Quarterly Report • Jul 13, 2021
Quarterly Report
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(Unaudited)
Q2
| Income statement | 2nd quarter | 2nd quarter | January-June | Full year | |
|---|---|---|---|---|---|
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2020 |
| Net interest income | 9 409 | 9 451 | 18 639 | 19 846 | 38 623 |
| Net commissions and fees | 2 883 | 2 396 | 5 514 | 4 634 | 9 500 |
| Net gains on financial instruments at fair value | 532 | 1 672 | 1 331 | 4 900 | 5 902 |
| Net financial and risk result, life insurance | 228 | 131 | 440 | (115) | 659 |
| Other operating income | 541 | 473 | 1 015 | 401 | 1 714 |
| Net other operating income | 4 184 | 4 673 | 8 300 | 9 821 | 17 776 |
| Total income | 13 593 | 14 123 | 26 939 | 29 666 | 56 399 |
| Operating expenses | (5 980) | (5 698) | (11 685) | (10 994) | (22 759) |
| Restructuring costs and non-recurring effects | (58) | (12) | (170) | (196) | (643) |
| Pre-tax operating profit before impairment | 7 555 | 8 414 | 15 084 | 18 476 | 32 998 |
| Net gains on fixed and intangible assets | (103) | 2 | (106) | 782 | 767 |
| Impairment of financial instruments | 833 | (2 120) | 943 | (7 892) | (9 918) |
| Pre-tax operating profit | 8 285 | 6 295 | 15 921 | 11 366 | 23 847 |
| Tax expense | (1 823) | (1 259) | (3 503) | (2 273) | (4 229) |
| Profit from operations held for sale, after taxes | (30) | (17) | (101) | (73) | 221 |
| Profit for the period | 6 432 | 5 019 | 12 317 | 9 020 | 19 840 |
| Balance sheet | 30 June | 31 Dec. | 30 June |
|---|---|---|---|
| Amounts in NOK million | 2021 | 2020 | 2020 |
| Total assets | 3 080 095 | 2 918 943 | 3 053 973 |
| Loans to customers | 1 710 930 | 1 693 811 | 1 703 905 |
| Deposits from customers | 1 230 931 | 1 105 574 | 1 104 224 |
| Total equity | 245 548 | 248 396 | 239 599 |
| Average total assets | 3 322 383 | 3 230 354 | 3 231 476 |
| Total combined assets | 3 597 409 | 3 363 166 | 3 444 445 |
| Key figures and alternative performance measures | 2nd quarter | 2nd quarter | January-June | Full year | |
|---|---|---|---|---|---|
| 2021 | 2020 | 2021 | 2020 | 2020 | |
| Return on equity, annualised (per cent) 1) | 11.1 | 8.7 | 10.5 | 7.6 | 8.4 |
| Earnings per share (NOK) | 4.01 | 3.06 | 7.66 | 5.34 | 12.04 |
| Combined weighted total average spreads for lending and deposits (per cent) 1) |
1.18 | 1.25 | 1.18 | 1.32 | 1.27 |
| Average spreads for ordinary lending to customers (per cent) 1) | 2.05 | 2.14 | 2.00 | 2.04 | 2.04 |
| Average spreads for deposits from customers (per cent) 1) | 0.02 | (0.07) | 0.07 | 0.20 | 0.12 |
| Cost/income ratio (per cent) 1) | 44.4 | 40.4 | 44.0 | 37.7 | 41.5 |
| Ratio of customer deposits to net loans to customers at end of period 1) | 72.6 | 64.8 | 72.6 | 64.8 | 67.3 |
| Net loans at amortised cost and financial commitments in stage 2, per cent of net loans at amortised cost 1) |
9.38 | 12.49 | 9.38 | 12.49 | 10.51 |
| Net loans at amortised cost and financial commitments in stage 3, per cent of net loans at amortised cost 1) |
1.54 | 1.83 | 1.54 | 1.83 | 1.55 |
| Impairment relative to average net loans to customers at amortised cost, annualised (per cent) 1) |
0.20 | (0.51) | 0.12 | (0.96) | (0.60) |
| Common equity Tier 1 capital ratio at end of period (per cent) 2) | 19.1 | 18.2 | 19.1 | 18.2 | 18.7 |
| Leverage ratio (per cent) 2) | 6.7 | 6.8 | 6.7 | 6.8 | 7.1 |
| Share price at end of period (NOK) | 187.60 | 127.10 | 187.60 | 127.10 | 168.00 |
| Book value per share | 147.35 | 142.66 | 147.35 | 142.66 | 148.30 |
| Price/book value 1) | 1.27 | 0.89 | 1.27 | 0.89 | 1.13 |
| Dividend per share (NOK) 3) | 9.00 | ||||
| Score from RepTrak's reputation survey in Norway (points) | 74.4 | 74.5 | 74.4 | 74.5 | 76.7 |
| Customer satisfaction index, CSI, personal customers in Norway (score) | 72.5 | 72.3 | 73.9 | 72.7 | 73.6 |
| Female representation at management levels 1-4 (%) | 38.0 | 39.3 | 38.0 | 39.3 | 39.5 |
1) Defined as alternative performance measure (APM). APMs are described on ir.dnb.no.
2) Dividends for 2019 and 2020 have been deducted.
3) Dividends for 2019 were paid on 4 March 2021. The Board of Directors was given an authorisation at the Annual General Meeting on 27 April 2021 to pay a dividend of up to NOK 9.00 per share for 2020, for distribution after September 2021.
For additional key figures and definitions, please see the Factbook on ir.dnb.no.
| Directors' report 4 | ||
|---|---|---|
| -- | --------------------- | -- |
| Income statement 12 | ||
|---|---|---|
| Comprehensive income statement 12 | ||
| Balance sheet 13 | ||
| Statement of changes in equity 14 | ||
| Cash flow statement 15 | ||
| Note 1 | Basis for preparation 16 | |
| Note 2 | Segments 16 | |
| Note 3 | Capital adequacy 17 | |
| Note 4 | Development in gross carrying amount and maximum exposure 19 | |
| Note 5 | Development in accumulated impairment of financial instruments 20 | |
| Note 6 | Loans and financial commitments to customers by industry segment 21 | |
| Note 7 | Financial instruments at fair value 23 | |
| Note 8 | Debt securities issued, senior non-preferred bonds and subordinated loan capital 24 | |
| Note 9 | Contingencies and subsequent events 25 |
| Statement pursuant to the Securities trading Act 27 | |
|---|---|
| Basis for preparation 26 | |
| Statement of changes in equity 26 | |
| Balance sheet 26 | |
| Income statement 26 |
| Information about DNB 28 | |
|---|---|
| --------------------------- | -- |
There has been no full or partial external audit of the quarterly directors' report and accounts, though the report has been reviewed by the Audit Committee.
DNB's financial performance continued to improve in the second quarter, supported by a gradual reopening of the Norwegian economy and strong liquidity in most households. The increase in earnings per share gives a firm foundation for delivering on the company's dividend policy.
The vaccine rollout in Norway has picked up speed, and as more restrictions are being lifted, there is a sense of optimism about the second half of the year, backed by brisk activity in the Norwegian housing, saving and capital markets. A clear upturn in economic activity is expected in the second half of 2021, and the Norwegian central bank, Norges Bank, has signalled a rise in the key policy rate as soon as in September.
The profit in the quarter was NOK 6 432 million, an increase of NOK 1 413 million from the year-earlier period. Compared with the previous quarter, profits increased by NOK 548 million.
Earnings per share were NOK 4.01 in the quarter, an increase from NOK 3.06 in the year-earlier period and NOK 3.65 in the first quarter of 2021.
The common equity Tier 1 (CET1) capital ratio was 19.1 per cent, up from 18.2 per cent a year earlier, and down from 19.2 per cent in the first quarter of 2021.
The leverage ratio for the Group was 6.7 per cent, down from 6.8 per cent in the second quarter of 2020, and from 6.9 per cent in the first quarter of 2021, due to higher deposits with central banks.
Return on equity (ROE) was positively impacted by net reversals of impairment of financial instruments and strong results from net commissions and fees, and ended at 11.1 per cent. The comparable figures were 8.7 per cent in the second quarter of 2020 and 10.0 per cent in the first quarter of 2021.
Net interest income was at the same level as the second quarter of 2020. Deposit volumes and margins contributed positively, but were offset by negative exchange rate effects. Compared with the first quarter of 2021, net interest income was up NOK 180 million, mainly due to increased deposit and lending volumes from both the personal customers and corporate customers portfolios and an additional interest day.
Net other operating income amounted to NOK 4 184 million in the second quarter, down NOK 489 million from the corresponding period in 2020, affected by a negative effect on basis swaps and a financial market returning to more normalised levels. Net commissions and fees showed a strong result and increased by NOK 486 million, or 20.3 per cent, from the year-earlier period, due to higher income from real estate broking, investment banking, asset management and custodial services, as well as insurance. Compared with the first quarter of 2021, net other operating income was at the same level. Net commissions and fees increased by NOK 252 million or 9.6 per cent, due to higher income from real estate broking and investment banking services, where there was a high level of activity.
Operating expenses amounted to NOK 6 038 million in the second quarter, up NOK 329 million from the same period a year earlier, affected by increased activity within IT projects following the reopening of the society, and higher salaries and other personnel expenses. Compared with the previous quarter, operating expenses were up NOK 221 million.
Impairment of financial instruments showed net reversals of NOK 833 million in the second quarter. This is an improvement compared with both the second quarter of last year and the first quarter of 2021, which saw impairment provisions of NOK 2 120 million and net reversals of NOK 110 million, respectively. The net reversals of NOK 833 million in the quarter are mainly due to reversals in the corporate customers industry segments. The
personal customers industry segment saw a small net reversal in the quarter.
On 30 November 2020, it was decided at the extraordinary general meetings of DNB ASA and DNB Bank ASA to merge the two companies, with DNB Bank ASA as the surviving company. The completion of the merger was conditional on obtaining the necessary regulatory permissions, which were granted on 27 May 2021 by the Norwegian Ministry of Finance. The merger was completed on 1 July 2021. The shares in DNB Bank ASA were listed on Oslo Børs (Oslo Stock Exchange) on the same date.
At DNB Bank ASA's Annual General Meeting on 27 April 2021, and with effect from the merger date, a new Board of Directors of DNB Bank ASA was elected. In accordance with the principle of continuity, DNB Bank ASA's Board of Directors will be responsible for ensuring that the company's obligations are fulfilled. The company's interim accounts have therefore been approved by the new Board of Directors of DNB Bank ASA.
In the second quarter, DNB presented a revised sustainable strategy establishing that the Group will be a driving force for sustainable transition. The strategy builds on a materiality analysis, which identifies three priority areas where DNB can have the greatest impact on long-term value creation for the company, as well as for the key stakeholders.
In order to support the goal of being a net-zero emissions bank in 2050, the Group has set quantifiable targets for emissions from its credit and investment activities, as well as for sustainable financing at portfolio level towards 2030. The targets are concrete, measureable and dynamic and show how DNB will take a leading role in the financing of the green transition in the Nordics.
In recent years, DNB has put gender equality higher on the agenda both within the Group and through its products, services and procurements. The Group will continue this work in the time ahead, while at the same time seeking to boost the efforts to promote diversity and inclusion.
The principal goal of DNB's efforts to fight financial crime is to reduce financial loss for society, customers and for the Group itself, while maintaining trust in the bank's products and services. This work is essential for fulfilling DNB's social responsibility and ensuring compliance.
The full list of targets can be found on https://www.dnb.no/en/about-us/loans-investments.html
As announced on 17 June 2021, DNB received acceptances from shareholders of its offer representing approximately 81.3 per cent of the outstanding shares and votes in Sbanken. In addition, DNB has a holding of approximately 9.9 per cent of the shares and votes in Sbanken. Following the completion of the acquisition, this holding will be approximately 91.2 per cent. Following a positive recommendation from Finanstilsynet (the Financial Supervisory Authority of Norway) on 25 June, on 1 July the Ministry of Finance authorised DNB to acquire Sbanken on the condition that the merger with DNB Bank ASA is completed by 1 January 2023. The acquisition is
subject to the Norwegian Competition Authority (NCA) not making any objections. The NCA has opened a phase II review to assess the proposed acquisition, and will now carry out an in-depth assessment of the potential effects of the proposed transaction on the distribution of mutual funds. The final deadline for the NCA's review is 7 October 2021.
In June, DNB's associated company Vipps signed a merger agreement with the Danish company MobilePay and the Finnish company Pivo, to create a joint digital wallet. The merger will enable cross-border mobile payments and better solutions for people and businesses in Denmark, Finland and Norway. The transaction is subject to the approval of the relevant authorities, such as the European Commission.
In May, DNB launched Norway's first bank card made from recycled materials. Initially, this type of card will be available to the around 300 000 members of DNB's programme for young customers, DNB Ung, but the goal is to offer this to all customers. The cards are made of 75 per cent recycled PVC plastic from industrial waste.
In December 2020, DNB received a preliminary report from Finanstilsynet following an ordinary AML inspection in February 2020. According to the report, DNB had not been complicit in money laundering, but Finanstilsynet criticised the bank for inadequate compliance with the Norwegian Anti-Money Laundering Act. On the basis of this criticism, Finanstilsynet wrote that it was considering imposing an administrative fine of NOK 400 million on the bank. In May, Finanstilsynet announced that it was maintaining the administrative fine.
Every year, Universum ranks Norway's most attractive employers among students, as well as the career preferences of students at Norwegian universities and university colleges. This year, just under 14 000 students expressed their opinion. DNB still has the top ranking among business students in the Universum survey. The bank has also retained its title as the financial industry's best in the category of banks. In addition, DNB is ranked in the top 4 among IT students and number 12 among law students.
In June, the Ministry of Finance decided to raise the countercyclical capital buffer for banks to 1.5 per cent, with effect from 30 June 2022.
DNB recorded profits of NOK 12 317 million in the first half of 2021, up NOK 3 297 million from the previous year. Return on equity was 10.5 per cent, compared with 7.6 per cent in the year-earlier period, and earnings per share were NOK 7.66, up from NOK 5.34 in the first half of 2020.
Net interest income decreased by NOK 1 207 million from the same period last year, driven by negative exchange rate effects and a negative contribution from spreads. There was an average decrease in the healthy loan portfolio of 0.2 per cent in parallel with a 12.6 per cent increase in average deposit volumes from the first half of 2020. Both lending and deposit volumes increased towards the end of the quarter and showed growth compared to end-June 2020 of 1.0 per cent and 12.7 per cent, respectively. The combined spreads narrowed by 13 basis points compared with the year-earlier period. Average lending spreads for the customer segments narrowed by 4 basis points, and deposit spreads narrowed by 13 basis points.
Net other operating income decreased by NOK 1 521 million from the first half of 2020, mainly due to negative exchange rate effects on AT1 capital and basis swaps. Net commissions and fees showed a strong development and increased by NOK 880 million, or 19.0 per cent, compared with the first half of 2020. The increase was due to higher income from investment banking services.
Total operating expenses were up by NOK 665 million from the first half of 2020 due to increased salaries and other personnel expenses.
There were net reversals of financial instruments of NOK 943 million in the first half of 2021, a decrease of NOK 8 835 million from the previous year. The large decrease is explained by the COVID-19 pandemic's impact on the economy last year, in combination with the effect of the oil price fall.
For the corporate customers industry segments there were reversals across all stages and spreads across different segments. About half of the reversals were in stages 1 and 2 and can be explained by improved underlying credit quality and a slightly improved macro outlook. The remaining stage 3 reversals were mainly driven by a few specific customers. The reversals for the personal customers industry segment amounted to NOK 15 million, driven by customers in stages 1 and 2, but were curtailed by increased impairment provisions in stage 3.
| Amounts in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Lending spreads, customer segments | 8 067 | 7 572 | 8 454 |
| Deposit spreads, customer segments | 65 | 353 | (180) |
| Amortisation effects and fees | 884 | 941 | 909 |
| Operational leasing | 535 | 529 | 510 |
| Contributions to the deposit guarantee and resolution funds |
(277) | (280) | (217) |
| Other net interest income | 133 | 115 | (26) |
| Net interest income | 9 409 | 9 230 | 9 451 |
Net interest income was at the same level as the second quarter of 2020. Deposit volumes and margins contributed positively, but were offset by negative exchange rate effects. There was an average decrease of NOK 10.2 billion, or 0.6 per cent, in the healthy loan portfolio compared with the second quarter of 2020. Adjusted for exchange rate effects, volumes were up NOK 35.6 billion, or 2.2 per cent, and lending volumes showed an upturn towards the end of the quarter, both within the personal customers and corporate customers portfolios. During the same period, deposits were up NOK 115.2 billion, or 10.8 per cent. Adjusted for exchange rate effects, there was an increase of NOK 151.0 billion, or 14.2 per cent. Average lending spreads narrowed by 9 basis points, and deposit spreads widened by 9 basis points compared with the second quarter of 2020. Volume-weighted spreads for the customer segments narrowed by 7 basis points compared with the same period in 2020.
Compared with the first quarter of 2021, net interest income increased by NOK 180 million, or 1.9 per cent, mainly due to increased deposit and lending volumes from both the personal customers and corporate customers portfolios and an additional interest day. In addition, spreads contributed positively, but were offset by decreased interest income on equity. There was an average increase of NOK 7.3 billion, or 0.5 per cent, in the healthy loan portfolio, and deposits were up NOK 42.4 billion, or 3.7 per cent. Volume-weighted spreads for the customer segments were at the same level compared with the previous quarter. Spreads on lending and deposits reflected the 19-basis-point decrease in average NOK money market rates. The volume-weighted spreads were negatively affected by portfolio mix effects with higher growth in deposits compared to loans.
| Amounts in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Net commissions and fees | 2 883 | 2 631 | 2 396 |
| Basis swaps | (212) | (345) | (19) |
| Exchange rate effects on additional Tier 1 capital | 59 | 29 | (1 343) |
| Net gains on other financial instruments at fair value |
685 | 1 115 | 3 034 |
| Net financial and risk result, life insurance | 228 | 212 | 131 |
| Net profit from associated companies | 260 | 86 | 174 |
| Other operating income | 281 | 389 | 299 |
| Net other operating income | 4 184 | 4 116 | 4 673 |
Net other operating income decreased by NOK 489 million from the second quarter of 2020, and was affected by a negative effect on
basis swaps and a financial market returning to more normalised levels from high volatility in the year-earlier period. Net commissions and fees showed solid development and increased by NOK 486 million, or 20.3 per cent, from the year-earlier period, driven by higher income from real estate broking, investment banking, asset management and custodial services, as well as insurance. In addition, this quarter included a recognition of an expected discount on the personal customer lending portfolio in DNB Poland of NOK 116 million as a result of the Group's intended withdrawal from Poland.
Compared with the previous quarter, net other operating income was up 1.7 per cent. Net commissions and fees showed a positive development and increased by NOK 252 million, or 9.6 per cent, from the first quarter of 2021, mainly driven by higher income from investment banking services and real estate broking.
| Amounts in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Salaries and other personnel expenses | (3 442) | (3 254) | (3 240) |
| Restructuring expenses | (37) | (83) | (12) |
| Other expenses | (1 724) | (1 658) | (1 651) |
| Depreciation of fixed and intangible assets | (834) | (822) | (806) |
| Impairment of fixed and intangible assets | (1) | (0) | |
| Total operating expenses | (6 038) | (5 817) | (5 710) |
Operating expenses were up NOK 329 million, or 5.8 per cent, compared with the second quarter of 2020. This can be ascribed to increased expenses related to IT projects, due to higher activity following the reopening of society, as well as an increase in salaries and other personnel expenses.
Compared with the first quarter of 2021, operating expenses were up NOK 221 million, or 3.8 per cent. The operating expenses this quarter were negatively impacted by higher salaries and other personnel expenses. The high activity within Markets, real estate broking and asset management contributed to a NOK 70 million increase in variable salaries. In addition, there was an increase in pension costs related to the increased return on the closed definedbenefit pension scheme, where the hedging is presented as gains on financial instruments.
The cost/income ratio was 44.4 per cent in the second quarter.
| Amounts in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Personal customers | 39 | (24) | (43) |
| Commercial real estate | 7 | 46 | 15 |
| Shipping | 81 | 155 | (136) |
| Oil, gas and offshore | (26) | 127 | (1 863) |
| Other industry segments | 733 | (193) | (93) |
| Total impairment of financial instruments | 833 | 110 | (2 120) |
There were net reversals of impairment of financial instruments of NOK 833 million in the second quarter. This is a decrease in impairment provisions of NOK 2 953 million and NOK 723 million compared with the second quarter of 2020 and the first quarter of 2021, respectively. The decrease from the year-earlier period can be ascribed to the severe effects of the pandemic in the second quarter of last year. Overall, the macro forecasts have gradually improved since the second quarter of last year.
The personal customers industry segment had net reversals of NOK 39 million in the quarter, compared with impairment provisions of NOK 43 million in the same quarter of 2020, and impairment provisions of NOK 24 million in the first quarter of 2021. The generally low level of impairment was due to a stable macro outlook and sound credit quality.
Impairment of financial instruments in the commercial real estate industry segment showed net reversals of NOK 7 million, compared with the second quarter of 2020 and the first quarter of 2021, which saw net reversals of NOK 15 million and NOK
46 million, respectively. Commercial real estate had somewhat better macro forecasts in the quarter.
There were net reversals in the shipping segment, amounting to a total of NOK 81 million in the second quarter. This is an improvement of NOK 216 million compared with the second quarter of 2020, while net reversals were down NOK 74 million compared with the first quarter of 2021. The net reversals could be seen in both stage 2 and 3 and were spreads across several segments.
The oil, gas and offshore industry segment showed impairments of NOK 26 million compared with NOK 1 863 million and net reversals of NOK 127 million in the second quarter of 2020 and first quarter of 2021, respectively. The impairment provisions can generally be attributed to the offshore segment, where the increase in stage 3 for a few specific customers was partly offset by reversals in stages 1 and 2.
Other industry segments experienced net reversals amounting to NOK 733 million in the quarter. This is a large decrease compared with the second quarter of 2020 and the first quarter of 2021, which showed impairment provisions of NOK 93 million and NOK 193 million respectively. The large reversals can mainly be ascribed to a few specific customers in stage 3 and a slightly improved underlying credit quality.
Net stage 3 loans and financial commitments amounted to NOK 26 billion at end-June 2021, which is down NOK 4 billion compared with last year and down NOK 1 billion from the first quarter of 2021.
The DNB Group's tax expense for the second quarter has been estimated at NOK 1 823 million, or 22.0 per cent of pre-tax operating profits.
Financial governance in DNB is adapted to the different customer segments. Reported figures reflect total sales of products and services to the relevant segments.
| Income statement in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Net interest income | 3 244 | 2 982 | 3 390 |
| Net other operating income | 1 400 | 1 243 | 1 149 |
| Total income | 4 644 | 4 225 | 4 538 |
| Operating expenses | (2 322) | (2 243) | (2 214) |
| Pre-tax operating profit before impairment | 2 322 | 1 982 | 2 324 |
| Impairment of financial instruments | 114 | 23 | (82) |
| Pre-tax operating profit | 2 437 | 2 005 | 2 242 |
| Tax expense | (609) | (501) | (561) |
| Profit for the period | 1 827 | 1 504 | 1 682 |
| Average balance sheet items in NOK billion | |||
| Loans to customers | 825.2 | 819.2 | 795.6 |
| Deposits from customers | 477.2 | 464.1 | 453.4 |
| Key figures in per cent | |||
| Lending spreads 1) | 1.64 | 1.50 | 1.81 |
| Deposit spreads 1) | (0.00) | 0.15 | (0.22) |
| Return on allocated capital | 15.5 | 12.9 | 13.7 |
| Cost/income ratio | 50.0 | 53.1 | 48.8 |
| Ratio of deposits to loans | 57.8 | 56.7 | 57.0 |
1) Calculated relative to the 3-month money market rate. See ir.dnb.no for additional information on alternative performance measures (APMs).
The personal customers segment delivered sound results in the second quarter of 2021, with a return on allocated capital of 15.5 per cent. A rise in total income contributed to the positive development.
Combined spreads on loans and deposits narrowed by 3 basis points from the corresponding quarter of 2020. Compared with the previous quarter, combined spreads widened by 3 basis points, mainly due to decreasing NOK money market rates.
Loans to customers grew by 3.7 per cent from the second quarter of 2020. The healthy home mortgage portfolio grew by 4.0 per cent in the same period. Deposits from customers continued to show a solid average growth of 5.2 per cent compared with the year-earlier period, and the ratio of deposits to loans improved by 0.8 percentage points.
Net other operating income improved by 21.8 per cent from the second quarter of 2020. Increased income from real estate broking, as well as long-term savings products and securities, contributed to the positive development. Revenues from payment services were relatively stable in the period.
Operating expenses rose by 4.9 per cent from the corresponding quarter last year, explained by rising activity in areas such as IT, real estate broking, long-term savings and securities, and annual pay settlements. The termination of the agreement with Posten Norge AS (the Norwegian postal service) has had a positive effect since the second quarter of 2020.
The personal customers segment saw net reversals of impairment of financial instruments of NOK 114 million in the second quarter, corresponding to 0.06 per cent of net loans to customers. Overall, the credit quality and macro forecasts were stable in the quarter, and impairment losses remained at a very low level.
DNB's market share of credit to households stood at 22.8 per cent at end-May 2021, while the market share of total household savings was 30.7 per cent at the same point in time. The market share of mutual funds grew from 38.7 per cent at end-June 2020 to 40.3 per cent at end-May 2021. DNB Eiendom had a market share of 16.7 per cent in June 2021.
The second quarter was characterised by the reopening of DNB's regional head offices, DNB Finanshus, as well as high activity in the customer service centre.
| Income statement in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Net interest income | 5 912 | 5 778 | 5 944 |
| Net other operating income | 2 264 | 2 139 | 1 851 |
| Total income | 8 176 | 7 917 | 7 794 |
| Operating expenses | (3 289) | (3 238) | (3 149) |
| Pre-tax operating profit before impairment | 4 887 | 4 679 | 4 646 |
| Net gains on fixed and intangible assets | (0) | (0) | 0 |
| Impairment of financial instruments | 709 | 94 | (2 030) |
| Profit from repossessed operations | (61) | (39) | (29) |
| Pre-tax operating profit | 5 535 | 4 734 | 2 587 |
| Tax expense | (1 384) | (1 184) | (647) |
| Profit for the period | 4 151 | 3 551 | 1 940 |
| Average balance sheet items in NOK billion | |||
| Loans to customers | 773.6 | 773.4 | 815.8 |
| Deposits from customers | 703.6 | 674.0 | 613.8 |
| Key figures in per cent | |||
| Lending spreads 1) | 2.48 | 2.44 | 2.46 |
| Deposit spreads 1) | 0.04 | 0.11 | 0.05 |
| Return on allocated capital | 17.3 | 14.4 | 7.3 |
| Cost/income ratio | 40.2 | 40.9 | 40.4 |
| Ratio of deposits to loans | 91.0 | 87.2 | 75.2 |
1) Calculated relative to the 3-month money market rate. See ir.dnb.no for additional information on alternative performance measures (APMs).
The corporate customers segment delivered a solid profit and return on allocated capital in the second quarter, improving on the levels in the previous quarter. The profitability in the second quarter was mainly driven by increased net interest income from lending, high income within investment banking services, and a net reversal of impairment of financial instruments.
Net interest income increased from the previous quarter but was slightly lower than in the corresponding quarter of 2020. The second quarter's average loan volumes in NOK remained at the same level as in the first quarter of 2021. However, adjusted for exchange rate effects, volumes were up 0.7 per cent. Both lending and deposit volumes increased towards the end of the quarter and showed growth compared to end-March 2021 of 2.7 per cent and 3.1 per cent respectively.
There was continued growth in deposit volumes in the second quarter in all segments. The strong increase in deposit volumes over the last five quarters has resulted in a record-high deposits to loans ratio of 91.0 per cent. Deposit spreads were negatively affected by decreasing NOK money market rates throughout the second quarter. NOK money market rates and deposit spreads are expected to increase in the second half of the year.
Net other operating income remains at a high level. The income in the second quarter was up 22.3 per cent compared with the corresponding quarter last year, and up 5.8 per cent from the previous quarter. Income from Markets was strong, driven by high activity within investment banking services. The income from Markets activities was up 24.2 per cent from the second quarter of 2020, and up 12.4 per cent from the previous quarter.
Net gains on financial instruments at fair value amounted to NOK 174 million in the quarter, mainly due to mark-to-market adjustments. This is an increase from NOK 45 million in the first quarter of the year.
Operating expenses were up 4.5 per cent compared with the second quarter of 2020, mainly due to higher personnel expenses and depreciations of fixed and intangible assets linked to higher business volumes in DNB Finans. Compared with the previous quarter, operating expenses were up by 1.6 per cent, driven by increased IT expenses and higher activity levels in Markets.
Impairment of financial instruments amounted to a net reversal of NOK 709 million in the second quarter of 2021, compared with a net reversal of NOK 94 million in the previous quarter. Net impairments of NOK 2 030 million were recognised in the corresponding quarter last year. The significant reversals of impairment in the second quarter of 2021 were primarily driven by customer specific reversals in stage 3. There were also reversals within stage 2, due to improved credit quality and a slightly better macro-outlook.
In the time ahead, DNB will focus on capital optimisation and a further strengthening of the bank's position within the large corporates portfolio, as well as on ensuring continued profitable growth within the SME segment. DNB will continue to improve its range of sustainable and green products.
With the expected easing of the COVID-19 pandemic restrictions, the outlook for increased economic activity is positive. However, a number of corporate customers are still in an uncertain financial situation due to the pandemic, and DNB will continue to support and advise its customers during this challenging period.
This segment includes the results from risk management in DNB Markets and from traditional pension products. In addition, the other operations segment includes Group items not allocated to the customer segments.
| Income statement in NOK million | 2Q21 | 1Q21 | 2Q20 |
|---|---|---|---|
| Net interest income | 253 | 470 | 117 |
| Net other operating income | 1 512 | 1 561 | 2 025 |
| Total income | 1 765 | 2 031 | 2 143 |
| Operating expenses | (1 419) | (1 163) | (698) |
| Pre-tax operating profit before impairment | 346 | 868 | 1 444 |
| Net gains on fixed and intangible assets | (103) | (3) | 1 |
| Impairment of financial instruments | 10 | (7) | (8) |
| Profit from repossessed operations | 61 | 39 | 29 |
| Pre-tax operating profit | 313 | 896 | 1 466 |
| Tax expense | 170 | 5 | (52) |
| Profit from operations held for sale, after taxes | (30) | (71) | (17) |
| Profit for the period | 454 | 830 | 1 398 |
| Average balance sheet items in NOK billion | |||
| Loans to customers | 130.2 | 134.3 | 135.1 |
| Deposits from customers | 101.4 | 94.3 | 73.4 |
The profit for the other operations segment was NOK 454 million in the second quarter of 2021.
Risk management income fell from NOK 1 166 million in the second quarter of 2020, influenced by the effects of the outbreak of the pandemic in the first quarter of the same year, to NOK 128 million in the second quarter of this year. Interest rates and bonds were the main contributor to this quarter's income. There was a high degree of volatility within value adjustments of derivatives (XVA factors).
For traditional pension products with a guaranteed rate of return, net other operating income was at a strong level of NOK 479 million in the second quarter, up NOK 144 million from the year-earlier period, reflecting an increase in profits in the common portfolio due to last year's fall in financial markets. The solvency margin with transitional rules, which is the company's regulatory capital requirement, was 188 per cent as at 30 June 2021. This as a marginal reduction from 189 per cent at the end of the first quarter. The solvency margin without transitional rules as at 30 June was 142 per cent, which is a decrease from 146 per cent in the first quarter. The main reasons for the reduced solvency margin without transitional rules were lower market rates and reduced volatility adjustment. The ten-year Norwegian swap rate increased by 18 basis points in the quarter and amounted to 1.67 per cent as at 30 June. During the quarter, the level of market risk was reduced, mainly as a result of lower equity exposure. In addition, profit generation and return on financial assets in the second quarter made a positive contribution. Together, these three factors have resulted in a reduction in the solvency margin without transitional rules of 4 percentage points during the second quarter.
DNB's share of the profit in associated companies (most importantly Luminor, Vipps and Fremtind) is included in this segment, with a profit of NOK 260 million in the second quarter. There was an increase in profit from these companies of NOK 86 million compared with the second quarter of 2020, and an increase of NOK 175 million compared with the previous quarter.
Access to short-term funding through the bank's funding programmes was very good throughout the second quarter. The US market still provides the best levels. The bank expects to continue to have good access to liquidity during all periods.
The long-term funding markets have also been strong in the second quarter. The cost of long-term funding has remained stable in most markets, but in May, credit risk premiums increased somewhat for covered bonds, which have long been very lowpriced. Prices in the markets for senior non-preferred bonds have varied somewhat more, particularly for new issues, although prices in the secondary market have remained relatively stable. In the second quarter, DNB successfully completed several issues of senior non-preferred bonds in the NOK, USD and JPY markets. DNB still has ample access to long-term funding in all markets.
The total nominal value of long-term debt securities issued by the Group was NOK 573 billion at the end of the quarter, compared with NOK 660 billion a year earlier. Average remaining term to maturity for long-term debt securities issued was 3.8 years at the end of the quarter, compared with 3.5 years a year earlier.
The short-term liquidity requirement, the Liquidity Coverage Ratio (LCR), remained stable at above 100 per cent throughout the quarter and stood at 148 per cent at the end of the quarter.
Total combined assets in the DNB Group were NOK 3 597 billion at the end of the quarter, up from NOK 3 444 billion a year earlier. Total assets in the Group's balance sheet were NOK 3 080 billion at the end of the quarter and NOK 3 054 billion a year earlier.
Loans to customers increased by NOK 7.0 billion or 0.4 per cent in the second quarter, compared with the year-earlier period. Customer deposits were up NOK 126.7 billion, or 11.5 per cent, during the same period. The ratio of customer deposits to net loans to customers was 72.6 per cent at the end of the quarter, up from 64.8 per cent a year earlier.
DNB's capital position remained strong during the second quarter, and the CET1 capital ratio reached 19.1 per cent at the end of the quarter, up from 18.2 per cent a year earlier, and slightly down from 19.2 per cent at end-March. At end-June, there was a solid 317 basis points of headroom above the supervisory authorities' capital level expectation. The CET1 requirement for DNB was 14.9 per cent as at end-June, while the ratio expectation from the supervisory authorities was 15.9 per cent including Pillar 2 Guidance.
DNB's strong capital generation provides a firm foundation for continued delivery on the dividend policy. The dividends for 2020 are part of the Group's equity, but have been deducted from the CET1 capital. The Board of Directors has been given an authorisation from the Annual General Meeting to pay a dividend of up to NOK 9.00 per share for 2020, for distribution after September 2021 or when the economic outlook suggests that there is a basis for doing so.
The risk exposure amount increased by NOK 23 billion from end-March, to NOK 977 billion at end-June 2021. The increase was mainly driven by lending growth. Profit in the period led to an increase in the CET1 capital ratio of 31 basis points.
The non-risk-based leverage ratio was 6.7 per cent at end-June, down from 6.8 per cent from the year-earlier period, and from 6.9 per cent at end-March, mainly due to an increase in deposits with central banks.
| Per cent | CET1 capital ratio |
|---|---|
| 1Q21 | 19.2 |
| Retained profit (50 per cent after tax) | 0.3 |
| Increase in risk exposure amount | (0.4) |
| 2Q21 | 19.1 |
The capital adequacy regulations specify a minimum for own funds based on a risk exposure amount that includes credit risk, market risk and operational risk. In addition to meeting the minimum requirement, DNB must satisfy various buffer requirements (Pillar 1 and Pillar 2 requirements).
| 2Q21 | 1Q21 | 2Q20 | |
|---|---|---|---|
| CET1 capital ratio, per cent | 19.1 | 19.2 | 18.2 |
| Tier 1 capital ratio, per cent | 20.3 | 20.6 | 19.6 |
| Capital ratio, per cent | 22.2 | 22.4 | 21.8 |
| Risk exposure amount, NOK billion | 977 | 954 | 1 008 |
| Leverage ratio, per cent | 6.7 | 6.9 | 6.8 |
As the DNB Group consists of both a credit institution and an insurance company, DNB has to satisfy a cross-sectoral calculation test to demonstrate that it complies with sectoral requirements: the capital adequacy requirement, in accordance with CRR/CRD IV, and the Solvency II requirement. At end-June, DNB complied with these requirements by a good margin, with excess capital of NOK 39.2 billion.
On 30 April, the European Systemic Risk Board (ESRB) adopted a recommendation that other EEA countries should recognise Norwegian capital requirements for banks, so that these requirements can also be made applicable to foreign banks in Norway. The recommendation applies to the new systemic risk buffer requirement and the temporary risk weight floors of home mortgages and commercial property loans, which were introduced for Norwegian banks from the end of 2020. Other EEA countries are advised to recognise the Norwegian systemic risk buffer requirement within 18 months, and the floors for risk weighting within 3 months. On 21 June 2021, the Swedish financial supervisory authority (FI) confirmed that it will recognise the risk weight floors for real estate exposures with effect from 30 September 2021.
The recommendation came after the Norwegian Ministry of Finance, on 2 February this year, asked the ESRB to recommend that other EEA countries' authorities recognise the Norwegian requirements. The Ministry emphasises that capital requirements that are as similar as possible for Norwegian and foreign banks contribute to stability and equal conditions of competition in the Norwegian banking market.
The Ministry of Finance has decided to increase the countercyclical capital buffer to 1.5 per cent as of 30 June 2022, in line with guidance from the Norwegian central bank, Norges Bank. The requirement was lowered from 2.5 per cent to 1 per cent in March last year, to prevent more stringent lending practices in banks from reinforcing a downturn in the economy.
Norges Bank's current assessment of economic developments, projected losses and banks' expected lending capacity indicates that guidance will be given to further increase the buffer requirement in the course of 2021. In its capital planning, DNB has factored in that the buffer requirement in Norway is expected to return to 2.5 per cent.
On 9 June 2021, Finanstilsynet published a circular that is intended to guide banks on the Authority's practice for the approval and supervision of IRB models. DNB's assessment is that the circular does not suggest that there will be any significant changes to the capital adequacy calculation. Nevertheless, the circular contains important points that will entail stricter regulation of risk weights than proposed in the EU capital requirements rules and legislation. Finanstilsynet warns that if the effective maturity parameter (M), which is used, among other things, in the risk weight calculation for the financing of commercial property, does not reflect the actual maturity, this must be considered as a risk in the calculation of pillar 2 capital requirements.
On 10 December 2020, Finanstilsynet issued a circular assessing the types of exposures to be regarded as high risk under the EU capital requirements rules and legislation for banks, and which should as a consequence have higher capital requirements according to the standard method of calculating credit risk. In the circular, Finanstilsynet set out that all financing for the development and construction of real estate with a view to reselling at a profit must be given a risk weighting of 150 per cent, up from 100 per cent. The circular led to a reduction in DNB's common equity Tier 1 (CET1) capital ratio of 4 basis points.
However, in an interpretive statement of 25 May 2021, the Ministry of Finance wrote that Finanstilsynet should take a different approach when assessing which exposures should be considered high risk. When the borrower has entered into legally binding purchase agreements on pre-sales that cover more than half of the amount of the exposure, and from which the purchaser does not unilaterally have the right to withdraw, the Ministry stated that it will not as a rule be possible for the project to be considered high risk. This means that the loan exposure should not have higher capital requirements and should retain a risk weighting of 100 per cent. As a result of the statement from the Ministry of Finance, Finanstilsynet amended its circular. The Ministry's interpretation of the law meant that, in the second quarter of 2021, DNB regained the 4 CET1 capital ratio basis points that were lost in the fourth quarter of 2020. Changes in the banking rules and legislation for problem loans
The Ministry of Finance has recently laid down amendments to the Norwegian CRR/CRD IV Regulations, which implement the EU Regulation on loss coverage for non-performing exposures. The Regulation amends the EU Capital Requirements Regulation (CRR), and introduces requirements relating to reductions in companies' common equity Tier 1 capital for problem loans that have not been sufficiently written down. The new rules will apply to loans granted after 7 February 2020. A new directive that is to help strengthen the secondary market for problem loans is being prepared in the EU, and the Ministry of Finance has announced that it will consider implementing this directive once it has been finalised.
On 29 May 2020, the European Banking Authority (EBA) published new guidelines for granting and monitoring loans. The purpose of the guidelines is to ensure a common minimum standard for lending practices and to harmonise supervisory practices. The guidelines took effect on 30 June 2021, but in several countries there are concerns that a number of issues and interpretations have not yet been clarified. Finanstilsynet has made clear that some more time will be needed for the implementation of the guidelines, and that the new requirements will not be made fully applicable in Norway until 1 January 2022. Finanstilsynet will clarify the implementation of certain parts of the EBA guidelines, including the use of statistical models for the valuation of real estate, through a circular and by updating risk modules.
On 4 June 2021, the Ministry of Finance presented a proposal for a new act on the disclosure of sustainability-related information in the financial sector. The draft legislation (bill) covers the Norwegian implementation of the EU Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy Regulation. Both Regulations are EEA relevant, but they have not yet been incorporated into the EEA Agreement. The bill will not be considered by the Storting (Norwegian parliament) until autumn 2021 at the earliest.
In October 2019, the Ministry of Finance appointed a committee to evaluate the current Norwegian Estate Agency Act. On 4 June 2021, the committee submitted its recommendations to the Ministry. The purpose of the recommendations is, among other things, to ensure safe and simple real estate broking, to strengthen consumer rights and to reduce the time pressure in the home purchasing process. The recommendations have been circulated for public comment.
The Ministry of Finance has decided on amendments to the Norwegian regulations relating to anti-money laundering and to payment services. The amendments concern, for example, providers of virtual currency services, the issuance of e-money, the termination and blocking of customer relationships, minimum requirements for electronic monitoring systems, and rules on highrisk countries. They are partly based on changes in international standards (FATF) and the EU's 5th Anti-Money Laundering Directive. Most of the new regulatory provisions will come into force on 1 July 2021.
On 18 June 2021, the Government presented a bill on amendments to the rules and legislation relating to guaranteed pension products, which covers defined-benefit pension schemes, paid-up policies and individual pension products with guarantees. The amendments will provide greater freedom of choice and flexibility for customers and pension providers.
The bill provides a legal basis for the Ministry of Finance to, through regulations, allow increased flexibility in the use of excess returns on guaranteed pension products. The Ministry of Finance will ask Finanstilsynet to draw up drafts of more detailed regulatory provisions to ensure that flexibility of this kind benefits customers.
After a downturn in economic activity in the first quarter, this development was gradually reversed during the second quarter. The number of infections has been reduced and in April the Government initiated the first of a total of four steps in the reopening of the economy. Step two was introduced at the end of May, and the Government reopened Norwegian society even more towards the end of June. The easing of the infection control measures contributed to economic activity picking up during the second quarter.
Despite a decline in mainland GDP in the first quarter, the recorded unemployment rate remained unchanged at 4 per cent, adjusted for normal seasonal variations. However, the upturn in activity in May and June helped bring registered unemployment down to 2.9 per cent in June. The largest reduction in unemployment in the second quarter, in percentage terms was among employees in the transport and tourism sector.
Annual consumer price growth was 3 per cent in the first quarter, declining to 2.7 per cent in May. Adjusted for developments in energy prices and fees, there was a more marked reduction in consumer price growth, from 2.7 per cent in the first quarter to 1.5 per cent in May. In the housing market, there are indications that the market might be cooling off. Prospects of increased interest rates may contribute to keeping price growth at a moderate level in the time ahead. Higher oil prices and increased activity have not yet led to any substantial strengthening of the Norwegian krone.
In the revised national budget for Norway, the Government proposed a further increase in the use of money from the Norwegian oil fund, and for 2021, the deficit is expected to increase by 4.3 per cent of mainland GDP. By contrast, Norges Bank has signalled a monetary policy involving a possible rise in the key policy rate in September this year and is expecting a clear upturn in economic activity in the second half of this year and the beginning of next. This will help raise capacity utilisation in the economy towards a normal level. Unemployment rates are projected to decline further. This will allow the central bank to start reducing the powerful monetary policy stimuli introduced during the pandemic. In the interest rate path presented in June, Norges Bank indicates that interest rates will go up by a quarter of a percentage point in September and December this year.
The Group's financial target of a return on equity (ROE) above 12 per cent remains unchanged for the period 2021 to 2023. Due to the COVID-19 pandemic and the subsequent developments in the macroeconomic environment, the ROE target is, however, unlikely to be achieved in 2021. This said, the following factors will help DNB to reach the ROE target in the course of the target period: increased net interest income as a result of increasing NOK interest rates and growth in loans and deposits; growth in commissions and fees from capital-light products; and reduced impairment provisions combined with cost control measures. Capital efficiency will also contribute to higher ROE when the payment of the 2019 dividends and expected 2020 dividends is taken into account, as well as the effect of DNB's potential acquisition of Sbanken.
In the period 2021 to 2023, the annual increase in lending volumes is expected to be between 3 and 4 per cent, while maintaining a sound deposit-to-loan ratio. According to Norges Bank's own forecasts, the key policy rate is expected to increase by 0.25 per cent in September and each quarter until June 2022, to 1 per cent. Thereafter, another two or three hikes to 1.56 per cent are projected until 2024.
During the period 2021 to 2023, DNB has an ambition to increase net commissions and fees by 4 to 5 per cent annually and to achieve a cost/income ratio below 40 per cent.
The tax rate going forward is expected to be 22 per cent. The supervisory expectation for the common equity Tier 1 (CET1) capital ratio for DNB is 15.9 per cent, including Pillar 2 Guidance at 1.0 per cent, while the actual value achieved was 19.1 per cent. The Norwegian Ministry of Finance has announced an increase in the countercyclical buffer requirement from 1 to 1.5 per cent with effect from June 2022. In its capital planning, DNB takes into account the full counter-cyclical buffer requirement of 2.5 per cent in Norway, which is expected to take full effect in 2023 at the earliest, and which will increase the supervisory expectation for the CET1 level to 17.1 per cent. The supervisory expectation plus some headroom will be DNB's target capital level. The headroom will reflect expected future capital needs including anticipated future regulatory capital changes and market-driven CET1 fluctuations.
The potential acquisition of Sbanken will have an initial and immediate effect on the CET1 ratio of around 120 basis points from the expected closing in the fourth quarter of 2021. The EU's Banking Package, CRR II/CRD V, is expected to have only minor effects on the CET1 capital ratio.
The Group's dividend policy remains unchanged, with a payout ratio of more than 50 per cent in cash dividends and an ambition to increase the nominal dividend per share each year. In addition to dividend payments, repurchases of own shares will be used as a flexible tool for allocating excess capital to DNB's owners.
Oslo, 12 July 2021 The Board of Directors of DNB Bank ASA
Olaug Svarva Svein Richard Brandtzæg (Chair of the Board) (Vice Chair of the Board)
Gro Bakstad Julie Galbo Lillian Hattrem
Jens Petter Olsen Stian Tegler Samuelsen Jaan Ivar Semlitsch
Eli Solhaug Kim Wahl
Kjerstin R. Braathen (Group Chief Executive Officer, CEO)
| 2nd quarter | 2nd quarter | January-June | Full year | ||
|---|---|---|---|---|---|
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2020 |
| Interest income, amortised cost | 10 542 | 12 787 | 21 189 | 28 761 | 50 660 |
| Other interest income | 733 | 1 232 | 1 613 | 2 638 | 4 636 |
| Interest expenses, amortised cost | (1 097) | (2 917) | (2 364) | (8 619) | (11 511) |
| Other interest expenses | (769) | (1 650) | (1 799) | (2 934) | (5 161) |
| Net interest income | 9 409 | 9 451 | 18 639 | 19 846 | 38 623 |
| Commission and fee income | 3 845 | 3 334 | 7 509 | 6 482 | 13 289 |
| Commission and fee expenses | (962) | (938) | (1 996) | (1 849) | (3 789) |
| Net gains on financial instruments at fair value | 532 | 1 672 | 1 331 | 4 900 | 5 902 |
| Net financial result, life insurance | 206 | 84 | 310 | (271) | 418 |
| Net risk result, life insurance | 22 | 47 | 130 | 156 | 241 |
| Profit from investments accounted for by the equity method | 260 | 174 | 346 | (172) | 402 |
| Net gains on investment properties | 6 | (7) | 36 | (32) | (61) |
| Other income | 275 | 306 | 633 | 605 | 1 373 |
| Net other operating income | 4 184 | 4 673 | 8 300 | 9 821 | 17 776 |
| Total income | 13 593 | 14 123 | 26 939 | 29 666 | 56 399 |
| Salaries and other personnel expenses | (3 480) | (3 252) | (6 817) | (6 058) | (12 873) |
| Other expenses | (1 724) | (1 651) | (3 381) | (3 538) | (7 208) |
| Depreciation and impairment of fixed and intangible assets | (835) | (806) | (1 657) | (1 593) | (3 320) |
| Total operating expenses | (6 038) | (5 710) | (11 855) | (11 190) | (23 401) |
| Pre-tax operating profit before impairment | 7 555 | 8 414 | 15 084 | 18 476 | 32 998 |
| Net gains on fixed and intangible assets | (103) | 2 | (106) | 782 | 767 |
| Impairment of financial instruments | 833 | (2 120) | 943 | (7 892) | (9 918) |
| Pre-tax operating profit | 8 285 | 6 295 | 15 921 | 11 366 | 23 847 |
| Tax expense | (1 823) | (1 259) | (3 503) | (2 273) | (4 229) |
| Profit from operations held for sale, after taxes | (30) | (17) | (101) | (73) | 221 |
| Profit for the period | 6 432 | 5 019 | 12 317 | 9 020 | 19 840 |
| Portion attributable to shareholders | 6 210 | 4 766 | 11 875 | 8 336 | 18 712 |
| Portion attributable to non-controlling interests | (12) | (4) | (32) | (7) | (15) |
| Portion attributable to additional Tier 1 capital holders | 235 | 258 | 474 | 690 | 1 143 |
| Profit for the period | 6 432 | 5 019 | 12 317 | 9 020 | 19 840 |
| Earnings/diluted earnings per share (NOK) | 4.01 | 3.06 | 7.66 | 5.34 | 12.04 |
| Earnings per share excluding operations held for sale (NOK) | 4.03 | 3.07 | 7.73 | 5.39 | 11.89 |
| DNB Group | |||||
|---|---|---|---|---|---|
| 2nd quarter | 2nd quarter | January-June | Full year | ||
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2020 |
| Profit for the period | 6 432 | 5 019 | 12 317 | 9 020 | 19 840 |
| Actuarial gains and losses | (144) | (288) | (324) | ||
| Property revaluation | 71 | 17 | 153 | 59 | 578 |
| Items allocated to customers (life insurance) | (71) | (17) | (153) | (59) | (578) |
| Financial liabilities designated at FVTPL, changes in credit risk | (3) | (399) | (34) | 216 | 33 |
| Tax | 1 | 100 | 45 | 18 | 72 |
| Items that will not be reclassified to the income statement | (2) | (299) | (134) | (54) | (218) |
| Currency translation of foreign operations | 1 120 | (5 279) | (695) | 8 066 | 3 519 |
| Currency translation reserve reclassified to the income statement | (6) | ||||
| Hedging of net investment | (864) | 4 735 | 528 | (7 010) | (3 246) |
| Financial assets at fair value through OCI | (70) | 114 | 30 | (240) | 103 |
| Tax | 234 | (1 212) | (139) | 1 812 | 786 |
| Items that may subsequently be reclassified to the income statement | 420 | (1 642) | (282) | 2 629 | 1 161 |
| Other comprehensive income for the period | 418 | (1 942) | (416) | 2 574 | 943 |
| Comprehensive income for the period | 6 850 | 3 078 | 11 901 | 11 594 | 20 783 |
| DNB Group | ||||
|---|---|---|---|---|
| 30 June | 31 Dec. | 30 June | ||
| Amounts in NOK million | Note | 2021 | 2020 | 2020 |
| Assets | ||||
| Cash and deposits with central banks | 513 674 | 283 526 | 337 282 | |
| Due from credit institutions | 48 269 | 78 466 | 117 469 | |
| Loans to customers | 4, 5, 6, 7 | 1 710 930 | 1 693 811 | 1 703 905 |
| Commercial paper and bonds | 7 | 408 819 | 439 231 | 473 046 |
| Shareholdings | 7 | 34 506 | 29 360 | 21 652 |
| Financial assets, customers bearing the risk | 7 | 129 966 | 116 729 | 95 194 |
| Financial derivatives | 7 | 129 073 | 186 740 | 200 477 |
| Investment properties | 18 649 | 18 087 | 17 720 | |
| Investments accounted for by the equity method | 18 628 | 18 389 | 18 307 | |
| Intangible assets | 5 277 | 5 498 | 5 362 | |
| Deferred tax assets | 4 253 | 4 377 | 1 180 | |
| Fixed assets | 21 027 | 20 474 | 20 127 | |
| Assets held for sale | 2 456 | 2 402 | 1 315 | |
| Other assets | 34 569 | 21 852 | 40 938 | |
| Total assets | 3 080 095 | 2 918 943 | 3 053 973 | |
| Liabilities and equity | ||||
| Due to credit institutions | 280 278 | 207 457 | 304 612 | |
| Deposits from customers | 7 | 1 230 931 | 1 105 574 | 1 104 224 |
| Financial derivatives | 7 | 117 961 | 174 979 | 174 331 |
| Debt securities issued | 7, 8 | 755 002 | 777 829 | 828 710 |
| Insurance liabilities, customers bearing the risk | 129 966 | 116 729 | 95 194 | |
| Liabilities to life insurance policyholders | 199 986 | 200 422 | 199 073 | |
| Payable taxes | 7 925 | 7 556 | 9 994 | |
| Deferred taxes | 11 | 48 | 50 | |
| Other liabilities | 42 385 | 31 522 | 56 885 | |
| Liabilities held for sale | 882 | 1 016 | 385 | |
| Provisions | 1 576 | 2 096 | 2 832 | |
| Pension commitments | 4 891 | 4 476 | 4 206 | |
| Senior non-preferred bonds | 8 | 31 351 | 8 523 | |
| Subordinated loan capital | 7, 8 | 31 400 | 32 319 | 33 878 |
| Total liabilities | 2 834 547 | 2 670 547 | 2 814 375 | |
| Additional Tier 1 capital | 16 932 | 18 362 | 18 376 | |
| Non-controlling interests | 270 | 119 | 43 | |
| Share capital | 15 503 | 15 503 | 15 504 | |
| Share premium | 22 609 | 22 609 | 22 609 | |
| Other equity | 190 234 | 191 804 | 183 067 | |
| Total equity | 245 548 | 248 396 | 239 599 | |
| Total liabilities and equity | 3 080 095 | 2 918 943 | 3 053 973 |
DNB Group
| Net | ||||||||
|---|---|---|---|---|---|---|---|---|
| Non- | Additional | currency | Liability | |||||
| Amounts in NOK million | controlling interests |
Share capital 1) |
Share premium |
Tier 1 capital |
translation reserve |
credit reserve |
Other equity 1) |
Total equity 1) |
| Balance sheet as at 31 Dec. 2019 | 45 | 15 706 | 22 609 | 26 729 | 4 872 | (2) | 172 297 | 242 255 |
| Profit for the period | (7) | 690 | 8 336 | 9 020 | ||||
| Actuarial gains and losses | (288) | (288) | ||||||
| Financial assets at fair value through OCI | (240) | (240) | ||||||
| Financial liabilities designated at FVTPL, | ||||||||
| changes in credit risk | 216 | 216 | ||||||
| Currency translation of foreign operations | 5 | 8 062 | 8 066 | |||||
| Hedging of net investment | (7 010) | (7 010) | ||||||
| Tax on other comprehensive income | 1 752 | (54) | 132 | 1 831 | ||||
| Comprehensive income for the period | (2) | 690 | 2 804 | 162 | 7 940 | 11 594 | ||
| Interest payments additional Tier 1 | ||||||||
| capital | (1 110) | (1 110) | ||||||
| Additional Tier 1 capital redeemed | (10 024) | (10 024) | ||||||
| Currency movements on interest | ||||||||
| payments and redemption additional Tier 1 capital |
2 091 | (1 971) | 120 | |||||
| Repurchased under share buy-back | ||||||||
| programme | (202) | (3 036) | (3 238) | |||||
| Balance sheet as at 30 June 2020 | 43 | 15 504 | 22 609 | 18 376 | 7 676 | 160 | 175 231 | 239 599 |
| Balance sheet as at 31 Dec. 2020 | 119 | 15 503 | 22 609 | 18 362 | 5 952 | 23 | 185 829 | 248 396 |
| Profit for the period | (32) | 474 | 11 875 | 12 317 | ||||
| Actuarial gains and losses | (144) | (144) | ||||||
| Financial assets at fair value through OCI | 30 | 30 | ||||||
| Financial liabilities designated at FVTPL, | ||||||||
| changes in credit risk | (34) | (34) | ||||||
| Currency translation of foreign operations | (1) | (700) | (701) | |||||
| Hedging of net investment | 528 | 528 | ||||||
| Tax on other comprehensive income | (132) | 8 | 29 | (94) | ||||
| Comprehensive income for the period | (33) | 474 | (304) | (25) | 11 789 | 11 901 | ||
| Interest payments additional Tier 1 capital |
(513) | (513) | ||||||
| Currency movements on interest | ||||||||
| payments additional Tier 1 capital | 9 | (11) | (3) | |||||
| Additional Tier 1 capital redeemed 2) | (1 400) | (1 400) | ||||||
| Non-controlling interests | 184 | (3) | 182 | |||||
| Net sale of treasury shares 1) | 0 | 9 | 10 | |||||
| Dividends paid for 2019 | ||||||||
| (NOK 8.40 per share) | (13 023) | (13 023) | ||||||
| Balance sheet as at 30 June 2021 | 270 | 15 503 | 22 609 | 16 932 | 5 648 | (3) | 184 589 | 245 548 |
| 1) Of which treasury shares held by DNB Markets for trading purposes: | ||||||||
| Balance sheet as at 31 December 2020 | (1) | (16) | (17) | |||||
| Net sale of treasury shares | 0 | 9 | 10 | |||||
| Reversal of fair value adjustments through | ||||||||
| the income statement Balance sheet as at 30 June 2021 |
(1) | (5) (11) |
(5) (12) |
|||||
2) An additional Tier 1 capital instrument of NOK 1 400 million, issued by the DNB Group's subsidiary DNB Bank ASA in 2016, was redeemed in the second quarter of 2021.
| DNB Group | |||
|---|---|---|---|
| Amounts in NOK million | 2021 | January-June 2020 |
Full year 2020 |
| Operating activities | |||
| Net payments on loans to customers | (22 384) | (5 467) | (26 092) |
| Interest received from customers | 20 872 | 27 074 | 48 628 |
| Net receipts on deposits from customers | 127 192 | 110 242 | 133 573 |
| Interest paid to customers | (992) | (2 410) | (6 597) |
| Net receipts on loans to credit institutions | 94 290 | 106 276 | 32 784 |
| Net interest paid to credit institutions | (713) | (527) | (1 154) |
| Net receipts/(payments) on the sale of financial assets for investment or trading | 13 922 | (54 554) | (70 650) |
| Interest received on bonds and commercial paper | 746 | 1 766 | 3 280 |
| Net receipts on commissions and fees | 6 055 | 4 806 | 9 523 |
| Payments to operations | (11 331) | (11 068) | (20 291) |
| Taxes paid | (3 271) | (1 252) | (9 211) |
| Receipts on premiums | 7 835 | 7 028 | 14 313 |
| Net receipts/(payments) on premium reserve transfers | 334 | (4 854) | (4 204) |
| Payments of insurance settlements | (7 073) | (7 046) | (13 704) |
| Other net payments | 1 332 | (1 480) | (5 626) |
| Net cash flow from operating activities | 226 816 | 168 536 | 84 573 |
| Investing activities | |||
| Net payments on the acquisition or disposal of fixed assets | (2 033) | (1 620) | (3 835) |
| Net receipts on investment properties | 366 | 29 | 54 |
| Net investment in long-term shares | (152) | (937) | (1 370) |
| Dividends received on long-term investments in shares Net cash flow from investing activities |
296 (1 522) |
60 (2 468) |
428 (4 723) |
| Financing activities | |||
| Receipts on issued bonds and commercial paper | 1 115 890 | 735 851 | 1 152 054 |
| Payments on redeemed bonds and commercial paper | (1 086 236) | (848 416) | (1 225 085) |
| Interest payments on issued bonds and commercial paper | (6 515) | (9 049) | (13 193) |
| Receipts on the raising of subordinated loan capital | 4 056 | 4 056 | |
| Redemptions of subordinated loan capital | (4 207) | (4 207) | |
| Interest payments on subordinated loan capital | (306) | (330) | (504) |
| Net payments on issue or redemption of additional Tier 1 capital | (1 400) | (10 024) | (10 024) |
| Interest payments on additional Tier 1 capital | (513) | (1 110) | (1 578) |
| Lease payments | (247) | (177) | (502) |
| Net sale/(purchase) of own shares | 10 | (3 238) | (3 247) |
| Dividend payments | (13 023) | ||
| Net cash flow from financing activities | 7 660 | (136 645) | (102 232) |
| Effects of exchange rate changes on cash and cash equivalents | (4 827) | 4 202 | 3 723 |
| Net cash flow | 228 128 | 33 625 | (18 659) |
| Cash as at 1 January | 289 092 | 307 751 | 307 751 |
| Net receipts/(payments) of cash | 228 128 | 33 625 | (18 659) |
| Cash at end of period *) | 517 220 | 341 376 | 289 092 |
| *) Of which: Cash and deposits with central banks |
513 674 | 337 282 | 283 526 |
| Deposits with credit institutions with no agreed period of notice 1) | 3 546 | 4 095 | 5 566 |
1) Recorded under "Due from credit institutions" in the balance sheet.
The quarterly financial statements for the Group have been prepared in accordance with IAS 34 Interim Financial Reporting, as issued by the International Accounting Standards Board and as adopted by the European Union. When preparing the consolidated financial statements, the management makes estimates, judgements and assumptions that affect the application of the accounting principles, as well as income, expenses, and the carrying amount of assets and liabilities. Estimates and assumptions are subject to continual evaluation and are based on historical experience and other factors, including expectations of future events that are believed to be probable on the balance sheet date. A description of the accounting policies, significant estimates, and areas where judgement is applied by the Group, can be found in Note 1 Accounting principles in the annual report for 2020. In the interim report, the accounting policies, significant estimates, and areas where judgement is applied by the Group are in conformity with those described in the annual report.
According to DNB's management model, the operating segments are independent profit centres that are fully responsible for their profit after tax and for achieving the targeted returns on allocated capital. DNB has the following operating segments: Personal customers, Corporate customers, Risk management and Traditional pension products. The Risk management and Traditional pension products segments are included in Other operations. DNB's share of profit in associated companies (most importantly Luminor, Vipps and Fremtind) is included in Other operations.
| Personal | Corporate | Other | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| customers | customers | operations | Eliminations | DNB Group | ||||||
| 2nd quarter | 2nd quarter | 2nd quarter | 2nd quarter | 2nd quarter | ||||||
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 |
| Net interest income | 3 244 | 3 390 | 5 912 | 5 944 | 253 | 117 | 9 409 | 9 451 | ||
| Net other operating income | 1 400 | 1 149 | 2 264 | 1 851 | 1 512 | 2 025 | (991) | (352) | 4 184 | 4 673 |
| Total income | 4 644 | 4 538 | 8 176 | 7 794 | 1 765 | 2 143 | (991) | (352) | 13 593 | 14 123 |
| Operating expenses | (2 322) | (2 214) | (3 289) | (3 149) | (1 419) | (698) | 991 | 352 | (6 038) | (5 710) |
| Pre-tax operating profit before impairment | 2 322 | 2 324 | 4 887 | 4 646 | 346 | 1 444 | 7 555 | 8 414 | ||
| Net gains on fixed and intangible assets | 0 | (0) | 0 | (103) | 1 | (103) | 2 | |||
| Impairment of financial instruments | 114 | (82) | 709 | (2 030) | 10 | (8) | 833 | (2 120) | ||
| Profit from repossessed operations | (61) | (29) | 61 | 29 | ||||||
| Pre-tax operating profit | 2 437 | 2 242 | 5 535 | 2 587 | 313 | 1 466 | 8 285 | 6 295 | ||
| Tax expense | (609) | (561) | (1 384) | (647) | 170 | (52) | (1 823) | (1 259) | ||
| Profit from operations held for sale, after taxes | (30) | (17) | (30) | (17) | ||||||
| Profit for the period | 1 827 | 1 682 | 4 151 | 1 940 | 454 | 1 398 | 6 432 | 5 019 |
| Personal | Corporate | Other | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| customers | customers | operations | Eliminations | DNB Group | ||||||
| Jan.-June | Jan.-June | Jan.-June | Jan.-June | Jan.-June | ||||||
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 |
| Net interest income | 6 227 | 7 095 | 11 689 | 12 052 | 723 | 699 | 18 639 | 19 846 | ||
| Net other operating income | 2 642 | 2 309 | 4 403 | 3 579 | 3 073 | 4 862 | (1 818) | (929) | 8 300 | 9 821 |
| Total income | 8 869 | 9 404 | 16 093 | 15 631 | 3 795 | 5 560 | (1 818) | (929) | 26 939 | 29 666 |
| Operating expenses | (4 565) | (4 461) | (6 527) | (6 195) | (2 582) | (1 462) | 1 818 | 929 | (11 855) | (11 190) |
| Pre-tax operating profit before impairment | 4 304 | 4 943 | 9 566 | 9 435 | 1 214 | 4 098 | 15 084 | 18 476 | ||
| Net gains on fixed and intangible assets | 1 | (0) | (0) | (107) | 782 | (106) | 782 | |||
| Impairment of financial instruments | 137 | (815) | 803 | (7 068) | 3 | (9) | 943 | (7 892) | ||
| Profit from repossessed operations | (100) | (109) | 100 | 109 | ||||||
| Pre-tax operating profit | 4 442 | 4 128 | 10 270 | 2 259 | 1 209 | 4 980 | 15 920 | 11 366 | ||
| Tax expense | (1 110) | (1 032) | (2 567) | (565) | 175 | (677) | (3 503) | (2 273) | ||
| Profit from operations held for sale, after taxes | (101) | (73) | (101) | (73) | ||||||
| Profit for the period | 3 331 | 3 096 | 7 702 | 1 694 | 1 283 | 4 230 | 12 317 | 9 020 |
For further details about the reportable segments, quarterly results and explanatory comments, see the directors' report.
Capital adequacy is calculated and reported in accordance with the EU capital requirements regulations for banks and investment firms (CRR/CRD IV). The regulatory consolidation deviates from consolidation in the accounts and comprises the parent company, subsidiaries and associated companies within the financial sector, excluding insurance companies. The figures as at 30 June are partially based on estimates.
| Own funds | DNB Bank ASA | DNB Bank Group | DNB Group | ||||
|---|---|---|---|---|---|---|---|
| Amounts in NOK million | 30 June 2021 |
31 Dec. 2020 |
30 June 2021 |
31 Dec. 2020 |
30 June 2021 |
31 Dec. 2020 |
|
| Total equity | 216 308 | 208 905 | 232 245 | 236 161 | 245 548 | 248 396 | |
| Effect from regulatory consolidation | (175) | (250) | (6 624) | (6 014) | |||
| Adjustment to retained earnings for foreseeable dividends | (4 497) | (5 453) | (5 346) | ||||
| Additional Tier 1 capital instruments included in total equity | (16 595) | (17 995) | (16 595) | (17 995) | (16 595) | (17 995) | |
| Net accrued interest on additional Tier 1 | |||||||
| capital instruments | (253) | (276) | (253) | (276) | (253) | (276) | |
| Common equity Tier 1 capital instruments | 194 963 | 190 635 | 209 769 | 217 641 | 216 731 | 224 112 | |
| Regulatory adjustments | |||||||
| Goodwill | (2 408) | (2 427) | (2 972) | (2 992) | (4 676) | (4 697) | |
| Deferred tax assets that rely on future profitability, | |||||||
| excluding temporary differences | (453) | (453) | (978) | (970) | (978) | (970) | |
| Other intangible assets | (820) | (1 014) | (1 388) | (1 583) | (1 388) | (1 583) | |
| Proposed dividends and group contributions 1) | (13 953) | (13 953) | (13 953) | (26 949) | (13 953) | (26 976) | |
| Deduction for investments in insurance companies | (6 047) | (6 018) | |||||
| IRB provisions shortfall (-) | (1 092) | (788) | (2 068) | (1 781) | (2 068) | (1 781) | |
| Additional value adjustments (AVA) | (1 023) | (683) | (1 146) | (855) | (1 146) | (855) | |
| Insufficient coverage for non-performing exposures | (0) | (0) | |||||
| (Gains) or losses on liabilities at fair value resulting from | |||||||
| own credit risk | 31 | 29 | 3 | (23) | 3 | (23) | |
| (Gains) or losses on derivative liabilities resulting from | |||||||
| own credit risk (DVA) | (373) | (527) | (85) | (94) | (85) | (94) | |
| Common equity Tier 1 capital | 174 872 | 170 819 | 187 182 | 182 393 | 186 393 | 181 115 | |
| Additional Tier 1 capital instruments | 16 595 | 17 995 | 16 595 | 17 995 | 16 595 | 17 995 | |
| Deduction of holdings of Tier 1 instruments | |||||||
| in insurance companies 3) | (1 500) | (1 500) | |||||
| Non-eligible Tier 1 capital, DNB Group 4) | (2 938) | (2 920) | |||||
| Additional Tier 1 capital instruments | 16 595 | 17 995 | 16 595 | 17 995 | 12 157 | 13 575 | |
| Tier 1 capital | 191 466 | 188 814 | 203 777 | 200 388 | 198 550 | 194 689 | |
| Perpetual subordinated loan capital | 5 619 | 5 640 | 5 619 | 5 640 | 5 619 | 5 640 | |
| Term subordinated loan capital | 25 577 | 26 320 | 25 577 | 26 320 | 25 577 | 26 320 | |
| Deduction of holdings of Tier 2 instruments in insurance companies 3) |
(5 750) | (5 750) | |||||
| Non-eligible Tier 2 capital, DNB Group 4) | (6 791) | (6 711) | |||||
| Additional Tier 2 capital instruments | 31 196 | 31 960 | 31 196 | 31 960 | 18 656 | 19 499 | |
| Own funds | 222 663 | 220 774 | 234 973 | 232 348 | 217 206 | 214 188 | |
| Total risk exposure amount | 808 045 | 801 447 | 939 620 | 930 384 | 976 567 | 967 146 | |
| Minimum capital requirement | 64 644 | 64 116 | 75 170 | 74 431 | 78 125 | 77 372 | |
| Capital ratios: | |||||||
| Common equity Tier 1 capital ratio | 21.6 | 21.3 | 19.9 | 19.6 | 19.1 | 18.7 | |
| Tier 1 capital ratio | 23.7 | 23.6 | 21.7 | 21.5 | 20.3 | 20.1 | |
| Total capital ratio | 27.6 | 27.5 | 25.0 | 25.0 | 22.2 | 22.1 | |
| Own funds and capital ratios excluding interim profit | |||||||
| Common equity Tier 1 capital | 170 374 | 181 729 | 180 456 | ||||
| Tier 1 capital | 186 969 | 198 324 | 192 613 | ||||
| Own funds | 218 165 | 229 520 | 211 269 | ||||
| Common equity Tier 1 capital ratio | 21.1 | 19.3 | 18.5 | ||||
| Tier 1 capital ratio | 23.1 | 21.1 | 19.7 | ||||
| Total capital ratio | 27.0 | 24.4 | 21.6 |
1) The Board of Directors in DNB ASA and DNB Bank ASA were given an authorisation at the Annual General Meeting on 27 April 2021 to pay a dividend of up to NOK 9.00 per share for 2020, for distribution after September 2021.
2) Deductions are made for significant investments in financial sector entities when the total value of the investments exceeds 10 per cent of common equity Tier 1 capital. The amounts that are not deducted are given a risk weight of 250 per cent.
3) Investments in Tier 1 and Tier 2 instruments issued by the Group's insurance companies are deducted from the Group's Tier 1 and Tier 2 capital.
4) Tier 1 and Tier 2 capital in DNB Bank ASA not included in consolidated own funds in accordance with Articles 85-88 of the CRR.
The majority of the credit portfolios are reported according to the IRB approach. Exposures to central governments, institutions, equity positions and other assets are, however, reported according to the standardised approach.
| Specification of exposures | DNB Group | |||||
|---|---|---|---|---|---|---|
| Exposure | Average | Risk | ||||
| Original exposure |
at default EAD 1) |
risk weight in per cent |
exposure amount REA |
Capital requirement |
Capital requirement |
|
| 30 June | 30 June | 30 June | 30 June | 30 June | 31 Dec. | |
| Amounts in NOK million | 2021 | 2021 | 2021 | 2021 | 2021 | 2020 |
| IRB approach | ||||||
| Corporate exposures | 983 508 | 795 035 | 45.1 | 358 492 | 28 679 | 30 405 |
| of which specialised lending (SL) | 13 298 | 12 558 | 37.8 | 4 742 | 379 | 516 |
| of which small and medium-sized enterprises (SME) | 212 843 | 188 291 | 45.9 | 86 442 | 6 915 | 6 931 |
| of which other corporates | 757 367 | 594 186 | 45.0 | 267 307 | 21 385 | 22 958 |
| Retail exposures | 971 250 | 954 129 | 22.1 | 210 391 | 16 831 | 16 371 |
| of which secured by mortgages on immovable property | 884 455 | 884 452 | 21.6 | 190 987 | 15 279 | 14 931 |
| of which other retail | 86 795 | 69 677 | 27.8 | 19 403 | 1 552 | 1 440 |
| Total credit risk, IRB approach | 1 954 757 | 1 749 164 | 32.5 | 568 882 | 45 511 | 46 776 |
| Standardised approach | ||||||
| Central government and central banks | 525 263 | 524 532 | 0.1 | 264 | 21 | 19 |
| Regional government or local authorities | 48 481 | 43 833 | 2.3 | 1 024 | 82 | 88 |
| Public sector entities | 32 002 | 31 389 | 1.2 | 370 | 30 | 31 |
| Multilateral development banks | 31 662 | 31 591 | ||||
| International organisations | 4 958 | 4 958 | ||||
| Institutions | 100 617 | 69 817 | 22.3 | 15 559 | 1 245 | 1 469 |
| Corporate | 202 839 | 170 343 | 76.9 | 130 960 | 10 477 | 8 402 |
| Retail | 193 617 | 68 397 | 74.4 | 50 861 | 4 069 | 3 580 |
| Secured by mortgages on immovable property | 35 105 | 33 609 | 57.6 | 19 355 | 1 548 | 1 366 |
| Exposures in default | 2 801 | 2 017 | 137.5 | 2 774 | 222 | 233 |
| Items associated with particular high risk | 733 | 709 | 150.0 | 1 064 | 85 | 641 |
| Covered bonds | 33 684 | 33 684 | 10.0 | 3 368 | 269 | 348 |
| Collective investment undertakings | 737 | 737 | 24.4 | 180 | 14 | 41 |
| Equity positions | 24 151 | 24 150 | 215.5 | 52 054 | 4 164 | 3 908 |
| Other assets | 22 607 | 22 606 | 91.0 | 20 578 | 1 646 | 1 579 |
| Total credit risk, standardised approach | 1 259 256 | 1 062 371 | 28.1 | 298 411 | 23 873 | 21 706 |
| Total credit risk | 3 214 013 | 2 811 535 | 30.8 | 867 294 | 69 384 | 68 483 |
| Market risk | ||||||
| Position and general risk, debt instruments | 8 449 | 676 | 748 | |||
| Position and general risk, equity instruments | 700 | 56 | 52 | |||
| Currency risk | 131 | 10 | 4 | |||
| Commodity risk | 0 | 0 | 0 | |||
| Total market risk | 9 280 | 742 | 803 | |||
| Credit value adjustment risk (CVA) | 4 662 | 373 | 459 | |||
| Operational risk | 95 331 | 7 627 | 7 627 | |||
| Total risk exposure amount | 976 567 | 78 125 | 77 372 |
| Loans to customers at amortised cost | DNB Group | |||||||
|---|---|---|---|---|---|---|---|---|
| January-June 2021 | January-June 2020 | |||||||
| Amounts in NOK million | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Gross carrying amount as at 31 Dec. | 1 482 987 | 137 450 | 32 020 | 1 652 457 | 1 503 609 | 88 347 | 24 308 | 1 616 264 |
| Transfer to stage 1 | 54 532 | (53 629) | (903) | 48 343 | (47 370) | (973) | ||
| Transfer to stage 2 | (59 313) | 59 945 | (632) | (135 792) | 137 582 | (1 790) | ||
| Transfer to stage 3 | (1 919) | (5 416) | 7 335 | (3 517) | (12 433) | 15 950 | ||
| Originated and purchased | 218 889 | 4 632 | 1 212 | 224 733 | 216 982 | 10 592 | 227 573 | |
| Derecognition | (173 882) | (21 211) | (7 117) | (202 210) | (176 599) | (20 454) | (1 844) | (198 897) |
| Exchange rate movements | (3 056) | (199) | (28) | (3 283) | 15 722 | 1 163 | 227 | 17 111 |
| Other | ||||||||
| Gross carrying amount as at 30 June 1) | 1 518 239 | 121 572 | 31 886 | 1 671 696 | 1 468 747 | 157 426 | 35 877 | 1 662 050 |
1) On 1 January 2021, DNB introduced a new definition of default. According to the new definition, the gross carrying amount for stage 3 customers in probation after default was NOK 3 172 million as at 30 June 2021.
| January-June 2021 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in NOK million | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Maximum exposure as at 31 Dec. | 657 434 | 36 478 | 6 024 | 699 937 | 621 594 | 23 794 | 3 343 | 648 730 |
| Transfer to stage 1 | 12 514 | (11 988) | (526) | 13 278 | (13 132) | (146) | ||
| Transfer to stage 2 | (14 141) | 15 306 | (1 164) | (54 416) | 54 801 | (385) | ||
| Transfer to stage 3 | (283) | 282 | (1 509) | (6 120) | 7 629 | |||
| Originated and purchased | 236 096 | 2 476 | 93 | 238 665 | 201 974 | 1 184 | 0 | 203 158 |
| Derecognition | (202 294) | (6 473) | (4) | (208 771) | (158 709) | (10 170) | (2 524) | (171 404) |
| Exchange rate movements | (1 674) | 22 | (12) | (1 665) | 13 073 | 772 | 14 | 13 860 |
| Maximum exposure as at 30 June 1) | 687 936 | 35 538 | 4 693 | 728 167 | 635 283 | 51 130 | 7 931 | 694 344 |
1) On 1 January 2021, DNB introduced a new definition of default. According to the new definition, the maximum exposure relating to stage 3 customers in probation after default was NOK 350 million as at 30 June 2021.
| Loans to customers at amortised cost | DNB Group | |||||||
|---|---|---|---|---|---|---|---|---|
| January-June 2021 | January-June 2020 | |||||||
| Amounts in NOK million | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Accumulated impairment as at 31 Dec. | (765) | (1 214) | (12 039) | (14 018) | (306) | (1 042) | (8 905) | (10 252) |
| Transfer to stage 1 | (179) | 178 | 1 | (281) | 250 | 30 | ||
| Transfer to stage 2 | 141 | (154) | 13 | 107 | (176) | 70 | ||
| Transfer to stage 3 | 1 | 58 | (60) | 1 | 217 | (218) | ||
| Originated and purchased | (175) | (109) | (284) | (201) | (157) | (358) | ||
| Increased expected credit loss | (197) | (715) | (2 193) | (3 105) | (830) | (1 872) | (6 969) | (9 670) |
| Decreased (reversed) expected credit loss | 520 | 588 | 2 641 | 3 748 | 482 | 436 | 2 208 | 3 126 |
| Write-offs | 1 065 | 1 065 | 1 167 | 1 167 | ||||
| Derecognition | 85 | 277 | 64 | 426 | 55 | 386 | 47 | 487 |
| Exchange rate movements | 3 | 4 | (12) | (14) | (91) | (118) | ||
| Other | ||||||||
| Accumulated impairment as at 30 June 1) | (566) | (1 091) | (10 507) | (12 165) | (985) | (1 972) | (12 661) | (15 618) |
| January-June 2021 | January-June 2020 | |||||||
|---|---|---|---|---|---|---|---|---|
| Amounts in NOK million | Stage 1 | Stage 2 | Stage 3 | Total | Stage 1 | Stage 2 | Stage 3 | Total |
| Accumulated impairment as at 31 Dec. | (284) | (566) | (601) | (1 451) | (146) | (667) | (543) | (1 357) |
| Transfer to stage 1 | (59) | 59 | (88) | 85 | 3 | |||
| Transfer to stage 2 | 34 | (36) | 1 | 52 | (56) | 3 | ||
| Transfer to stage 3 | 13 | (13) | 1 | 250 | (250) | |||
| Originated and purchased | (99) | (17) | (116) | (218) | (30) | (249) | ||
| Increased expected credit loss | (48) | (155) | (254) | (458) | (334) | (1 405) | (1 393) | (3 132) |
| Decreased (reversed) expected credit loss | 212 | 196 | 407 | 814 | 191 | 739 | 1 114 | 2 044 |
| Derecognition | 5 | 96 | 101 | 2 | 196 | 198 | ||
| Exchange rate movements | 1 | 1 | (4) | (33) | (1) | (38) | ||
| Other | ||||||||
| Accumulated impairment as at 30 June 1) | (238) | (410) | (460) | (1 108) | (545) | (922) | (1 067) | (2 535) |
1) On 1 January 2021, DNB introduced a new definition of default. According to the new definition for customers in probation after default, the effect on expected credit loss was not significant as at 30 June 2021.
| Loans to customers as at 30 June 2021 | Accumulated impairment | DNB Group | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Gross carrying amount |
Stage 1 | Stage 2 | Stage 3 | Loans at fair value |
Total |
| Bank, insurance and portfolio management | 74 362 | (20) | (27) | (150) | 74 164 | |
| Commercial real estate | 204 909 | (86) | (65) | (332) | 78 | 204 504 |
| Shipping | 37 259 | (40) | (98) | (268) | 36 853 | |
| Oil, gas and offshore | 51 489 | (47) | (248) | (6 689) | 44 505 | |
| Power and renewables | 35 959 | (29) | (9) | (238) | 35 684 | |
| Healthcare | 15 096 | (3) | (0) | 15 092 | ||
| Public sector | 8 692 | (15) | (0) | (0) | 8 676 | |
| Fishing, fish farming and farming | 50 668 | (42) | (69) | (154) | 106 | 50 509 |
| Retail industries | 38 727 | (27) | (44) | (409) | 3 | 38 250 |
| Manufacturing | 35 075 | (32) | (55) | (79) | 34 909 | |
| Technology, media and telecom | 23 491 | (15) | (8) | (20) | 0 | 23 447 |
| Services | 80 520 | (68) | (88) | (936) | 20 | 79 447 |
| Residential property | 103 122 | (35) | (21) | (149) | 238 | 103 155 |
| Personal customers | 845 776 | (64) | (137) | (371) | 50 941 | 896 145 |
| Other corporate customers | 66 554 | (41) | (222) | (712) | 11 | 65 589 |
| Total 1) | 1 671 696 | (566) | (1 091) | (10 507) | 51 398 | 1 710 930 |
1) Of which NOK 47 857 million in repo trading volumes.
| Loans to customers as at 30 June 2020 | Accumulated impairment | DNB Group | ||||
|---|---|---|---|---|---|---|
| Amounts in NOK million | Gross carrying amount |
Stage 1 | Stage 2 | Stage 3 | Loans at fair value |
Total |
| Bank, insurance and portfolio management | 79 444 | (60) | (20) | (311) | 79 054 | |
| Commercial real estate | 189 054 | (90) | (93) | (369) | 141 | 188 642 |
| Shipping | 49 553 | (61) | (199) | (338) | 48 956 | |
| Oil, gas and offshore | 70 242 | (93) | (513) | (8 419) | 61 218 | |
| Power and renewables | 34 257 | (46) | (20) | (27) | 34 165 | |
| Healthcare | 23 432 | (22) | (2) | 23 409 | ||
| Public sector | 15 866 | (9) | (0) | (0) | 15 856 | |
| Fishing, fish farming and farming | 47 201 | (56) | (60) | (138) | 121 | 47 069 |
| Retail industries | 38 516 | (40) | (65) | (396) | 28 | 38 043 |
| Manufacturing | 44 861 | (54) | (83) | (229) | 5 | 44 501 |
| Technology, media and telecom | 27 771 | (46) | (16) | (30) | 6 | 27 684 |
| Services | 82 407 | (100) | (130) | (659) | 67 | 81 586 |
| Residential property | 95 254 | (30) | (23) | (138) | 363 | 95 425 |
| Personal customers | 799 985 | (210) | (415) | (680) | 56 680 | 855 359 |
| Other corporate customers | 64 205 | (68) | (333) | (928) | 63 | 62 939 |
| Total 1) | 1 662 050 | (985) | (1 972) | (12 661) | 57 473 | 1 703 905 |
1) Of which NOK 51 657 million in repo trading volumes.
| Financial commitments as at 30 June 2021 | Accumulated impairment | DNB Group | |||
|---|---|---|---|---|---|
| Maximum | |||||
| Amounts in NOK million | exposure | Stage 1 | Stage 2 | Stage 3 | Total |
| Bank, insurance and portfolio management | 40 843 | (11) | (3) | (0) | 40 829 |
| Commercial real estate | 30 442 | (16) | (1) | (1) | 30 423 |
| Shipping | 10 029 | (9) | (2) | 10 019 | |
| Oil, gas and offshore | 47 402 | (47) | (213) | (254) | 46 888 |
| Power and renewables | 34 739 | (20) | (3) | 0 | 34 716 |
| Healthcare | 20 281 | (4) | (0) | 20 277 | |
| Public sector | 7 944 | (0) | 7 944 | ||
| Fishing, fish farming and farming | 21 312 | (16) | (7) | (4) | 21 286 |
| Retail industries | 34 182 | (18) | (11) | (6) | 34 146 |
| Manufacturing | 50 796 | (16) | (39) | (1) | 50 741 |
| Technology, media and telecom | 22 450 | (9) | (5) | (0) | 22 437 |
| Services | 29 566 | (29) | (29) | (9) | 29 499 |
| Residential property | 41 140 | (14) | (2) | (8) | 41 116 |
| Personal customers | 300 570 | (12) | (24) | (0) | 300 534 |
| Other corporate customers | 36 470 | (17) | (71) | (177) | 36 206 |
| Total | 728 167 | (238) | (410) | (460) | 727 059 |
| Financial commitments as at 30 June 2020 | Accumulated impairment | ||||
|---|---|---|---|---|---|
| Amounts in NOK million | Maximum exposure |
Stage 1 | Stage 2 | Stage 3 | Total |
| Bank, insurance and portfolio management | 39 110 | (51) | (4) | (0) | 39 055 |
| Commercial real estate | 26 047 | (32) | (2) | (4) | 26 010 |
| Shipping | 9 124 | (13) | (75) | (5) | 9 031 |
| Oil, gas and offshore | 57 703 | (76) | (484) | (685) | 56 459 |
| Power and renewables | 31 821 | (29) | (34) | 31 759 | |
| Healthcare | 23 073 | (11) | (0) | 23 062 | |
| Public sector | 10 030 | (0) | (0) | 10 030 | |
| Fishing, fish farming and farming | 17 645 | (24) | (5) | (4) | 17 612 |
| Retail industries | 34 936 | (24) | (32) | (21) | 34 859 |
| Manufacturing | 55 712 | (51) | (59) | (6) | 55 596 |
| Technology, media and telecom | 18 559 | (21) | (4) | 18 534 | |
| Services | 26 645 | (35) | (34) | (34) | 26 542 |
| Residential property | 33 750 | (14) | (5) | (5) | 33 726 |
| Personal customers | 274 943 | (135) | (99) | 0 | 274 710 |
| Other corporate customers | 35 244 | (30) | (85) | (304) | 34 825 |
| Total | 694 344 | (545) | (922) | (1 067) | 691 810 |
| DNB Group | ||||
|---|---|---|---|---|
| Amounts in NOK million | Level 1 | Level 2 | Level 3 | Total |
| Assets as at 30 June 2021 | ||||
| Loans to customers | 51 398 | 51 398 | ||
| Commercial paper and bonds | 33 789 | 283 143 | 954 | 317 886 |
| Shareholdings | 7 200 | 15 630 | 11 676 | 34 506 |
| Financial assets, customers bearing the risk | 129 966 | 129 966 | ||
| Financial derivatives | 1 878 | 125 750 | 1 445 | 129 073 |
| Liabilities as at 30 June 2021 | ||||
| Deposits from customers | 10 351 | 10 351 | ||
| Debt securities issued | 17 040 | 17 040 | ||
| Senior non-preferred bonds | 1 117 | 1 117 | ||
| Subordinated loan capital | 175 | 175 | ||
| Financial derivatives | 2 209 | 114 608 | 1 143 | 117 961 |
| Other financial liabilities 1) | 2 623 | (0) | 0 | 2 623 |
| Assets as at 30 June 2020 | ||||
| Loans to customers | 57 473 | 57 473 | ||
| Commercial paper and bonds | 42 185 | 337 305 | 406 | 379 896 |
| Shareholdings | 4 793 | 8 312 | 8 547 | 21 652 |
| Financial assets, customers bearing the risk | 95 194 | 95 194 | ||
| Financial derivatives | 878 | 197 545 | 2 054 | 200 477 |
| Liabilities as at 30 June 2020 | ||||
| Deposits from customers | 20 591 | 20 591 | ||
| Debt securities issued | 21 019 | 21 019 | ||
| Subordinated loan capital | 176 | 176 | ||
| Financial derivatives | 631 | 172 202 | 1 499 | 174 331 |
| Other financial liabilities 1) | 3 413 | 3 413 |
1) Short positions, trading activities.
For a further description of the instruments and valuation techniques, see the annual report for 2020.
| Financial | |||||
|---|---|---|---|---|---|
| Financial assets | liabilities | ||||
| Loans to | Commercial paper and |
Share- | Financial | Financial | |
| Amounts in NOK million | customers | bonds | holdings | derivatives | derivatives |
| Carrying amount as at 31 December 2019 | 61 178 | 356 | 7 018 | 1 868 | 1 536 |
| Net gains recognised in the income statement | 1 544 | (8) | 367 | 642 | 418 |
| Additions/purchases | 6 242 | 277 | 1 440 | 224 | 219 |
| Sales | (90) | (278) | |||
| Settled | (11 656) | (707) | (695) | ||
| Transferred from level 1 or level 2 | 85 | ||||
| Transferred to level 1 or level 2 | (204) | (0) | |||
| Other | 166 | (9) | 0 | 27 | 22 |
| Carrying amount as at 30 June 2020 | 57 473 | 406 | 8 547 | 2 054 | 1 499 |
| Carrying amount as at 31 December 2020 | 55 372 | 283 | 10 787 | 1 877 | 1 513 |
| Net gains recognised in the income statement | (645) | (1) | 344 | (285) | (214) |
| Additions/purchases | 4 421 | 488 | 1 251 | 215 | 206 |
| Sales | (368) | (703) | |||
| Settled | (7 650) | (11) | (362) | (361) | |
| Transferred from level 1 or level 2 | 740 | ||||
| Transferred to level 1 or level 2 | (200) | (2) | |||
| Other | (100) | 24 | (0) | ||
| Carrying amount as at 30 June 2021 | 51 398 | 954 | 11 676 | 1 445 | 1 143 |
An increase in the discount rate on fixed-rate loans by 10 basis points will decrease the fair value by NOK 153 million. The effects on other Level 3 financial instruments are insignificant.
As an element in liquidity management, the DNB Group issues and redeems own securities.
| Debt securities issued 2021 | DNB Group | |||||
|---|---|---|---|---|---|---|
| Balance | Exchange | Balance | ||||
| sheet | Matured/ | rate | Other | sheet | ||
| 30 June | Issued | redeemed | movements | changes | 31 Dec. | |
| Amounts in NOK million | 2021 | 2021 | 2021 | 2021 | 2021 | 2020 |
| Commercial papers issued, nominal amount | 193 710 | 1 066 597 | (1 003 139) | (7 678) | 137 931 | |
| Bond debt, nominal amount 1) | 135 906 | 393 | (37 139) | (2 463) | 175 115 | |
| Covered bonds, nominal amount 1) | 405 358 | 26 038 | (45 958) | (8 776) | 434 054 | |
| Value adjustments | 20 029 | (10 701) | 30 729 | |||
| Debt securities issued | 755 002 | 1 093 027 | (1 086 236) | (18 918) | (10 701) | 777 829 |
1) Minus own bonds. The total nominal amount of outstanding covered bonds in DNB Boligkreditt was NOK 339.7 billion as at 30 June 2021. The market value of the cover pool represented NOK 689.6 billion.
| Debt securities issued 2020 | DNB Group | |||||
|---|---|---|---|---|---|---|
| Balance | Exchange | Balance | ||||
| sheet | Matured/ | rate | Other | sheet | ||
| 30 June | Issued | redeemed | movements | changes | 31 Dec. | |
| Amounts in NOK million | 2020 | 2020 | 2020 | 2020 | 2020 | 2019 |
| Commercial papers issued, nominal amount | 135 092 | 734 970 | (798 236) | 10 238 | 188 120 | |
| Bond debt, nominal amount 1) | 214 415 | 2 612 | (30 345) | 19 598 | 222 550 | |
| Covered bonds, nominal amount 1) | 445 366 | (1 731) | (19 835) | 35 452 | 431 480 | |
| Value adjustments | 33 837 | 5 818 | 28 019 | |||
| Debt securities issued | 828 710 | 735 851 | (848 416) | 65 288 | 5 818 | 870 170 |
1) Minus own bonds.
| Balance | Exchange | Balance | ||||
|---|---|---|---|---|---|---|
| sheet | Matured/ | rate | Other | sheet | ||
| 30 June | Issued | redeemed | movements | changes | 31 Dec. | |
| Amounts in NOK million | 2021 | 2021 | 2021 | 2021 | 2021 | 2020 |
| Senior non-preferred bonds, nominal amount | 31 598 | 22 862 | 217 | 8 519 | ||
| Value adjustments | (248) | (252) | 4 | |||
| Senior non-preferred bonds | 31 351 | 22 862 | 217 | (252) | 8 523 |
| Subordinated loan capital and perpetual subordinated loan capital securities 2021 | DNB Group | |||||
|---|---|---|---|---|---|---|
| Balance | Exchange | Balance | ||||
| sheet | Matured/ | rate | Other | sheet | ||
| 30 June | Issued | redeemed | movements | changes | 31 Dec. | |
| Amounts in NOK million | 2021 | 2021 | 2021 | 2021 | 2021 | 2020 |
| Term subordinated loan capital, nominal amount | 25 577 | (743) | 26 320 | |||
| Perpetual subordinated loan capital, nominal amount | 5 619 | (21) | 5 640 | |||
| Value adjustments | 204 | (155) | 359 | |||
| Total subordinated loan capital and perpetual | ||||||
| subordinated loan capital securities | 31 400 | (764) | (155) | 32 319 |
| Subordinated loan capital and perpetual subordinated loan capital securities 2020 | DNB Group | |||||
|---|---|---|---|---|---|---|
| Balance | Exchange | Balance | ||||
| sheet | Matured/ | rate | Other | sheet | ||
| 30 June | Issued | redeemed | movements | changes | 31 Dec. | |
| Amounts in NOK million | 2020 | 2020 | 2020 | 2020 | 2020 | 2019 |
| Term subordinated loan capital, nominal amount | 27 168 | 4 056 | (4 207) | 2 376 | 24 943 | |
| Perpetual subordinated loan capital, nominal amount | 6 385 | 611 | 5 774 | |||
| Value adjustments | 324 | (54) | 378 | |||
| Total subordinated loan capital and perpetual subordinated loan capital securities |
33 878 | 4 056 | (4 207) | 2 988 | (54) | 31 095 |
Due to its extensive operations in Norway and abroad, the DNB Group will regularly be party to various legal actions and tax-related disputes. None of the current disputes are expected to have any material impact on the Group's financial position.
In December 2020, DNB received a preliminary report from Finanstilsynet following an ordinary AML inspection in February 2020. In May 2021, Finanstilsynet published its final report. According to the report, DNB had not been complicit in money laundering, but Finanstilsynet criticised the bank for inadequate compliance with the Norwegian Anti-Money Laundering Act. On the basis of the criticism in the report, Finanstilsynet imposed an administrative fine of NOK 400 million on the bank. This constitutes about 7 per cent of the maximum amount Finanstilsynet is at liberty to impose, and 0.7 per cent of DNB's annual turnover. The maximum administrative fine it is possible to impose corresponds to 10 per cent of a company's annual turnover. Based on the preliminary report, a provision of NOK 400 million was booked in the fourth quarter of 2020.
According to Norwegian tax legislation, external interest expenses are to be distributed proportionally among companies' operations in Norway and international branch offices based on the respective entities' total assets. This could result in additions or deductions from the companies' income in Norway.
In May 2021, DNB Bank ASA received a draft decision from the Norwegian tax authorities relating to the deduction of external interest expenses. The draft decision covers the fiscal years 2015–2019 and represents a tax exposure of NOK 1.7 billion for the period in question. DNB disagrees with the tax authorities' interpretation of the legislation and will actively pursue the matter. DNB is still of the opinion that it has a strong case, and no provisions have been recognised in the accounts at the end of the second quarter of 2021. See also note 26 Taxes in the annual report for 2020.
The merger of DNB ASA and DNB Bank ASA, with DNB Bank ASA as the surviving company was completed on 1 July 2021.
The merger was implemented on the basis of accounting and tax continuity. The DNB Bank ASA shares that were owned by DNB ASA have been issued as merger consideration to the shareholders of DNB ASA, and there has therefore been no capital increase in DNB Bank ASA as a result of the merger. No additional consideration has been paid. As part of the merger, DNB ASA's ownership of the fully owned subsidiaries DNB Livsforsikring AS and DNB Asset Management AS, as well as its 35 per cent ownership interest in Fremtind Forsikring AS, have been transferred to DNB Bank ASA for the sake of company continuity in the parent company accounts.
As of the third quarter of 2021, the DNB Group, with DNB Bank ASA as the parent company, will prepare only one consolidated financial statement. Comparative figures for the DNB Group after the merger will be based on the principle of continuity, and will thus correspond with previous figures for the DNB Group.
| Income statement | DNB ASA | ||||
|---|---|---|---|---|---|
| 2nd quarter | 2nd quarter | January-June | Full year | ||
| Amounts in NOK million | 2021 | 2020 | 2021 | 2020 | 2020 |
| Interest income, amortised cost | 1 | 2 | 4 | 16 | 19 |
| Interest expenses, amortised cost | (90) | (130) | (184) | (300) | (471) |
| Net interest income | (89) | (128) | (179) | (284) | (452) |
| Commissions and fees payable | (4) | (2) | (5) | (3) | (5) |
| Other income 1) | 192 | (125) | 192 | 1 092 | (10 855) |
| Net other operating income | 189 | (126) | 187 | 1 089 | (10 860) |
| Total income | 100 | (254) | 8 | 805 | (11 312) |
| Other expenses | (71) | (66) | (143) | (132) | (271) |
| Total operating expenses | (71) | (66) | (143) | (132) | (271) |
| Pre-tax operating profit | 29 | (320) | (135) | 672 | (11 583) |
| Tax expense | (7) | 49 | 34 | 113 | (0) |
| Profit for the period | 21 | (271) | (102) | 786 | (11 584) |
| Earnings/diluted earnings per share (NOK) | 0.01 | (0.17) | (0.07) | 0.50 | (7.28) |
| Earnings per share excluding operations held for sale (NOK) | 0.01 | (0.17) | (0.07) | 0.50 | (7.28) |
| Balance sheet | DNB ASA | ||||
| Amounts in NOK million | 30 June 2021 |
31 Dec. 2020 |
30 June 2020 |
||
| Assets | |||||
| Due from DNB Bank ASA | 2 579 | 1 779 | 2 017 | ||
| Investments in associated companies | 6 714 | 6 714 | 6 714 | ||
| Investments in subsidiaries | 74 163 | 74 163 | 74 257 | ||
| Receivables due from group companies | 13 820 | 26 532 | |||
| Other assets | 37 | 1 | 113 | ||
| Total assets | 83 492 | 96 477 | 109 634 | ||
| Liabilities and equity | |||||
| Short-term amounts due to DNB Bank ASA | 8 | 9 | 9 | ||
| Other liabilities and provisions | 13 023 | 15 692 | |||
| Long-term amounts due to DNB Bank ASA | 23 728 | 23 587 | 22 718 | ||
| Total liabilities | 23 736 | 36 619 | 38 419 | ||
| Share capital | 15 504 | 15 504 | 15 504 | ||
| Share premium | 22 556 | 22 556 | 22 556 | ||
| Other equity | 21 696 | 21 798 | 33 155 | ||
| Total equity | 59 756 | 59 858 | 71 215 | ||
| Total liabilities and equity | 83 492 | 96 477 | 109 634 |
1) Of which NOK 100 million from DNB Asset Management Holding AS has been reversed in the second quarter of 2021. Fremtind Forsikring AS has paid a dividend of NOK 292 million in the second quarter 2021.
| Share Share Other Total capital premium equity equity |
|---|
| 15 706 22 556 35 406 73 668 |
| 786 786 |
| (202) (3 036) (3 238) |
| 15 504 22 556 33 155 71 215 |
| 15 504 22 556 21 798 59 858 |
| (102) (102) |
| 15 504 22 556 21 696 59 756 |
DNB ASA has prepared the financial statements according to the Norwegian Ministry of Finance's regulations on annual accounts. A description of the accounting principles applied by the company when preparing the financial statements appear in Note 1 Accounting principles in the annual report for 2020. In the interim report, the accounting policies, significant estimates, and areas where judgement is applied by the company are in conformity with those described in the annual report.
The merger of DNB ASA and DNB Bank ASA, with DNB Bank ASA as the surviving company, was completed on 1 July 2021. See further information in note 9 to the consolidated accounts.
We hereby confirm that the half-yearly financial statements for the Group and the company for the period 1 January through 30 June 2021 to the best of our knowledge have been prepared in accordance with IAS 34 Interim Financial Reporting, as adopted by the European Union, and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group and the company taken as a whole.
To the best of our knowledge, the half-yearly report gives a true and fair:
Oslo, 12 July 2021 The Board of Directors of DNB Bank ASA
Olaug Svarva Svein Richard Brandtzæg
(Chair of the Board) (Vice Chair of the Board)
Gro Bakstad Julie Galbo Lillian Hattrem
Jens Petter Olsen Stian Tegler Samuelsen Jaan Ivar Semlitsch
Eli Solhaug Kim Wahl
(Group Chief Executive Officer, CEO) (Group Chief Financial Officer, CFO)
Kjerstin R. Braathen Ottar Ertzeid
Telephone +47 91 50 48 00 Internet dnb.no
Mailing address P.O.Box 1600 Sentrum, NO-0021 Oslo Visiting address Dronning Eufemias gate 30, Oslo
Olaug Svarva, Chair of the Board Svein Richard Brandtzæg, Vice Chair of the Board Gro Bakstad Julie Garbo Lillian Hattrem Jens Petter Olsen Stian Tegler Samuelsen Jaan Ivar Semlitsch Eli Solhaug Kim Wahl
| Group Chief Executive Officer (CEO) |
|---|
| Group Chief Financial Officer (CFO) |
| Group Executive Vice President of Personal Banking |
| Group Executive Vice President of Corporate Banking |
| Group Executive Vice President of Wealth Management |
| Group Executive Vice President of Markets |
| Group Executive Vice President of Payments & Innovation |
| Group Chief Compliance Officer (CCO) |
| Group Chief Risk Officer (CRO) |
| Group Executive Vice President of Technology & Services |
| Acting Group Executive Vice President of People |
| Group Executive Vice President of Communications & Sustainability |
| Rune Helland, head of Investor Relations | tel. +47 23 26 84 00 | [email protected] |
|---|---|---|
| Anne Engebretsen, Investor Relations | tel. +47 23 26 84 08 | [email protected] |
| Marius Michelsen Fjellbo, Investor Relations | tel. +47 99 56 75 93 | [email protected] |
| Thor Tellefsen, Long Term Funding | tel. +47 23 26 84 04 | [email protected] |
| 10 February | Q4 2021 |
|---|---|
| 10 March | Annual report 2021 |
| 26 April | Annual General Meeting |
| 27 April | Ex-dividend date |
| As of 5 May | Distribution of dividends |
| 28 April | Q1 2022 |
| 12 July | Q2 2022 |
| 20 October | Q3 2022 |
Separate annual and quarterly reports are prepared for the DNB Bank Group, DNB Boligkreditt and DNB Livsforsikring. The reports and the Factbook are available on ir.dnb.no. Annual and quarterly reports can be ordered by sending an e-mail to Investor Relations.
The quarterly report has been produced by Group Financial Reporting in DNB. Cover design: HyperRedink
Mailing address: P.O.Box 1600 Sentrum N-0021 Oslo
Visiting address: Dronning Eufemias gate 30 Bjørvika, Oslo dnb.no
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