DNB Bank (DNB) Q3 2021 earnings summary

Executive summary

• Q3 profit was NOK 6.883bn, up NOK 1.337bn YoY; ROE was 11.4%, supported by stronger income, lower expenses QoQ and NOK 200m net impairment reversals.

• Norway’s reopening, higher economic activity and improved credit quality supported the strongest Q3 to date.

Financial highlights

• Total income was NOK 14.343bn, up 7% YoY; net interest income reached NOK 9.766bn, up NOK 468m YoY and 3.8% QoQ.

• Profit for the period was NOK 6.883bn versus NOK 5.546bn in Q3 2020; EPS was NOK 4.29, up 25.8% YoY.

• Operating expenses were NOK 5.752bn, down NOK 286m QoQ; lower pension, IT and variable-pay costs contributed to the decline.

• Net commissions and fees were NOK 2.448bn, up 3.2% YoY; total other operating income was NOK 4.577bn.

• Net impairment reversals were NOK 200m, versus NOK 776m in provisions a year earlier; mortgage portfolio losses were NOK 25m.

Outlook and guidance

• Customer repricing of up to 25bps from mid-November is expected to add NOK 1.5bn annually to net interest income; this reflects announced pricing changes, not rate-hike sensitivity.

• The ROE target remains above 12% for 2021–2023, though it is unlikely to be reached in 2021; annual lending growth target is 3%–4%.

• 2021–2023 ambitions include annual net commission and fee growth of 4%–5% and a cost/income ratio below 40%; no specific cost guidance was given.

• Norges Bank forecast six further rate hikes; customer loan and deposit repricing requires eight weeks’ notice.

• The Banking Package was expected to take effect in H1 2022, with a slight net positive CET1 impact anticipated.