Feb. 9 (Bloomberg) -- DNB ASA rose the most in almost three years after fourth-quarter profit at the Nordic region’s second-largest bank fell less than analysts estimated.
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.
DNB rose as much as 10.4 percent, the biggest gain since June 2009, and traded 8 percent higher at 69.30 kroner as of 3:21 p.m. in Oslo. The bank’s shares have risen 18 percent this year, erasing much of 2011’s 29 percent loss.
DNB has managed to contain a drop in profits even as the bank faces a slowing economy in Norway and pressure on lending from a slump in the shipping market. The International Monetary Fund said this month the Nordic country’s exports may suffer amid a weaker global outlook. At the same time, the financial regulator wants to tighten 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.
“We have growth opportunities both inside and outside Norway and the industries we target are growing in almost all regions,” Chief Executive Officer Rune Bjerke said today in an interview. “So for DNB it’s a question of our own capacity and willingness to grow.”
The company expects its loan book to grow about 5 percent this year, down from 9.3 percent in 2011, Bjerke said. The bank also reduced its reliance on funding markets in the quarter as deposits grew 15.3 percent to make up 57.8 percent of lending, it said.
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 equity 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.
It cut its proposed dividend to 2 kroner from 4 kroner last year because of tougher capital rules.
“DNB is working to be ready meet the new capitalization and liquidity requirements,” it said. “Until the new and stricter regulations are introduced, the group’s funding activities will reflect a gradual adaptation to regulations.”
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.
“Though writedowns have increased somewhat compared with the corresponding period last year, they remain at a low level,” said Bjerke. Impairments rose to 926 million kroner from 529 million kroner a year earlier, the bank said. The bank’s writedowns this year “are expected to be on level with 2011,” he said.
The bank had said loan losses on “large corporates” increased 126 million kroner, primarily from loans to Nordic and shipping companies. DNB was the lead arranger of syndicated marine loans in 2011, according to TradeWinds, citing data from Dealogic.
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