Capital build-up completed one year ahead of schedule

DNB recorded profits of NOK 5 380 million in the fourth quarter of 2016, a reduction of
NOK 1 404 million from the fourth quarter of 2015. Even though lower net interest income and higher impairment losses had a negative effect on profits, DNB continued to build capital throughout the year. The Board of Directors has proposed a dividend of NOK 5.70 per share.

DNB delivered solid profits despite an increase in impairment losses in oil-related industries and shipping. Profits for the year totalled NOK 19.3 billion, and the bank built up additional capital. The Group fulfilled the capital requirements one year ahead of plan and is well positioned in relation to its peers and possible new requirements.

Consequently, the Board of Directors has proposed a dividend for 2016 of NOK 5.70 per share, which corresponds to 49.8 per cent of profits for the 2016 accounting year. DNB’s long-term target is to distribute more than 50 per cent of profits as dividends to its shareholders. The Group is planning a share buy-back programme to be implemented in the course of 2017.

“Over a long period, we have focused on building up capital and restricted dividend payments, distributing a much lower dividend than our Nordic peers. We are pleased that we can now resume a normalised and sustainable dividend policy,” says Rune Bjerke, group chief executive.

More Vipps, more ideas
During 2016, the payment app Vipps was established as a well-known and popular brand with more than two million users. Vipps Corporate was launched during the third quarter, while Vipps Invoice was introduced in November. Vipps Invoice is a simple solution for companies that would like an alternative to paper invoices. Through Vipps, invoices can be paid by just a few clicks on a mobile phone.

DNB is also strongly committed to supporting Norwegian entrepreneurs and growth companies through the NXT programme. In October, DNB organised the NXT Conference, Norway’s largest meeting place for ideas and capital. In November, DNB and StartupLab launched NXT Accelerator.

“DNB plays a key role in connecting ideas and capital. Our role is to highlight promising entrepreneurial companies and help ensure that they are given the best possible growth opportunities. Some of these will become DNB customers over the coming years, others will become our business partners, while some may even become future competitors, but all will make a positive contribution to society. We find this inspiring. However, we also acknowledge that we do not have all the solutions ourselves, and it is thus important to establish new types of alliances and cooperation,” says Bjerke.

Tough competition
The accounts for the fourth quarter show a decline in net interest income of NOK 690 million compared with the fourth quarter of 2015, which primarily reflects a planned reduction in loans with low profitability to large international corporate customers. Narrower lending spreads and higher funding costs also had a negative effect on income, as was the case in the preceding quarters.

Net other operating income increased by NOK 405 million, reflecting a rise in income in DNB Markets driven by a high level of activity in the debt and equity capital markets.

Impairment losses on loans and guarantees totalled NOK 1 753 million in the fourth quarter, up NOK 333 million from the corresponding quarter in 2015. The impairment losses mainly related to large international companies within oil-related industries. Total operating expenses increased by NOK 1 568 million. Adjusted for non-recurring effects in 2015, however, there was a NOK 225 million reduction in operating expenses compared with the fourth quarter of 2015.

“Overall, we are pleased with DNB’s performance in 2016, in spite of higher losses and large currency fluctuations. As we have now reached our capital target, our most important financial tasks in the period ahead will be to increase our return on equity and provide a robust dividend payout ratio. However, it is just as important to work hard every day to meet our customers’ expectations,” concludes Bjerke.

Key figures for the fourth quarter of 2016
• Pre-tax operating profit before impairment was NOK 7.4 billion (9.3)
• Profit for the period was NOK 5.4 billion (6.8)
• The common equity Tier 1 capital ratio (transitional rules) was 16.0 per cent (14.4)
• Earnings per share were NOK 3.16 (4.11)
• Return on equity was 10.9 per cent (15.0)
• The cost/income ratio was 41.2 per cent (28.1)

Key figures for the full year 2016
• Pre-tax operating profit before impairment was NOK 30.8 billion (34.1)
• Profit for the year was NOK 19.3 billion (24.8)
• The common equity Tier 1 capital ratio (transitional rules) was 16.0 per cent (14.4)
• Earnings per share were NOK 11.46 (14.98)
• Return on equity was 10.1 per cent (14.5)
• The cost/income ratio was 40.9 per cent (36.9)
• The proposed dividend is NOK 5.70 per share (4.50)

Comparable figures for 2015 in parentheses.

This information is subject to the disclosure requirements pursuant to section 5-12 of the
Norwegian Securities Trading Act.

Contact persons:
Thomas Midteide, group executive vice president, Corporate Communications, tel.: + 47 962 32 017
Rune Helland, head of Investor Relations, tel: +47 977 13 250

The quarterly report, presentation and Fact Book can be downloaded from www.dnb.no/en/ir

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DNB is Norway's largest financial services group and offers financial products and services, including loans and deposits, mutual funds and asset management, life insurance and pension savings, payment and financing services, real estate broking and services related to the money and capital markets.