DnB NOR: Sound underlying rise in income

DnB NOR recorded profits of NOK 1 760 million in the third quarter of 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 This press release is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). This press release does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States. The Securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”). The Securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the Securities Act. There will be no public offer of securities in the United States. The quarterly report, presentation and Supplementary Information for Investors and Analysts can be downloaded from www.dnbnor.com

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