DnB NOR: Sound underlying rise in income

DnB NOR recorded profits of NOK 1 760 million in the 2009. Compared with the
second quarter of 2009, profits were up NOK 1 117 million, while there was a
reduction from NOK 2 810 million in the third quarter of 2008. 
 
After minority interests, profits attributable to DnB NOR's shareholders
totalled NOK 2 167 million in the third quarter of 2009, compared with NOK 1
200 million in the second quarter and NOK 2 829 million in the year-earlier
period. 
 
"DnB NOR's profit figures reflect a rise in income in a still uncertain market
situation. There is a positive underlying trend, especially in Retail Banking
and Vital. The cost programme has positive effects, and write-downs on loans
are within previous estimates. In addition, we are strengthening equity through
a NOK 14 billion rights issue later this year, which will make us well
positioned for future growth," says group chief executive Rune Bjerke. 
 
Third quarter 2009
Pre-tax operating profits before write-downs were NOK 5.0 billion (4.4)
Profit for the period was NOK 1.8 billion (2.8)
Profit after minority interests was NOK 2.2 billion (2.8)
Earnings per share were NOK 1.63 (2.12)
Return on equity was 10.6 per cent (15.5)
The cost/income ratio, excluding impairment losses for goodwill, was 46.9 per
cent (50.6) 
The core capital ratio, including 50 per cent of interim profits, was 7.6 per
cent (6.7) 
Upon full implementation of the Basel II IRB system, the core capital ratio
will be 
8.8 per cent 
January through September 2009

Pre-tax operating profits before write-downs were NOK 14.6 billion (10.5)
Profit for the period was NOK 5.3 billion (7.3)
Profit after minority interests was NOK 6.5 billion (7.2)
Earnings per share were NOK 4.85 (5.39)
Return on equity was 10.7 per cent (13.0)
The cost/income ratio, excluding impairment losses for goodwill, was 48.0 per
cent (55.6) 
 Comparable figures for 2008 in parentheses.

 
Rise in interest and operating income
Net interest income was NOK 5 740 million in the third quarter of 2009, up NOK
49 million from the year-earlier period. There was a NOK 87 million increase in
net interest income compared with the second quarter of 2009. Net other
operating income amounted to NOK 3 951 million, up 26.1 per cent from the third
quarter of 2008. 
 
"Due to the financial market recovery, both DnB NOR Markets and Vital recorded
sound profits. Income from payment services also showed a positive trend, while
the upturn in the housing market gave a boost in income from real estate
broking," says Rune Bjerke. 
 
Stable lending volumes
There was a decline in average lending volumes during the third quarter due to
exchange rate movements. Adjusted for exchange rate effects, lending volumes
were virtually unchanged from year-end 2008, reflecting a reduction in credit
demand. 
 
"During the financial crisis, we have focused on assisting our customers and
maintaining sound business relations," says Bjerke. 
 
Write-downs on loans within previous estimates
The effect of write-downs on loans in the income statement was NOK 2 277
million, a slight decline from the second quarter and within estimated
write-downs of NOK 8-10 billion for the whole of 2009. 
 
"There was a decline in write-downs in DnB NORD compared with the second
quarter. There was a stable level of individual write-downs in other
operations, while there was an increase in group write-downs during the
quarter. Over the past year, the Group has stepped up its efforts considerably
to ensure the value of problem commitments," underlines Rune Bjerke. 
 
Cost reductions  
There was a positive cost trend during the quarter, with a NOK 90 million
decline in costs from the second quarter. The initiatives to create a more
integrated group had significant effects on Norwegian-related operations, while
market adjustments reduced costs both in and outside Norway. 
 
Very sound liquidity
Through the swap scheme with Norges Bank, DnB NOR has built up a significant
liquidity reserve through 2009. In addition, access to and prices of capital
market funding improved considerably during the summer, which gives the Group a
sound platform for the future. During the third quarter, Moody's downgraded DnB
NOR's credit rating by two notches to Aa3. The corresponding rating from
Standard and Poor's is AA-. This places the bank in a small, exclusive group of
financial institutions with a double A rating from both large rating agencies
and is of great significance with respect to funding opportunities. 
 
Equity strengthening
The core capital ratio, including 50 per cent of interim profits, increased
from 7.3 per cent 
at end-June to 7.6 per cent at end-September. On 24 September 2009, DnB NOR's
Board of Directors proposed to strengthen equity by NOK 14 billion through an
issue of ordinary shares with pre-emptive subscription rights for existing
shareholders. 
 
"The capital increase will make the Group better positioned for stricter
capital adequacy requirements while enabling a swifter return to its long-term
dividend policy. Moreover, the transaction will enhance the Group's ability to
meet customers' future financing needs and to pursue profitable business
opportunities as part of its future growth strategy," says Rune Bjerke. 
 
Including capital from the rights issue, the core capital ratio would have been
11.4 per cent at end-September 2009 based on full implementation of the new
capital adequacy regulations and including 50 per cent of interim profits. 
 
Sustainable development
During the third quarter of 2009, DnB NOR qualified for inclusion in the Dow
Jones World Sustainability Index, which means that the Group is regarded as
being among the top 10 per cent within its industry worldwide in terms of
sustainability with respect to economic, environmental and social factors. 
 
Contact person:
Trond Bentestuen, group executive vice president, Marketing and Communications, 
tel.: +47 950 28 448