DNB Bank (DNB) Q4 2023 earnings summary

Executive summary

• FY2023 profit was NOK 39.5bn, up 18.1% YoY; ROE was 15.9% versus 14.7% in 2022.

• Q4 profit was NOK 9.4bn and ROE was 14.6%; results benefited from higher rates and a diversified fee platform.

• FY total income reached NOK 81.7bn, while capital remained solid and the loan portfolio robust.

Financial highlights

• FY total income was NOK 81.7bn versus NOK 66.1bn in 2022; net interest income rose to NOK 61.5bn from NOK 48.3bn.

• FY net interest income grew 27.4% and commissions and fees rose 7.6% to NOK 11.1bn, an all-time high.

• Q4 total income was NOK 19.988bn; NII was NOK 15.997bn, up 1.8% QoQ, and Q4 net commissions and fees increased 8.1% YoY.

• Q4 pre-tax operating profit was NOK 11.366bn; profit for the period was NOK 9.403bn, including NOK 9.019bn attributable to shareholders.

• FY operating expenses were NOK 28.6bn and impairment expense was NOK 2.65bn; Q4 expenses were NOK 7.703bn and impairment provisions NOK 920m.

Outlook and guidance

• ROE target remains above 13%; longer-term targets include organic loan growth of 3–4%, annual commission and fee growth of 4–5%, and cost/income below 40%.

• Repricing announced after the December 2023 policy-rate increase was due to take effect at end-February 2024, providing a positive NII tailwind.

• Economists forecast mainland GDP growth of 0.6% in 2024 and 1.4% in 2025; the policy rate was expected to stay at 4.5% until September and fall to 3.25% by end-2025.

• FY2024 wholesale funding was expected to be NOK 100bn, tilted toward covered bonds and senior preferred issuance.

• Wage growth was forecast at 5.1% in 2024; IT efficiency, automation, Sbanken integration savings and KYC improvements were intended to offset cost pressures.