DNB Markets 16

Shareholder distribution

Top 20 shareholders As at 30 June 2018 Shares (1 000) Ownership (per cent) Quarterly change in shares (1 000) Norwegian Government/Ministry of Trade, Industry and Fisheries 1) 553 792 34.4 - DNB Savings Bank Foundation 130 001 8.1 - Folketrygdfondet 2) 97 058 6.0 1 865 Fidelity International 31 165 1.9 755 BlackRock 28 314 1.8 (1 281) The Vanguard Group 27 771 1.7 (249) Deutsche Asset Management 24 639 1.5 2 307 Schroder Investment Management 20 511 1.3 (303) Capital World Investors 18 043 1.1 - Storebrand Kapitalforvaltning 16 571 1.0 (133) T. Rowe Price 15 164 0.9 6 063 KLP 14 576 0.9 (149) MFS Investment Management 13 897 0.9 (1 833) SAFE Investment Company 13 442 0.8 157 Newton Investment Management 12 997 0.8 859 DNB Asset Management 12 511 0.8 (1 036) Davis Selected Advisers 12 424 0.8 9 413 State Street Global Advisors 11 975 0.7 (655) Nordea Funds 10 667 0.7 (114) LSV Asset Management 10 288 0.6 1 148 Total largest shareholders 1 075 804 66.9 2 Other shareholders 532 757 33.1 (6) Total 1 608 561 100.0 (4)

Ownership according to nationality As at 30 June 2018

1) DNB has completed three buy-back programmes totalling 1.5 per cent of outstanding shares. According to an agreement, the Norwegian government will redeem shares on a proportional basis so that its holding will remain at 34 per cent.

2) Folketrygdfondet's ownership fluctuates due to lending of shares.

Dividend per share increased by 25 per cent to NOK 7.10 for 2017

Dividend per share and payout ratio

• Cash dividend of 55 per cent and total distribution to shareholders of 73 per cent of profits in 2017.
• New authorisation for 2018 approved at AGM for buy-backs of up to 3.5 per cent of outstanding shares. Initially DNB has applied for and got approval by the FSA for up to 2 per cent.
• Buy-back programme of 1.5 per cent initiated in the second quarter.

DNB portfolio and income split

Distribution of exposure at default by industry segment 30 June 2018

Total income split 2Q18

>78 per cent from Norwegian units

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