DNB Bank (DNB) Q3 2024 (Media) earnings summary

Executive summary

• Third quarter profit reached NOK 12.2 billion, up 19.9% year-over-year, with EPS at NOK 7.83 and annualised ROE at 18.9%, reflecting strong customer activity and a NOK 716 million insurance merger gain.

• Net interest income rose 2.6% year-over-year to NOK 16,129 million, with lending volumes up 1.6% and record fees and commissions, especially in asset management and investment banking.

• Operating expenses increased 8.4% year-over-year to NOK 7,431 million, mainly due to higher personnel costs, but fell 1% sequentially; cost-income ratio at 32.5%.

• Impairment of financial instruments dropped to NOK 170 million from NOK 937 million a year earlier.

• DNB announced the acquisition of Carnegie Group for SEK 12 billion, expected to close in H1 2025 and reduce CET1 by 120 basis points upon closing.

Financial highlights

• Net interest margin increased by 1 basis point to 190 bps; customer segment spreads down 1 bp due to higher money market rates and competition.

• Net commissions and fees reached NOK 3,038 million, up 11.1% year-over-year; investment banking services up 19.1%, asset management up 27.6%.

• Net other operating income rose to NOK 6,722 million, up NOK 1,470 million year-over-year, with a NOK 716 million non-recurring gain from the Fremtind/Eika merger.

• Operating expenses were NOK 7,431 million, up NOK 574 million year-over-year, but down NOK 74 million sequentially.

• Profit for the period was NOK 12,160 million, with EPS of NOK 7.83 and annualised ROE of 18.9%.

Outlook and guidance

• Macroeconomic outlook remains positive, with expectations of a soft landing for the Norwegian economy and loan growth target at 3–4%.

• DNB targets ROE above 13%, with net commissions/fees to grow 4–5% per year over time.

• Cost/income ratio to be maintained below 40%; long-term tax rate expected at 23%, but 2024 tax rate estimated at 20%.

• CET1 capital ratio target set above 16.8% plus headroom; dividend policy unchanged with payout ratio above 50% and annual nominal dividend growth ambition.

• Unemployment remains low at 2%, with a slight increase expected but peaking at 2.3% in 2026; inflation above target but decreasing.