Supplementary information for Investors and Analysts
2001 (Preliminary and unaudited)
Investor Relations Chief Executive Officer Svein Aaser
For further information, please contact
Tom Grøndahl, Chief Financial Officer [email protected] +47 22482922 Per Sagbakken, Head of Investor Relations* [email protected] +47 22482072 Jan Erik Gjerland, Investor Relations [email protected] +47 22949969 Halfdan Bakøy, Group Financial Reporting [email protected] +47 22481071 Anne Johansen, Secretary, Investor Relations [email protected] +47 22481749
*Andrew Sayer until 1 March 2002
Address
DnB Holding ASA, Stranden 21, N-0021 Oslo Visiting address: Stranden 21, Aker Brygge, Oslo
e-mail Investor Relations: [email protected] Telefax Investor Relations: +47 22482035 DnB switchboard: +47 22481050
Information on the Internet
DnB’s Investor Relations page www.dnb.no/ir DnB’s home page www.dnb.no Hugin www.huginonline.no/DNB/
Financial calendar 2002
First quarter 3 May Second quarter 7August Third quarter 31 October
Annual general meeting 25 April Ex-dividend date 26 April Payment of dividend May Supplementary information year-end 2001
Contents
Page
1. DnB - an overview 1 Financial highlights...... 2 DnB - Norway's leading financial services group ...... 3 Debt ratings...... 3
2. Financial results DnB Group 5 Financial highlights...... 6 Profit and loss accounts...... 7 Net interest income...... 8 Operating income ...... 10 Profit from Vital ...... 12 Net commissions and fees on banking services...... 13 Net gain on financial instruments...... 14 Sundry operating income ...... 16 Operating expenses...... 17 Losses and reversals on loans and guarantees...... 20 Asset quality...... 21 Total assets owned or managed by the DnB Group ...... 22 Customer savings...... 24 Capital adequacy and Taxes...... 25 Financial results DnB Group...... 26 DnB Group 1997-2001...... 27
3. DnB Group and business areas 29 Group strategy...... 30 Legal structure...... 31 Group structure...... 32 Business areas...... 33 - Asset management and Life insurance...... 35 - Retail banking...... 42 - Corporate banking...... 44 - Capital markets ...... 51 Financial, payment and group services ...... 54 DnB on the Internet ...... 55 e-commerce initiatives...... 56
4. Shareholder information 57 Equity-related data ...... 58 Shareholder structure...... 59
5. The Norwegian economy 61
DnB Group Supplementary information year-end 2001
DnB Group
Section 1 DnB - an overview
DnB Group 1 Supplementary information year-end 2001 1. DnB - an overview
Financial highlights
Sound results in a demanding year
• Ordinary pre-tax operating profits before losses: NOK 5 196 million (5 012) • Annual profits: NOK 4 100 million (4 018) • Earnings per share: NOK 5.29 (5.16) • Return on equity: 15.8 per cent (17.0) • Total combined assets: NOK 460 billion (445) • Core capital ratio: 8.8 per cent (7.6) • Proposed dividend per share: NOK 2.40 (2.25)
(comparable figures for 2000 in parentheses)
2 DnB Group Supplementary information year-end 2001 1. DnB - an overview
DnB - Norway's leading financial services group
Asset management and life insurance As at 31 December 2001: • Total assets of Vital Forsikring and Vital Link NOK 72.0 billion • Assets in mutual funds and under discretionary NOK 37.5 billion management
Banking operations • Total assets NOK 358.0 billion • Gross lending NOK 279.1 billion • Customer deposits NOK 191.6 billion
Customer base • Serving more than 1.85 million retail customers throughout Norway with various levels of activity • More than 100 000 business customers • Some 640 000 individuals are insured through Vital • About 402 000 users of DnB´s electronic banking services
Distribution network • 126 domestic DnB branches, of which • About 430 post office counters 1) 58 fully automated and • About 600 post office in-store outlets 1) 11 regional centres (incl. Oslo) • About 2 400 rural postmen 1) • 6 international branches • 63 Postbanken Eiendomsmegling sales offices • 4 international representative offices (franchises) • 40 Postbanken sales outlets • 45 DnB Eiendom sales offices • Internet banking (all located in DnB branches) • Electronic banking • 20 Vital sales offices • Telephone banking • 27 Vital agent agreements • SMS/WAP banking • Online equities trading 1) Provided by Norway Post (the Norwegian postal system)
Agreement with Norway Post Den norske Bank ASA and Norway Post have a master agreement relating to the distribution of financial services through the postal network, which is effective until 31 December 2005. This agreement is an extension of the former agreement between Norway Post and Postbanken. The agreement is based on transaction-specific prices and a joint aim to increase the number of financial services distributed through the postal network.
Debt ratings from international rating agencies
Long term Short term Moody's A1 P1 Standard & Poor's A A1
DnB Group 3 Supplementary information year-end 2001 1. DnB - an overview
4 DnB Group
Section 2 Financial results DnB Group
DnB Group 5 Supplementary information year-end 2001 2. Financial results DnB Group
Financial highlights Key financials
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000
Pre-tax operating profit before losses (NOK million) 1 471 975 1 406 1 345 1 311 5 196 5 012 Pre-tax operating profit (NOK million) 1 224 496 1 514 1 453 1 393 4 687 5 248 Net profit for the period (NOK million) 903 372 1 676 1 149 1 161 4 100 4 018 Earnings per share (NOK) 1.17 0.48 2.16 1.48 1.49 5.29 5.16 Earnings per share ex. goodwill (NOK) 1.21 0.53 2.21 1.52 1.53 5.47 5.33 Return on equity (Per cent) 13.2 5.6 26.0 18.8 18.5 15.8 17.0 Combined assets (NOK billion) 460 465 483 463 445 460 445 Core capital ratio at end of period 1) (Per cent) 8.8 8.6 8.6 7.3 7.5 8.8 7.5
Group income including premium income (NOK million) 22 226 20 126
1) Including 50 per cent of profit for the period, except year-end figures
Combined assets
NOK billion 460 445 407
358 344 319 313 300 275 246 253 228 227
183 192 169 171 175
108 97
1) 1) 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 31 Dec. 2001
Deposits from customers Net lending to customers Total DnB Group assets Combined assets owned or managed
1) Figures up to the end of 1998 do not include Postbanken
6 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Profit and loss accounts Profit and loss accounts
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Net interest income 2 1582 0131 9591 8691 9287 9997 221 Net other ordinary operating income 1 403 949 1 456 1 488 1 601 5 296 5 736 Ordinary operating expenses 2 027 2 000 2 010 2 015 2 154 8 053 7 879 Ordinary operating profit 1 533 961 1 405 1 342 1 376 5 242 5 078 Gains on the sale of fixed assets 14 14 1 1 1 30 15 Other expenses 1) 77 0 0 (2) 65 75 81 Pre-tax operating profit before losses 1 471 975 1 406 1 345 1 311 5 196 5 012 Net losses/(reversals) on loans etc. 245 128 (101) (94) (85) 178 (241) Net gain/(loss) on long-term securities (1) (351) 714 (3) (332) (5) Pre-tax operating profit 1 224 496 1 514 1 453 1 393 4 687 5 248 Taxes 321 124 (162) 304 232 587 1 230 Profit for the period 903 372 1 676 1 149 1 161 4 100 4 018
1) Allocations to the DnB Employees Fund, restructuring, and losses on fixed assets
Pre-tax operating profit before losses
NOK million 1 471 1 428 1 406 1 311
1 008
975 808 757
581
264
1) 1) 1) 1) 1) 1) 1) 1Q98 2Q98 3Q98 4Q98 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01
1) Pro forma figures
DnB Group 7 Supplementary information year-end 2001 2. Financial results DnB Group
Net interest income Net interest income
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Net interest income 2 1582 0131 9591 8691 9287 9997 221
Changes in net interest income
Amounts in NOK million 2001 Change 2000 Net interest income 7 999 777 7 221
Of which: Loan volumes 308 Deposits volumes 86 Loan margins 185 Deposits margins (371) Equity capital and hybrid capital 359 Income from interest rate instruments 272 Other (61)
8 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Development in average interest rate spread
Development in volumes
DnB Group 9 Supplementary information year-end 2001 2. Financial results DnB Group
Operating income Net other operating income
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Dividends 3 3 51 2 11 60 242 Net profit from Vital 304 (254) 100 88 81 238 345 Net commissions and fees 718 640 683 669 798 2 710 3 113 Net gain on foreign exchange and financial instruments 245 116 463 344 559 1 168 1 517 Sundry operating income 132 444 159 385 152 1 120 519 Net other ordinary operating income 1 403 949 1 456 1 488 1 601 5 296 5 736 Gains on the sale of fixed assets 14141113015 Net other operating income 1 417 962 1 457 1 489 1 602 5 325 5 751
As a percentage of total income 39.6 32.4 42.6 44.3 45.4 40.0 44.3 Unrecorded gains on short-term 1) equities at end of period 0 0 96 117 302 0 302
1) The investment in Storebrand was reclassified as a long-term investment in the third quarter
Changes in net other operating income
2001 Change 2000 NOK million Net other operating income 5 325 (426) 5 751 Of which Reduced income from stock market activities: - Reduced income on secondary market share trading (113) - Reduced income from Vital (107) (310) - Reduced income on fund management (82) - Reduced income on own share investments (8) Income from dividends and sale of shares in Christiania Bank in 2000 (400) Gains on the outsourcing of IT operating services 299 Gains on the sale of Postbanken's Clearing House 230 Reduced income from payment transactions (257) Other income items 12
10 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Operating income
NOK million 13 324 12 972 12 021 2 710 3 113 10 410 10 040 2 617 1 168 2 307 2 295 1 517 40 % 1 256 44 % 1 447 590 41 % 36 % 387 35 % 1 067 1 121 871 878
7 999 7 221 6 642 6 480 7 081 64 % 65 % 59 % 56 % 60 %
19971) 19981) 19991) 2000 2001
Net commissions and fees on banking services Net gain on foreign exchange and financial instruments Other operating income Net interest income 1) Pro forma figures
Interest rate risk sensitivity
The table below shows potential losses for DnB resulting from parallel one percentage point change in all interest rates. The calculations are based on a hypothetical situation where interest rate movements in all currencies are unfavourable for DnB relative to the Group`s positions. Also, all interest rate movements within the same time bracket will be unfavourable for the Group. In the trading portfolio, such losses will be charged to the accounts as they occur. In the banking portfolio, the losses will be amortised over the remaining maturity. The calculations are based on the Group`s positions as at 31 December 2001 and market rates on the same date. From From From Up to Over 1 month 3 months 1 year Total 1 month 5 years Amounts in NOK million to 3 months to 1 year to 5 years Trading portfolio NOK 4 3 34 18 39 32 USD 0 3 58 48 1 8 EURO 1 1 6 1 6 2 GBP 0 2 1 1 0 4 Other currencies 1 3 9 3 0 11 Banking portfolio NOK 0 6 49 3 37 88 Total NOK 5 9 15 15 76 120 USD 0 3 58 48 1 8 EURO 1 1 6 1 6 2 GBP 0 2 1 1 0 4 Other currencies 1 3 9 3 0 11
The table does not include adminstrative interest rate risk and interest rate risk relating to non-interest-earning assets
DnB Group 11 Supplementary information year-end 2001 2. Financial results DnB Group
Profit from Vital Extract of the accounts of Vital Forsikring
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Premium income 998 1 382 1 681 3 721 1 160 7 782 5 440 Income from financial assets 2 053 2 551 3 296 3 304 2 301 11 204 9 925 Insurance settlements 1 017 925 890 1 120 993 3 952 4 103 Increase in insurance provisions 373 875 1 257 3 025 1 232 5 530 3 724 Insurance-related operating expenses 175 164 140 149 164 628 556 Expenses related to financial assets (655) 5 362 1 826 3 952 2 860 10 485 7 368 From/ (to) securities adjustment reserve (52) 987 (235) 2 000 1 677 2 700 2 153 Other income/(expenses) (42) (16) 1 (26) (13) (83) (69) Profit before allocation to policyholders, equity and taxes 2 047 (2 422) 630 753 (124) 1 008 1 698 Allocated to policyholders 695 (1 115) 490 627 (222) 697 1 231 Taxes 73 (122) 17 15 (7) (17) 37 Allocated to equity 1 279 (1 186) 124 111 106 328 430 Return on assets, annualised (%) 17.6 (10.3) 7.9 9.1 7.9 5.6 8.4 Value-adjusted return on assets, 1) annualised (%) 18.0 (15.5) 9.4 (3.9) (3.3) 1.3 4.2
Amounts at end of period Total assets 67 760 64 648 67 406 65 592 63 674 67 760 63 674 2) Policyholders funds 61 858 60 381 61 664 59 419 58 269 61 858 58 269 - of which 75 per cent of securities adjustment reserve 40 0 740 564 2 064 40 2 064 3) Buffer capital 7 445 5 755 8 778 8 241 9 450 7 445 9 450
Vital profit reconciliation (Vital Forsikring and Vital Link)
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Estimated profit in Vital Forsikring, after taxes 1 279 (1 186) 124 111 106 328 430 Covered by additional allocations (956) 956 Amortisation of goodwill, etc. 25 25 25 25 25 101 99 Estimated profit from Vital Link, after taxes 61220 1114 Total net profit from Vital 304 (254) 100 88 81 238 345
Developement in premium income and policyholders' funds (Vital Forsikring and Vital Link) Premium income 1 353 1 498 1 895 4 033 1 666 8 779 7 042 Policyholders' funds at end of period 2) 65 908 63 839 65 648 63 133 62 139 65 908 62 139 - of which Vital Link 4 050 3 458 3 984 3 714 3 870 4 050 3 870
1) Return on assets excluding change in value of long-term investments in bonds 2) Including undistributed profits to policyholders and 75 per cent of securities adjustment reserve 3) Vital's buffer capital was strengthened in October 2001 through the issue of a perpetual subordinated loan of USD 70 million
For information on profit split model, see page 37.
12 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Net commissions and fees on banking services Net commissions and fees
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Money transfers 2) 394 324 313 342 410 1 374 1 631 Asset management services 79 87 98 99 97 363 445 Custodial services 38 33 34 36 41 141 131 Corporate finance etc. 45 61 84 38 97 228 249 Securities brokerage 36 18 26 39 50 120 232 Guarantees 46 44 48 48 37 187 156 Insurance sales 1) 15 15 17 17 20 64 66 Other 63 58 63 49 46 234 203 Net commissions and fees on banking services 718 640 683 669 798 2 710 3 113
1) DnB's share of Vital's sale of individual life insurance policies (%) 53.3 43.2 54.9 47.3 53.8 50.4 52.2 2) Postbankens Betalingssentral (clearing house) was sold to Bankenes Betalingssentral (clearing house) in the first quarter of 2001. After the sale, fees paid to Bankenes Betalingssentral have been netted against income received from customers.
Net commissions and fees
NOK million 3 113
2 710 2 617
2 307 2 296 1 631
1 374 1 590 1 437 1 437
445 363 131 310 141 209 252 91 102 482 348 114 281 292 195 156 187 121 136 138 298 168 161 184 269
1) 1) 1) 1997 1998 1999 2000 2001
Money transfers Asset management services Custodial services Securities brokerage and corporate finance Guarantees Other 1) Pro forma figures
DnB Group 13 Supplementary information year-end 2001 2. Financial results DnB Group
Net gain on financial instruments
Net gain on foreign exchange and financial instruments
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Net gain/(loss) on short-term shareholdings 55 (106) 224 34 242 206 473 Net gain/(loss) on commercial paper and bonds (116) 191 (69) 18 80 24 (107) Net gain on trading in foreign exchange and financial derivatives 39 394 696 299 258 1 429 1 156 Net gain/(loss) on other money market instruments 268 (364) (388) (8) (21) (491) (5) Net gain on foreign exchange and financial instruments 245 116 463 344 559 1 168 1 517 Of which: DnB Markets (I+II) 188 174 229 301 252 891 901 Banking portfolio, equity investments 46 (98) 224 31 283 202 536 Banking portfolio, other 12 40 11 12 24 75 80
Total income in DnB Markets
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Customer business Net gain on trading in foreign exchange and financial instruments (I) 203 188 168 212 216 771 726 Net interest income 18 3 20 10 2 51 45 Other income 111 117 149 113 172 489 618 Total income customer business 332 308 337 335 389 1 311 1 389 Trading/market making Dividends 0 0 4 0 2 3 21 Net gain on trading in foreign exchange and financial instruments (II) (15) (14) 61 89 36 120 175 Net interest income 150 114 83 62 33 408 113 Other income (4) (1) (2) (2) 0 (8) (1) Total income trading/market making 131 98 145 149 71 523 308 Total income customer business and trading/market making 462 406 482 484 461 1 834 1 697 Interest on allocated equity 25 27 28 27 26 107 96 Total income DnB Markets 488 433 510 511 487 1 941 1 794
Market value above acquisition cost, banking portfolio 1) 31 Dec. 30 Sept. 30 June 31 March 31 Dec. 30 Sept. Amounts in NOK million 2001 2001 2001 2001 2000 2000 Short-term shareholdings 0 0 96 117 302 615 1) Unrealised gains have not been included in the profit and loss accounts
14 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Major short-term shareholdings as at 31 December 2001 1)
Amounts in NOK million Book value Market value Nordstjernen Holding 125 114 IT Fornebu Eiendom 92 92 Cape Investments 68 72 Privatbanken 34 34 Industrifinans SMB III 30 25 Viking Ship Finance 25 49 Orkla 23 62 Energos 23 11 Equity funds, total 455 423 Other 481 440 Total 2) 1 355 1 322 Value adjustement (33) - Book value 1 322 1 322 1) Excluding shares held by Vital 2) The investment in Storebrand was reclassified as a long-term investment in the third quarter
Short-term investments in securities 31 Dec. 2001 30 Sept. 2001 31 Dec. 2000 Book Market Book Market Book Market Amounts in NOK million value value value value value value Commercial paper and bonds Trading portfolio 32 749 32 749 38 909 38 909 30 385 30 385 Banking portfolio 6 060 6 068 6 602 6 605 5 054 5 054 Total commercial paper and bonds 38 809 38 817 45 511 45 514 35 439 35 439 Short-term shareholdings Trading portfolio 149 149 382 382 582 582 Banking portfolio 1) 1 173 1 173 1 099 1 004 1 499 1 802 Total short-term shareholdings 1 322 1 322 1 481 1 386 2 081 2 383
1) The investment in Storebrand was reclassified as a long-term investment in the third quarter
Financial derivatives 1) 31 Dec. 2001 31 Dec. 2000 Nominal Market value Nominal Market value Amounts in NOK million amount Positive Negative amount Positive Negative Trading portfolio Interest rate agreements 1 199 913 7 184 4 353 1 132 499 5 256 3 339 Foreign exchange agreements 558 371 6 511 5 983 439 201 9 022 10 570 Equity-related agreements 16 860 1 140 1 013 13 541 1 914 1 627 Commodity-related agreements 7 1 1 45 5 5 Banking portfolio Interest rate agreements 40 644 207 1 715 30 479 409 1 552 Netting Value of netting agreements (4 987) (5 733) 1) MTM effects on financial derivatives are mostly offset by cash positions. Net gains and losses have been recorded in the profit and loss accounts
DnB Group 15 Supplementary information year-end 2001 2. Financial results DnB Group
Sundry operating income Sundry operating income
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Operating income on real estate and rental income 25182017238069 Fees on real estate broking 64 67 74 51 74 256 233 Share of profit in associated companies 4 25 31 24 15 83 82 Remunerations 5 3 4 3 5 15 14 Gain on sale of Postbankens Betalingssentral (clearing house) and outsourcing of IT operations (8) 299 237 529 Miscellaneous 42 32 30 53 35 157 122 Total sundry ordinary operating income 132 444 159 385 152 1 120 519 Gain on the sale of fixed assets 14 14 1 1 1 30 15 Total sundry operating income 147 457 159 386 153 1 149 534
Sundry operating income
NOK million 1 149 80
573 550 571 534 72 1 040 115 96 69
457 424 407 450
35 46 43 15 30
1) 19971) 1998 19991) 2000 2 001
Operating income on real estate and rental income Total sundry ordinary operating income Gains on the sale of fixed assets 1) Pro forma figures
16 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Operating expenses Total operating expenses
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Total ordinary salaries and other personnel expenses 950 911 908 898 911 3 667 3 493 Fees 150 140 164 143 180 597 592 EDP expenses 289 289 272 271 255 1 121 991 Expenses on fixed assets and rented premises 171 169 172 171 203 683 720 Marketing and public relations 43 57 88 86 97 274 316 Reimbursement to Norway Post 1) 192 192 166 175 208 725 705 Miscellaneous operating expenses 231 243 241 270 299 985 1 062 Total ordinary operating expenses 2 027 2 000 2 010 2 015 2 154 8 053 7 879 Write-downs and losses on the sale of fixed assets 0 0 (1) (2) (13) (3) (27) Provisions for restructuring measures 0 0 0 0 0 0 30 Allocations to the DnB Employee Fund 77 0 0 0 78 78 78 Total operating expenses 2 104 2 000 2 010 2 013 2 219 8 128 7 960 1) Further reimbursement to the Norwegian postal system is included in interest expenses and fees payable on banking services
Total operating expenses
NOK million 8 413 7 960 8 128 7 293 7 488
3 265 3 493 3 667 2 996 3 119
2 448 2 357 2 362 2 575 2 533 481 415 426 1 432 459 476 1 368 1 447 1 352 1 376 787 159 134 81 75 19971) 1998 1) 1999 1) 2000 2001 Ordinary salaries and other personnel expenses Total administrative expenses Ordinary depreciation Total other ordinary operating expenses Write-downs, provisions for restructuring measures, allocations to Employee Fund etc. 1) Pro forma figures
DnB Group 17 Supplementary information year-end 2001 2. Financial results DnB Group
Cost/income ratio before goodwill amortisation, but after VAT 1) Per cent
66.6
63.9 64.5 62.8 62.9 61.4 60.4 60.4 59.3 58.1
56.1 56.3
1Q992) 2Q992) 3Q992) 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1) Ordinary operating expenses in per cent of ordinary operating income 2) Pro forma figures
Changes in total ordinary operating expenses
Amounts in NOK million 2001 Change 2000 Total operating expenses 8 053 174 7 879 Of which VAT on services 121 Effect of sale of Postbanken's Clearing House (179) Effects of integration (158) Effects of streamlining operations (86) Effects of IT outsourcing (70) e-activities and IT 183 Wage settlements etc. 219 Increased activity levels 144
Integration process - cost reduction targets (synergy effects) NOK million 464 424 382
Achieved 2001 Target 2001 Target 2003
18 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Employees
2001 2000 1999 1998 1997 Full-time positions at end of period Den norske Bank incl. Postbanken 6 320 6 481 6 732 6 900 7 017 Vital 613 570 553 537 573 Total 6 932 7 052 7 285 7 437 7 590
2001 Change 2000 Full-time positions at end of period Total 6 932 (120) 7 052 Of which: Retail Banking 110 Corporate Banking 35 DnB Markets 25 Asset management and Life Insurance 88 Financial, Payment and Group Services (380) - of which Postbanken Betalingssentral (clearing house) (145) - of which Cash handling operations (50) - of which IT-outsourcing (194) - other 9 Other 2
IT expenses
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Operating expenses IT 301 284 325 322 265 1 231 1 122 Systems development expenses 111 133 97 89 161 431 555 e-business 5145605881214159 Integration projects (3) 11 25 27 12 60 49 Total IT expenses 1) 461 473 508 496 519 1 937 1 885 1) Incl. salaries and indirect costs
Restructuring provisions as at 31 December 2001 Balance at Accrued Balance at 31 Dec. expenses 31 Dec. Amounts in NOK million 2001 2001 2000 Personnel related expenses1) 21 33 54 IT - termination of contracts and reorganisation 36 21 56 Vacated premises and rehabilitation 14 0 14 Total, Postbanken merger 71 54 125 Foreign branches 5 1 6 Restructuring provisions Postbanken 1995-97 17 12 30 Total 93 67 160 1) Agreements entered into with employees relating to early retirement and severance packages
DnB Group 19 Supplementary information year-end 2001 2. Financial results DnB Group
Losses and reversals on loans and guarantees Losses/(reversals) by business area 1)
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Retail Banking - DnB 11 7 18 (6) (60) 31 (135) - Postbanken 2 10 (3) 20 11 29 15 Corporate Banking - Small and medium-sized businesses 85 54 (8) (27) 20 105 (28) - Large corporates 117 4 (111) 36 17 46 (39) - Shipping customers 2 5 (19) (135) (71) (146) (136) - Other 8 8 13 13 4 41 28 Other units 21 39 9 4 (6) 73 55 DnB Group 245 128 (101) (94) (85) 178 (241) 1) Expected loan losses have been reduced from 0.58 per cent of loan portfolio prior to the Postbanken merger to 0.37 per cent at the end of 1999 for the combined entity, to 0.32 per cent at the end of December 2001
Net losses/(reversals)
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Loss Kværner ASA 71 37 0 0 0 108 0 Other new specified losses 273 161 86 161 165 682 460 Reversals on specified losses 99 71 187 255 250 612 700 Net losses/(reversals) on loans, etc. 245 128 (101) (94) (85) 178 (241)
Losses/(reversals) for customer sectors
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000 Amounts in NOK million Retail customers 20 28 24 23 (48) 95 (84) International shipping 2 19 (19) (134) (70) (133) (109) Real estate (6) 12 (50) (14) (17) (59) (108) Services 92 49 20 (26) 0 135 15 Manufacturing 70 36 (12) 53 84 147 81 Trade 48 (10) (8) 7737(14) Transportation and communication 7 10 8 5 10 31 28 Oil and gas (3) (27) (61) (0) (49) (91) (53) Building and construction, power and water supply 7032112 0 Other sectors 8 8 (7) (7) (3) 2 (4) Total customers 245 126 (104) (92) (85) 176 (249) Credit institutions 0 0 3 (3) 0 0 0 Repossessed assets 0 2 0 0 0 2 0 Increase in/(reversals on) unspecified provisions 0 0 0 0 0 0 8 Total losses/(reversals) 245 128 (101) (94) (85) 178 (241)
20 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Asset quality Development in problem commitments
NOK million Non-performing commitments after related specified provisions 5 432 Doubtful commitments after related specified provisions
4 371 Problem commitments after related specified provisions
3 581 3 422 3 034 2 775 2 660 2 277 2 010 1 914 1 726
1 304 1 337
860 933
31 Dec. 19971) 31 Dec. 1998 1) 31 Dec. 1999 31 Dec. 2000 31 Dec. 2001 Gross problem commitments before specified provisions: 7 147 8 768 7 034 4 711 4 500
Unspecified loan-loss provisions
NOK million
2 164 2 086 2 117 2 117
1 514 1 343
31 Dec. 1)31 Dec. 1)31 Dec. 1) 31 Dec. 31 Dec. 31 Dec. 1996 1997 1998 1999 2000 2001
1) Pro forma figures
DnB Group 21 Supplementary information year-end 2001 2. Financial results DnB Group
Total assets owned or managed by the DnB Group Combined assets 1) 2)
NOK billion 460 445 407 72 68 64 37 40 319 300 35 56 257 52 21 49 23 182 19 14 344 358 313 228 246 190 168
31 Dec. 1995 31 Dec. 1996 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 31 Dec. 2001
DnB Funds under management Vital
1) Figures up to the end of 1998 do not include Postbanken 2) Totals are net of inter-company balances
DnB Group balance sheets
31 Dec. 30 Sept. 30 June 31 March 31 Dec. Amounts in NOK billion 2001 2001 2001 2001 2000 Cash and lending to/deposits with credit institutions 19.7 25.9 33.3 32.8 29.2 Net lending to and receivables from customers 275.2 271.1 270.5 261.3 252.7 Commercial paper, bonds, etc. 38.8 45.5 44.2 39.9 35.4 Shareholdings 7.3 7.1 7.8 6.3 6.3 Fixed and intangible assets 3.4 3.7 4.0 4.1 4.2 Other assets 13.8 15.1 19.6 17.6 16.3 Total assets 358.2 368.4 379.5 362.1 344.2 Loans and deposits from credit institutions 34.9 47.7 50.1 47.1 51.3 Deposits from customers 191.6 183.1 185.1 179.5 175.4 Borrowings through the issue of securities 75.9 78.1 80.6 80.9 63.9 Other liabilities and provisions 18.2 21.0 24.8 21.2 21.5 Primary capital 37.7 38.5 38.7 33.4 32.0 Total liablities and equity 358.2 368.4 379.5 362.1 344.2
Average total assets for the year to date 367.4 365.7 363.3 351.0 341.4 Ratio of deposits to net lending (per cent) 69.6 67.6 68.5 68.7 69.4
22 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Lending to principal sectors 1) 2)
31 Dec. 30 Sept. 30 June 31 March 31 Dec. Amounts in NOK billion 2001 2001 2001 2001 2000 Retail customers 125.6 122.7 119.5 114.8 112.1 International shipping 26.1 27.8 30.1 30.0 27.6 Real estate 29.0 28.0 28.8 27.2 25.9 Services 29.4 30.6 29.6 28.7 27.7 Manufacturing 18.4 18.5 19.5 19.4 17.8 Trade 15.1 15.0 14.5 13.6 13.9 Transportation and communication 8.8 8.0 7.6 7.1 7.4 Oil and gas 4.1 3.8 4.3 4.1 4.1 Building and construction, power and water supply 8.8 8.1 8.2 8.2 7.8 Other sectors 12.2 10.7 10.5 10.3 10.7 Total 277.3 273.2 272.6 263.4 254.8
1) Split according to official industry definitions 2) Gross lending after deductions for related specified loan-loss provisions
Lending to certain sectors
Amounts in NOK billion 31 Dec. 2001 In per cent of lending Information and communication technology (ICT) 4.0 1.4% Fish farming 3.2 1.2% Cruise 2.3 0.8% Civil aviation 0.7 0.3%
Increase in lending 1 January - 31 December 2001 NOK billion Trade Others Total Transport 8.6 % -0.3 % 8.8 % Services 18.7 % 1.2 -0.2 Fishing 6.0 % 1.4 Real estate 48.9 % 1.6 Retail 12.1 % 1.8 customers 12.1 % 3.1 22.5
13.5
DnB Group 23 Supplementary information year-end 2001 2. Financial results DnB Group
Customer savings Customer savings in DnB companies 1) 2)
NOK billion 297 278 264 37 40 35 66 62 58 180 7 164 168 5 21 3 19 23 51 44 48 106 1 14 1 192 171 175
108 91 100 97
31 Dec. 1995 31 Dec. 1996 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 31 Dec. 2001 Customer deposits Index based bonds Vital policyholders' funds DnB Investor and other funds
1) Figures up to the end of 1998 do not include Postbanken 2) Totals are net of inter-company balances
DnB Investor – funds and fee income
Volum, NOK million Income, NOK million 30 353 29 649 160 30 000 28 705 2 559 2 436 27 260 2 472 25 550 2 509 7 913 7 497 24 000 7 038 2 523 6 266 120 5 649 115 18 000 99 8 278 7 888 97 84 7 628 6 785 80 87 5 992 12 000
40 6 000 11 603 11 828 11 567 11 700 11 386
0 0 4Q00 1Q01 2Q01 3Q01 4Q01 Balanced funds and bond funds International equity funds Norwegian equity funds Money-market funds Asset management fees (right-hand scale)
24 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
Capital adequacy and Taxes Developments in primary capital and capital ratios
Den norske Bank Den norske Bank DnB Group ASA ASA consolidated
31 Dec. 31 Dec. 31 Dec. 31 Dec. Amounts in NOK million 2001 % 2001 % 2001 % 2000 % Share capital 7 787 7 787 7 706 7 787 Reserves 11 240 12 579 16 388 14 129 Perp. subord. loan capital securities 3 358 3 601 3 601 Core capital 1) 22 385 8.7 23 967 8.5 27 695 8.8 21 915 7.5 Perpetual subordinated loan capital 5 330 5 086 5 086 5 016 Term subordinated loan capital 3 133 3 906 4 814 4 909 Ineligible subordinated loan capital 0 (239) (333) (299) Net supplementary capital 8 463 8 753 9 568 9 625 Deductions 1 398 1 524 1 619 674 Total eligible primary capital 29 449 31 196 35 643 30 866 Total risk-weighted assets 256 194 281 605 313 389 292 279 Capital ratio 11.5 11.1 11.4 10.6
1) New capital adequacy regulations taking effect from 1 April 2001 has improved the core capital ratio by approximately 0.2 percentage points
Capital ratios
Per cent 12
11
10
9
8
7
6
5 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
1998 1999 2000 2001 Core capital Supplementary capital
Taxes DnB recorded taxes of NOK 587 million in the 2001 profit and loss account, corresponding to an average tax rate of 12.5 per cent. The relatively low tax rate is due to the final judgement on the so-called preference capital matter, where the court found in favour of Den norske Bank in 2001. The Group's future average tax charge is estimated at 25 per cent.
DnB Group 25 Supplementary information year-end 2001 2. Financial results DnB Group
Financial results DnB Group
Profit and loss accounts DnB Group
4th quarter 4th quarter Full year Full year Amounts in NOK million 2001 2000 2001 2000
Interest income 6 283 6 450 25 474 22 987 Interest expenses 4 125 4 522 17 475 15 767 Net interest income and credit commissions 2 158 1 928 7 999 7 221 Dividends 3 11 60 242 Net profit from Vital 304 81 238 345 Commissions and fees receivable 936 1 000 3 712 3 847 Commissions and fees payable 218 202 1 002 734 Net gain on foreign exchange and financial instruments 245 559 1 168 1 517 Sundry ordinary operating income 132 152 1 120 519 Gains on the sale of fixed assets 14 1 30 15 Net other operating income 1 417 1 602 5 325 5 751 Salaries and other ordinary personnel expenses 950 911 3 667 3 493 Administrative expenses 620 757 2 533 2 575 Depreciation 109 127 476 459 Sundry ordinary operating expenses 347 358 1 376 1 352 Restructuring, write-downs, etc. 77 65 75 81 Total operating expenses 2 104 2 219 8 128 7 960 Pre-tax operating profit before losses 1 471 1 311 5 196 5 012 Net losses/(reversals) on loans, guarantees, etc. 245 (85) 178 (241) Net loss on long-term securities 1 3 332 5 Pre-tax operating profit 1 224 1 393 4 687 5 248 Taxes 321 232 587 1 230 Profit for the period 903 1 161 4 100 4 018 Earnings per share 1.17 1.49 5.29 5.16 Diluted earnings per share 1.17 1.48 5.26 5.14 Average total assets 372 427 350 617 367 366 341 428
Balance sheets DnB Group
31 Dec. 31 Dec. Amounts in NOK million 2001 2000
Assets Cash and deposits with central banks 2 820 8 387 Lending to and deposits with credit institutions 16 854 20 798 Gross lending to customers 279 101 256 693 - Specified loan-loss provisions (1 764) (1 871) - Unspecified loan-loss provisions (2 115) (2 115) Net lending to customers 275 222 252 707 Repossessed assets 98 76 Commercial paper and bonds 38 809 35 439 Shareholdings etc. 3 453 2 711 Investments in Vital and associated companies 3 825 3 616 Intangible assets 929 1 375 Fixed assets 2 512 2 866 Other assets 10 450 12 565 Prepayments and accrued income 3 217 3 667 Total assets 358 190 344 208
Liabilities and equity Loans and deposits from credit institutions 34 920 51 322 Deposits from customers 191 575 175 430 Securities issued 75 878 63 919 Other liabilities 14 420 17 578 Accrued expenses and prepaid revenues 2 330 2 747 Provisions for commitments 1 412 1 192 Subordinated loan capital 11 820 8 105 Share capital 7 706 7 787 Equity reserves 18 130 16 127 Total liabilities and equity 358 190 344 208
26 DnB Group Supplementary information year-end 2001 2. Financial results DnB Group
DnB Group 1997-2001
Amounts in NOK million
PROFIT AND LOSS ACCOUNTS 2001 2000 1999 1) 1998 1) 1997 1) Interest income 25 474 22 987 21 411 19 532 15 345 Interest expenses 17 475 15 767 14 330 13 053 8 703 Net interest income 7 999 7 221 7 081 6 480 6 642 Dividends 60 242 146 145 106 Net profit from Vital before provisions for restructuring 238 345 350 183 192 Net commissions and fees receivable on banking services 2 710 3 113 2 617 2 295 2 307 Net gain on foreign exchange and financial instruments 1 168 1 517 1 256 387 590 Sundry ordinary operating income 1 120 519 528 504 539 Net other ordinary operating income 5 296 5 736 4 897 3 514 3 733 Salaries and other ordinary personnel expenses 3 667 3 493 3 265 3 119 2 996 Administrative expenses 2 533 2 575 2 448 2 362 2 357 Depreciation on fixed assets 476 459 481 426 415 Sundry ordinary operating expenses 1 376 1 352 1 432 1 447 1 368 Total ordinary operating expenses 8 053 7 879 7 626 7 354 7 135 Pre-tax ordinary operating profit before losses 5 242 5 078 4 352 2 639 3 239 Gains on the sale of fixed assets, etc. 30 15 43 46 34 Restructuring, write-downs, etc. 75 81 787 134 158 Pre-tax operating profit before losses 5 196 5 012 3 608 2 552 3 116 Net losses/(reversals) on loans, guarantees, etc. 178 (241) (15) 1 178 (114) Net gain/(loss) on long-term securities (332) (5) 14 (0) (149) Pre-tax operating profit 4 687 5 248 3 636 1 373 3 081 Taxes 587 1 230 511 422 730 Profit for the year 4 100 4 018 3 125 952 2 351 Earnings per share (NOK) 5.29 5.16 4.01 1.22 3.02 Average total assets 367 366 341 428 325 160 317 202 283 197
31 Dec. 31 Dec. 31 Dec. 1) 31 Dec. 1) 31 Dec. 1) BALANCE SHEET SUMMARY 2001 2000 1999 1998 1997 Assets Cash and deposits with central banks 2 820 8 387 13 094 3 665 1 829 Lending to and deposits with credit institutions 16 854 20 798 15 572 13 383 14 102 Gross lending to customers 279 101 256 693 231 646 229 965 206 913 - Specified loan-loss provisions (1 764) (1 871) (2 636) (3 290) (3 493) - Unspecified loan-loss provisions (2 115) (2 115) (2 085) (2 163) (1 513) Net lending to customers 275 222 252 707 226 924 224 513 201 907 Repossessed assets 98 76 75 60 298 Commercial paper and bonds 38 809 35 439 33 937 48 507 51 923 Shareholdnings etc. 3 453 2 711 3 920 3 572 3 754 Investments in Vital and associated companies 3 825 3 616 3 289 3 038 2 630 Intangible assets 929 1 375 1 239 1 560 2 063 Fixed assets 2 512 2 866 2 688 3 262 3 409 Other assets 10 450 12 565 9 623 9 188 9 641 Prepayments and accrued income 3 217 3 667 3 022 4 040 3 679 Total assets 358 190 344 208 313 385 314 788 295 236 Liabilities and equity Loans and deposits from credit institutions 34 920 51 322 45 498 47 607 55 522 Deposits from customers 191 575 175 430 170 900 166 771 154 626 Securities issued 75 878 63 919 50 011 56 851 40 637 Other liabilities 14 420 17 578 14 585 12 577 13 188 Accrued expenses and prepaid revenues 2 330 2 747 2 004 2 885 3 745 Provisions for commitments 1 412 1 192 1 363 1 013 1 037 Subordinated loan capital and preference capital 11 820 8 105 7 344 6 838 6 334 Equity 25 836 23 914 21 679 20 247 20 146 Total liabilities and equity 358 190 344 208 313 385 314 788 295 236 Total risk-weighted volume 313 389 292 279 255 146 252 148 226 613
1) Pro forma figures
DnB Group 27 Supplementary information year-end 2001 2. Financial results DnB Group
28 DnB Group
Section 3 DnB Group and business areas
DnB Group 29 Supplementary information year-end 2001 3. DnB Group and business areas
Group strategy
Targets DnB’s principal target is to increase shareholder value by ensuring an attractive and competitive return on the DnB share through a combination of increases in the DnB share price and dividends.
DnB has set up specific targets to be reached by the first quarter of 2003. The primary target is a 15 per cent return on equity, combined with a 55 per cent cost/income ratio. The cost/income ratio includes total operating expenses before goodwill amortisation, but after VAT on services, which was introduced as of 1 July 2001. Costs are measured as a percentage of total income. Specific targets have also been set for the realisation of cost synergies from the merger between DnB and Postbanken, along with other operative sub-targets, including the number of users of Internet banking services.
Strategic position DnB’s strategy focuses on areas where the Group has or can achieve lasting competitive advantages.
DnB has a leading position relative to Norwegian retail and corporate customers. Just over 20 per cent of Norwegian retail customers and around 30 per cent of Norwegian corporate customers have chosen DnB as their main financial services provider. Customer service is provided through Norway’s most extensive distribution network, which includes bank branches, post offices, post office store outlets and new electronic services. DnB, Postbanken and Vital are among the strongest financial brands in Norway.
DnB has gained special advantages relative to international clients wishing to do business in Norway within foreign exchange trading, international cash management and custodial services. More than 50 per cent of all financial transactions between Norway and other countries are executed through DnB.
As a result of Norway’s position as a shipping nation, DnB has become one of the world’s leading shipping banks and is about to establish a corresponding position within the energy sector, based on North Sea activities. After acquiring the asset management operations of the Skandia Group, DnB will be well positioned to benefit from Norway’s future role as a major financial investor.
Strategic measures To further strengthen its position among Norwegian retail and corporate customers, DnB will seek to provide the best financial products. This could mean that DnB will have to offer solutions provided by other suppliers when the Group is unable to produce the best products itself. DnB will devote considerable resources to the further development of electronic distribution channels which will be on a level with those offered by competitors.
The Group will attach particular importance to strengthening its position among high net-worth clients through the introduction of new products and a new advisory concept, which can be achieved by drawing on the expertise of all the Group’s product specialists. Vital will introduce a competitive defined-contribution pension product aimed at the large number of Norwegians who are not part of an occupational pension scheme. DnB will devote more effort to equities trading and associated services offered to Norwegian retail and corporate customers. In addition, the Group will build a stronger position in the market for small and medium-sized businesses by improving and adapting products to their special needs.
To strengthen its position as the leading financial institution for international customers with a presence in Norway, DnB will consider the possibility of making its international cash management and custodial services even more competitive through cooperation on product development with other market players.
Parallel to this, DnB will seek to become an even better supplier of niche products in international markets through organic growth within asset management and by seeking new asset management mandates. Additional acquisitions may be an option if such moves would contribute to DnB achieving its long-term targets.
30 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Legal structure
In accordance with the requirements of the Norwegian regulatory authorities, the asset management and life insurance activities of the DnB Group are organised under the holding company DnB Holding ASA. The banking activities are contained within Den norske Bank ASA, which is a subsidiary of DnB Holding ASA.
DnB Holding is the stock-exchange listed parent company of the group of companies that form the DnB Group.
DnB Group - corporate structure
DnB Holding ASA
Fondsforsikrings- Den norske Vital Forsikring Vital Skade DnB Kapital- selskapet Vital Bank ASA ASA AS forvaltning ASA Link AS
subsidiaries subsidiaries
In January 2002, DnB signed an agreement on the acquisition of Skandia Asset Management. DnB has applied for concession to supervisory authorities in several countries, and expects the transaction to be completed by the end of June 2002.
DnB Group 31 Supplementary information year-end 2001 3. DnB Group and business areas
Group structure
DnB is organised into five business areas with responsibility for underlying divisions, departments and subsidiaries. The business area Retail Banking includes the smallest businesses; Corporate Banking serves small and medium-sized companies as well as large Norwegian corporations, shipping companies and international corporate customers; DnB Markets is the Group´s capital markets arm and; Asset Management and; Vital, the group´s life insurance operations, are independent profit centres subject to specific profit requirements. In addition, the Group has support and staff functions organised into separate units. Efforts to increase cross-sales and boost efficiency in the internal supply of products and services are key strategic elements.
DnB Group - organisation chart as of 14 February 2002
President and CEO Svein Aaser
•Financial Reporting •Risk Management Corporate Group Staff •Credit Communications •Legal Department Tom Grøndahl •Company Secretariat Jarl Veggan •Investor Relations
•Cash Management •Electronic Payment Services E-development Financial, Payment and •DnB Consulting •International Payment Services Group Services Nikolai Stefanovic •DnB Kort •DnB IT Evlyn Raknerud •Group Services •Group Human Resources
1) 1) Corporate Retail DnB Markets Asset Vital Banking Banking Management
Leif Teksum Petter Jansen Ottar Ertzeid Anders Kvist* Bjørn Østbø
•Large Corporates •Postbanken •Customers FX/Treasury •DnB Asset Management •Vital Forsikring •Shipping •DnB Retail •Trading FX/Treasury •DnB Investor •Vital Link •Small and Medium-sized •DnB Small Corporate •Equities Trading/Research •DnB PrivatBank •Vital Eiendomsforvaltning Corporates Clients •Corporate Finance •Vital skade •Vital Pekon •DnB Finans •Postbanken •Securities Services •DnB Næringsmegling Eiendomsmegling •Domestic Treasury •Regions •DnB Eiendom •Equity Investments •International Branches •Internet Banking *Will assume his position once DnB’s acquisition of Skandia •Telephone Banking Asset Management has been formally approved and completed •Credit Production in spring 2002
1) The Group was restructured in January 2002. All figures for business areas are based on the organisational structure at the end of 2001, when Asset Management and Vital constituted one business area (Asset Management and Life Insurance).
32 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Business areas Operating results and key financial data for main business areas (pro forma figures)
The business area reporting is based on internal management reporting to the Board of Directors and chief executive officer. The principles for internal prices and double entries were changed in 2001, and the figures for both 2000 and 2001 have been restated accordingly. The adjustments are based on management’s best estimates.
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 Net other Pre-tax Net losses Pre-tax Net interest operating Operating operating profit on loans and long- operating Amounts in NOK million income income expenses before losses term securities profit/(loss)
Retail Banking 3 473 3 340 1 622 1 640 4 069 4 099 1 026 880 113 (97) 913 977
Corporate Banking 3 682 3 465 1 672 1 559 2 337 2 452 3 018 2 572 44 (177) 2 973 2 749
DnB Markets 567 255 1 374 1 539 918 864 1 023 930 (33) (8) 1 056 938 Asset Management and Life Insurance 52 52 751 768 427 320 375 500 (5) 0 380 500
Group Centre 450 335 293 742 396 341 346 736 389 46 (43) 690
Eliminations (225) (226) (387) (497) (20) (116) (592) (606) 00(592) (606)
DnB Group 7 999 7 221 5 325 5 751 8 128 7 960 5 196 5 012 509 (236) 4 687 5 248
Main balance sheet items, average balances
Funds under Key figures: management Key figures: Ratio of Allocated Key figures: Net lending to and customer Cost/income deposits to equity Return on equity 2) Amounts in NOK billion customers deposits ratio (%) lending (%) (%)
Retail Banking 115.7 103.0 86.5 84.9 80 82 75 82 3.4 3.0 19 24
Corporate Banking 152.6 141.0 95.9 90.0 44 49 63 64 11.6 11.5 18 17
DnB Markets 1.6 1.1 9.6 10.3 47 48 1.5 1.5 50 45 Asset Management and Life Insurance 1.5 1.1 103.1 99.4 4.6 2.0 7 22
Other (0.4) (0.2) (6.5) (7.7) 4.9 5.6
DnB Group 271.1 245.9 288.6 276.9 61 61 70 74 26.0 23.6 16 17
1) The DnB Group's income, expenses and balance sheet volumes are allocated to the business areas. In the above table some of the income generated in DnB Markets related to foreign exchange/treasury instruments, sales of securities in the primary market, as well as custodial services, is also included in the net other operating income of Retail Banking and Corporate Banking. These double entries are eliminated under "Eliminations".
2) Calculations of return on equity are based on profits after taxes. A 28 per cent tax rate is used for Retail Banking, Corporate Banking and DnB Markets. The tax rate used for Vital Forsikring is 10 per cent representing the expected tax rate. The average tax rate for Asset Management and Life Insurance is thus 13.3 per cent for 2001 and 11.2 per cent for 2000.
DnB Group 33 Supplementary information year-end 2001 3. DnB Group and business areas
The "Group Centre" line item comprises Group Services and Group Staff, investments for IT infrastructure etc. charged to the accounts and shareholder-related expenses.
Consolidation adjustments and eliminations of the double entries described above are shown in the line item "Eliminations". The double entries are:
2001 2000 Amounts in NOK million Net interest income 13 39 Net other operating income 513 467 Operating expenses 21 28
Depreciation of goodwill for the Group’s acquisition of Vital and similar fair value adjustments relating to the Postbanken acquisition are not allocated to the business areas. Goodwill in Vital is depreciated by 25 million each quarter, ending in 2005. The depreciation of Postbanken’s fair value adjustments amounts to NOK 12 million per quarter, depreciated by 2004.
Allocation of equity to the business areas is based on DnB’s internal risk assessment model, which assigns risk capital for credit, market, insurance, liquidity and operational risk to the various areas of the Group. The Group’s additional equity is mainly a consequence of official capital requirement regulations, but also a necessary cushion for uncertainty in the risk estimates and a buffer to meet future requirements.
34 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Asset management and life insurance
In January 2002 the Asset Management and Life Insurance business area was split into two separate business areas, cf. page 32. All figures for this business area are based on the organisational structure at the end of 2001, when Asset Management and Vital constituted one business area (Asset Management and Life Insurance).
This presentation include Vital Forsikring (life insurance), Vital Link (unit linked), DnB Investor (mutual funds), DnB Kapitalforvaltning (DnB Asset management), Vital Eiendomsforvaltning (real estate management), DnB PrivatBank (private banking) and Vital Skade (non-life). The business area was headed by Gunn Wærsted until December 2001. New head of the insurance area is Group Executive Vice President Bjørn Østbø, while Anders Kvist will be new head of the enlarged asset management area and join the group management as Group Executive Vice President when the new organisational structure is in place.
Comments on operating performance in 2001
In January 2002, DnB signed an agreement on the acquisition of Skandia Asset Management. As a consequence, Asset Management and Life Insurance has been split into two new, independent business areas in the DnB Group with responsibility for asset management and life insurance respectively.
The dramatic international events in 2001 had an appreciable impact on the business area’s operations. In spite of volatile stock markets, the business area showed progress in key areas and came through the financial unrest. Insurance operations benefited from good management systems and from being part of a strong financial services group. Competitive returns were achieved for clients within asset management.
Vital achieved competitive returns for its policyholders, and recorded and value-adjusted returns in Vital Forsikring were 5.6 and 1.3 per cent respectively, as against 8.4 and 4.2 per cent in 2000. The fall in share prices resulted in lower values in DnB Investor's equity funds, which in turn had an impact on returns and management fees. Premium income in Vital showed a strong rise in 2001.
Assets under management 1)
31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. Amounts in NOK million 2001 2000 1999 1998 1997 1996 Vital Forsikring 2) 67 760 63 674 61 785 53 713 49 556 47 518 Vital Link 2) 4 233 4 158 2 713 1 042 326 - DnB Kapitalforvaltning 11 369 10 200 9 340 6 803 8 122 5 549 DnB Investor 3) 26 130 29 507 25 255 14 174 14 806 12 191 1) Inter-company balances have not been eliminated 2) Of which managed by DnB Kapitalforvaltning: 60 511 58 397 55 170 48 499 3) Figures up to and including 1998 do not include Postbanken
Life and pension insurance Vital Forsikring ASA is Norway’s second largest private life and pension insurance company. The products provided by Vital include a variety of savings products allowing DnB to benefit from the expected strong growth in private savings. DnB’s distribution network has become a major channel for selling Vital’s individual life insurance products. A sister company, Fondsforsikringselskapet Vital Link AS (formerly Vital Fondsforsikring AS), is responsible for developing and offering unit linked products. Products tailored to DnB’s corporate customers enable Vital to benefit from the large potential in DnB’s corporate customer base, which includes many companies without corporate pension plans. Cost synergies are also being exploited in a number of areas, such as property and asset management.
DnB Group 35 Supplementary information year-end 2001 3. DnB Group and business areas
Product range • Individual life insurance • Individual annuity and pension insurance • Group life, health and pension insurance • Defined contribution • Unit linked • Health, safety and working environment services
Market shares 30 Sept. 30 June 31 March 31 Dec. 30 Sept. 30 June Per cent 2001 2001 2001 2000 2000 2000 Of total premiums 22.8 26.1 26.6 20.1 20.9 20.9 Of total premiums less reserves transferred to others 25.6 30.8 32.2 21.3 21.7 21.7 Of premiums from individuals 21.1 21.8 19.9 23.5 23.6 23.6 Of premiums from corporates 23.0 27.3 28.8 18.2 18.3 19.4 Of insurance funds 18.5 19.0 18.6 18.3 18.2 18.3 Of premiums from unit linked products 19.0 20.1 20.9 21.7 28.6 22.4 All premiums include reserves transferred from life insurance companies
Market shares Vital Forsikring and Vital Link
Premium income Policyholder's funds 2000 2000 Per cent Per cent 2001 2001 30.4 29.6 27.4 25.9 25.5 25.5
21.7 21.8 20.6 18.7 18.5 18.3 17.9 16.5 16.6 16.2
Vital Storebrand KLP Gjensidige Vital Storebrand KLP Gjensidige
Source: FNH/Vital
36 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Model for profit split between allocations to policyholders and return on equity Return on equity includes: • The company’s average return on capital, calculated on equity, subordinated loan capital and the security fund. Return on capital represents net financial income less allocations to or reversals from the securities adjustment reserve • Less accrued interest on subordinated loan capital and allocations to the security reserve • Plus 0.38 per cent of average customer funds. These funds include premium reserves, supplementary provisions, the premium and pension adjustment funds and the claims reserve • Plus 12 per cent of effective risk premium adjusted for survival risk • Less taxes
According to statutory regulations, return on equity cannot exceed 35 per cent of profits available for allocation. If necessary, the Board will adjust the profit split to secure the company’s competitive strength.
In addition to profits on products subject to a profit split (see above), total profits for products not subject to a profit split will be included in profits for allocation to equity and taxes.
Key figures - Vital Forsikring and Vital Link
4Q01 3Q01 2Q01 1Q01 4Q00 2001 2000
Premium income (NOK million) 1 353 1 498 1 895 4 033 1 666 8 779 7 042 Policyholders' funds at end of period 1) (NOK million) 65 908 63 839 65 648 63 133 62 139 65 908 62 139 Sale of individual policies through DnB's distribution network (%) 53.3 43.2 54.9 47.3 53.8 50.4 52.2 1) Including undistributed profits to policyholders and 75 per cent of securities adjustment reserve
Buffer capital - Vital Forsikring 31 Dec. 30 Sept. 30 June 31 March 31 Dec. 30 Sept. Amounts in NOK million 2001 2001 2001 2001 2000 2000 Interim profit/(loss) (951) 1 384 753 1 821 Unrealised gains 150 137 849 902 2 870 4 354 Additional allocations 2 404 2 401 2 350 2 401 2 414 2 219 Equity 2 994 2 666 2 666 2 666 2 666 2 451 Subordinated loan capital 1) 1 727 1 087 1 114 1 104 1 085 1 106 Security reserve 170 415 415 415 415 416 Buffer capital 7 445 5 755 8 778 8 241 9 450 12 367 1) Vital's buffer capital was strengthened in October 2001 through the issue of a perpetual subordinated loan of USD 70 million
DnB Group 37 Supplementary information year-end 2001 3. DnB Group and business areas
Total assets and liabilities - Vital Forsikring
31 Dec. 30 Sept. 30 June 31 March 31 Dec. 30 Sept. Amounts in NOK million 2001 2001 2001 2001 2000 2000 Financial assets 1) 63 237 59 585 62 180 62 438 61 148 62 223 Other assets 4 524 5 063 5 226 3 154 2 526 2 001 Total assets 67 760 64 648 67 406 65 592 63 674 64 224
Equity 2 995 1 715 2 901 2 777 2 667 2 775 Subordinated loan capital 1 727 1 087 1 114 1 104 1 085 1 105 Securities adjustment reserve 53 0 987 752 2 752 4 429 Insurance provisions 2) 61 818 60 381 60 924 58 855 56 205 55 307 Other liabilities 1 168 1 465 1 481 2 104 965 608 Total equity and liabilities 67 760 64 648 67 407 65 592 63 674 64 224
1) Of which: Equities and participations 16 032 15 384 19 684 19 838 19 091 19 610 Short-term investments in bonds 18 214 18 513 21 261 17 390 17 826 18 269 Money market instruments 8 567 6 214 3 432 5 834 5 991 7 286 Long-term investments in bonds 12 690 12 318 12 166 12 103 11 768 10 918 Real estate 7 242 7 058 5 532 5 567 5 527 5 393 Other financial assets 522 98 105 1 707 945 747 Financial assets 63 237 59 585 62 180 62 438 61 148 62 223
2) Of which: Premium fund 4 182 3 462 3 601 3 361 4 341 3 619 Premium reserve 54 868 53 905 54 375 52 509 48 900 48 916 Additional allocations 2 404 2 401 2 350 2 401 2 414 2 219 Claims reserve 73 76 75 73 72 70 Other technical reserves 121 122 108 96 63 67 Security reserve 170 415 415 415 415 416 Insurance provisions 61 818 60 381 60 924 58 855 56 205 55 307
Value-adjusted return on assets - Vital Forsikring
2001 2000 1999 1998 1997 1996 Value-adjusted return on assets - Vital Forsikring (%) 1.3 4.2 14.4 5.8 9.4 9.7
38 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Non-life Vital Skade AS is the DnB Group's non-life company. Products are sold on a commission basis, and the company assumes no risk on its own, but operates as an agent. It manages non-life insurance under the Postbanken, DnB and Vital brand names. The company has 30 full-time positions. Responsibilities include underwriting (on behalf of others), production, sales support and advisory services with respect to products sold through the DnB Group.
The company offers a full range of products to private and corporate clients. Vital Skade is the fourth largest supplier of travel insurance in Norway with a market share of 5 per cent. 20 per cent of retail customers in the DnB Group have travel insurance contracts through their benefits programme with the company. Vital Skade is the market leader on medical malpractice insurance for doctors and dentists.
Premium volume in Vital Skade totalled NOK 126 million at the end of 2001, up NOK 18 million from the end of December 2000. Non-life insurance fee income for Vital Skade totalled NOK 28 million in 2001, compared with NOK 23 million in 2000.
Mutual funds DnB Investor AS is the DnB Group’s mutual fund company and is required by law to manage assets in mutual funds separately. It is the second largest fund management company in Norway with a market share of 19.8 per cent as at 31 December 2001. It has nearly 435 000 client relationships including 198 000 savings agreements (for clients making savings every month). It manages funds under both the Postbanken and DnB brand names.
The company's staff comprises around 90 full-time positions. Responsibilities include providing sales support and advisory services with respect to funds sold through Den norske Bank branches and the Postbanken network.
DnB Investor manages portfolios with focus on geographic areas as well as sector-specific portfolios. It offers 11 money-market and fixed-income funds and 39 domestic and international equity and balanced funds, five of which focus on specific sectors (consumer goods, finance, health care and technology). DnB Investor's product range represents internally managed funds as well as funds based on subadvisory accounts, "fund of fund", with third parties. In January 2002, DnB Investor launched two new equity funds with an ethical profile, DnB Global Etisk III and DnB Global Etisk IV.
Asset management fee income for DnB Investor in the fourth quarter of 2001 was NOK 84.2 million, compared with NOK 115 million for the fourth quarter last year, a decrease of NOK 31 million.
Management fees are calculated on the funds on a continuing basis (fees range from 20 to 200 basis points depending on the type of fund). Sales commissions depend on the amount invested (up-front fees from 0 to 500 basis points depending on type of fund and client) and the amount accruing to the fund varies from 0 to 50 basis points. Commissions upon redemption are directly accrued to the various funds and vary from 0 to 100 basis points.
DnB Group 39 Supplementary information year-end 2001 3. DnB Group and business areas
DnB Investor - mutual funds 31 Dec. 31 Dec. 31 Dec. 31 Dec. 1) Amounts in NOK million 2001 2000 1999 1998 Equity funds (Norwegian) 6 452 7 807 7 948 3 146 Equity funds (international) 5 851 7 768 6 130 3 134 Money-market funds 11 104 11 478 8 578 6 325 Balanced funds and bond funds 2 723 2 455 2 599 1 569 Total mutual funds 26 130 29 507 25 255 14 174 1) Figures for 1998 do not include Postbanken
Assets under management in DnB Investor were NOK 26.1 billion at end-December 2001, down from NOK 29.5 billion at end-December 2000. Equity and balanced funds declined by NOK 3.3 billion during 2001, while bond and money-market funds rose by NOK 0.03 billion. New subscription was totally a net outflow of NOK 245 million.
DnB Group's market share of the Norwegian mutual fund market 31 Dec. 31 Dec. 31 Dec. 31 Dec. Per cent 2001 2000 1999 1998 Equity funds (Norwegian) 17.9 16.9 15.2 14.9 Equity funds (international) 15.5 17.3 21.4 21.0 Balanced funds 43.0 44.3 40.4 34.1 Fixed-income funds 8.8 5.0 9.7 7.3 Money-market funds 26.3 33.8 38.2 36.0 Total market share 19.8 20.7 21.2 20.4
Total Norwegian mutual fund market, net new subscriptions
NOK million Per cent 30.0 12 000 25.0 10 000 21.2 20.7 20.4 19.8 20.0 8 000 15.0 6 000
10.0 4 000
2 000 5.0
0 0.0
-2 000 -5.0 1998 1999 2000 2001 Equity funds Balanced funds Fixed-income and money-market funds DnB Group's market share of total mutual fund market (per cent)
40 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Portfolio management Asset management incorporates the management of individually designed investment portfolios by DnB Kapitalforvaltning ASA (DnB Asset Management). Assets include global equities, bonds and derivatives as well as mutual funds managed on a discretionary basis with reference to relevant indices. An important part of the service is to advise clients with respect to strategic allocation, risk levels, specific mandates and on-going monitoring of portfolios. The largest client is Vital Forsikring, for which the company manages total policyholders' funds.
• DnB Kapitalforvaltning is one of the leading discretionary asset managers in Norway • At 31 December 2001, DnB Kapitalforvaltning managed NOK 71.9 billion on behalf of clients, up from NOK 67.8 billion on 31 December 2000 • New sales in 2001 amounted to approximately NOK 3.1 billion to a broad range of clients, both directly and through agents • The company carries out discretionary asset management (NOK 11.4 billion) on behalf of pension funds (52 per cent), the public sector (22 per cent), corporates (11 per cent), trusts (10 per cent) and private individuals (5 per cent) • Vital's policyholders' funds under management total NOK 60.5 billion. This includes NOK 2.2 billion of Vital Link’s unit linked funds
Portfolio split as of 31 December 2001 (comparable figures for 2000 in parentheses)
International equities
17% Norwegian (23%) bonds 34% Norwegian (31%) equities 12% (12%)
14% (10%) 23% Money (24%) market International bonds
DnB PrivatBank DnB PrivatBank is the private banking entity of the DnB Group, offering a full range of banking services and private banking advisory services to high net-worth individuals. The company is the longest established and leading Norwegian private banking entity, managing assets of approximately NOK 11.8 billion for around 2 000 clients. Despite the difficult market conditions during most of 2001, DnB PrivatBank increased the number of clients by more than 30 per cent and thus further strengthened its position in the Norwegian private banking market.
DnB PrivatBank has an excellent strategic position, benefiting from DnB's unique access to high net- worth clients and its unmatched product offering across banking, insurance and asset management.
DnB Group 41 Supplementary information year-end 2001 3. DnB Group and business areas
Retail banking
Retail Banking includes the following units: Postbanken, Den norske Bank retail operations, residential real estate broking, the Internet banks and the telephone banks. The figures reported also include DnB Kort. The business area is headed by Petter Jansen, Group Executive Vice President.
Comments on operating performance in 2001
At the end of 2001, Retail Banking had an overall market share of 23 per cent of deposits and 21 per cent of lending. Market shares in deposits came under pressure due to the competitive situation, but showed a positive trend towards the end of the year. Combined figures for the two brand names showed stable market shares within lending in 2001.
The business area recorded profits before losses of NOK 1 026 million for 2001, up NOK 146 million on the previous year. Performance improved in spite of the unrest in financial markets, which had a strong impact on the sale of equity-linked products and earnings on asset management. Intense competition led to substantial pressure on interest spreads, and the introduction of value-added tax on services pushed up costs within the area. Nonetheless, healthy growth in lending and income from other areas in combination with strict cost controls resulted in a strengthening of profits.
Retail Banking achieved a 10 per cent increase in lending during 2001, while deposits rose by 2.7 per cent. The major part of lending growth represented residential mortgages backed by sound collateral. In relative terms, net interest income showed a lower rise, with narrower spreads due to stiffer competition and climbing interest rates.
Other operating income declined in 2001 due to reduced income on investment fund and equity products, which should be seen in connection with price developments in the stock markets. The decline in transactions carried out in branch offices resulted in a reduction in income on traditional giro-based payment transfers. In connection with changes in the use of payments services, the sales network has been strengthened through increased competence and the shift to active sales.
Private individuals
Average volumes in December 2001 Gross lending: NOK 122.1 billion 1) Deposits: NOK 88.1 billion
1) Guarantees not included
Market shares 30 Sept. 30 June 31 March 31 Dec. 30 Sept. 2001 2001 2001 2000 2000 Of total lending to households 1) 16.8 16.8 16.7 16.7 16.7 - of which commercial and savings banks 20.7 20.8 20.6 20.6 20.7 Of household savings 2) 23.6 23.6 24.0 24.3 24.7 1) Overall lending includes all credits given by commercial and savings banks, state banks, insurance companies, mortgage institutions and finance companies 2) Including bank deposits, mutual funds and premiums paid on individual life insurance policies
Source: Norges Bank, Statistics Norway, DnB
42 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Business profile • Serving around 1.85 million private individuals (of which DnB: 0.55 million, Postbanken: 1.3 million) • Serving around 51 000 of the smallest businesses • Serving around 170 000 customers by telephone payment service (telegiro) • More than 227 600 customers subscribe to customer benefits programmes • More than 402 000 clients use the Group's Internet banks, with more than 13.2 million payment transactions carried out over the Internet in 2001.
Strategic focus • Delivering growth and operating efficiency • Efficient distribution by restructuring the branch network and increasing the reliance on Internet, phone and electronic banking • Upgrading professional skills and focusing on sales • Cross-sales and increased focus on savings products (i.e. equity-linked bonds) and consumer finance • Focus on relationship banking and on increasing the number of customers enrolled in benefits programmes • Develop the DnB and Postbanken brand names
Breakdown of retail lending Breakdown of residential mortgages 1)
Other > 80%
6% 5%
60-80% 21%
74% 94% Residential mortgages 0-60%
1) Classified according to percentage of appraised value
Residential real estate broking
Through DnB Eiendom and Postbanken Eiendomsmegling AS, wholly-owned subsidiaries of Den norske Bank, the Retail Banking business area also offers one of Norway’s leading residential real estate brokerage operations. At 31 December 2001, DnB Eiendom had 45 outlets, all of which are located in Den norske Bank branches, and Postbanken Eiendomsmegling operated through 63 franchises owned by independent real estate brokers. Management estimates that the DnB Group’s market share of sales in the Norwegian real estate market was approximately 19 per cent in 2001, with total sales of 12 711 properties. In 2001, DnB Eiendom carried out 6 455 sales and Postbanken Eiendomsmegling 6 256 sales, compared with 6 144 and 5 687 respectively last year. In addition to brokerage income, the real estate brokerage also generates business for other units in the DnB Group in the form of housing loans and savings.
DnB Group 43 Supplementary information year-end 2001 3. DnB Group and business areas
Corporate banking
Corporate Banking includes the following: large corporates, shipping, small and medium-sized businesses, financing and real estate broking. The business area has responsibility for domestic regions and the international branch network and is headed by Leif Teksum, Group Executive Vice President.
Outstanding volumes Gross lending, average: NOK 156.0 billion Bond issues: NOK 57.1 billion Guarantees, average: NOK 35.0 billion Loan syndications: NOK 48.7 billion
Comments on operating performance in 2001 Corporate Banking recorded a 17.3 per cent increase in pre-tax operating profits before losses relative to the previous year due to strong income growth but no corresponding rise in operating expenses.
Loans and guarantees to corporate customers averaged NOK 184 billion, up NOK 18.2 billion on the year-earlier figure. Deposits rose by NOK 5.9 billion. As a consequence of expanding lending and deposit volumes, net interest income increased by 6.3 per cent in spite of fierce competition and lower interest income on payment transactions. Efforts to improve asset quality have also brought down interest income.
The rise in income is attributable to high levels of activity within areas with healthy earnings from foreign exchange and interest rate products, sound income from syndication activity and the successful completion of several large corporate finance projects, including the initial public offering of Statoil.
Costs were down NOK 115 million from 2000 to 2001, partly due to the realisation of synergies following the merger of DnB and Postbanken.
The strategy to focus on customers with low credit risk has proved successful and resulted in a continued limited volume of new losses.
Corporate banking market shares 30 Sept. 30 June 31 March 31 Dec. 30 Sept. 2001 2001 2001 2000 2000 Of total lending to corporates 1) 9.5 9.8 9.9 9.5 9.6 - of which commercial and savings banks 23.9 24.7 24.5 24.1 24.7 Of deposits to corporates 2) 25.5 24.9 25.5 25.3 26.6 1) Overall lending includes all credits given by commercial and savings banks, state banks, insurance companies, mortgage institutions, finance companies, bonds, commercial paper, money market loans and foreign institutions 2) Savings and commercial banks
44 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Large corporates
Average volumes in December 2001 Gross lending: NOK 51.6 billion Guarantees: NOK 19.0 billion Deposits: NOK 38.6 billion
Business profile • Serving large Norwegian corporations, the public sector, international companies doing business in Norway, international customers within oil and energy as well as financial institutions • Around 60 per cent of the 300 largest Norwegian corporations use DnB as their main banker while an additional 30 per cent use one or more of the products provided by the DnB Group • Selling an average of 5.7 products to major clients using DnB as their main banker, and 3.4 products to clients using DnB as their no. 2 bank • Product categories are: Credit, trade finance, cash management, custody services, FX/money market and corporate finance • Internationally, customers are served through a network of offices located in Stockholm, Copenhagen, Hamburg, London, New York and Singapore
Strategic focus • Continued emphasis on cross-selling, particularly with regard to corporate finance and asset management • Maintain satisfactory credit portfolio quality and continue the reduction in international and non- strategic client exposure • Maintain quality in strategic products by ensuring that clients are offered the best products available, whether they are provided from within the DnB Group or by external suppliers • Making service concepts available on the Internet by providing value-enhancing services for clients
Lending according to sector 1) Risk classification of portfolio
Expected loss Trade Finance >75 bp Expected loss 25-75 bp 2% 12% 13% Public sector 17% 8% Oil/gas/ supply 14%
25% 5% Energy Real estate 81% 19% 4% Expected loss Manu- < 25 bp Telecom/IT facturing
1) Expected exposure at default
DnB Group 45 Supplementary information year-end 2001 3. DnB Group and business areas
Shipping
Average volumes in December 2001 Gross lending: NOK 29.0 billion Guarantees: NOK 9.7 billion Deposits: NOK 16.0 billion
Business profile • Provide commercial and investment banking services to high-quality Norwegian and international shipping and offshore clients • Strong and proactive client focus and long-term relationship orientation • Shipping expertise available nationally through offices in Oslo and Bergen and internationally through offices in New York, London and Singapore
Total portfolio (loans and guarantees) 1) Results
USD million NOK million 5 000 500
4 000 300
100 3 000 -100
2 000 -300
-500 1 000 -700 Profit before losses Net profit Net losses 0 -900 1993 1994 1995 1996 1997 1998 1999 2000 2001 1993 1994 1995 1996 1997 1998 1999 2000 2001
1) Average volumes for the last month of each period
46 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Strategic focus • Client-focused organisation with a professional and proactive pool of staff • Improve risk management tools in order to maintain a high-quality portfolio • To be the preferred provider of financial products and services for large industrial shipping and offshore companies requiring a comprehensive range of financial products and services • Increase the share of non-lending income such as corporate and structured finance, cash management, treasury products and foreign exchange • Contribute to DnB's return on equity by increasing profits before losses, keeping losses at a minimum level and maintaining cost awareness • Attract and retain highly competent staff and be recognised by our clients as being knowledgeable, professional and proactive
Lending according to segment 1) Risk classification of portfolio
Expected loss Other non- >75 bp Other shipping shipping Offshore 3% 7% Expected loss 7% 25-75 bp 20% 15% Chemical 10%
13% Shuttle 5% Tanker
8% 10% 82% Product 14% 6% Ro/ Container/ PCC Expected loss Dry cargo Cruise/Ferry/ <25 bp Passenger
1) Expected exposure at default
DnB Group 47 Supplementary information year-end 2001 3. DnB Group and business areas
Small and medium-sized businesses
Average volumes in December 2001 Gross lending: NOK 62.1 billion Guarantees: NOK 6.2 billion Deposits: NOK 43.4 billion
Business profile • Main bankers for nearly 49 000 small and medium-sized corporations, with 7 000 medium-sized, 25 000 small and 17 000 served through DnB Næringsliv Direkte, a telephone banking service also available on the Internet Classified by turnover: medium-sized > NOK 15 mill, small < NOK 15 mill and Næringsliv Direkte < NOK 40 mill • DnB is the leading bank in Norway within this segment • 21 per cent of companies within this segment use DnB as their main banking partner while an additional 16 per cent use DnB for supplementary banking services. DnB's market share increases with company size • 11 regional centres (incl. Oslo) with special expertise within important product areas such as cash management, foreign exchange and interest rate products, insurance, financing products and asset management • Serving and communicating with the businesses at various levels and through different concepts depending on their size and requirements
Strategic focus • Increasing cross-sales and "share of wallet" • More effective credit process (credit scoring) and service concept for small and medium-sized companies • Increasing the effectiveness of the DnB Group's distribution channels • Internet bank applications
Lending according to sector Risk classification of portfolio
Transp. and Public Expected loss comm. Primary >75 bp Finance industries 6% 7% 2% 8% 7% Expected loss Energy 25-75 bp Property/ 9% 20% real estate 22%
14% Manu- 73% 14% facturing
Services 15% 4% Expected loss <25 bp Building and Trade construction
48 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Financing DnB Finans operates within factoring, leasing, vendor and car financing, and is one of the leading finance companies in Norway in both the corporate and retail segments with a market share of 20 per cent within leasing and lending at year-end 2001. The company’s market share of factoring was 35 per cent at end- December 2001. DnB Finans is a wholly-owned subsidiary of Den norske Bank ASA.
The company has 365 full-time positions, branch offices throughout Norway and distributes its products through its own network, through DnB branches and sales staff, the Postbanken distribution network as well as car dealers and vendors. More than 40 per cent of business comes from close co-operation and cross-selling with other members of the DnB Group. Profit for the year before tax was NOK 226.2 million, compared with NOK 198 million in 2000. Total assets amounted to NOK 13.8 billion as at 31 December 2001, compared with NOK 12.7 billion in 2000.
Commercial real estate broking DnB Næringsmegling AS is a leading real estate broker for urban business premises. The company was established in 1995 and has offices in Oslo and Bergen. It co-operates closely with DnB’s corporate banking business area and other parts of the DnB Group, as well as with Scandinavian partners in Sweden and Denmark.
During 2001 the company was involved in 85 transactions for a total value of approximately NOK 2 700 million, compared with 92 transactions totalling NOK 3 174 million in 2000. DnB Næringsmegling is a wholly-owned subsidiary of Den norske Bank ASA.
DnB Group 49 Supplementary information year-end 2001 3. DnB Group and business areas
Capital markets
DnB Markets comprises the following units: Sales FX/Treasury, Trading FX/Treasury, Nordic Equities (Sales/Research), Corporate Finance and Securities Services. The Domestic Treasury and Equity Investments are organisationally part of DnB Markets though profits and losses for these units are not recorded under this business area. Ottar Ertzeid, Group Executive Vice President, is head of DnB Markets.
DnB Markets is the capital markets arm of DnB, providing a wide range of investment and securities services. It has 500 full-time positions, including 30 in the Group´s international branches.
Comments on operating performance in 2001 2001 was a turbulent year in the foreign exchange, interest rate and capital markets. Based on a strategy of diversified operations and a low risk profile, DnB Markets achieved record profits in 2001, in spite of market conditions. With the exception of equities brokerage, activity levels rose in all areas. Pre-tax profits were up 12.6 per cent from NOK 938 million in 2000 to NOK 1 056 million in 2001. All units showed sound performance. Total income came to NOK 1 941 million, up 8.2 per cent from a year earlier. Due to developments in financial markets, income on customer business declined somewhat in 2001, while income on market-making and trading activities increased under the same conditions. Costs rose by NOK 55 million, corresponding to 6.3 per cent. The increase resulted from higher profits in areas with performance-based pay, a generally high level of activity and the introduction of value-added tax on services. Return on equity was 50.3 per cent and the cost/income ratio 47.3 per cent.
Product range • Foreign exchange, money market instruments and derivatives • Fixed-income instruments and loan syndications • Nordic equities, research and corporate finance services • Other investment products • Securities and custodial services • 24-hour service through operations in Oslo, New York and Singapore • Ten regional sales desks in Norway • Internet service
Market position in Norway • Market leader in Norway for investment and securities services • 29 per cent of total income for Norwegian investment firms • Number one provider of equity-linked bank deposits and hedge funds in Norway • Number one provider of derivatives in Norway • Number one arranger of syndicated loans for Norwegian borrowers • Arranger for approximately 18 per cent of all domestic issues of bonds and commercial paper • 25 per cent market share for trading in Norwegian fixed income securities in 2001 • Market share of close to two-thirds of the Norwegian market for custodial services • Account operator in the Norwegian Central Securities Depository for 45 per cent of companies, approximately 20 per cent of the fixed income securities issued and 160 000 investors
Rankings • Named best equity house in Norway by Euromoney i 2001 • Named best custody clearing bank in Norway by Global Investors European Clearing Survey • Named the only Norwegian top-rated subcustodian/ agent bank in Norway by Global Custodian
50 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Key figures - fourth quarter 2001 • Revenues of NOK 487.6 million, from NOK 487 million in the same quarter last year • Pre-tax profit decreased 3,8 per cent to NOK 240.7 million, from NOK 250.2 million in 4Q00 • Market making/trading revenues of NOK 130.8 million, up NOK 59.4 million (83 per cent) compared with 4Q00 • Total customer revenues of NOK 331.5 million, down NOK 57.7 million (15 per cent) from 4Q00 • Customer revenues of NOK 118.6 million from FX and interest rate derivatives, down NOK 10.5 million (8 per cent) on 4Q00 • Customer revenues of NOK 135.4 million from investment products, up NOK 12.0 million (10 per cent) compared with 4Q00 • Customer revenues of NOK 32.3 million from corporate finance, down NOK 60.8 million (65 per cent) on 4Q00 • Customer revenues of NOK 45.2 million from securities services, up NOK 1.7 million (4 per cent) from 4Q00
Income distribution DnB Markets 1) Income from customer business DnB Markets 1)
NOK million NOK million 1 389 1 311
484 482 461 462 4Q 1 060 4Q 406 389
335 337 332 848 308 777 4Q 3Q 3Q
543 492 500 3Q 2Q 2Q 149 145 131 98 2Q 71
1Q 1Q 1Q
4Q00 1Q01 2Q01 3Q01 4Q01 1994 1995 1996 1997 1998 1999 2000 2001 Income on customer business Income on trading / market making Total income
1) Excluding interest on allocated equity
Distribution of income over the 259 trading days in 2001 Number of days 55 53
42 38
27
10 10 9 8 4 1 00000000 0 11 0 More 2 500 5 000 7 500 -7 500 -5 000 -2 500 10 000 12 500 15 000 17 500 20 000 22 500 25 000 -25 000 -22 500 -20 000 -17 500 -15 000 -12 500 -10 000 NOK thousand
DnB Group 51 Supplementary information year-end 2001 3. DnB Group and business areas
Financial, payment and group services
Financial, Payment and Group Services includes Cash Management, Electronic Payment Services, International Payment Services, DnB Kort (DnB Kort is included in the figures for Retail Banking), IT and Human Relations. The area is headed by Evlyn Raknerud, Group Executive Vice President.
Outsourcing and sale of operations in 2001 Clearing House In March 2001, Postbanken’s Clearing House was taken over by the Banks’ Central Clearing House (BBS) to achieve economies of scale for the DnB Group within paper-based payment services. The sale provided a gain of NOK 304 million in the accounts of Den norske Bank. The recorded gain in the group accounts was NOK 230 million, reflecting the Group’s 23.6 per cent holding in BBS. 145 full-time positions were transferred as a result of the sale.
Cash-handling operations In the second quarter, DnB established a cash-handling company, Norsk Kontanthåndtering AS (NOKAS), in cooperation with Norges Bank (the central bank of Norway) and other banks. The company started operations on 1 July and will be in charge of the major part of the banks’ cash handling operations and also provide services to the central bank. The establishment of the company will open up for the coordination of operations and productivity gains, in addition to improved security and quality of services. 30 full-time positions were transferred due to the establishment of the company.
IT -outsourcing In July 2001, DnB signed an agreement with Telenor and EDB Business Partner on the outsourcing of IT operating services. Consequently EDB Business Partner and Telenor took over both ownership and operating responsibility for the bank’s IT operations, including equipment, buildings and around 195 employees in Oslo and Bergen. The gain on the sale of NOK 299 million was taken to income in the third quarter. The agreement will ensure slower growth in annual IT operating expenses. The agreement entered into force on 5 July for a period of five years and will represent annual cost savings for DnB of around NOK 150 million from the time the transfer of operating services is completed.
Human resources Group Human Resources (HR) is, among other things, responsible for management development programmes, organisational development and trainee programmes. Currently, particular emphasis is placed on setting up an training centre for managers, implementing the Group’s core values throughout the organisation, carrying out employee surveys and implementing HR policy guidelines. The Human Resources department also works with the effects on people of introducing new technology through a programme called “web-adapted organisation”. The HR department works closely with all business areas.
52 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
Electronic services and cash management • More than 80 per cent of the approximately 235 million payment transactions made in 2001 were carried out electronically • 22 100 customers use PC/Web-based payment solutions (DnB Telebank or Alfa-XS) • Approximately 170 000 customers use telephone payment services (telegiro). • 7 197 applications for loans were received in 2001
Central bank statistics released in May 2001 showed that in 2000, the DnB Group had a 27 per cent share of the Norwegian market for payment services. Electronic payment solutions specifically tailored to corporate customers provide a major competitive advantage. DnB aims to be the preferred bank for Norwegian companies in providing cross-border payment services, and the foreign branches linked up to DnB's electronic banking channel provide solutions for customers with operations in other countries. Through agreements with international banks, similar services are offered in places where DnB has no offices of its own.
DnB is the leading Norwegian euro bank and is linked to both the EU's euro real-time gross settlement system (Target) and the payment system between banks (Chaps Euro). The links to euro settlement and payment systems allow DnB to effectuate euro payment transfers on behalf of Norwegian customers in the same way as banks within the EU.
DnB Telebank - number of transactions Million transactions 35.2
4Q 1) 25.3 23.2 20.0 4Q 4Q 3Q 16.9 14.6 3Q 3Q 2Q 2Q 2Q
1Q 1Q 1Q
1996 1997 1998 1999 2000 2001 1) The large increase in the fourth quarter stems from the conversion of certain large customers from Postbanken to Telebank, including the National Insurance Administration and the Directorate of Taxes
DnB Group 53 Supplementary information year-end 2001 3. DnB Group and business areas
Consumer finance DnB Kort AS, a wholly-owned subsidiary of Den norske Bank ASA, is responsible for the Group’s card operations. The company is Norway’s leading MasterCard issuer and sole franchisee for American Express’ Norwegian operations. At end-September 2001, a total of 1 660 000 cards had been issued by the DnB Group. During 2001, 108 000 new credit cards were issued, compared with 104 000 issued cards in 2000.
The consumer loans for which DnB Kort took over product responsibility and management in 2000/2001 have proved to be very successful, and by the end of 2001, almost 17 000 loans had been granted.
DnB Kort recorded operating profits of NOK 120.8 million in 2001. Total assets were NOK 3.6 billion and NOK 2.6 billion at end 2001 and 2000 respectively.
Number of credit cards issued
Thousands 1 660 1 602 1 540
1 336 1 153 821 873 803 702 603
737 781 787 550 634
31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 1997 1998 1999 2000 2001 Postbanken Den norske Bank
54 DnB Group Supplementary information year-end 2001 3. DnB Group and business areas
DnB on the Internet DnB.no and Postbanken.no • Internet bank was introduced in April 1998 • Strong growth in the number of Internet banking clients, as well as the number of payments made • More than 425 000 Internet banking clients had signed up by the end of December • More than 13.2 million payment transactions were made in 2001, compared with 7.4 million in 2000 • e-invoice via e-mail and into Internet banking offered • Wap and SMS-message banking • Trading in mutual funds started in June 1999, a new and improved version is now available • DnB Markets Online currently has more than 19 000 online equities customers • Online customers trade about four times as frequently as offline customers, but in smaller lots (the average transaction is approximately NOK 50 000) and did in 2001 more than 100 000 transactions • The online research site publishes daily morning reports and more extensive company reports • Vital Skade online (non-life insurance) has implemented an integrated solution for the sale of insurance products through Postbanken.no’s Internet bank, which has proved a success • From the beginning of last summer to the end of December there were 16 000 visitors to the non-life insurance site, and 50 per cent of the visitors calculated prices on insurance products • About 80 per cent of factoring clients were users of the Telefactor system (a web based interactive factoring service) by the end of December 2001
Vital.no • Through Teleinsurance, Vital has made interactive communication available to insurance customers via the Internet. The service gives corporate customers updated information on their group pension schemes and is used by a total of 624 companies with about 77 000 employees • Vital developed and introduced a new Internet portal during the first half of the year. The service provides customers with an overall view of all products and services offered by Vital, along with access to all information on the customer relationship with Vital. Customers in certain companies have been given direct online access to details on their personal pensions within group pension schemes. Version 2.0 of this portal is under development, and will be launched in April 2002
Internet banking services in 1999-2001
Number of clients Number of transactions
400 000 1 200 000 350 000
1 000 000 300 000
250 000 DnB.no 800 000
200 000 600 000
150 000 400 000 100 000
200 000 50 000 Postbanken.no
0 0 135791113579111357911 8101224 6 8101224 6 81012 1999 2000 2001 19992000 2001 Postbanken.no DnB.no
DnB Group 55 Supplementary information year-end 2001 3. DnB Group and business areas
e-commerce initiatives
Netaxept - DnB's e-commerce initiative with Norway Post and Accenture Last year DnB established Netaxept, a joint venture with Norway Post and Accenture. Netaxept provides a secure payment system combined with delivery of goods purchased online. The company offers its services to online shops, marketplaces and portals. DnB and Norway Post each holds 47.5 per cent, whereas Accenture is a minor partner with 5 per cent of the shares. The owners' financial commitment to the company is a total of NOK 120 million. More info on www.netaxept.no
SmartPay - e-alliance with Telenor SmartPay is a payment system for both digital and physical marketplaces. The system has been developed jointly by DnB and Telenor and represents a new platform for money transfers using digital media. The system is the first in the world to use PKI (Public Key Infrastructure) on mobile phones, incorporating user certificate in SIM cards. Users are offered a choice of three payment methods charging their SmartCash account, debiting their bank account or using their credit card. Payments may be made by mobile phone, over the Internet or later via interactive TV. The product was commercially launched in the Norwegian market in the beginning of October 2001. More info on www.smartpay.no
Atento - joint venture between DnB, Telenor, Ergo Group and Accenture In 2001, DnB, Telenor Business Solutions, Ergo Group and Accenture formed a company, which establish and operate an electronic infrastructure and marketplace for business to business (B2B) commerce. The company's B2B services are expected to reduce purchasing costs for those public and private sector clients buying its services. The company initially develop and establish a purchasing system for its parent companies. During 2001 the four owners became the company's first customers. DnB owns 28.6 per cent of the shares in the joint venture. The owners' financial commitment to the company is NOK 100 million.
56 DnB Group
Section 4 Shareholder information
DnB Group 57 Supplementary information year-end 2001 4. Information on the DnB share
Equity-related data
Key figures
1) 2001 2000 1999 1998 1997
2) Shares outstanding at end of period (1 000) 770 591 778 658 778 658 640 500 640 500 2) 3) Average no. of shares - accounting basis (1 000) 774 773 778 658 675 039 640 500 640 500 2) Average no. of shares - fully diluted (1 000) 4) 779 972 781 400 - - - 2) Earnings per share (NOK) 5.29 5.16 4.01 2.05 4.04 2) EPS excluded goodwill (NOK) 5.47 5.33 4.25 2.30 4.21 2) EPS fully diluted (NOK) 5.26 5.14 - - - Return on equity (per cent) 15.9 17.0 14.4 4.6 11.6 Price/earnings ratio 5) 7.63 9.21 8.20 12.82 8.61 Dividend per share (NOK) 2.40 2.25 1.75 1.35 1.75 Dividend yield (per cent) 5) 5.94 4.74 5.32 5.13 5.03 2) Equity per share (NOK) 33.53 30.71 27.84 24.24 23.51
1) Pro forma figures 2) Including the effect of holding 8 067 420 shares in treasury (to be cancelled at AGM 2002) 3) 652 013 158 shares were average outstanding in 1999 4) Based on the dilution effect of 27 172 000 shares from an employee option scheme linked to a Nordic financial institution index which includes: Gjensidige NOR Sparebank, Sparebanken Midt-Norge, Danske Bank, SEB, Svenska Handelsbanken and Nordea 5) Based on share price at end of period
Share price development 2001
NOK DnB actual DJ STOXX Bank Pan-Europe Index (rebased) 55 Mainindex
50
45
40
35
30
25 02.01. 30.01. 27.02. 27.03. 26.04. 25.05. 22.06. 20.07. 16.08. 13.09. 11.10. 08.11. 05.12.
58 DnB Group Supplementary information year-end 2001 4. Information on the DnB share
Shareholder structure as at 31 December 2001
Major shareholders
Shares in 1 000 Ownership in %
Government Bank Investment Fund 368 158 47.78 Folketrygdfondet 21 544 2.80 State Street Bank NOM 19 382 2.52 JPMorgan Chase Bank, clients NOM 18 462 2.40 Goldman Sachs int. equity, nontreaty NOM 14 362 1.86 The Northern Trust, treaty NOM 13 291 1.72 Orkla ASA 12 251 1.59 Fidelity Funds, Europe 11 125 1.44 Bankers Trust, US treaty NOM 11 003 1.43 Boston Safe dep & Trust NOM 10 430 1.35 JPMorgan Chase Bank, omnibus NOM 9 259 1.20 Bank of New York, Equity repo. 7 804 1.01 Fidelity Funds, low 6 630 0.86 Storebrand Livsforsikring - P980 6 577 0.85 Mutual Discovery Fund 6 350 0.82 DnB Employee Fund 6 225 0.81 Arendals Fossekompani ASA 6 059 0.79 Fidelity Funds, Nordic 5 695 0.74 JPMorgan Chase Bank, BGI NOM 5 594 0.73 Total largest shareholders 560 202 72.70 Other 210 388 27.30 Total without shares held in treasury 770 590 100.00 1) DnB Holding ASA 8 067 1.05 Total 778 658 1) Shares held in treasury to be cancelled at the annual general meeting in April 2002
Shareholder structure On 2 April 2001, the Government Bank Insurance Fund sold their 104 million shares in a secondary offering.
Before the secondary offering After the secondary offering As at 31 March 2001 As at 31 December 2001
Foreign investors Foreign 23% investors 31% Norwegian Norwegian 61% government 47% government 16%
Other 22% Norwegian Other investors Norwegian investors
DnB Group 59 Supplementary information year-end 2001 4. Information on the DnB share
60 DnB Group
Section 5 The Norwegian economy
DnB Group 61 Supplementary information year-end 2001 5. The Norwegian economy
The Norwegian economy
Key macro-economic indicators
2000 2001 2002 2003 Per cent GDP growth - Norway, total 2.3 1.5 2.3 1.9 - Mainland Norway 1.8 1.1 1.6 2.0 Private consumption 2.4 1.9 2.8 2.9 Gross fixed investment (1.1) (1.7) 0.7 (0.1) Inflation (CPI) 3.1 3.0 1.5 2.3 Savings ratio 1) 7.7 8.0 8.7 8.9 Unemployment rate 3.4 3.5 3.6 3.6 Current account 2) 14.3 13.8 11.1 10.9 Net foreign assets 2) 23.0 33.0 43.5 52.1 General government budget balance 2) 14.9 15.1 12.6 13.0 1) Per cent of disposable income 2) Per cent of GDP Source: Statistics Norway, Norges Bank, Ministry of Finance, Norwegian Financial Services Association
Financial market growth
31 Dec. 31 Dec. 31 Dec. 30 Nov. Percentage change from previous year 1998 1999 2000 2001 1) Credit Total 13.5 9.0 13.5 7.6 - of which commercial and savings banks 11.9 9.3 14.5 8.9 Total retail market 7.7 9.3 12.1 12.4 Total corporate market 17.1 8.9 14.4 5.0
Savings 4) Total 2) 4.3 13.2 10.8 3.0 - of which commercial and savings banks 6.8 11.0 10.3 8.6 Total retail market 3) 3.5 15.4 10.7 4.5 Total corporate market 3) 4.9 13.2 12.0 7.6 1) Commercial and savings banks, state banks, insurance companies, mortgage institutions, finance companies, bonds, commercial paper, money market loans, foreign institutions 2) Deposits in commercial and savings banks, participation in mutual funds, funds for insurance commitments 3) Deposits in commercial and savings banks, participation in mutual funds, insurance premiums recorded as income over the last 12 months 4) As at 30 September 2001
62 DnB Group Supplementary information year-end 2001 5.The Norwegian economy
General government's financial position 1) (Per cent of GDP)
Net financial assets Budget balance 110 18 100 16 90
80 14
70 12
60 10
50 8 40 6 30 4 20 2 10
0 0 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 -10 -2
General government net financial assets General government budget balance
Source: The Ministry of Finance
Current account and net foreign assets (incl. private sector) 1) (Per cent of GDP)
Net foreign assets Current account 20 70 18 60 16 14 50 12 40 10 30 8 6 20 4 10 2 0 0 -2 -10 -4 -20 -6 -30 -8 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004
Net foreign assets Current account Source: The Ministry of Finance
1) The projections are based on an assumed oil price of NOK 220 per barrel in 2001, NOK 185 in 2002 and NOK 152 in 2005. (The oil price in September 2001 was NOK 232 per barrel and in December NOK 172)
DnB Group 63 Supplementary information year-end 2001 5. The Norwegian economy
Household debt servicing capacity
Per cent Per cent 15 160
Debt in per cent of Debt interest (after tax) 150 13 disposable in per cent of cash surplus income (left-hand scale) (right-hand scale) 140 11
130 9 120
7 110 Average lending rate (after tax) 5 (left-hand scale) 100
--- Forecast --- 3 90 1983 85 87 89 91 93 95 97 99 01 03 05
Source: Norges Bank
Private non-financial enterprises Interest-bearing debt as a percentage of cash surplus minus interest expenses 1)
Per cent 700 Private non-financial enterprises (excl. petroleum and shipping) 600
500
400
300
200 Private non-financial enterprises (incl. petroleum and shipping) 100
--- Forecast --- 0 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003
Source: Norges Bank
1) Interest-bearing debt is defined as loans from domestic and foreign financial institutions and from the bond and short-term paper markets. Cash surplus is defined as the sum of value added and wealth income less wages and tax. In the denominator of the indicator on the chart, interest expenses are deducted from the cash surplus to provide a measure of the sector's ability to make principal payments.
64 DnB Group