DNB Fourth-Quarter Profit Falls as Shipping Loan Losses Increase

DNB ASA, Norway’s largest bank, said profit in the fourth quarter fell 7 percent after loan losses at its shipping unit rose amid a slump in the maritime industry.

Net income dropped to 3.81 billion kroner ($693 million) from 4.09 billion kroner a year earlier, the Oslo-based bank said in a statement today. That beat the 3.32 billion-krone average estimate of 15 analysts surveyed by Bloomberg. Loan impairments rose 29 percent to 1.19 billion kroner.

The global shipping industry is struggling because of an overcapacity of ships and declining demand. DNB is the world’s second-largest shipping bank, setting the lender apart from Swedish rivals, which all have reported profit gains. Svenska Handelsbanken AB, Swedbank AB and SEB AB -- the best capitalized major banks in the European Union -- and Nordea Bank AB all also raised their 2012 dividends because of rising capital.

“There was a certain rise in impairment within both retail banking and the large corporate segments, with a significant increase within shipping,” DNB said. “Record-low freight rates in the tanker, dry bulk and container segments put pressure on shipping companies’ earnings and liquidity. Lower portfolio quality must be expected in these segments in the future.”

The increase in loan losses at DNB’s shipping unit followed a more than a 17-fold increase in the third quarter, when DNB forecast credit impairments at its shipping division would reach 1 billion kroner to 1.5 billion kroner this year.

DNB proposed a dividend of 2.1 kroner per share for 2012, or 25 percent of its earnings per share and an increase of 5 percent from 2011.

The board “has taken the new regulatory capital adequacy requirements into account while focusing on conducting a consistent long-term dividend policy,” DNB said.

Swedbank targets an 87 percent dividend increase to 9.9 kronor a share while SEB is raising its payment by 57 percent to 2.75 kronor a share. Nordea stepped up its proposed payout for last year by 31 percent to 0.34 euro. Handelsbanken proposed increasing it by 10 percent to 10.75 kronor.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net

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

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