DNB Quarterly Profit Falls 24% as Loan Losses, Costs Increase

DNB ASA (DNB), the Nordic region’s second- largest bank, reported a 24 percent drop in fourth-quarter profit after loan losses and costs swelled.

Net income fell to 4.09 billion kroner ($713 million) from 5.35 billion kroner a year earlier, Oslo-based DNB said in a statement today. That beat the 3.57 billion-krone average estimate of 12 analysts surveyed by Bloomberg. Loan losses jumped to 926 million kroner from 529 million kroner.

“This was another quarter affected by financial turmoil,” Chief Executive Rune Bjerke said in the statement. “There was a high level of activity in the bank, with a close to 1.7 billion kroner rise in income.”

DNB faces slowing growth in Norway as the International Monetary Fund warns the Nordic country’s exports may suffer amid a weaker global outlook. At the same time, the financial regulator wants banks to target more rigorous lending standards to cool what Robert Shiller, the co-creator of the S&P/Case- Shiller home-price index, has dubbed Norway’s housing bubble.

Net interest income, the difference between what a bank earns from lending and what it pays on deposits, rose 10 percent to 6.79 billion kroner in the quarter. The lender said its core Tier 1 capital ratio, a key measure of financial strength, rose to 9.4 percent of its risk-weighted assets at the end of the quarter, from 9.2 percent a year earlier. Net loan losses rose to 926 million kroner from 529 million kroner.

Norway, the world’s seventh-largest oil exporter, has been shielded from the worst of Europe’s debt turmoil as its crude revenue generates surpluses and unemployment remains close to 3 percent. The central bank in December cut its benchmark interest rate by 50 basis points to 1.75 percent to protect exporters from the fallout of the debt crisis.

DNB shares, which slumped 29 percent last year, have gained 11 percent in 2012 as Europe’s lenders benefit from unlimited liquidity from the European Central Bank.

To contact the reporter on this story: Adam Ewing in Stockholm at aewing5@bloomberg.net;

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net

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