DnB NOR first quarter 2009 results

DnB NOR achieved pre-tax operating profits before write-downs of NOK 6 109
million in the first quarter of 2009, which are the best operating profits ever
recorded by the Group. The corresponding figure in 2008 was NOK 1 454 million.
Profit for the period was NOK 2 934 million. 
 
The improved performance was primarily due to a strong rise in other operating
profits, which increased from NOK 625 million in the first quarter of 2008 to
NOK 5 190 million. 
 
First quarter 2009
·          Pre-tax operating profits before write-downs were NOK 6.1 billion
(1.5) 
·          Profit for the period was NOK 2.9 billion (1.1)
·          Return on equity was 15.8 per cent (5.7)
·          Earnings per share were NOK 2.32 (0.79)
·          The cost/income ratio was 43.6 per cent (74.3)
·          The core capital ratio, including 50 per cent of interim profits,
was 7.0 per cent (7.0) 
 
(Comparable figures for the first quarter of 2008 in parentheses.)
 
"We are very pleased to be able to record such healthy profits during a period
characterised by great uncertainty, where the consequences of the financial
turmoil have started to manifest themselves in the real economy," says DnB
NOR's group chief executive, Rune Bjerke. 
 
DnB NOR recorded profits of NOK 2 934 million in the first quarter of 2009, up
from NOK 1 120 million in the year-earlier period. The Group thus built up a
buffer to absorb expected future losses. 
 
Net lending clearly levelled off in the first quarter of 2009, reflecting
reduced exchange rates and lower demand for credit in the Norwegian market.
Higher credit risk margins in the market and the effects of time lags due to
the rapid decline in interest rate levels resulted in widening lending spreads.
Parallel to this, there was a narrowing in deposit spreads. 
 
Write-downs on loans were within previously estimated levels during the first
quarter. There were relatively large write-downs in DnB NORD's operations in
the Baltic region. Write-downs in the Group's Norwegian operations were at a
normalised level, but showed a rising trend. Prior to the onset of the
financial crisis, the credit quality of the Group's shipping portfolio was very
sound. Consequently, the Group still did not have to record individual
write-downs in this sector in the first quarter. 
 
Cost programme on schedule
Operating expenses rose by 12.4 per cent from the first quarter of 2008, to NOK
4 714 million. 
 
"Both growth initiatives implemented during the first half of 2008 and direct
income-generating activities contributed to the cost increase. However, the
Group's cost programme is on schedule, introducing measures which will have
lasting cost-reducing effects. The annual cost reduction target in the cost
programme has been increased from NOK 1.4 billion by year-end 2010 to NOK 2
billion by the end of 2012," says Rune Bjerke. 
 
Long-term funding and capital position
Access to long-term funding improved during the first quarter, partly due to
the scheme to exchange covered bonds for Treasury bills. Financial markets
remained volatile, however, and the price of long-term funding was very high
compared with historical levels. 
 
Including 50 per cent of interim profits, the core capital ratio increased from
6.7 per cent at end-December 2008 to 7.0 per cent at end-March 2009. The Group
is considered to be adequately capitalised relative to the risk in the loan
portfolios and other operations, but the Board of Directors nevertheless aims
to increase capital adequacy in future. 
 
On 28 April 2009, Standard & Poor's affirmed DnB NOR Bank's AA- rating.
  
 
Contact person:
Trond Bentestuen, group executive vice president, Marketing and Communications, 
tel.: +47 950 28 448