Q4 RESULTS DNB GROUP FOURTH QUARTER 2014 Rune Bjerke (CEO) Bjørn Erik Næss (CFO) Full year 2014 Pre-tax operating profit before impairment in NOK billion 28.7 (24.7) Cost/income ratio in per cent 41.9 (45.7) Return on equity in per cent 13.8 (13.1) Earnings per share 12.67 (10.75) Common equity Tier 1 capital ratio in per cent (transitional rules) 12.7 (11.8) Proposed dividend in NOK 3.80 (2.70) Figures in parentheses refer to 2013 2 05.02.2015 Profit figures last five years Pre-tax operating profit before impairment NOK million Pre-tax operating profit before impairment excl. basis swaps NOK million 28 689 26 107 24 744 21 081 21 833 2010 2011 20 957 2012 20 514 2013 2014 2010 Profit for the period 28 295 22 643 18 802 2011 2012 2013 2014 Profit for the period excl. basis swaps NOK million NOK million 20 617 18 493 17 511 14 062 2010 12 979 13 792 2011 2012 20 329 15 006 13 653 10 796 2013 3 2014 2010 2011 2012 2013 2014 05.02.2015 Return on equity and cost/income ratio last five years Return on equity Return on equity excl. basis swaps Per cent Per cent 13.6 11.4 11.7 13.1 13.8 13.2 12.7 13.9 13.6 2013 2014 9.5 2010 47.6 2010 2011 2012 2013 2014 2010 2011 2012 Cost/income ratio Cost/income ratio excl. basis swaps Per cent Per cent 47.1 2011 49.1 2012 45.7 2013 4 48.3 50.8 47.2 41.9 2014 2010 2011 2012 44.4 42.2 2013 2014 05.02.2015 Earnings and dividend per share last five years Earnings per share Dividend per share NOK NOK 12.67 10.75 8.66 8.48 7.98 4.00 3.80 2.70 2010 2011 2012 2013 5 2014 2010 2.00 2.10 2011 2012 2013 2014 05.02.2015 Customer segments NOK million Full year 2014 Pre-tax operating profit after impairment Full year 2013 10 914 9 795 9 342 8 586 3 343 Personal customers 3 551 Small and mediumsized enterprises 6 Large corporates and international customers 05.02.2015 Profit figures per quarter Pre-tax operating profit before impairment NOK million Pre-tax operating profit before impairment excl. basis swaps NOK million 6 750 4Q13 7 377 1Q14 7 626 6 722 2Q14 3Q14 6 964 4Q14 7 570 7 973 6 689 4Q13 Profit for the period 1Q14 2Q14 7 177 6 456 3Q14 4Q14 Profit for the period excl. basis swaps NOK million NOK million 5 700 6 290 5 620 5 478 4 553 4Q13 1Q14 2Q14 3Q14 7 5 913 4 965 4Q14 5 292 4 594 4 529 4Q13 1Q14 2Q14 3Q14 4Q14 05.02.2015 Return on equity and cost/income ratio per quarter 16.3 Return on equity Return on equity excl. basis swaps Per cent Per cent 18.0 15.4 1Q14 2Q14 14.0 12.6 12.4 4Q13 16.6 14.8 3Q14 4Q14 12.3 4Q13 1Q14 2Q14 11.7 3Q14 4Q14 Cost/income ratio Cost/income ratio excl. basis swaps Per cent Per cent 40.4 41.3 4Q13 1Q14 43.8 2Q14 40.4 42.2 3Q14 4Q14 8 37.9 39.4 4Q13 1Q14 43.9 41.8 2Q14 3Q14 44.1 4Q14 05.02.2015 Development in loans NOK billion 1 439 1 357 1 341 1 298 1 307 1 298 31 Dec.12 31 March 13 30 June 13 30 Sept. 13 Loans at end of period 9 31 Dec.13 31 March 14 30 June 14 30 Sept. 14 31 Dec.14 Loans adjusted for exchange rate movements 05.02.2015 Development in deposits – adjusted for short-term money market investments NOK billion 914 854 850 797 832 797 31 Dec.12 31 March 13 30 June 13 30 Sept. 13 31 Dec.13 31 March 14 30 June 14 30 Sept. 14 31 Dec.14 Deposits adjusted for short-term money market investments Deposits adjusted for short-term money market investments and exchange rate movements 10 05.02.2015 Development in average interest rate spreads Per cent 2.18 2.21 1.22 1.20 (0.27) (0.30) 4Q12 1Q13 2.32 2.42 2.42 2.39 1.30 1.25 1.27 (0.29) (0.30) (0.29) (0.27) 3Q13 4Q13 1Q14 2Q14 1.28 1.29 (0.24) 2Q13 2.42 11 2.31 2.32 Lending spread 1.25 1.27 Combined spread - weighted average (0.17) (0.15) Deposit spread 3Q14 4Q14 05.02.2015 Development in commissions and fees last six years NOK million + 6% growth 7 901 7 891 2010 2011 7 429 2009 8 096 2012 8 445 1) 2013 8 969 2014 Sale of insurance products Money transfer and banking services Asset management and custodial services Investment banking services Real estate broking Net commissions and fees 1) Figures for 2013 are exclusive of Svensk Fastighetsförmedling AB, which represented NOK 92 million. 12 05.02.2015 Income statement Amounts in NOK million 4Q14 3Q14 2Q14 1Q14 4Q13 Full year 2014 Net interest income Net commissions and fees 8 700 8 228 7 867 7 691 7 940 32 487 30 192 2 313 2 229 2 242 2 185 2 147 8 969 8 537 279 185 1 817 136 1 132 183 2 089 105 1 342 365 5 317 609 5 032 1 021 Net insurance result, DNB Skadeforsikring Other operating income Net other operating income, total Total income 129 446 3 352 12 052 121 256 4 560 12 788 139 391 4 087 11 954 102 397 4 877 12 569 122 343 4 318 12 258 491 1 490 418 1 420 16 877 49 363 16 427 46 619 Operating expenses Restructuring costs and non-recurring effects 5 045 42 5 088 74 5 150 5 168 24 5 163 20 452 20 186 223 682 0 0 0 0 0 0 6 964 42 821 7 626 13 6 722 (3) 0 0 7 377 0 0 557 6 750 153 0 0 28 689 52 450 557 24 744 151 554 6 165 1 600 80 7 297 36 6 868 1 639 27 102 2 185 22 709 1 236 183 7 456 1 828 16 4 965 (8) 5 620 (11) 4 553 1 799 (19) 5 478 1 177 9 5 700 6 463 (22) 20 617 5 202 4 Net gains on financial instruments at fair value Net financial and risk result, DNB Livsforsikring Expenses relating to debt-financed structured products Impairment losses for goodwill and intangible assets Pre-tax operating profit before impairment Net gains on fixed and intangible assets Impairment of loans and guarantees Pre-tax operating profit Tax expense 6 184 Profit from operations held for sale, after taxes Profit for the period 13 83 (212) Full year 2013 17 511 05.02.2015 Net gains on financial instruments Change Amounts in NOK million Net gains on financial instruments at fair value 4Q14 279 3Q14 1 817 4Q13 1 342 508 449 (819) - - 705 1 368 1 456 549 454 459 Trading in foreign exchange/fixed income/equities in DNB Markets 94 408 446 Changes in credit spreads on bonds in DNB Markets (196) 200 120 Minor adjustments in valuation models (242) 67 - The bank's own equity investments (146) (38) 69 Other mark-to-market adjustments (incl. CVA/DVA) (287) 277 362 Basis swaps Valuation of the investment in Nets Net gains on financial instruments at fair value, excl basis swap Customer revenues in DNB Markets 14 (229) 4Q14 3Q14 4Q14 4Q13 (1 597) (1 685) 05.02.2015 Changes in net interest income From 3rd quarter 2014 to 4th quarter 2014 NOK million 101 144 92 50 (22) Lending and deposit spreads Other net interest income Longterm funding 8 700 108 8 228 3Q14 Exchange rate movements Lending and deposit volumes 15 Interest rate instruments 4Q14 05.02.2015 Changes in net other operating income From 3rd quarter 2014 to 4th quarter 2014 NOK million 4 560 106 91 84 59 48 (1 597) 3 352 3Q14 Net gains on investment property Other operating income 16 Net commissions and fees Basis swaps Net financial and risk result from DNB Livsforsikring Net gains on other financial instruments 4Q14 05.02.2015 Changes in operating expenses per quarter Amounts in NOK million Total adjusted operating expenses 4Q14 5 045 Income-related costs Ordinary depreciation on operational leasing 19 Expenses directly related to operations IT expenses Performance-based pay Properties and premises Marketing Other costs Non-recurring effects 86 (102) (81) (33) (6) 42 Restructuring costs - employees Other restructuring costs and non-recurring effects Impairment losses for goodwill and capitalised systems development Reversal of provisions IT restructuring Operating expenses 17 Change (117) Change in 4Q13 per cent 5 163 (2.3) 86 (40) 0 (73) 70 5 088 (303) 345 45 57 (557) 83 70 (420) 41 (97) 557 (157) 0 5 508 (7.6) 05.02.2015 Changes in operating expenses per year Amounts in NOK million Total adjusted operating expenses Full year 2014 20 452 Income-related costs Ordinary depreciation on operational leasing 92 Expenses directly related to operations IT expenses External distribution channels Other costs Non-recurring effects 200 88 (114) 223 Restructuring costs - employees Other restructuring costs and non-recurring effects Provisions for debt-financed structured products Impairment losses for goodwill and capitalised systems development Reversal of provisions IT restructuring Operating expenses 18 Change 266 Full year Change in 2013 per cent 20 186 1.3 239 (13) 0 0 (73) 70 20 675 (1 467) 1 690 (359) (253) (450) (557) 83 70 (1 201) 598 240 450 557 (157) 0 21 875 (5.5) 05.02.2015 Impairment of loans and guarantees Full year 2014 Full year 2013 4Q14 3Q14 2Q14 1Q14 4Q13 (63) 56 (5) 61 50 (16) 66 72 (141) 78 89 33 56 36 37 132 (129) 261 458 167 162 73 207 861 77 284 564 484 333 166 (21) 5 1 1 879 11 (3) 86 (116) 5 39 1 267 284 97 (17) 152 (2) 53 1 502 209 (56) 56 152 24 31 3 332 (43) 67 86 (271) (17) 93 (3) 236 987 370 291 166 31 124 5 1 980 1 391 136 228 500 52 471 4 2 318 DNB excl. Baltics, Russia and Poland Baltics, Russia and Poland (49) (79) 71 (227) (171) (284) (13) (9) (5) (19) (25) (29) (58) (119) Total collective impairment of loans Impairment of loans and guarantees (58) 821 (84) 183 52 554 (252) 80 (200) 36 (341) 1 639 (133) 2 185 Amounts in NOK million Individual impairment: Personal customers - Mortgage loans - Consumer finance Small and medium-sized enterprises Large corporates and international customers - Nordic Corporates Division - International Corporates Divison - Shipping, Offshore and Logistics Division - Energy Division - Baltics, Russia and Poland - Other units Total individual impairment 361 Collective impairment: 19 05.02.2015 Impairment in per cent of loans Per cent Total impairment in relation to average volumes (annual basis) - DNB excl. Baltics and Poland - Baltics and Poland 20 4Q14 3Q14 2Q14 1Q14 4Q13 Full year 2014 Full year 2013 0.23 0.05 0.16 0.02 0.01 0.12 0.17 0.24 0.04 0.16 0.02 (0.01) 0.12 0.14 (0.05) 0.24 0.25 0.03 0.44 0.11 0.65 05.02.2015 Net non-performing and net doubtful loans and guarantees 1) Per cent 1.71 1.55 1.71 1.50 1.50 1.70 1.48 1.38 1.19 1.39 1.37 1.05 1.10 1.16 19.1 18.4 0.91 23.3 NOK billion 19.5 19.7 22.9 31 Dec. 31 Dec. 31 Dec. 2009 2010 2011 2012 31 March 0.96 0.81 0.78 0.80 20.7 19.9 16.4 31 Dec. 1.01 1.10 1.10 0.88 1.05 30 June 30 Sept. 31 Dec. 31 March 14.9 30 June 2013 1) Includes non-performing commitments and commitments subject to individual impairment. Accumulated individual impairment is deducted. 17.3 16.1 30 Sept. 31 Dec. 2014 Baltics and Poland DNB Group excl. Baltics and Pola nd As a percentage of net loans As a percentage of net loans excl. Baltics and Poland 21 05.02.2015 Balance sheets DNB Group DNB Bank ASA 31 Dec. 2014 31 Dec. 2013 31 Dec. 2014 31 Dec. 2013 59 373 1 439 779 2 649 167 181 1 341 717 2 406 54 608 723 613 1 998 163 399 680 583 1 826 Due to credit institutions Deposits from customers 214 942 234 868 269 903 281 849 Short-term debt securities issued Long-term debt securities issued 207 605 184 528 207 160 184 169 523 159 2 649 450 142 2 406 332 128 1 998 228 115 1 826 65.4 63.5 64.7 63.7 124.8 121.0 124.9 122.9 2 936 2 656 1 998 1 826 Amounts in NOK billion Deposits with central banks Due from credit institutions Loans to customers Other assets Total assets Other liabilities and provisions Equity Total liabilities and equity Ratio of deposits to net loans (%) Adjusted ratio of deposits to net loans (%) Total combined assets 1) Currency-adjusted loans to customers Currency-adjusted deposits from customers 1 391 686 900 865 1) Excluding short-term money market deposits 22 05.02.2015 Common equity Tier 1 capital ratio 1) Transitional rules Leverage ratio Per cent Per cent 11.9 11.8 12.1 31 Dec. 31 March 30 June 2013 2014 2014 12.6 12.7 5.3 30 Sept. 2014 31 Dec. 2014 31 Dec. 2013 Per cent 14.2 14.4 31 Dec. 31 March 30 June 2013 2014 2014 31 March 30 June 2014 2014 5.7 30 Sept. 2014 6.0 31 Dec. 2014 Estimate applying average weights used by Swedish banks 2) Future Basel III estimate 13.6 5.1 5.3 Per cent 15.0 15.1 16.3 30 Sept. 2014 31 Dec. 2014 31 Dec. 2013 17.5 17.3 31 March 30 June 2014 2014 18.0 18.3 30 Sept. 2014 31 Dec. 2014 1) Common equity Tier 1 capital includes 50 per cent of interim profits in all quarters, apart from the Leverage Ratio figures. Annual figures are exclusive of dividend payments 2) Average weights used by Swedish banks on corporate loans and loans secured by real estate 23 05.02.2015 Change in common equity Tier 1 capital ratio Per cent From 31 December 2013 to 31 December 2014 0.29 0.08 (0.29) (0.43) 1.27 12.68 11.76 Common equity Tier 1 capital ratio as at 31 Dec. 2013 Increase in Tier 1 capital Regulatory changes 24 Other effects Volume growth Increased volume from Common equity Tier 1 exchange rate capital ratio as at 31 movements Dec. 2014 05.02.2015 Financial ambitions – 2016 and 2017 Return on equity > 12 per cent Min. 14% CET1 ratio 1) > 50% dividend as capital plateau when capital plateau is reached 1) Based on transitional rules 25 05.02.2015 The financial ambitions stay firm Lending volumes expected to grow at an annual rate of around 3-4 per cent, subject to stable exchange rates Stable development in volume-weighted spreads Commissions and fees – underlying growth of 5 per cent Flat nominal costs throughout 2015 (excluding restructuring costs) Impairment expected to stay below normalised levels 1) in 2015 1) Normalised levels are around 20 bps of EaD (exposure at default), which corresponds to losses of approx. NOK 4 billion. 26 05.02.2015
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