Strong underlying operations, but higher losses

DNB recorded profits of NOK 4 569 million in the second quarter of 2016, a reduction of
NOK 512 million from the second quarter of 2015. The decline in profits was primarily a result
of higher impairment losses on loans and guarantees, though basis swaps also had a negative effect on profits.

“We are satisfied with these figures, in spite of the effects of historically low interest rates and a
rise in losses. The Norwegian economy is sound, even though oil-related industries are still under restructuring,” says Rune Bjerke, group chief executive.

The common equity Tier 1 capital ratio, calculated according to the transitional rules, was 15.2 per cent, up from 13.0 per cent a year earlier. DNB is thus one of the best capitalised banks in the world.

Net interest income was reduced by NOK 185 million from the second quarter of 2015, reflecting lower lending volumes, adjusted for exchange rate effects, and higher long-term funding costs.

Net other operating income increased by NOK 732 million. A positive effect from the completion of the sale of DNB’s holding in Visa Europe, announced in November 2015, was partly offset by the negative effect from fair value adjustments of derivatives.

Reduced costs and increased digitalisation
Operating expenses were reduced by 2.6 per cent or NOK 142 million from the second quarter of 2015.

“The first half of the year was characterised by an acceleration in the digitalisation of DNB. Thus far this year, we have closed down 59 branch offices parallel to achieving higher home mortgage volumes. In addition, the number of downloads of the payment app Vipps now exceeds two million – an incredible figure. Both these facts show that Norwegian bank customers are global frontrunners when it comes to adopting new digital services,” says Bjerke.

Vipps is now being launched as a means of payment in shops and online stores. In addition, Vipps has been introduced as a payment option for public transport in the RuterBillett app and has been taken into use by thousands of sports clubs and associations.

Increase in estimated impairment losses for 2016
Impairment losses on loans and guarantees totalled NOK 2 321 million, rising by NOK 1 654 million from the second quarter of 2015. There was an increase in both individual and collective impairment losses on loans, reflecting a challenging situation for a number of oil-related companies.

“We are maintaining our guiding that total impairment losses for 2016, 2017 and 2018 will be below
NOK 18 billion. We have previously stated that total impairment losses will be below NOK 6 billion in 2016. The way things look now, however, the level of impairment will probably be higher, as some of the losses related to the downturn in the petroleum industry are materialising earlier than we expected,” says Bjerke.

DNB is continuing to work closely with customers who are affected by the oil price collapse. A number of these companies are operating under challenging market conditions, but DNB is still not experiencing any material secondary effects in the Norwegian economy.

Key figures for the second quarter of 2016
• Pre-tax operating profits were NOK 5.8 billion (6.8)
• Profit for the period was NOK 4.6 billion (5.1)
• Earnings per share were NOK 2.74 (3.04)
• Return on equity was 9.9 per cent (12.1)
• The cost/income ratio was 39.9 per cent (42.8)
• The common equity Tier 1 capital ratio (transitional rules) was 15.2 per cent (13.0)

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

About Us

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.