Q3 2024 Dnb Bank ASA Earnings Call Transcript
Key Points
- DNB Bank ASA (DNBBF) reported a strong return on equity of 18.9% for the quarter, indicating robust profitability.
- Net interest income increased by 2% from the previous quarter, driven by lending growth and increased activity.
- The bank experienced strong loan growth across all customer segments, with notable growth in the large corporate segment at 4.7%.
- Net commission and fees rose by 11.1% compared to the same quarter last year, marking an all-time high for the third quarter.
- Solid asset quality was maintained with impairment provisions totaling NOK170 million, and a core Tier 1 capital ratio of 19% was reported.
- Deposit volumes decreased by 4.1%, influenced by seasonal effects and reductions in low-margin, short-term deposits.
- The bank missed consensus expectations on costs, despite efforts to reduce IT consultant spend and a planned reduction of 500 staff.
- There is uncertainty regarding the potential increase in risk weight floors, which could impact capital distribution decisions.
- The bank is facing inflationary pressures and significant wage growth, which could affect cost efficiency.
- Interest rate cuts are expected to have a negative impact on net interest income as rates are anticipated to decrease starting in March 2025.
(audio in progress)
And inflation levels have come down gradually, but are still at higher levels than what Norwegian Central Bank's long-term targets say.
Wage growth is expected to come in at 5.2% this year, and then gradually come down over the following years to 3.3% in 2027. Due to the strong Norwegian economy and the low unemployment levels, as well as how well the households as well as corporates are upholding, the key policy rate remains unchanged at 4.5% and is expected to remain at this level until March 2025, after which rates are expected to gradually move downwards to 2.75% at year-end 2027.
This quarter, there is a strong performance across the board in the bank. We see strong development and activity levels in all customer segments. Return on equity at 18.9% in the quarter, with a strong activity around the bank; 18% adjusted for a one-off gain from Fremtind/Eika merger, but still then at very high levels.
Net interest income, up 2% from the last quarter, driven by lending growth and increased
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