05/02/2025 - DnB Bank ASA: Quarterly Report DNB Group 4Q24

Directors' report

The Norwegian economy remained resilient in the fourth quarter of 2024, with a capacity utilisation close to normal levels. The inflationary pressure continued to ease during the quarter and is now closer to the target level of 2.0 per cent. These were important factors in the decision of the Norwegian central bank, Norges Bank, to keep the key policy rate unchanged at its monetary policy meeting in December. The first lowering of the key policy rate is still expected in March 2025.

DNB's results in the fourth quarter were solid, driven by strong deliveries across the Group. The capital situation remained sound, and the portfolio well-diversified and robust.

Fourth quarter financial performance

The Group delivered profits of NOK 12 675 million in the quarter, an increase of NOK 3 271 million, or 34.8 per cent, from the corresponding quarter of last year. Compared with the third quarter of 2024, profits increased by NOK 515 million or 4.2 per cent.

Earnings per share were NOK 8.21, compared with NOK 5.93 in the year-earlier period, and NOK 7.83 in the third quarter.

The common equity Tier 1 (CET1) capital ratio was 19.4 per cent at end-December, up from 18.2 per cent a year earlier and from 19.0 per cent in the previous quarter.

The leverage ratio was 6.9 per cent at end-December, up from

6.8 per cent in the year-earlier period and from 6.3 per cent at end- September.

Annualised return on equity (ROE) was 19.0 per cent in the fourth quarter, driven by strong results across the Group. The corresponding figures were 14.6 per cent in the fourth quarter of 2023, and 18.9 per cent in the third quarter of 2024.

The Board of Directors will propose to the Annual General Meeting a dividend for 2024 of NOK 16.75 per share, or a total of NOK 24 835 million.

Net interest income was up NOK 721 million, or 4.5 per cent, from the fourth quarter of 2023, due to profitable volume growth. Compared with the previous quarter, net interest income increased by NOK 589 million, or 3.7 per cent. The increase was driven by lending growth in all segments.

Net other operating income amounted to NOK 4 998 million, up NOK 1 006 million, or 25.2 per cent, from the corresponding period in 2023. Net commissions and fees reached an all-time high fourth quarter result, with strong deliveries across product areas, and increased by NOK 360 million and 249 million, compared with the same quarter of last year and the previous quarter, respectively. Compared with the previous quarter, net other operating income decreased by NOK 1 724 million, or 25.7 per cent, mainly due to negative effects on basis swaps and other mark-to-market adjustments.

Operating expenses amounted to NOK 8 227 million in the fourth quarter, up NOK 524 million, or 6.8 per cent, from the corre- sponding period a year earlier. Compared with the previous quarter, operating expenses were up NOK 795 million, or 10.7 per cent, due to restructuring expenses and seasonally higher activity.

Impairment of financial instruments amounted to NOK 157 million in the fourth quarter.

Sustainability

In the fourth quarter of 2024, DNB signed an agreement with the European Investment Bank (EIB) that will channel NOK 2.2 billion to green financing activities for Nordic businesses. This is the first agreement of its kind in the Nordics. The capital will primarily support the transition to zero-emissions technology for vehicles, construction machinery and other transport technology.

Towards the end of the year, DNB announced a strategic

partnership with HUB Ocean, a foundation focused on advancing

ocean data solutions in order to strengthen sustainable practices within ocean industries. This collaboration aims to support DNB's commitment to sustainable growth, focusing on the shipping, seafood and renewable energy sectors by applying data-driven insight.

The fourth quarter of 2024 marked a strong period for the sustainable bond market, and DNB Markets saw a record number of transactions and overall volume on par with last year. There was also a return of momentum in the sustainability-linked loan market after an almost two-year decline.

In the fourth quarter of 2024, DNB Asset Management (DAM) updated its expectations document on climate change and launched a new expectations document on health and sustainable food systems. DAM also launched targets for biodiversity towards the end of the year.

To increase the level of sustainability competence in DNB, over 85 per cent of employees in the corporate banking segment (large corporates and international customers and corporate customers Norway) and all employees in DAM achieved third-party sustainability certification before the year ended. A competence- building programme for corporate banking and the commercial real estate sector was launched in the fourth quarter of 2024. Topics included energy efficiency, energy performance certificates and how to assess customers' transition risk in the credit process.

As of 31 December, DNB had mobilised a cumulative total of NOK 752 billion to the sustainable transition, through lending and facilitation, thereby passing the halfway mark to reaching the target of NOK 1 500 billion by 2030. With regards to the target of NOK 200 billion in assets in mutual funds and portfolios with a sustainability profile by 2025, NOK 138 billion had been invested as of

31 December.

Other events in the fourth quarter

In December, the Norwegian payment service provider Vipps launched its mobile payment solution Tap with Vipps. At the same time, DNB started offering Apple Pay to all of its customers.

In November, the Norwegian Supreme Court gave DNB unanimous support in the case regarding the deduction of external interest expenses in Norwegian taxation. The case represented a tax exposure of approximately NOK 1.7 billion for the period covered by the decision.

DNB held its Capital Markets Day in London in November. During the event, the Group presented its updated strategy and changed some of its financial targets, raising the ROE target from above 13 to above 14 per cent and the ambition for net commission and fee income from 4-5 per cent to above 9 per cent.

In the fourth quarter, DNB's mobile banking app came in second place in Cicero Consulting's ranking of Norway's best mobile banking apps.

DNB Markets was ranked first in the categories Corporate Finance, ECM Advisors and M&A Advisors in the Kantar Prospera survey, which was published in the fourth quarter of 2024. In addition, Markets was given the top ranking in Domestic Equity for the tenth year running, which is the longest winning streak for any bank in the Nordics.

DNB achieved a score of 57 in Traction's reputation survey for the fourth quarter. The goal is a score of over 65.

Acquisition of the Carnegie Group

On 21 October, DNB Bank ASA entered into an agreement to acquire all the shares of Carnegie Holding AB, the parent company of the Carnegie Group.

The purchase price is expected to be approximately SEK 12 billion payable in cash consideration. The purchase price is subject

to certain adjustments, including payment for the shares of the minority shareholders in the subsidiaries of Carnegie Holding AB. The transaction is expected to close in the first half of 2025, provided the necessary regulatory approvals are obtained from the authorities in relevant jurisdictions. The transaction is expected to reduce DNB's CET1 capital ratio by approximately 120 basis points upon closing.

Fourth quarter income statement - main items

Net interest income

Amounts in NOK million	4Q24	3Q24	4Q23
Lending spreads, customer segments	8 104	7 760	7 179
Deposit spreads, customer segments	3 705	3 855	4 680
Amortisation effects and fees	1 393	1 211	1 150
Operational leasing	753	791	791
Contributions to the deposit guarantee
and resolution funds	(328)	(327)	(308)
Other net interest income	3 092	2 839	2 504
Net interest income	16 718	16 129	15 997

Net interest income increased by NOK 721 million, or 4.5 per cent, from the fourth quarter of 2023. This was mainly due to profitable volume growth. There was an average increase of NOK 56.7 billion, or 3.0 per cent, in the healthy loan portfolio compared with the fourth quarter of 2023. Adjusted for exchange rate effects, volumes were up NOK 49.2 billion, or 2.6 per cent. During the same period, deposits were up NOK 15.6 billion, or 1.1 per cent. Adjusted for exchange rate effects, deposits were up NOK 8.2 billion, or 0.6 per cent. Average lending spreads widened by 15 basis points, and average deposit spreads narrowed by 28 basis points compared with the fourth quarter of 2023. Volume-weighted spreads for the customer segments narrowed by 3 basis points.

Compared with the third quarter of 2024, net interest income increased by NOK 589 million, or 3.7 per cent, driven by lending growth in all segments. There was an average increase of NOK

52.5 billion, or 2.8 per cent, in the healthy loan portfolio, and deposits remained at the same level. Average lending spreads widened by 3 basis points, and average deposit spreads narrowed by 4 basis points compared with the previous quarter. Volume- weighted spreads for the customer segments remained stable.

Net other operating income

Amounts in NOK million	4Q24	3Q24	4Q23
Net commissions and fees	3 287	3 038	2 927
Basis swaps	(836)	(194)	(500)
Exchange rate effects related to additional
Tier 1 capital	982	(19)	(392)
Net gains on other financial instruments
at fair value	226	1 873	730
Net insurance result	467	318	326
Net profit from associated companies	256	1 016	274
Other operating income	616	690	626
Net other operating income	4 998	6 722	3 991

Net other operating income increased by NOK 1 006 million, or

1. per cent, compared with the fourth quarter of 2023. This was mainly due to a positive exchange rate effect related to additional Tier 1 (AT1) capital. Net commissions and fees reached an all-time high fourth quarter result, and increased by NOK 360 million, or
2. per cent. The increase was mainly driven by solid income from investment banking and asset management services.
   Compared with the previous quarter, net other operating income decreased by NOK 1 724 million, or 25.7 per cent, mainly due to negative exchange rate effects on basis swaps and other mark-to- market adjustments. However, this was partly offset by strong results from net commissions and fees which increased by NOK 250 million, or 8.2 per cent. In addition, the third quarter included a

positive non-recurring effect from the merger between Eika and Fremtind.

Operating expenses

Amounts in NOK million	4Q24	3Q24	4Q23
Salaries and other personnel expenses	(4 555)	(4 399)	(4 413)
Restructuring expenses	(427)	(0)	(15)
Other expenses	(2 334)	(2 123)	(2 298)
Depreciation of fixed and intangible assets	(903)	(910)	(929)
Impairment of fixed and intangible assets	(8)		(49)
Total operating expenses	(8 227)	(7 431)	(7 703)

Operating expenses were up NOK 524 million, or 6.8 per cent, compared with the fourth quarter of 2023. This was mainly due to costs relating to a restructuring process within the Group's staff and support functions.

Compared with the third quarter, operating expenses were up NOK 795 million, or 10.7 per cent, reflecting the restructuring within staff and support, as well as higher activity. There were lower pension expenses in the quarter, due to the decreased return on the closed defined-benefit pension scheme. The scheme is partly hedged, and a corresponding loss was recognised in net gains on financial instruments

The cost/income ratio was 37.9 per cent in the fourth quarter.

Impairment of financial instruments by industry segment

Amounts in NOK million	4Q24	3Q24	4Q23
Personal customers	(79)	(44)	(117)
Commercial real estate	42	9	(122)
Residential property	33	(93)	(67)
Power and renewables	(1)	6	(88)
Oil, gas and offshore	144	137	(45)
Other	(295)	(185)	(482)
Total impairment of financial instruments	(157)	(170)	(920)

Impairment of financial instruments amounted to NOK 157 million in the quarter.

Impairment provisions in the personal customers industry segment amounted to NOK 79 million, primarily in stage 3 and driven by consumer finance.

The corporate customers industry segments saw impairment provisions of NOK 77 million. Excluding the legacy portfolio in Poland, which increased by NOK 268 million, the corporate customers segment showed reversals of NOK 191 million. The corresponding quarter of 2023 saw impairment provisions of NOK 804 million, whereas impairment provisions in the previous quarter were NOK 126 million. The reversals in the quarter could primarily be seen within stage 3 in the oil, gas and offshore segment, mainly due to reversals and recoveries relating to a few specific customers. The real estate-related segments also showed reversals across all stages.

The macro forecasts remained relatively stable during the quarter and did not have a significant impact on the portfolio.

The Group's loan portfolio remained robust, with 99.3 per cent in stages 1 and 2. Net stage 3 loans and financial commitments amounted to NOK 21.2 billion at end-December 2024, which was a decrease of NOK 0.2 billion from the previous quarter and a decrease of NOK 1.7 billion from the corresponding period of 2023.

Taxes in the quarter

The DNB Group's tax expense for the fourth quarter is estimated at NOK 765 million, or 6 per cent of the pre-tax operating profit. The tax expense was mainly affected by the estimated debt interest distribution between the US and Norway in Norwegian taxation, which resulted in a higher interest deduction in Norway, an increase in tax-exempt income as well higher as non-deductible expenses compared with the estimated forecast in the previous quarters.

Financial performance - segments

Financial governance in DNB is adapted to the different customer segments. Reported figures reflect total sales of products and services to the relevant segments.

Personal customers

Income statement in NOK million	4Q24	3Q24	4Q23
Net interest income	5 525	5 580	5 703
Net other operating income	1 439	1 600	1 186
Total income	6 964	7 180	6 889
Operating expenses	(2 645)	(2 781)	(2 911)
Pre-tax operating profit before impairment	4 319	4 399	3 978
Net gains on fixed and intangible assets	(1)
Impairment of financial instruments	(55)	(34)	(149)
Pre-tax operating profit	4 263	4 365	3 829
Tax expense	(1 066)	(1 091)	(957)
Profit for the period	3 197	3 274	2 872
Average balance sheet items in NOK billion
Loans to customers	953.8	943.1	957.6
Deposits from customers	582.3	582.3	582.4
Key figures in per cent
Lending spreads1	1.00	0.98	0.74
Deposit spreads1	1.72	1.82	2.21
Return on allocated capital	20.7	21.1	18.5
Cost/income ratio	38.0	38.7	42.2
Ratio of deposits to loans	61.0	61.7	60.8

1 Calculated relative to the corresponding money market rate. See ir.dnb.no for additional information on alternative performance measures (APMs).

The personal customers segment delivered strong profits and an increase in return on allocated capital of 2.2 percentage points from the corresponding quarter of last year. Compared with the previous quarter, return on allocated capital decreased by 0.4 percentage point.

Average loans to customers remained relatively stable compared with the fourth quarter of 2023. Compared with the previous quarter, average loans increased by 1.1 per cent. Average deposits from customers were stable compared with both the corresponding period of 2023 and the previous quarter. Combined spreads on loans and deposits narrowed by 2 basis points both from the fourth quarter of 2023 and 3 basis points from the previous quarter.

Net other operating income increased by 21.3 per cent from the corresponding quarter of 2023, mainly due to a positive development in income from long-term saving products as well as real estate broking activities. Compared with the previous quarter, there was a seasonal decrease of 10.1 per cent.

There was a positive development in operating expenses, with a decrease of 9.1 per cent from the fourth quarter of 2023 and 4.9 per cent from the previous quarter. Restructuring expenses relating to the downsizing in staff and support functions amounted to NOK 80 million in the quarter.

Impairment provisions amounted to NOK 55 million in the personal customers segment in the quarter, compared with impairment provisions of NOK 149 million and NOK 34 million in the corresponding quarter of 2023 and the third quarter of 2024, respectively. The impairment provisions were mainly in stage 3 and driven by consumer finance. The macro effect on the impairment provisions for the quarter was insignificant. Overall, the credit portfolio remained robust.

DNB's market share of credit to households in Norway was 22.9 per cent at end-November 2024. The market share of total household savings was 28.9 per cent at the same point in time, while the market share of savings in mutual funds amounted to

33.6 per cent at end-December. DNB Eiendom had a market share of 13.6 per cent in the fourth quarter.

Corporate customers Norway

Income statement in NOK million	4Q24	3Q24	4Q23
Net interest income	5 057	4 889	4 936
Net other operating income	1 058	1 113	964
Total income	6 115	6 002	5 900
Operating expenses	(1 819)	(1 755)	(1 581)
Pre-tax operating profit before impairment	4 296	4 247	4 320
Impairment of financial instruments	(45)	(148)	(418)
Profit from repossessed operations	(19)	(6)
Pre-tax operating profit	4 232	4 094	3 902
Tax expense	(1 058)	(1 023)	(975)
Profit for the period	3 174	3 070	2 926
Average balance sheet items in NOK billion
Loans to customers	531.2	523.2	518.6
Deposits from customers	390.8	390.1	352.3
Key figures in per cent
Lending spreads1	2.20	2.18	2.23
Deposit spreads1	1.13	1.15	1.33
Return on allocated capital	23.5	24.5	23.2
Cost/income ratio	29.8	29.2	26.8
Ratio of deposits to loans	73.6	74.6	67.9

The corporate customers Norway segment delivered solid profits and a return on allocated capital of 23.5 per cent in the fourth quarter. The result was mainly driven by sound volume growth and was primarily due to an increase in net interest income.

Net interest income increased by NOK 121 million, or 2.4 per cent, from the fourth quarter of last year, and NOK 167 million, or

1. per cent, from the third quarter of 2024. Average loans to customers were up 2.4 per cent compared with the corresponding quarter of last year and 1.5 per cent from the previous quarter. Lending spreads narrowed by 3 basis points compared with the corresponding quarter of last year. Compared with the previous quarter, lending spreads widened by 2 basis points. This was due to DNB Finans. Average deposit volumes were up NOK 38.5 billion, or

1. per cent, compared with the corresponding quarter of 2023. Compared with the previous quarter, deposit volumes were down

1. per cent. This can be ascribed to normal fluctuations. Deposit spreads narrowed through the year, and were 2 basis points lower than the previous quarter. The ratio of deposits to loans remained at a high level of 73.6 per cent in the quarter.
   Net other operating income amounted to NOK 1 058 million in the fourth quarter, an increase of NOK 94 million, or 9.8 per cent, from the corresponding quarter of 2023, and a decrease of NOK 55 million, or 4.9 per cent, compared with the previous quarter.
   Operating expenses amounted to NOK 1 819 million in the fourth quarter, up NOK 239 million, or 15.1 per cent, compared with the corresponding quarter of last year. Compared with the previous quarter, operating expenses were up NOK 64 million, or 3.7 per cent, mainly due to restructuring expenses as a consequence of the downsizing process.
   Impairment of financial instrument amounted to NOK 45 million in the quarter. This was a decrease from both the corresponding quarter in 2023 and the previous quarter of NOK 373 million and NOK 103 million, respectively. The impairments were spread over various industries and could primarily be seen in stage 3.
   DNB will continue to build on its market-leading position in the corporate customers Norway segment. In line with DNB's net-zero emissions ambition, which is embedded into key sectoral strategies, the Group is assisting its customers in their transition to a low- carbon economy and more sustainable value creation, and has a strong focus on energy efficiency in its property portfolios.

Large corporates and international customers

Income statement in NOK million	4Q24	3Q24	4Q23
Net interest income	5 044	4 690	4 906
Net other operating income	2 421	1 878	2 161
Total income	7 465	6 569	7 066
Operating expenses	(2 949)	(2 685)	(2 769)
Pre-tax operating profit before impairment	4 516	3 883	4 298
Net gains on fixed and intangible assets	1	0	0
Impairment of financial instruments	(58)	11	(352)
Profit from repossessed operations	147	(52)	(111)
Pre-tax operating profit	4 606	3 843	3 835
Tax expense	(1 152)	(961)	(959)
Profit for the period	3 455	2 882	2 876
Average balance sheet items in NOK billion
Loans to customers	491.8	460.3	445.6
Deposits from customers	475.4	472.1	492.2
Key figures in per cent
Lending spreads1	2.33	2.31	2.30
Deposit spreads1	0.12	0.10	0.25
Return on allocated capital	22.1	18.3	18.9
Cost/income ratio	39.5	40.9	39.2
Ratio of deposits to loans	96.7	102.6	110.5

1 Calculated relative to the corresponding money market rate. See ir.dnb.no for additional information on alternative performance measures (APMs).

The return on allocated capital in the fourth quarter in the large corporates and international customers segment was 22.1 per cent. The result was affected by solid net interest income and other operating income.

Net interest income increased by NOK 138 million, or 2.8 per cent, compared with the corresponding quarter of last year. Compared with the previous quarter, net interest income increased by NOK 353 million, or 7.5 per cent. Average loans to customers were up 10.4 per cent and 6.8 per cent from the corresponding quarter of 2023 and the third quarter of 2024, respectively. Lending spreads in the fourth quarter widened by 2 basis points compared with the corresponding quarter of 2023. Compared with the previous quarter, lending spreads widened by 1 basis point. Average deposit volumes were down 3.4 per cent compared with the corresponding quarter of 2023. Compared with the third quarter of 2024, deposit volumes increased by 0.7 per cent. Deposit spreads increased by 2 basis points from the previous quarter. The ratio of deposits to loans decreased to 96.7 per cent, but this development has been expected for some time.

Net other operating income amounted to NOK 2 421 million in the fourth quarter, which is an increase of 12.1 per cent compared with the fourth quarter of 2023. The increase in net other operating income from the previous quarter was linked to higher income from Markets activities. Total income for the quarter ended at NOK 7 465 million.

Operating expenses amounted to NOK 2 949 million in the fourth quarter, up NOK 264 million, or 9.8 per cent, from the previous quarter.

Impairment of financial instruments amounted to NOK 58 million in the quarter. Excluding the legacy portfolio in Poland, there were net reversals of NOK 210 million. The previous quarter saw net reversals of NOK 11 million, while the corresponding quarter in 2023 showed impairment provisions of NOK 352 million. The reversals could be seen in all three stages, but primarily in stage 3, relating to a few specific customers spread across various industry segments.

DNB is well positioned for continued profitable growth in the large corporates and international customers segment. The segment has embedded DNB's net-zero emissions ambition into key sectoral strategies, and through a wide range of advisory services and sustainable finance products, the Group is assisting its customers in their transition to a low-carbon economy and more sustainable value creation.

Other operations

This segment includes the results from risk management in DNB Markets and from traditional pension products with a guaranteed rate of return. In addition, the other operations segment includes Group items not allocated to the customer segments.

Income statement in NOK million	4Q24	3Q24	4Q23
Net interest income	1 093	969	452
Net other operating income	348	2 462	(592)
Total income	1 441	3 431	(140)
Operating expenses	(1 082)	(542)	(171)
Pre-tax operating profit before impairment	359	2 889	(310)
Net gains on fixed and intangible assets	2	0	(0)
Impairment of financial instruments	1	1	(1)
Profit from repossessed operations	(128)	58	111
Pre-tax operating profit	233	2 949	(200)
Tax expense	2 510	25	1 067
Profit from operations held for sale, after taxes	106	(40)	(138)
Profit for the period	2 849	2 934	729
Average balance sheet items in NOK billion
Loans to customers	192.2	126.1	108.4
Deposits from customers	183.7	177.9	53.1

The profit for the other operations segment was NOK 2 849 million in the fourth quarter.

Risk management income improved in the quarter, reaching NOK 552 million, which was an increase of NOK 305 million compared with the corresponding quarter of last year. The main contributor to the increased income was interest rate and bond trading. In addition, lower counterparty risk (XVA) had a positive impact on the income for the quarter.

The pre-tax operating profit for guaranteed pension products was NOK 451 million, compared with NOK 442 million in the fourth quarter of 2023. The contractual service margin release was somewhat higher in the fourth quarter of 2024 due to increased interest rates, and the return on the company portfolio was slightly lower than in the same period of 2023. The solvency margin without transitional rules was 262 per cent as of 31 December, an increase from 259 per cent at the end of the third quarter, mainly due to higher interest rates and a volatility adjustment. In December, DNB Livsforsikring made a capital repayment of NOK 1.5 billion to DNB Bank ASA. In addition, the Board of Directors will propose a dividend for the financial year 2024 of NOK 1.5 billion to be paid in the first quarter of 2025. Total dividends in the fourth quarter caused a reduction in the solvency margin of 15 percentage points. At the current interest rate level, the transitional rules for technical insurance provisions have no effect, and the solvency margins with and without transitional rules are equal.

DNB's share of the profit in associated companies (most

importantly Luminor, Vipps and Fremtind) is included in this seg- ment. There was a decrease in profit from these companies of NOK 21 million compared with the fourth quarter of 2023, and of NOK 758 million compared with the previous quarter. The decrease from the third quarter can mainly be ascribed to a non-recurring positive effect from the merger between Fremtind and Eika which was recognised in the third quarter.

Full year 2024

DNB recorded profits of NOK 45 804 million in 2024, up NOK

6 325 million, or 16.0 per cent, from 2023. Return on equity was

1. per cent, compared with 15.9 per cent in the year-earlier period, and earnings per share were NOK 29.34, up from NOK 24.83 in 2023.
   Net interest income increased by NOK 2 643 million from 2023, driven by widened combined spreads and higher interest on equity.
   Net other operating income increased by NOK 2 196 million, or 10.9 per cent. Net commissions and fees showed a strong development in 2024 and increased by NOK 1 351 million, or

1. per cent. This was mainly due to money transfer and banking and investment banking services, as well as all-time high levels in asset management services.
   Total operating expenses were up NOK 1 827 million from 2023, due to higher activity and restructuring expenses.
   Impairment of financial instruments totalled NOK 1 209 million in 2024. Impairment provisions of NOK 345 million and NOK 863 million could be seen in the personal customers and corporate customers industry segments, respectively. The impairment provisions in the corporate customers segments were spread across various industry segments. The impairment provisions were partly curtailed by net reversals within the oil, gas and offshore industry segment.

Income statement for 2024 - main items

Net interest income

Amounts in NOK million	2024	2023
Lending spreads, customer segments	31 289	27 261
Deposit spreads, customer segments	15 505	18 925
Amortisation effects and fees	4 799	4 327
Operational leasing	3 137	2 993
Resolution fund fee and deposit
guarantee fund levy	(1 371)	(1 259)
Other net interest income	10 832	9 300
Net interest income	64 190	61 547

Net interest income increased by NOK 2 643 million, or 4.3 per cent from 2023, mainly due to widened combined spreads and higher interest on equity. There was an average increase in the healthy loan portfolio of NOK 21.4 billion, or 1.1 per cent, from

2023. In the same period, there was an increase of NOK 4.4 billion, or 0.3 per cent, in average deposit volumes. Combined spreads widened by 1 basis point compared with the year-earlier period. Average lending spreads for the customer segments widened by

20 basis points, and average deposit spreads narrowed by 24 basis points.

Net other operating income

Amounts in NOK million	2024	2023
Net commissions and fees	12 466	11 115
Basis swaps	(1 559)	(612)
Exchange rate effects related to additional
Tier 1 capital	1 427	332
Net gains on other financial instruments
at fair value	4 357	5 563
Net insurance result	1 421	1 183
Net profit from associated companies	1 719	449
Other operating income	2 516	2 120
Net other operating income	22 347	20 150

Net other operating income increased by NOK 2 196 million, or

10.9 per cent, compared with 2023. This was mainly due to positive exchange rate effects related to AT1 capital as well as solid results from net commissions and fees, which showed a strong development and increased by NOK 1 351 million, or 12.2 per cent,

in 2024. The increase in net commissions and fees was driven by solid performance across product areas, particularly within investment banking and asset management services, with asset management services reaching an all-time high. However, this was partly offset by negative exchange rate effects relating to basis swaps. In addition, there was a positive non-recurring effect in the third quarter from associated companies relating to the merger between Eika and Fremtind.

Operating expenses

Amounts in NOK million	2024	2023
Salaries and other personnel expenses	(17 521)	(16 278)
Restructuring expenses	(440)	(42)
Other expenses	(8 893)	(8 506)
Depreciation of fixed and intangible assets	(3 618)	(3 613)
Impairment of fixed and intangible assets	25	(181)
Operating expenses	(30 448)	(28 620)

Total operating expenses were up NOK 1 827 million, or 6.4 per cent in 2024, reflecting higher activity and restructuring expenses relating to the downsizing within the Group's staff and support functions, as well higher personnel expenses.

The cost/income ratio was 35.2 per cent in 2024.

Impairment of financial instruments by industry segment

Amounts in NOK million	2024	2023
Personal customers	(345)	(276)
Commercial real estate	(25)	(241)
Residential property	(169)	(200)
Power and renewables	(33)	(292)
Oil, gas and offshore	247	905
Other	(883)	(2 545)
Total impairment of financial instruments	(1 209)	(2 649)

Impairment of financial instruments totalled NOK 1 209 million in 2024.

Impairment provisions of NOK 345 million and NOK 863 million could be seen in the personal customers and corporate customers industry segments, respectively.

Impairment provisions in the personal customers industry segment were primarily in stage 3 and related to consumer finance. The mortgage portfolio remained stable throughout the year.

Impairment provisions in the corporate customers industry segments amounted to NOK 564 million, excluding the legacy portfolio in Poland. These could mainly be seen in stage 3, spread across various industries driven by customer-specific events, as well as object financing. The impairment provisions were partly curtailed by net reversals within the oil, gas and offshore segment relating to specific customers.

Net stage 3 loans and financial commitments decreased by NOK 2 billion during the year, totalling NOK 21 billion at end- December 2024. The decrease for the year can primarily be ascribed to specific customers in connection with restructuring.

Taxes for the full year 2024

The DNB Group's tax expense for the full year 2024 was NOK

9 074 million, or 17 per cent of the pre-tax operating profit. The tax expense was affected by the estimated debt interest distribution resulting in a higher interest deduction in Norway, an increase in tax-exempt income as well as higher non-deductible expenses compared with 2023. In 2024, the debt interest distribution resulted in an interest deduction in Norway which reduced the tax expense for the Group by NOK 3 690 million, compared with NOK

2 464 million in 2023.

Funding, liquidity and balance sheet

The bank's short-term funding programmes have been a reliable and stable source of funding for a long period of time. In the first half of 2024, interest rates in Europe were higher than they had been for some time. Combined with the expectation of a decline in interest rates, there was considerable interest from European investors. The outstanding volume under the European Commercial Paper / Certificates of Deposit (ECP/ECD) Programmes increased throughout the first half of the year, and for some time it was higher than the outstanding volume under the US Commercial Paper (USCP) Programme in the US. In the second half of the year, the outstanding volume under the USCP Programme increased, at the same time that the bank issued less funding under the European programmes. At the end of the year, the situation was more normalised, with the outstanding volume in USD being highest.

Access to short-term funding has been good throughout the

year, with USD remaining the most important currency. At the same time, the European market has proved to be a good source of short- term funding, which is positive for the diversification of DNB's short- term funding.

Developments in credit risk premiums for financial issuers were positive for most instrument types in 2024. However, the credit risk premiums for covered bonds stand out, as these premiums ended at a higher level than at the beginning of the year.

As usual, the volume of issues at the beginning of year was high, which led to marginally higher credit risk premiums. Strong macro figures from the leading economies, indicating continued high activity, contributed to lower credit risk premiums during the first quarter. The positive sentiment continued into the second quarter, with a further reduction in credit risk premiums. However, the situation deteriorated towards the end of the second quarter, as a result of increased political unrest in the EU, and President Macron's decision to call a snap election in France. The third quarter was characterised by quieter markets during the summer and stable developments in the credit risk premiums. In the early autumn, the markets weakened, mainly due to an increase in the key policy rate in Japan, which led to a reversal of financial positions that was financed through loans in JPY and weaker macro figures in the US. However, a surprisingly large 50-basis point cut in the key policy rate by the US Federal Reserve, along with somewhat improved macroeconomic figures at the end of the third quarter of 2024, helped improve the sentiment.

In the fourth quarter of 2024, the market's main focus was increased government bond yields in the EU, especially in Germany and France. The higher required rate of return for presumably safe European government bonds led to a substantial increase in covered bonds, but the positive trend for the credit risk premium for unsecured corporate bonds continued, resulting in a lower level at year-end than at the beginning of 2024.

DNB made issues in the SEK, JPY, NOK, EUR, USD and CHF markets totalling NOK 121 billion in 2024, compared with NOK

101 billion in 2023. In the fourth quarter of 2024, DNB issued long- term financing equivalent to NOK 33 billion. In 2024, new issues were mainly linked to covered bonds, which constituted about

60 per cent of the volume issued. The remaining volume was mainly issued in the form of senior unsecured debt, as well as additional Tier 1 capital (AT1/T2). The average maturity of new issues in 2024 was about 5 years.       

The total nominal value of long-term debt securities issued by the Group was NOK 533 billion at end-December, compared with NOK 506 billion a year earlier. The average remaining term to maturity for long-term debt securities issued was 3.6 years, at the same level a year earlier.

The short-term liquidity requirement, the Liquidity Coverage Ratio (LCR), remained stable at above 100 per cent throughout the year, and was 148 per cent at the end of 2024. The net long-term stable funding ratio (NSFR) was 113 per cent, which was well

above the minimum requirement of 100 per cent for stable and long-term funding.

Total combined assets in the DNB Group were NOK

4 350 billion at the end of December, up from NOK 4 035 billion a year earlier. Total assets in the Group's balance sheet were NOK 3 614 billion at end-December 2024, compared with NOK 3 440 billion at end-December 2023.

Loans to customers increased by NOK 254.2 billion, or 12.7 per cent, from the end of 2023 to the end of 2024. Customer deposits were up NOK 64.8 billion, or 4.6 per cent, during the same period. The ratio of customer deposits to net loans to customers was 74.3 per cent, down from 74.9 per cent a year earlier.

Capital position

The common equity Tier 1 (CET1) capital ratio was 19.4 per cent at year-end 2024, up from 18.2 per cent a year earlier and from 19.0 per cent at end-September. The CET1 ratio was positively impacted by retained earnings in the quarter, a net reversal relating to the proposed dividend payout ratio, repayment of excess capital from DNB Livsforsikring and a lower risk exposure amount relating to credit risk. These effects were partly offset by a redemption of AT1 capital and increased operational risk.

The CET1 capital ratio requirement for DNB at year-end 2024 was 15.3 per cent, while the expectation from the supervisory authorities was 16.6 per cent including Pillar 2 Guidance. The Group thus had a solid 2.8 percentage-point headroom above the current supervisory authorities' capital level expectation.

The risk exposure amount increased by NOK 11 billion from end-September and amounted to NOK 1 121 billion at year-end.

The leverage ratio was 6.9 per cent at year-end, up from 6.8 per cent in the year-earlier period, and from 6.3 per cent at end- September.

Capital adequacy

The capital adequacy regulations specify a minimum requirement for own funds based on a risk exposure amount that includes credit risk, market risk and operational risk. In addition to meeting the Pillar 1 minimum requirement, DNB must meet the Pillar 2 requirements and the combined buffer requirements under Pillar 1.

Capital and risk

	4Q24	3Q24	4Q23
CET1 capital ratio, per cent	19.4	19.0	18.2
Tier 1 capital ratio, per cent	21.2	20.9	20.0
Capital ratio, per cent	23.8	23.4	22.5
Risk exposure amount, NOK billion	1 121	1 110	1 100
Leverage ratio, per cent	6.9	6.3	6.8

As the DNB Group consists of both a credit institution and a life insurance company, DNB has to satisfy a cross-sectoral calculation test to demonstrate that it complies with sectoral requirements: the capital adequacy requirement, in accordance with the Capital Requirements Regulation / Capital Requirements Directive (CRR/CRD), and the Solvency II requirement. At the end ot 2024-, DNB complied with these requirements by a good margin, with excess capital of NOK 54.8 billion.

New regulatory framework

CRR III - Norwegian implementation

On 6 December, the Norwegian Ministry of Finance made certain changes to the Regulations on capital requirements and implementation of CRR/CRD (CRR/CRD Regulations) based on a proposal from Finanstilsynet (the Financial Supervisory Authority of Norway) on the implementation of the Capital Requirements Regulation III (CRR III) in Norway.

The Norwegian risk weight floors for exposures secured by real estate under the internal ratings-based (IRB) approach have been maintained, with some adjustments. For exposures secured by residential property, the requirement for the average risk weight has been increased, from 20 to 25 per cent. For exposures secured by commercial property, the requirement for an average risk weight of 35 per cent has been maintained.

In line with Finanstilsynet's proposal, the specific Norwegian loss given default (LGD) floor of 20 per cent has now been removed. The Norwegian requirement will therefore be in line with the CRR III, which entails a requirement for an average LGD value of at least 5 per cent for residential property and 10 per cent for commercial property. In addition, under the CRR III, the calculation will now be made at exposure level, rather than at portfolio level, as was the case previously.

The changes in the minimum requirement for average risk weight for IRB banks take effect on 1 July 2025.

Systemically important financial institutions

On 3 December, the Ministry of Finance decided that DNB Bank ASA, Kommunalbanken AS, Nordea Eiendomskreditt AS and Sparebank 1 Sør-Norge ASA (formerly Sparebank 1 SR-Bank ASA) will continue to be considered systemically important financial institutions in Norway. This decision was in line with the recommendation from Finanstilsynet.

According to the capital requirements regulations, national authorities must annually assess which institutions are to be classified as systemically important. Systemically important institutions are identified based on the criteria set out in Section 30 of the CRR/CRD Regulations.

The Ministry of Finance's decision means that DNB Bank ASA must continue to meet an Other Systemically Important Institution (O-SII) buffer requirement of 2 per cent, while Kommunalbanken AS, Nordea Eiendomskreditt AS and Sparebank 1 Sør-Norge ASA must continue to meet a requirement of 1 per cent.

Lending regulations

On 4 December, the Ministry of Finance adopted changes to the Norwegian Lending Regulations, in accordance with Section 1-7 of the Norwegian Financial Institutions Act. The Ministry decided to maintain most of the current requirements, but did make certain changes. The equity requirement for mortgages has been reduced from 15 to 10 per cent, which means that the maximum loan-to- value ratio has increased from 85 to 90 per cent. This change is in line with the consultation response from the Norwegian central bank, Norges Bank.

The Ministry emphasised that the Lending Regulations do not prevent banks from making individual assessments of the borrower's expenses and repayment capacity, especially for families with children, where economies of scale may be considered for large families. According to Section 5 of the Lending Regulations, the borrower must be able to withstand an interest rate increase of 3 percentage points or an interest rate of at least 7 per cent. For fixed-rate loans, the interest rate increase was previously calculated based on the amount outstanding at the end of the fixed-rate period according to the repayment schedule. Changes have been made so that the customer's expected income and expenses at the end of the fixed-rate period can be considered.

The expiry date for Section 19 of the Lending Regulations has been repealed. This means that the Lending Regulations have become 'permanent' and no longer need to be renewed periodically. However, the Ministry of Finance has stated that the regulations will still be assessed regularly. The changes took effect on 31 December 2024.

Countercyclical buffer kept unchanged

According to Section 34 of the CRR/CRD Regulations, Norges Bank is required to make a decision on the level of the countercyclical capital buffer rate for exposures in Norway each year. On 21 November, Norges Bank's Monetary Policy and Financial Stability Committee decided to maintain the countercyclical capital buffer requirement at 2.5 per cent.

The Committee pointed to the risk that vulnerabilities in the financial system could amplify an economic downturn in Norway, leading to bank losses. However, the Committee emphasised that the solvency stress test in the Financial Stability Report 2024 H1 showed that Norwegian banks are able to withstand substantial losses while continuing to lend, thereby not contributing to an economic downturn.

Macroeconomic developments

There was a clear upturn in the Norwegian economy in the third quarter of 2024. Mainland GDP increased by 0.4 and 0.3 per cent, respectively, during the first two quarters of 2024. Growth in the third quarter rose to 0.5 per cent. Adjusted for the volatile sectors power generation and fishing, the GDP for mainland companies remained virtually unchanged in the first and second quarters of 2024, but rose by about 1 per cent quarter-on-quarter in the third quarter. Despite weak growth in the first half of 2024, unemployment remained relatively stable. At the end of 2024, registered unemployment was 2.0 per cent, compared with 1.9 per cent in December 2023.

As in other countries, there was a pronounced decline in inflation in Norway in 2024. In December last year, annual growth in the consumer price index was 2.7 per cent, down from 4.8 per cent one year earlier. The high inflation in 2022 and 2023 contributed to a clear decline in real wages. Norges Bank raised the key policy rate to 4.5 per cent in December 2023 in order to counteract inflation. The central bank kept the rate unchanged in 2024, but signalled in December that it would probably be lowered in March 2025. The 3-month NIBOR was 4.68 per cent at the end of last year, 5 basis points lower than one year earlier. The stability in the money market rate is primarily due to the key policy rate remaining at a stable 4.5 per cent throughout the year. In addition, the structural liquidity in the money market was relatively high, which contributed to keeping the money market premiumin low and stable.

The increase in interest rates in 2022 and 2023 contributed to the weakening of Norwegian households' purchasing power. However, the large financial buffers of households after the pandemic, together with employment growth, helped support household demand. A high level of oil and gas investment has contributed to keeping activity up and has offset the decline in housing investment. The housing market has been supported by high immigration and public funding. These forces also dominated in 2024, while the decline in inflation and relatively high wage growth led to an increase in real wages of about 2 per cent.

The Norwegian krone, measured by the I-44 import-weighted index, moved laterally in 2024, but with large fluctuations. At the end of 2024, the import-weighted exchange rate was 5.2 per cent higher than one year earlier (weaker NOK). The value of the NOK has gone hand in hand with a relatively well-balanced economy, with low unemployment and normal capacity utilisation.