DNB Bank (DNB) Q2 2024 (Media) earnings summary

Executive summary

• Return on equity reached 16.6% for the quarter, exceeding the 13% target, driven by strong profitability and robust economic activity across the group.

• Earnings per share were NOK 6.83 for the quarter, with profit for the period at NOK 10,766 million, up 13.8% year-over-year.

• Net interest income grew by 3.8% year-over-year and 1.9% sequentially, while net commissions and fees reached an all-time high, up 22% year-over-year.

• CET1 capital ratio stood at 19.0% at end-June, providing a solid buffer above regulatory requirements.

• Share buyback program of 1% initiated in June, impacting CET1 capital ratio.

Financial highlights

• Q2 net interest income: NOK 15,817 million (+3.8% YoY); net commissions and fees up 22% YoY, reaching an all-time high.

• Operating expenses in Q2: NOK 7,505 million (+6.0% YoY), mainly due to higher personnel and IT costs.

• Pre-tax operating profit before impairment was NOK 14,067 million, up NOK 953 million from 1Q24.

• Cost/income ratio stood at 34.8%, improved from 35.1% in 1Q24.

• Customer deposits to net loans ratio at 77.1% at end-June.

Outlook and guidance

• Expectation of increased activity in the second half of the year, supported by a strong Norwegian economy, real wage growth, and positive market sentiment.

• Loan growth for 2024 may fall slightly below the 3-4% long-term target, but commission and fee growth remains robust.

• Cost/income ratio expected to stay below 40%; CET1 capital ratio target set above 16.9%, with actual Q2 at 19.0%.

• Dividend policy unchanged: payout ratio above 50% and ambition to increase nominal dividend per share annually.

• Markets expect the first policy rate cut in March 2025, with growth in the mainland economy projected to pick up.