Low interest rates contribute to revenues falling in the major bank in the third quarter, but loan losses also declined. Profit before tax shrank by NOK 690 million.
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DNB reports lower interest income and smaller profits in the third quarter.
The major bank achieved a profit before tax of NOK 6.93 billion in the third quarter, down from NOK 7.62 billion in the same period last year, the quarterly report shows on Thursday.
Low interest rates
Net interest income fell to NOK 9.3 billion from NOK 9.98 billion in the third quarter last year. The decline is due to low interest rates here at home and internationally, writes DNB.
– The low interest rate level affects all banks, including DNB, says CEO Kjerstin Braathen in a press release.
– Even though some are still struggling, there are also many who have opened
the doors and are back at work. The record low interest rate has given retail customers increased purchasing power, which at the same time creates opportunities and growth for a large part of our corporate customers, she says.
Analysts who, according to the bank, had anticipated that profits would shrink. According to estimates collected by Infront, they expected a profit of 5.83 billion before tax.
Increased commission income
DNB’s fee and commission income, on the other hand, increased in the quarter, to NOK 3.3 billion from NOK 3.28 billion at the same time last year.
– We see that the activity of customers is high in areas such as fund savings,
capital raising and real estate. We at DNB also benefit from this through increased revenues, says Braathen.
The corona situation has affected the banks, especially earlier this year.
In the first quarter, DNB set aside NOK 5.8 billion for future loan losses. In the second quarter, provisions were significantly lower, NOK 2.1 billion.
In the third quarter, the bank set aside NOK 776 million for losses.
Most of the loan losses are related to the crisis-hit offshore industry.
– The situation is still demanding in parts of the oil-related industry. Oil, gas and offshore account for more than 60 percent of the group’s loss provisions so far this year, the bank writes.