DNB Bank ASA

Earnings Release • Oct 21, 2021

Results DNB Group

Q3

Third quarter 2021

Kjerstin R. Braathen (CEO) Ottar Ertzeid (CFO)

21 October 2021

Continued strong performance and solid asset quality

Return on equity (ROE) of 11.4 per cent in 3Q21

Solid performance across the Group, lower expenses in the quarter and further net reversals of impairment provisions

Profitable lending and deposit growth and increased net interest income Net interest income increased by 3.8 per cent from the last quarter, driven by increased volumes. Loans up 0.6 per cent and deposits up 1.7 from June 2021

Net commissions and fees up 3.2 per cent from 3Q20 Positive development within money transfer services, insurance and asset management in an otherwise seasonally slow quarter

Net reversals of impairment provisions

Net reversals of NOK 200 million reflecting the robust portfolio and improved macroeconomic outlook

Strong earnings per share (EPS) – a firm foundation for dividend policy EPS of NOK 4.29 in the quarter, up 25.8 per cent from 3Q20

Profitability and solid capital position enabling delivery on our dividend policy

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4.00

6.00

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Dividend per share (DPS) and payout ratio

Key points

Dividend policy stands:

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30%

40%

50%

60%

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80%

• Distribution of excess capital through dividends and share buy-backs
• Payout ratio of more than 50 per cent in cash dividends
• Ambition of annual increase in DPS
• Delivery on dividend policy of more than 50 per cent in cash dividends before considering share buy-backs

1) Share buy-backs approved by both the Annual General Meetings and Finanstilsynet (the Financial Supervisory Authority of Norway) based on the accounts for the previous year.

Improved and strong outlook for the Norwegian economy

• High activity level in the Norwegian economy, fully reopened society since September with no significant restrictions
• Before the reopening, Norway was ranked no. 1 in Bloomberg's Covid Resilience Ranking of the countries handling COVID-19 most effectively
• After a key policy rate hike of 25 basis points in September, Norges Bank forecasts an additional six rate hikes before the end of 2024

Personal customers – continued high activity

Highlights in the quarter

• NOK million Annualised year-to-date growth in loans and deposits of 3.7 and 8.3 per cent, respectively
  • Announced repricing of up to 25 basis points, with effect from mid-November
  • Strong momentum in non-life insurance

Mobile banking app – number of active users Thousands

Corporate customers – strong results driven by high customer activity and net reversals of impairment provisions

Pre-tax operating profit

Highlights in the quarter

• NOK million Profitable lending growth, annualised year-to-date, of 8.4 per cent in the segment small and medium-sized customers
  • Solid performance within investment banking and pensions
  • Reversals of impairment provisions reflecting robust asset quality and strong macroeconomic outlook

Defined-contribution pensions

Profitable increase in both loans and deposits

• Loans to personal customers up 0.7 per cent and to corporate customers up 0.5 per cent in the quarter
• Currency-adjusted growth year-to-date, annualised:
  • ‒ Loans: personal customers 3.7 per cent, corporate customers 2.9 per cent, total segments 3.3 per cent
  • ‒ Deposits: personal customers 8.3 per cent, corporate customers 19.3 per cent, total segments 14.7 per cent

Stable development in net interest margin

• Spreads on loans and deposits reflected the increase of 12 basis points in average NOK money market rates
• Increased deposit-to-loan ratio had a negative effect of ~1 basis point on both combined spreads and net interest margin

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

2) Norges Bank reduced the key policy rate from 1.50 to 0.25 per cent in March 2020 and to 0 per cent in May 2020.

Net interest income driven by volume growth and high activity

• Norges Bank increased the key policy rate from 0 to 0.25 per cent in September
• DNB announced increase in customer interest rates with effect from mid-November
• The announced repricing is expected to have an annual effect of approximately NOK 1.5 billion

Commissions and fees – positive development in seasonally slow quarter

Operating expenses affected by capitalisation and reduced pension expenses

• IT expenses reduced due to capitalisation and a seasonally slow quarter
• Reduced pension expenses in the closed defined-benefits scheme, driven by lower returns in the stock market1)

Operating expenses from 2Q21 to 3Q21 NOK million

Net reversals of impairment provisions reflect the robust portfolio

• 98.9 per cent of the portfolio in stages 1 and 2
• Reversals in stages 1 and 2 reflected improved underlying credit quality and macroeconomic outlook

Impairment of financial instruments by industry segment NOK million
	3Q21	2Q21	3Q20
Total	200	833	(776)
Of which:
Personal customers - Stages 1 and 2 - Stage 3	25 (51)	69 (30)	380 (20)
Corporate customers*) - Stages 1 and 2 - Stage 3	289 (62)	244 550	636 (1 773)
*) Of which oil, gas and offshore: - Stages 1 and 2 - Stage 3	82 8	182 (208)	294 (1 331)

Maximum exposure (on- and off-balance sheet items), net of accumulated impairment provisions

Strong profit contributing to a continued high CET1 capital ratio

• In capital planning, DNB uses the full CCyB requirement of 250 basis points and thus a CET1 capital ratio ambition above 17.1 per cent
• Banking Package (CRR II/CRD V/BRRD II) expected to take effect first half 2022 slight net positive impact on the CET1 capital ratio expected
• CET1 capital ratio will initially be reduced by ~120 basis points if the acquisition of Sbanken is approved by the Norwegian Competition Authority

• 1) Supervisory authorities' expectation with full CCyB (counter-cyclical capital buffer) requirement expected to take effect in 2023 at the earliest.
• 2) Supervisory authorities' current expectation.
• 3) Supervisory authorities' current requirement.

Strong earnings per share – a firm foundation for delivering on dividend policy

• ROE positively affected by increased income, low expenses and net reversals of impairment provisions
• The first of several expected interest rate hikes from Norges Bank implemented, will contribute positively to future earnings
• High profitability reflected by a year-to-date EPS of NOK 11.95, up 36.4 per cent from corresponding period in 2020

Profitability and solid capital position enabling delivery on our dividend policy

Distribution of dividends: as of 5 November 2.00 2.10 2.70 3.80 4.50 5.70 7.10 8.25 8.40 9.00 2.34 2.43 3.09 25% 25% 25% 30% 30% 50% 73% 73% 72% 75% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Dividend per share (NOK) Share buy-back (NOK) Total payout ratio 1)

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2.00

4.00

6.00

8.00

10.00

12.00

14.00

Dividend per share (DPS) and payout ratio

Key points

• Dividend policy stands:
  • Distribution of excess capital through dividends and share buy-backs
  • Payout ratio of more than 50 per cent in cash dividends
  • Ambition of annual increase in DPS
  • Delivery on dividend policy of more than 50 per cent in cash dividends before considering share buy-backs
• The Board of Directors has decided to pay out a dividend of NOK 9.00 per share for 2020
  • Ex-dividend date: 28 October

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10%

20%

30%

40%

50%

60%

70%

80%

1) Share buy-backs approved by both the Annual General Meetings and Finanstilsynet (the Financial Supervisory Authority of Norway) based on the accounts for the previous year.

Appendix

Income statement

NOK million	3Q21	2Q21	3Q20	Change from 2Q21	Change from 3Q20
Net interest income	9 766	9 409	9 298	357	468
Other operating income	4 577	4 184	4 109	393	468
Total income	14 343	13 593	13 407	749	935
Operating expenses	(5 752)	(6 038)	(5 702)	287	(50)
Pre-tax operating profit before impairment	8 591	7 555	7 706	1 036	885
Impairment of loans and guarantees and gains on assets	200	730	(776)	(530)	976
Pre-tax operating profit	8 791	8 285	6 929	506	1 862
Tax expense	(1 934)	(1 823)	(1 386)	(111)	(548)
Profit from operations held for sale, after taxes	26	(30)	2	56	24
Profit for the period	6 883	6 432	5 546	451	1 337
Portion attributable to shareholders	6 657	6 210	5 293	447	1 364

Other operating income

NOK million	3Q21	2Q21	3Q20	Change from 2Q21	Change from 3Q20
Net commissions and fees	2 448	2 883	2 372	(435)	76
Customer revenues in DNB Markets	558	515	546	43	12
Trading revenues in DNB Markets	81	30	55	52	26
Hedging of defined-benefit pension scheme	9	67	41	(58)	(32)
Credit spreads on bonds	86	18	211	68	(125)
Credit spreads on fixed-rate loans	47	14	133	33	(86)
CVA/DVA/FVA	(9)	30	138	(39)	(148)
Other mark-to-market adjustments	392	12	448	380	(56)
Basis swaps	147	(212)	(363)	359	510
Exchange rate effects on additional Tier 1 capital	274	59	(391)	216	665
Net gains on financial instruments at fair value	1 585	532	819	1 052	766
Net financial and risk result, life insurance	147	228	299	(81)	(152)
Profit from investments accounted for by the equity method	185	260	310	(76)	(126)
Other	212	281	309	(69)	(97)
Net other operating income, total	4 577	4 184	4 109	393	468

Norwegian society has shown resilience in its handling of the pandemic

• Scandinavian countries among the world's most digitalised societies this has limited the impact of the restrictions on the economy
• A high level of public trust in the authorities has, together with strong welfare policies, led to a high degree of compliance with guidelines
• More than 90 per cent of those who have been offered the vaccine have accepted

DNB will be a driving force for sustainable transition

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.

We are here. So you can stay ahead. Results DNB Group We are you can Third quarter 2021