DNB Capital Buffers Increase as First-Quarter Profit Soars 73%

DNB ASA, Norway’s largest bank, said capital buffers increased in the first quarter after profit jumped 73 percent amid a decline in loan losses.

Net income rose to 5.52 billion kroner ($934 million) from 3.18 billion kroner a year earlier, beating the average 4.78 billion-krone estimate of 13 analysts surveyed by Bloomberg. Loan losses slumped 89 percent, the Oslo-based bank said in a statement today. DNB’s common equity Tier 1 capital ratio, according to transitional rules, rose to 11.9 percent at the end of March from 10.6 percent a year earlier.

DNB targets a return on equity of 12 percent by 2016 and a common equity Tier 1 ratio of 13.5 percent to 14 percent under Basel III rules by that year and has been cutting costs to reach its goals. It reported a return on equity of 15.5 percent in the first quarter and had a common equity Tier 1 capital ratio of 14.2 percent under Basel III rules, it said today.

“The strong profits contribute significantly to enabling the group to satisfy the regulatory capital requirements,” Chief Executive Officer Rune Bjerke said in the statement. “We are thus one step closer to reaching our capital adequacy target for 2016.”

Loan losses fell to 80 million kroner from 737 million kroner. The “most pronounced reductions stemmed from the shipping segments and the Baltics and Poland,” DNB said. Net interest income rose 12 percent to 7.69 billion kroner “mainly due to increasing lending spreads,” the bank said.

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