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Norway's DNB trounces quarterly forecast as appetite for loans grows

Greta Rosen Fondahn
Updated ·2 min read
FILE PHOTO: A DNB bank sign is seen on the bank's branch in Stavanger

By Greta Rosen Fondahn

(Reuters) -Norway's largest bank DNB reported a bigger-than-expected jump in second-quarter earnings on Thursday, and also forecast loan growth to pick up in the second half of 2024, supported by a stable Norwegian economy.

"Increasing wages and more stable interest rates have helped shift the mood among our customers," CEO Kjerstin Braathen said in a statement.

Shares in DNB rose 5% in early trade after the lender's net interest income and income from fees and commissions also topped expectations.

DNB saw an increase in mortgage applications during the quarter, Braathen said, adding that the company expects its loan growth to pick up somewhat in the second half of the year, after a muted first half.

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Its April-June quarterly net profit rose 13.4% to 10.77 billion crowns ($1.01 billion) from a year earlier. Analysts had expected 9.59 billion crowns on average, a poll compiled by the bank showed.

J.P.Morgan said in a note that better-than-expected income from fees helped boost DNB's quarterly profit, with fees from investment banking growing 60% year-on-year. However, this could be volatile going forward, it added.

Overall income from fees and commissions rose 22% to 3.44 billion crowns in the quarter, driven by high activity from customers raising money in the bond market, DNB said.

Net interest income, which reflects income from lending and deposits, grew by nearly 4% to 15.82 billion crowns.

While high interest rates have boosted profit at Nordic banks over the past two years, loan losses have also risen. Some central banks in the region have recently started to ease their monetary policy, dampening lenders' earnings outlook.

Norway's central bank has said it expects to make the first rate cut in 2025, pushing back its earlier prediction for a September cut, with policy rates standing at 16-year highs of 4.50%.

($1 = 10.7034 Norwegian crowns)

(Reporting by Greta Rosen Fondahn in Gdansk; Editing by Milla Nissi and Sherry Jacob-Phillips)