Supplementary information for Investors and Analysts
3rd quarter 2001
(Unaudited)
Investor Relations
Chief Executive Officer Svein Aaser
For further information, please contact Tom Grøndahl, Chief Financial Officer [email protected] +47 22482922 Andrew Sayer, Head of Investor Relations [email protected] +47 22481167 +44 20 76216005 Jan Erik Gjerland, Investor Relations [email protected] +47 22949969 Bjørn Brynildsen, Group Financial Reporting [email protected] +47 22482370 Janne Næss, Group Financial Reporting [email protected] +47 22481084 Halfdan Bakøy, Group Financial Reporting [email protected] +47 22481071 Anne Johansen, Secretary, Investor Relations [email protected] +47 22481749
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 home page www.dnb.no DnB's Investor Relations page www.dnb.no/ir Hugin www.huginonline.no/DNB/
Financial calendar 2002 Year end 2001 14 February First quarter 3 May Second quarter 7 August Third quarter 31 October
Annual general meeting 25 April Ex-dividend date 26 April Payment of dividend May
Supplementary information 3rd quarter 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 1996-2000 ...... 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...... 50 Financial, payment and group services...... 52 DnB on the Internet ...... 54 e-commerce initiatives...... 55
4. Shareholder information 57 Equity-related data ...... 58 Shareholder structure...... 59
5. The Norwegian economy 61
Supplementary information 3rd quarter 2001
Section 1 DnB - an overview
1 Supplementary information 3rd quarter 2001 1. DnB - an overview
Financial highlights
A special quarter
• Sound operating performance - Rise in net interest income - Stable cost levels - Sound credit quality - Healthy profit trend in DnB Markets • However, the third quarter reflects turbulent financial markets - Fall in share prices - Uncertainty regarding a particular commitment - Write-down on Storebrand investment • Nonetheless: Profits for the year to date of NOK 3.2 billion, up from NOK 2.9 billion last year
DnB Group – first three quarters
• Pre-tax operating profit before losses: NOK 3 726 million (3 701) • Earnings per share: NOK 4.12 (3.67) • Return on equity: 16.7 per cent (16.5) • Total combined assets: NOK 465 billion • Core capital ratio: 8.6 per cent
(comparable figures for 2000 in parentheses)
2 Supplementary information 3rd quarter 2001 1. DnB - an overview
DnB - Norway's leading financial services group
Asset management and life insurance As at 30 September 2001: • Total assets of Vital Forsikring and Vital Link NOK 68.3 billion • Assets in mutual funds and under discretionary management NOK 35.2 billion
Banking operations • Total assets NOK 368.4 billion • Gross lending NOK 274.9 billion • Customer deposits NOK 183.1 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
Distribution network • 125 domestic DnB branches, of which • 655 post office counters 1) 58 fully automated and • 721 post office in-store outlets 1) 11 regional centres (incl. Oslo) • 2 400 rural postmen 1) • 6 international branches • 63 Postbanken Eiendomsmegling sales offices • 4 international representative offices (franchises) • 40 Postbanken sales outlets • 44 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
3 Supplementary information 3rd quarter 2001 1. DnB - an overview
4
Section 2 Financial results DnB Group
5 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Financial highlights
Key financials
Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 2001 2000
Pre-tax operating profit before losses (NOK million) 975 1 406 1 345 1 311 1 192 3 726 3 701 Pre-tax operating profit (NOK million) 496 1 514 1 453 1 393 1 265 3 463 3 854 Net profit for the period (NOK million) 372 1 676 1 149 1 161 949 3 197 2 857 Earnings per share (NOK) 0.48 2.16 1.48 1.49 1.22 4.12 3.67 Return on equity (Per cent) 5.6 26.0 18.8 18.5 15.8 16.7 16.5 Combined assets (NOK billion) 465 483 463 445 452 465 452 Core capital ratio at end of period (including 50 per cent of profit for the period, except year-end figures) (Per cent) 8.6 8.6 7.3 7.5 7.5 8.6 7.5
Group income including premium income (NOK million) 4 506 4 532 17 267 14 907
Combined assets
NOK billion 500 465 445 407 400 368 344 319 313 300 300 271 246 253 228 232
183 183 200 169 171 175
97 108 100
0 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 30 Sept. 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 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Profit and loss accounts
Profit and loss accounts Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Net interest income 2 013 1 959 1 869 1 928 1 807 5 841 5 293 Net other ordinary operating income 949 1 456 1 488 1 601 1 306 3 893 4 135 Ordinary operating expenses 2 000 2 010 2 015 2 154 1 935 6 025 5 725 Ordinary operating profit 961 1 405 1 342 1 376 1 179 3 709 3 702 Gains on the sale of fixed assets 1411161514 Restructuring, write-downs, etc. 00(2) 65 (7) (2) 16 Pre-tax operating profit before losses 975 1 406 1 345 1 311 1 192 3 726 3 701 Net losses/(reversals) on loans etc. 128 (101) (94) (85) (75) (68) (156) Net gain/(loss) on long-term securities (351) 714 (3) (1) (330) (2) Pre-tax operating profit 496 1 514 1 453 1 393 1 265 3 463 3 854 Taxes 124 (162) 304 232 316 266 998 Profit for the period 372 1 676 1 149 1 161 949 3 197 2 857
Pre-tax operating profit before losses
NOK million 1600
1400
1200
1000
800
600
400
200
0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
1998 1999 2000 2001
7 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Net interest income
Net interest income Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Net interest income 2 013 1 959 1 869 1 928 1 807 5 841 5 293
Changes in net interest income
Amounts in NOK million 3Q01 Changes 3Q00 Net interest income 2 013 205 1 807
Of which: Hybrid capital (15) Net funding costs on problem loans (7) Loan and deposit volumes 85 Equity 82 Front-end fees 35 Loan and deposit margins 7 Other net interest 18
Amounts in NOK million 3Q01 Changes 2Q01 Net interest income 2 013 54 1 959
Of which: Hybrid capital (15) Net funding costs on problem loans (9) Front-end fees 25 Equity 13 Loan and deposit margins 4 Loan and deposit volumes 0 Other net interest 35
8 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Development in average interest rate spread
Development in volumes
9 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Operating income
Net other operating income
Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Dividends 3 51 2 11 10 57 231 Net profit from Vital (254) 100 88 81 87 (66) 264 Net commissions and fees 640 683 669 798 773 1 992 2 315 Net gain on foreign exchange and financial instruments 116 463 344 559 318 923 958 Sundry operating income 444 159 385 152 118 987 367 Net other ordinary operating income 949 1 456 1 488 1 601 1 306 3 893 4 135 Gains on the sale of fixed assets 1411161514 Net other operating income 962 1 457 1 489 1 602 1 312 3 908 4 149
As a percentage of total income 32.4 42.6 44.3 45.4 42.1 40.1 43.9 Unrecorded gains on short-term 1) equities at end of period 0 96 117 302 615 0 615
1) The investment in Storebrand was reclassified as a long-term investment in the third quarter
Other operating income in per cent of total income
10 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Operating income
NOK million 14 000 12 972 12 021 12 000 3 113 10 410 10 100 10 040 2 617 10 000 2 307 2 240 1 517 44 % 2 295 1 256 41 % 8 000 590 1 121 745 37 % 36 % 387 35 % 1 067 871 739 878 6 000
4 000 7 081 7 221 6 375 6 642 6 480 59 % 56 % 2 000 63 % 64 % 65 %
0 19961) 19971) 19981) 19991) 2000
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 indicates estimated negative changes in market values following a change in interest rates of 1 percentage point at the end of September 2001. The calculation is conditional on movements in each currency and for all time brackets being unfavourable for the Group relative to actual interest rate positions.
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 0 7 34 10 14 37 USD 3 3 15 18 2 6 EURO 0 1 3 3 1 0 GBP 0 2 2 1 0 5 Other currencies 2 4 18 4 0 21 Banking portfolio NOK 1 3 34 13 22 47 Total NOK 0 10 68 3 8 84 USD 3 3 15 18 2 6 EURO 0 1 3 3 1 0 GBP 0 2 2 1 0 5 Other currencies 2 4 18 4 0 21 The table does not include adminstrative interest rate risk and interest rate risk relating to non-interest-earning assets
11 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Profit from Vital
Extract of the accounts of Vital Forsikring 1) Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Premium income 1 382 1 681 3 721 1 160 1 068 6 784 4 280 Income from financial assets 2 551 3 296 3 304 2 301 2 800 9 151 7 624 Insurance settlements 925 890 1 120 993 906 2 935 3 110 Increase in insurance provisions 875 1 257 3 025 1 232 595 5 157 2 492 Insurance-related operating expenses 164 140 149 164 140 453 392 Expenses related to financial assets 5 362 1 826 3 952 2 860 1 836 11 140 4 506 From/ (to) securities adjustment reserve 987 (235) 2 000 1 677 393 2 752 476 Other income/(expenses) (16) 1 (26) (13) (24) (41) (59) Profit before allocation to policyholders, equity and taxes (2 422) 630 753 (124) 760 (1 039) 1 821 Allocated to policyholders (1 115) 490 627 (222) 624 2 1 453 Allocated to equity and taxes (1 308) 141 126 99 136 (1 041) 368 Return on assets, annualised (%) (10.3) 7.9 9.1 7.9 9.6 1.7 8.6 Value-adjusted return on assets, 2) annualised (%) (15.5) 9.4 (3.9) (3.3) 6.3 (3.8) 6.8
Amounts at end of period Total assets 64 648 67 406 65 592 63 674 64 224 64 648 64 224 3) Policyholders funds 60 381 61 664 59 419 58 269 58 629 60 381 58 629 - of which securities adjustment reserve 0 740 564 2 064 3 322 0 3 322 4) Buffer capital 5 755 8 746 8 226 9 450 12 323 5 755 12 323
Vital profit reconciliation (Vital Forsikring and Vital Link) 1) Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Estimated profit in Vital Forsikring, after taxes (1 186) 124 111 106 109 (951) 324 Covered by additional allocations 956 956 Amortisation of goodwill, etc. 25 25 25 25 25 76 74 Estimated profit from Vital Link, after taxes 122 04 5 14 Total net profit from Vital (254) 100 88 81 87 (66) 264
Development in premium income and policyholders' funds (Vital Forsikring and Vital Link) Premium income 1 498 1 895 4 033 1 666 1 369 7 426 5 377 Policyholders' funds at end of period 3) 63 839 65 648 63 133 62 139 62 368 63 839 62 368 - of which Vital Link 3 458 3 984 3 714 3 870 3 739 3 458 3 739
1) In accounting for the expected contribution from Vital, DnB has taken into consideration Vital's opportunity to cover part of the losses through the reversal of additional allocations in year-end adjustments. In Vitals own accounts, such adjustments cannot be made until 31 December, thus figures in the company's accounts were less favourable than those reported in the group accounts 2) Return on assets excluding change in value of long-term investments in bonds 3) Including undistributed profits to policyholders and, for earlier periods, 75 per cent of securities adjustment reserve 4) Vital's buffer capital was strengthened in October through the issue of a perpetual subordinated loan of USD 70 million
For information on profit split model, see page 37.
12 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Net commissions and fees on banking services
Net commissions and fees Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Money transfers 2) 324 313 342 410 423 979 1 221 Asset management services 87 98 99 97 114 284 348 Custodial services 33 34 36 41 29 102 90 Corporate finance etc. 61 84 38 97 54 183 152 Securities brokerage 18 26 39 50 50 83 182 Guarantees 44 48 48 37 37 141 119 Insurance sales 1) 15 17 17 20 14 51 46 Other 5863494653169158 Net commissions and fees on banking services 640 683 669 798 773 1 992 2 315
1) DnB's share of Vital's sale of individual life insurance policies (%) 44.4 54.5 49.4 57.0 49.3 49.6 50.4 2) Postbankens Betalingssentral (clearing house) was sold to Bankenes Betalingssentral (clearing house) in the first quarter of 2001
Net commissions and fees
NOK million 3 200 3 113
2 617
2 400 2 307 2 296 2 240 1 631
1 590 1 600 1 437 1 437 1 554 445
131 310 800 209 252 482 144 91 102 77 114 281 292 181 195 156 116 121 136 138 168 168 184 269 0 161 1) 1) 1) 1) 1996 1997 1998 1999 2000
Money transfers Asset management services Custodial services Securities brokerage and corporate finance Guarantees Other 1) Pro forma figures
13 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Net gain on financial instruments
Net gain on foreign exchange and financial instruments Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Net gain/(loss) on short-term shareholdings (106) 224 34 242 47 151 232 Net gain/(loss) on commercial paper and bonds 191 (69) 18 80 0 140 (187) Net gain on trading in foreign exchange and financial derivatives 394 696 299 258 241 1 390 898 Net gain/(loss) on other money market instruments (364) (388) (8) (21) 30 (759) 16 Net gain on foreign exchange and financial instruments 116 463 344 559 318 923 958 Of which: DnB Markets (I+II) 174 229 301 252 237 703 649 Banking portfolio, equity investments (98) 224 31 283 55 157 253 Banking portfolio, other 40111224266357
Total income in DnB Markets Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Customer business Net gain on trading in foreign exchange and financial instruments (I) 188 168 212 216 166 567 510 Net interest income 3 16 14 2 18 34 44 Other income 117 149 113 172 141 378 446 Total income customer business 308 333 338 389 324 979 1 000 Trading/market making Dividends 0 4 0 2 3 3 19 Net gain on trading in foreign exchange and financial instruments (II) (14) 61 89 36 71 136 139 Net interest income 1148362331625980 Other income (1) (2) (2) 0 (2) (5) (1) Total income trading/market making 98 145 149 71 88 393 237 Total income customer business and trading/market making 406 478 488 461 412 1 372 1 237 Interest on allocated equity 27 28 27 26 26 82 70 Total income DnB Markets 433 506 514 487 438 1 454 1 307
Market value above acquisition cost, banking portfolio 1) 30 Sept. 30 June 31 March 31 Dec. 30 Sept. 30 June Amounts in NOK million 2001 2001 2001 2000 2000 2000 Short-term shareholdings 0 96 117 302 615 444 1) Unrealised gains have not been included in the profit and loss accounts
14 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Major short-term shareholdings as at 30 September 2001
1) Amounts in NOK million Book value Market value IT Fornebu Eiendom 92 92 Cape Investments 66 71 Privatbanken 34 34 Industrifinans SMB III 30 29 Viking Ship Finance 25 50 Nordic Sea Holding 24 13 Orkla 23 56 Energos 23 23 Equity funds, total 458 346 Other 827 768 Total 2) 1 604 1 481 Value adjustement (123) - Book value 1 481 1 481 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 30 Sept. 2001 30 June 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 38 909 38 909 38 006 38 006 30 385 30 385 Banking portfolio 6 602 6 605 6 229 6 233 5 054 5 054 Total commercial paper and bonds 45 511 45 514 44 235 44 239 35 439 35 439 Short-term shareholdings Trading portfolio 382 382 322 322 582 582 Banking portfolio 1) 1 099 1 004 2 977 3 073 1 499 1 802 Total short-term shareholdings 1 481 1 386 3 299 3 395 2 081 2 383
1) The investment in Storebrand was reclassified as a long-term investment in the third quarter
Financial derivatives 1) 30 Sept. 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 1 163 930 7 122 4 542 1 132 499 5 256 3 339 Foreign exchange agreements 497 206 7 320 8 102 439 201 9 022 10 570 Equity-related agreements 15 700 964 637 13 541 1 914 1 627 Commodity-related agreements 12 2 2 45 5 5 Banking portfolio Interest rate agreements 32 105 260 1 572 30 479 409 1 552 Netting Value of netting agreements (7 038) (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
15 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Sundry operating income
Sundry operating income
Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Operating income on real estate and rental income 18 20 17 23 14 55 45 Fees on real estate broking 67 74 51 74 52 191 159 Share of profit in associated companies 25312415187966 Remunerations 34353109 Gain on sale of Postbankens Betalingssentral (clearing house) and outsourcing of IT operations 299 237 536 Miscellaneous 32 30 53 35 31 115 87 Total sundry ordinary operating income 444 159 385 152 118 987 367 Gain on the sale of fixed assets 1411161514 Total sundry operating income 457 159 386 153 124 1 002 381
Sundry operating income
NOK million 700 613 600 573 571 550 534 72 500 196 115 96 69
400
300 457 424 407 378 450 200
100
39 35 46 43 15 0 1) 1) 1) 1) 1996 1997 1998 1999 2000
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 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Operating expenses
Total operating expenses
Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Total ordinary salaries and other personnel expenses 911 908 898 911 886 2 716 2 582 Fees 140 164 143 180 151 447 413 EDP expenses 289 272 271 255 249 832 736 Expenses on fixed assets and rented premises 169 172 171 203 172 512 512 Marketing and public relations 57 88 86 97 67 231 220 Reimbursement to Norway Post 1) 192 166 175 208 160 533 497 Miscellaneous operating expenses 243 241 270 299 250 754 765 Total ordinary operating expenses 2 000 2 010 2 015 2 154 1 935 6 025 5 725 Write-downs and losses on the sale of fixed assets 0 (1) (2) (13) (7) (3) (14) Provisions for restructuring measures 0 0 0 0 0 0 30 Allocations to the DnB Employee Fund 0 0 0 78 0 1 0 Total operating expenses 2 000 2 010 2 013 2 219 1 927 6 024 5 741 1) Further reimbursement to the Norwegian postal system is included in interest expenses and fees payable on banking services
Total operating expenses
NOK million 9 000 8 413 7 960 8 000 7 305 7 293 7 488 7 000 3 265 3 493 6 000 2 968 2 996 3 119 5 000
4 000 2 448
3 000 2 297 2 357 2 362 2 575 481 2 000 456 415 426 1 432 459 1 000 1 408 1 368 1 447 1 352 787 0 177 159 134 81 19961) 19971) 19981) 19991) 2000 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
17 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Cost/income ratio
Per cent
1999: 63.7 75.0 2000: 60.8 1st - 3rd Q 2001: 59.2
70.0 67.5 64.7 65.3 65.0 63.7 63.7 62.1 1) 61.1 61.0 60.0 60.0 58.9 58.7 56.8
55.0
2) 50.0
45.0 3) 3) 3) 1Q99 2Q99 3Q99 4Q99 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 1) Write-downs related to stock market 2) Ordinary oper. expenses in per cent of ordinary oper. income. 3Q01 'normalised' (Vital and unrealised losses on shares) 3) Pro forma figures
Changes in total ordinary operating expenses from 2000 to 2001
Amounts in NOK million 3Q01 Change 3Q00 Total operating expenses 2 000 65 1 935 Of which Effect of sale of Postbanken's Betalingssentral (clearing house) (54) Effects of integration (39) Effect of IT-outsourcing (40) Performance-related personnel expenses (30) Increased activity levels 81 VAT on services 47 Wage settlements and pensions 35 Reimbursement to Norway Post 33 e-activities and IT 32
Integration process - cost reduction targets (synergy effects)
NOK million 500 464 382 400 322 300
200
100
0 Achieved as at Target 2001 Target 2003 30 September 2001
18 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Employees
3Q01 2Q01 2000 1999 1998 1997 Full-time positions at end of period Den norske Bank incl. Postbanken 6 307 6 476 6 481 6 732 6 900 7 017 Vital 609 584 570 553 537 573 Total 6 916 7 060 7 052 7 285 7 437 7 590
3Q01 Changes 3Q00 Full-time positions at end of period Total 6 916(111) 7 027 Of which: Retail Banking 72 Corporate Banking 69 DnB Markets 22 Asset management and Life Insurance 86 Financial, Payment and Group Services (368) - of which Postbanken Betalingssentral (clearing house) (145) - of which Cash handling operations (30) - of which IT-outsourcing (194) Other 8
IT expenses Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Operating expenses IT 284 325 322 265 292 931 857 Systems development expenses 133 97 89 161 140 319 395 e-business 45 60 58 81 43 163 78 Integration projects 11 25 27 12 12 63 36 Total IT expenses 1) 473 508 496 519 487 1 476 1 366 1) Incl. salaries and indirect costs
Restructuring provisions as at 30 September 2001 Balance at Accrued Balance at 30 Sept. expenses 31 Dec. Amounts in NOK million 2001 2001 2000 Personnel related expenses1) 14 41 54 IT - termination of contracts and reorganisation 43 14 56 Vacated premises and rehabilitation 14 0 14 Total, Postbanken merger 70 55 125 Foreign branches 5 1 6 Restructuring provisions Postbanken 1995-97 22 8 30 Total 97 63 160 1) Agreements entered into with employees relating to early retirement and severance packages
19 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Losses and reversals on loans and guarantees
Losses/(reversals) by business area 1) Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Retail Banking - DnB 7 18 (6) (60) (15) 20 (75) - Postbanken 10 (3) 20 11 2 27 4 Corporate Banking - Small and medium-sized businesses 54 (8) (27) 20 5 20 (48) - Large corporates 4 (111) 36 17 (21) (71) (56) - Shipping customers 5 (19) (135) (71) (57) (148) (65) - Other 8 13 13 4 7 33 24 Other units and unallocated unspecified provision 39 9 4 (6) 5 52 61 DnB Group 128 (101) (94) (85) (75) (68) (156) 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 September 2001
Net losses/(reversals) Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 New specified losses 198 86 161 165 43 445 295 Reversals on specified losses 71 187 255 250 118 513 451 Net losses/(reversals) on loans, etc. 128 (101) (94) (85) (75) (68) (156)
Losses/(reversals) for customer sectors Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 Amounts in NOK million 2001 2000 Retail customers 28 24 23 (48) (3) 76 (36) International shipping 19 (19) (134) (70) (57) (135) (40) Real estate 12 (50) (14) (17) (18) (53) (90) Services 49 20 (26) 0 (4) 44 15 Manufacturing 36 (12) 53 84 (6) 76 (3) Trade (10) (8) 774(11) (21) Transportation and communication 10 8 5 10 5 23 18 Oil and gas (27) (61) (0) (49) (0) (89) (4) Building and construction, power and water supply 032115(1) Other sectors 8 (7) (7) (3) 4 (6) (1) Total customers 126 (104) (92) (85) (75) (70) (164) Credit institutions 0 3 (3) 0000 Repossessed assets 200002 Increase in/(reversals on) unspecified provisions 0000008 Total losses/(reversals) 128 (101) (94) (85) (75) (68) (156)
20 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Asset quality
Development in problem commitments
Non-performing commitments after related specified provisions NOK million Doubtful commitments 6 000 after related specified provisions 5 432 Problem commitments after related specified provisions 5 000 4 371
4 000 3 581 3 422
3 034 2 956 2 918 3 000 2 277 2 010 1 914 2 000 1 779 1 304 1 337 1 041 1 140 1 000
0 31 Dec. 19971) 31 Dec. 1998 1) 31 Dec. 1999 31 Dec. 2000 30 Sept. 2001 Gross problem commitments before specified provisions: 7 147 8 768 7 034 4 891 4 666
Unspecified loan-loss provisions
NOK million 2 500 2 164 2 086 2 117 2 117 2 000
1 514 1 500 1 343
1 000
500
0 1) 1) 1) 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 30 Sept. 1996 1997 1998 1999 2000 2001 1) Pro forma figures
21 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Total assets owned or managed by the DnB Group
Combined assets 1) 2)
NOK billion 500 465 445 450 407 68 68 400 64 35 40 350 319 300 35 300 56 257 52 250 21 49 23 182 200 19 368 14 344 150 313 228 246 100 190 168 50
0 31 Dec. 1995 31 Dec. 1996 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 30 Sept. 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
30 Sept. 30 June 31 March 31 Dec. 30 Sept. 31 Dec. Amounts in NOK billion 2001 2001 2001 2000 2000 1999 Cash and lending to/deposits with credit institutions 25.9 33.3 32.8 29.2 38.6 28.7 Net lending to and receivables from customers 271.1 270.5 261.3 252.7 251.6 226.9 Commercial paper, bonds, etc. 45.5 44.2 39.9 35.4 31.0 33.9 Shareholdings 7.17.86.36.38.97.2 Fixed and intangible assets 3.74.04.14.23.73.9 Other assets 15.1 19.6 17.6 16.3 16.9 12.7 Total assets 368.4 379.5 362.1 344.2 350.6 313.4 Loans and deposits from credit institutions 47.7 50.1 47.1 51.3 46.3 45.5 Deposits from customers 183.1 185.1 179.5 175.4 179.7 170.9 Borrowings through the issue of securities 78.1 80.6 80.9 63.9 68.9 50.0 Other liabilities and provisions 21.0 24.8 21.2 21.5 22.8 18.0 Primary capital 38.5 38.7 33.4 32.0 32.8 29.0 Total liablities and equity 368.4 379.5 362.1 344.2 350.6 313.4
Average total assets for the year to date 365.7 363.3 351.0 341.4 338.4 325.2 Ratio of deposits to net lending (per cent) 67.6 68.5 68.7 69.4 71.4 75.3
22 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Lending to principal sectors 1) 2)
30 Sept. 30 June 31 March 31 Dec. 30 Sept. 31 Dec. Amounts in NOK billion 2001 2001 2001 2000 2000 1999 Retail customers 122.7 119.5 114.8 112.1 108.8 100.3 International shipping 27.8 30.1 30.0 27.6 29.8 24.3 Real estate 28.0 28.8 27.2 25.9 24.4 23.9 Services 30.6 29.6 28.7 27.7 27.8 21.1 Manufacturing 18.5 19.5 19.4 17.8 19.8 14.6 Trade 15.0 14.5 13.6 13.9 12.4 13.0 Transportation and communication 8.0 7.6 7.1 7.4 9.0 7.6 Oil and gas 3.8 4.3 4.1 4.1 5.3 7.5 Building and construction, power and water supply 8.1 8.2 8.2 7.8 6.6 5.3 Other sectors 10.7 10.5 10.3 10.7 9.7 11.4 Total 273.2 272.6 263.4 254.8 253.7 229.0
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 30 Sept. 2001 In per cent of lending Telecommunications 0.7 0.3% Travel/ hotels 1.5 0.5% Cruise 2.5 0.9% Civil aviation 0.4 0.1% Fish farming 2.3 0.8%
Increase in lending 1 January - 30 September 2001 NOK billion Manu- Others facturing Trade Total 20 4.1 % -1.3 % Fishing 7.7 % 7.2 % 0.7 -0.7 Real estate 41.4 % 1.1 Services 8.4 % 1.5 15 Retail 10.5 % 2.2 18.3 customers 2.9 9.5 % 10
5 10.6
0
23 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Customer savings
Customer savings in DnB companies 1) 2)
NOK billion 300 278 284 264 35 40 250 35
64 62 200 58 180 6 168 5 164 21 3 23 150 19 51 106 44 48 1 100 14 1 183 171 175
108 50 91 100 97
0 31 Dec. 1995 31 Dec. 1996 31 Dec. 1997 31 Dec. 1998 31 Dec. 1999 31 Dec. 2000 30 Sept. 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
NOK million NOK million 30 069 30 353 29 649 160 30 000 28 705 2 559 2 706 2 436 27 260 2 472 2 509 8 091 7 913 7 497 24 000 7 038 6 266 120 120 115 18 000 99 97 8 278 7 888 87 8 742 7 628 6 785 80
12 000
40 6 000 11 828 10 530 11 603 11 567 11 700
0 0 3Q00 4Q00 1Q01 2Q01 3Q01 Balanced funds and bond funds International equity funds Equity funds Money-market funds Asset management fees (right-hand scale)
24 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Capital adequacy and Taxes
Developments in primary capital and capital ratios
Den norske Bank Den norske Bank ASA DnB Group ASA consolidated
30 Sept. 30 Sept. 30 Sept. 31 Dec. Amounts in NOK million 2001 % 2001 % 2001 % 2000 % Share capital 7 787 7 787 7 722 7 787 Reserves 10 785 12 628 13 923 14 129 Perp. subord. loan capital securities 3 277 3 545 3 545 Core capital 1) 21 848 8.5 23 960 8.5 25 190 8.1 21 915 7.5 Perpetual subordinated loan capital 5 276 5 008 5 008 5 016 Term subordinated loan capital 3 084 4 003 4 929 4 909 Ineligible subordinated loan capital (80) (356) (451) (299) Net supplementary capital 8 281 8 654 9 486 9 625 Deductions 1 398 1 525 1 622 674 Total eligible primary capital 28 731 31 089 33 054 30 866 Total risk-weighted assets 255 958 280 735 311 326 292 279 Capital ratio 11.2 11.1 10.6 10.6 Core capital ratio incl. 50 per cent of profit for the period 1) 9.2 9.1 8.6 Capital ratio incl. 50 per cent of profit for the period 11.8 11.7 11.1
1) New capital adequacy regulations taking effect from 1 April 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
1998 1999 2000 2001 Core capital Supplementary capital
Taxes During the third quarter of 2001, Den norske Bank won the so-called preference capital matter. The estimated tax charge for 2001 was thus reduced by NOK 612 million. Because of uncertainty regarding other minor unsettled tax matters, DnB made additional provisions of NOK 100 million in the third quarter and adjusted the Group’s future average tax charge up to 25 per cent.
25 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
Financial results DnB Group
Profit and loss accounts DnB Group
3rd quarter 3rd quarter First three quarters Full year Amounts in NOK million 2001 2000 2001 2000 2000
Interest income 6 445 5 955 19 191 16 537 22 925 Interest expenses 4 432 4 148 13 350 11 244 15 704 Net interest income and credit commissions 2 013 1 807 5 841 5 293 7 221 Dividends 3 10 57 231 242 Net profit from Vital (254) 87 (66) 264 345 Commissions and fees receivable 924 956 2 776 2 847 3 847 Commissions and fees payable 284 183 784 532 734 Net gain on foreign exchange and financial instruments 116 318 923 958 1 517 Sundry ordinary operating income 444 118 987 367 519 Gains on the sale of fixed assets 14 6 15 14 15 Net other operating income 962 1 312 3 908 4 149 5 751 Salaries and other ordinary personnel expenses 911 886 2 716 2 582 3 493 Administrative expenses 644 587 1 913 1 818 2 575 Depreciation 104 112 367 331 459 Sundry ordinary operating expenses 341 350 1 029 994 1 352 Restructuring, write-downs, etc. 0 (7) (2) 16 81 Total operating expenses 2 000 1 927 6 024 5 741 7 960 Pre-tax operating profit before losses 975 1 192 3 726 3 701 5 012 Net losses/(reversals) on loans, guarantees, etc. 128 (75) (68) (156) (241) Net loss on long-term securities 351 1 330 2 5 Pre-tax operating profit 496 1 265 3 463 3 854 5 248 Taxes 124 316 266 998 1 230 Profit for the period 372 949 3 197 2 857 4 018 Earnings per share 0.48 1.22 4.12 3.67 5.16 Diluted earnings per share 0.48 1.21 4.09 3.66 5.14 Average total assets 370 377 349 671 365 679 338 365 341 428
Balance sheets DnB Group
30 Sept. 31 Dec. 30 Sept. Amounts in NOK million 2001 2000 2000
Assets Cash and deposits with central banks 1 681 8 387 13 098 Lending to and deposits with credit institutions 24 225 20 798 25 470 Gross lending to customers 274 860 256 693 256 195 - Specified loan-loss provisions (1 690) (1 871) (2 506) - Unspecified loan-loss provisions (2 115) (2 115) (2 115) Net lending to customers 271 054 252 707 251 574 Repossessed assets 96 76 76 Commercial paper and bonds 45 511 35 439 31 024 Shareholdings etc. 3 584 2 711 5 164 Investments in Vital and associated companies 3 512 3 616 3 702 Intangible assets 1 198 1 375 1 035 Fixed assets 2 539 2 866 2 665 Other assets 11 288 12 565 13 390 Prepayments and accrued income 3 707 3 667 3 393 Total assets 368 394 344 208 350 591
Liabilities and equity Loans and deposits from credit institutions 47 659 51 322 46 314 Deposits from customers 183 146 175 430 179 706 Securities issued 78 143 63 919 68 935 Other liabilities 12 606 17 578 15 769 Accrued expenses and prepaid revenues 7 000 2 747 5 698 Provisions for commitments 1 351 1 192 1 350 Subordinated loan capital 11 638 8 105 8 326 Share capital 7 722 7 787 7 787 Equity reserves 15 933 16 127 13 849 Profit for the period 3 197 - 2 857 Total liabilities and equity 368 394 344 208 350 591
26 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
DnB Group 1996-2000
Amounts in NOK million PROFIT AND LOSS ACCOUNTS 2000 1999 1 ) 1998 1 ) 19971 ) 1996 1 ) Interest income 22 925 21 411 19 532 15 345 15 706 Interest expenses 15 704 14 330 13 053 8 703 9 332 Net interest income and credit commissions 7 221 7 081 6 480 6 642 6 375 Dividends 242 146 145 106 70 Net profit from Vital before provisions for restructuring 345 350 183 192 156 Net commissions and fees receivable on banking services 3 113 2 617 2 295 2 307 2 240 Net gain on foreign exchange and financial instruments 1 517 1 256 387 590 745 Sundry ordinary operating income 519 528 504 539 574 Net other ordinary operating income 5 736 4 897 3 514 3 733 3 786 Salaries and other ordinary personnel expenses 3 493 3 265 3 119 2 996 2 968 Administrative expenses 2 575 2 448 2 362 2 357 2 297 Depreciation on fixed assets 459 481 426 415 456 Sundry ordinary operating expenses 1 352 1 432 1 447 1 368 1 408 Total ordinary operating expenses 7 879 7 626 7 354 7 135 7 128 Pre-tax ordinary operating profit before losses 5 078 4 352 2 639 3 239 3 033 Gains on the sale of fixed assets, etc. 15 43 46 34 (61) Restructuring, write-downs, etc. 81 787 134 158 176 Pre-tax operating profit before losses 5 012 3 608 2 552 3 116 2 795 Net losses/(reversals) on loans, guarantees, etc. (241) (15) 1 178 (114) (456) Net gain/(loss) on long-term securities (5) 14 (0) (149) 7 Pre-tax operating profit 5 248 3 636 1 373 3 081 3 258 Taxes 1 230 511 422 730 405 Profit for the year 4 018 3 125 952 2 351 2 853 Average total assets 341 428 325 160 317 202 283 197 252 845
31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 1) 1) 1) BALANCE SHEET SUMMARY 2000 1999 1998 1997 1996 Assets Cash and deposits with central banks 8 387 13 094 3 665 1 829 3 442 Lending to and deposits with credit institutions 20 798 15 572 13 383 14 102 11 123 Gross lending to customers 256 693 231 646 229 965 206 913 173 898 - Specified loan-loss provisions (1 871) (2 636) (3 290) (3 493) (4 160) - Unspecified loan-loss provisions (2 115) (2 085) (2 163) (1 513) (1 340) Net lending to customers 252 707 226 924 224 513 201 907 168 399 Repossessed assets 76 75 60 298 365 Commercial paper and bonds 35 439 33 937 48 507 51 923 47 864 Shareholdnings etc. 2 711 3 920 3 572 3 754 2 412 Investments in Vital and associated companies 3 616 3 289 3 038 2 630 2 276 Intangible assets 1 375 1 239 1 560 2 063 2 625 Fixed assets 2 866 2 688 3 262 3 409 4 325 Other assets 12 565 9 623 9 188 9 641 7 155 Prepayments and accrued income 3 667 3 022 4 040 3 679 4 314 Total assets 344 208 313 385 314 788 295 236 254 301 Liabilities and equity Loans and deposits from credit institutions 51 322 45 498 47 607 55 522 33 924 Deposits from customers 175 430 170 900 166 771 154 626 157 038 Securities issued 63 919 50 011 56 851 40 637 21 741 Other liabilities 17 578 14 585 12 577 13 188 11 699 Accrued expenses and prepaid revenues 2 747 2 004 2 885 3 745 3 894 Provisions for commitments 1 192 1 363 1 013 1 037 893 Subordinated loan capital and preference capital 8 105 7 344 6 838 6 334 6 034 Equity 23 914 21 679 20 247 20 146 19 078 Total liabilities and equity 344 208 313 385 314 788 295 236 254 301 Total risk-weighted volume 292 279 255 146 252 148 226 613 191 982
1) Pro forma figures
27 Supplementary information 3rd quarter 2001 2. Financial results DnB Group
28
Section 3 DnB Group and business areas
29 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Group strategy
The DnB Group’s strategy is to manage and further enhance DnB’s substantial customer base and distribution capacity in Norway. By offering the best financial products and services, DnB will be the preferred partner within the financial sector for Norwegian companies and households. DnB gives priority to meeting the specific needs of the various customers through a full range of competitive products.
Strategic focus DnB is dedicated to delivering shareholder value through the optimum use of its unique customer franchise. No other financial institution in Norway has a corresponding interface with its customers. In addition, the Group’s Internet services, through DnB.no and Postbanken.no, show fast growth. This unique customer franchise will be the focus of DnB’s strategy by ensuring that the most value for our shareholders is extracted from the best distribution network and the best solutions at the lowest cost.
Strategic direction - gateway to the best products DnB is committed to providing its customers with access to the best financial products in the market. When those products are not available from within the DnB Group of companies, DnB will seek solutions from external suppliers. This could be of particular relevance for product areas where it is impossible to obtain critical mass in the Norwegian market. In such areas, DnB will therefore try to find international partners to secure competitive solutions for the most demanding customers. DnB will create an operating environment based on appropriate management reporting systems, remuneration packages and ambitious financial targets, which will enable the Group to select and deliver the right products. DnB Group product areas will have to make sure that their products are not only able to compete with products from external suppliers in terms of performance and suitability, but also in terms of cost. This will create a competitive environment within the DnB Group, which is expected to deliver the best products at the lowest possible price.
Strategic direction - gateway to Norway DnB’s unique distribution system means that international entities requiring products or services in Norway, will want to use DnB as their partner. This places DnB in a strong position to attract non- Norwegian customers. DnB will also be the preferred partner for international financial institutions.
Strategic direction - niche products Norway has high personal computer, mobile phone and Internet penetration. Educational standards are above the European average. DnB will seek to maximise this combination to develop technology relating to financial services which could, in certain selected areas, be offered in markets outside Norway. Such areas could be Internet-based or require special professional skills. Additional expertise that could have an application in markets outside of Norway would include the shipping and offshore sectors.
30 Supplementary information 3rd quarter 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
31 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Group structure
DnB is organised into four business areas with responsibility for underlying divisions, departments and subsidiaries. The business areas Retail Banking includes the smallest businesses, Corporate Banking serving small and medium-sized companies as well as large Norwegian corporations, shipping companies and international corporate customers, DnB Markets, the capital markets arm and Asset Management and Life Insurance 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
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 •DnB Consulting E-development Financial, Payment and Group Services •International Payment Services •DnB Kort Nikolai Stefanovic Evlyn Raknerud •DnB IT •Group Services •Group Human Resources
Asset Corporate Retail DnB Markets Management Banking Banking and Life Insurance Leif Teksum Petter Jansen Audun Bø Gunn Wærsted
•Large Corporates •Postbanken •Customer FX/Treasury •Vital Forsikring •Shipping •DnB Retail •Trading FX/Treasury •Vital Skade •Small and Medium-sized •Postbanken •Equities Trading/Research •Vital Link Corporates Eiendomsmegling •Corporate Finance •Vital Eiendomsforvaltning •DnB Finans •DnB Eiendomsmegling •Securities Services •Vital Pekon •DnB Næringsmegling •Internet Banking •Domestic Treasury •DnB Kapitalforvaltning •Regions •Telephone Banking •Equity Investments •DnB Investor •International Branches •DnB PrivatBank •External channels
32 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Business areas
Operating results and key financial data for main business areas
The business area reporting is based on internal management reporting to the Board of Directors and chief executive officer. The figures for the first three quarters of 2000 are pre-reorganisation and the allocations to the business areas are based on management’s best estimates. Comparisons between 2000 and 2001 figures should therefore be made with caution. The principles applied for calculating and allocating equity to the business areas are subject to adjustments, and the figures may be somewhat affected in the future.
1) Extracts from profit and loss accounts
Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. Jan.-Sept. 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 2 556 2 453 1 248 1 240 2 954 2 847 849 846 81 (51) 768 897
Corporate Banking 2 732 2 563 1 285 1 184 1 615 1 622 2 401 2 125 (166) (146) 2 568 2 271
DnB Markets 374 194 1 080 1 113 671 627 782 680 (33) (8) 815 688 Asset Management and Life Insurance 38 38 183 662 318 214 (97) 486 0 0 (97) 486
Group Centre 311 208 448 324 554 350 205 181 381 51 (176) 131
Eliminations (170) (163) (334) (374) (89) 81 (415) (618) 00(415) (618)
DnB Group 5 841 5 293 3 908 4 149 6 024 5 741 3 726 3 701 263 (154) 3 463 3 854
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 114.0 102.4 86.0 88.5 78 77 75 86 3.4 2.9 22 29
Corporate Banking 152.1 145.7 93.9 95.0 40 43 62 65 11.6 11.5 21 19
DnB Markets 1.6 1.0 9.8 11.5 46 48 1.5 1.5 51 43 Asset Management and Life Insurance 1.5 1.1 102.6 98.5 3.3 3.1 (3) 18
Other (0.7) (8.6) (4.9) (17.3) 5.8 4.0
DnB Group 268.6 241.5 287.4 276.2 62 61 70 75 25.6 23.1 17 17
1) The DnB Group's profits 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 reported in the net other operating income of Retail Banking and Corporate Banking. Figures for the first three quarters of 2000 have been restated. These double entries are eliminated in the "'Eliminations" line item.
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. Profits from Vital Forsikring are recorded net of taxes in the Group accounts. The average tax rate for Asset Management and Life Insurance is thus 12.3 per cent for 2001 and 14.4 per cent for 2000.
33 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
The "Group Centre" line item comprises Group Services and Group Staff, investment costs 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:
Jan.-Sept. 2001 Jan.-Sept. 2000 Amounts in NOK million Net interest income 12 23 Net other operating income 439 423 Operating expenses 16 21
Depreciation of goodwill for the Group’s acquisition of Vital and similar fair value adjustments upon the Postbanken acquisition are not allocated to the business areas. Goodwill in Vital is depreciated by NOK 25 million each quarter, ending in 2005. The depreciation of Postbanken’s fair value adjustments amounts to NOK 12 million per quarter. These adjustments will be fully depreciated by 2004.
Tax charges are included in the ROE figures; stated at 28 per cent for all business areas apart from Vital Forsikring (Asset Management and Life Insurance), for which the tax charge is calculated at 10 per cent, representing the expected tax rate. Other tax benefits or charges are not allocated.
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. For Vital, the amount of equity recorded in the balance sheets is reallocated to Asset Management and Life Insurance. 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.
For a comprehensive description of principles for the business area reporting, please refer to DnB Group's 2000 annual report.
34 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Asset management and life insurance
This business area consists of Vital Forsikring (life insurance), Vital Link (unit linked), DnB Investor (mutual funds), DnB Kapitalforvaltning (discretionary asset management), Vital Eiendomsforvaltning (real estate management), DnB PrivatBank (private banking) and Vital Skade (non-life). The business area is headed by Gunn Wærsted, Group Executive Vice President.
Comments on operating performance in the first three quarters of 2001 The turbulence in international stock markets even before the attacks in the US had a strong impact on the business area. The downturn had the most pronounced impact on operations in Vital, though asset management activities and investment fund management did not remain unaffected. The business area recorded a pre-tax loss of NOK 97 million, compared with profits of NOK 486 million in the 2000. Still, the wide product range and risk diversification helped reduce the negative effects.
Funds managed by Asset Management and Life Insurance totalled NOK 100 billion as at 30 September 2001, compared with NOK 102 billion at end-December 2000. Business volumes reflected weak price developments in the equity portfolios.
Assets under management 1)
30 Sept. 31 Dec. 31 Dec. 31 Dec. 31 Dec. 31 Dec. Amounts in NOK million 2001 2000 1999 1998 1997 1996 Vital Forsikring 2) 64 648 63 674 61 785 53 713 49 556 47 518 Vital Link 2) 3 603 4 158 2 713 1 042 326 - DnB Kapitalforvaltning 10 323 10 200 9 340 6 803 8 122 5 549 DnB Investor 3) 24 911 29 507 25 255 14 174 14 806 12 191 1) Inter-company balances have not been deducted 2) Of which managed by DnB Kapitalforvaltning: 57 505 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.
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
35 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Due to stock market volatility, aggregate pre-tax profits in Vital Forsikring and Vital Link slid to NOK 10 million for the first three quarters of the year, from NOK 338 million in the year-earlier period. Calculations of the estimated contribution from Vital Forsikring are conditional on the application of additional allocations to cover the guaranteed returns payable to policyholders. In Vital’s own accounts, additional allocations cannot be applied until 31 December, and the accounts thus show a NOK 951 mil- lion loss for the first three quarters of the year.
Premium income showed brisk growth at 38 per cent compared with the year-earlier period, totalling NOK 7 426 million for Vital Forsikring and Vital Link for the first nine months of the year, up from NOK 5 377 million. Vital took over insurance schemes from competitors for a total net value of NOK 2.4 billion during the January through September period, compared with NOK 0.3 billion in the first nine months of 2000. Total funds under management for customers in Vital Forsikring and Vital Link came to NOK 63.8 billion at end-September 2001, up from NOK 62.1 billion at end-December 2000.
The recorded and value-adjusted returns on capital in Vital Forsikring were strongly affected by the stock market turbulence. While there was a 1.3 per cent return on book values for the January through September period, the value-adjusted return was negative at 2.8 per cent. Vital Forsikring’s buffer capital totalled NOK 5.8 billion at end-September, compared with NOK 9.5 billion at the beginning of the year. Vital’s buffer capital was strengthened in October 2001 through the issue of a perpetual subordinated loan of USD 70 million.
During the third quarter of 2001, Vital Forsikring signed an agreement on defined-contribution pension plans with the Federation of Norwegian Commercial and Service Enterprises. The agreement gave members of the Federation the option to establish pension schemes for their employees through Vital in line with the new Act on defined-contribution pensions, which entered into force on 1 January 2001. The agreement includes 14 600 enterprises with 250 000 employees.
Vital Link introduced MasterFund, a new investment product for unit-linked customers, in the first half of 2001. In spite of market turbulence, the fund has been well received in the market.
Vital’s real-estate portfolio was expanded through investment in a group of ten hotels taken over in 2001. The investment enhances risk diversification in Vital’s real-estate portfolio.
Market shares 30 June 31 March 31 Dec. 30 Sept. 30 June 31 March Per cent 2001 2001 2000 2000 2000 2000 Of total premiums 26.1 26.6 20.1 20.9 20.9 21.3 Of total premiums less reserves transferred to others 30.8 32.2 21.3 21.7 21.7 23.6 Of premiums from individuals 21.8 19.9 23.5 23.6 23.6 21.7 Of premiums from corporates 27.3 28.8 18.2 18.3 19.4 20.7 Of insurance funds 19.0 18.6 18.3 18.2 18.3 18.2 Of premiums from unit linked products 20.1 20.9 21.7 28.6 22.4 22.5 All premiums include reserves transferred from life companies
36 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Model for profit split between allocations to policyholders and return on equity Return on equity is determined by: • 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 fund • Plus 0.38 per cent of 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
Taxes will be covered by the return on equity. According to statutory regulations, return on equity cannot exceed 35 per cent of profits available for allocation. In connection with the annual accounts, the Board of Directors will consider how the new model will influence the company’s market position. 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
Jan.-Sept. Jan.-Sept. 3Q01 2Q01 1Q01 4Q00 3Q00 2001 2000 Premium income (NOK million) 1 498 1 895 4 033 1 666 1 369 7 426 5 377 Policyholders' funds at end of period (NOK million) 1) 63 839 65 648 63 133 62 139 62 368 63 839 62 368 Sale of individual policies through DnB's distribution network (%) 44.4 54.5 49.4 57.0 49.3 49.6 50.4 1) Including undistributed profits to policyholders and, for earlier periods, 75 per cent of securities adjustment reserve
Buffer capital - Vital Forsikring 30 Sept. 30 June 31 March 31 Dec. 30 Sept. 30 June Amounts in NOK million 2001 2001 2001 2000 2000 2000 Interim profit/ (loss) (951) 1 384 753 1 821 1 061 Unrealised gains 137 849 902 2 870 4 354 4 756 Additional allocations 2 401 2 350 2 401 2 414 2 219 2 214 Equity 2 666 2 666 2 666 2 666 2 451 2 451 Subordinated loan capital 1) 1 087 1 114 1 104 1 085 1 106 1 066 Security reserve 415 415 415 415 416 416 Buffer capital 5 755 8 778 8 241 9 450 12 367 11 963 1) Vital's buffer capital was strengthened in October through the issue of a perpetual subordinated loan of USD 70 million
37 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Total assets and liabilities - Vital Forsikring
30 Sept. 30 June 31 March 31 Dec. 30 Sept. 30 June Amounts in NOK million 2001 2001 2001 2000 2000 2000 Financial assets 1) 59 585 62 180 62 438 61 148 62 223 61 700 Other assets 5 063 5 226 3 154 2 526 2 001 2 563 Total assets 64 648 67 406 65 592 63 674 64 224 64 263
Equity 1 715 2 901 2 777 2 667 2 775 2 666 Subordinated loan capital 1 087 1 114 1 104 1 085 1 105 1 066 Security adjustment reserve 0 987 752 2 752 4 429 4 823 Insurance provisions 2) 60 381 60 924 58 855 56 205 55 307 54 486 Other liabilities 1 465 1 481 2 104 965 608 1 222 Total equity and liabilities 64 648 67 406 65 592 63 674 64 224 64 263
1) Of which: Equities and participations 15 384 19 684 19 838 19 091 19 610 21 250 Short-term shareholdings 24 727 24 694 23 223 23 817 25 555 22 684 Long-term shareholdings 12 318 12 166 12 103 11 768 10 918 11 058 Loans 84 85 88 11 12 13 Real estate 7 058 5 532 5 567 5 527 5 393 5 379 Other financial assets 14 20 1 619 934 735 1 316 Financial assets 59 585 62 180 62 438 61 148 62 223 61 700
2) Of which: Premium fund 3 462 3 601 3 361 4 341 3 619 3 855 Premium reserve 53 905 54 375 52 509 48 900 48 916 47 876 Additional allocations 2 401 2 350 2 401 2 414 2 219 2 214 Claims reserve 76 75 73 72 70 70 Other technical reserves 122 108 96 63 67 55 Security reserve 415 415 415 415 416 416 Insurance provisions 60 381 60 924 58 855 56 205 55 307 54 486
38 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Non-life Vital Skade, which is the DnB Group’s non-life company, manages non-life products on behalf of Lloyd's of London and entered into a new agreement with Zürich of Norway on 1 May 2001. The company assumes no risk on its own, but operates as an agent. Products are sold on a commission basis. Zürich is the risk carrier for the sale of non-life insurance to the Group's Internet banking clients. The full underwriting risk is carried by Lloyd's of London and Zürich of Norway.
Vital Skade has implemented a new solution for the sale of insurance products through Postbanken’s Internet bank. As an integrated part of Internet banking services, customers are offered the opportunity to take out non-life insurance via the web and can calculate prices and purchase insurance coverage for cars, private homes, household contents, travel and vacation homes. In the second phase it will be available at DnB.no.
There was a 9 per cent increase in commissions from the third quarter of 2000 to the third quarter of 2001. Premiums paid in the first nine months of 2001 were NOK 90 million, compared with NOK 88 million in the same period last year.
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 20.3 per cent as at 30 sept 2001. It has nearly 435 000 client relationships including 192 000 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. Responsibilies 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 a focus on geographic areas as well as sector-specific portfolios. It offers 12 money-market and fixed-income funds and 35 domestic and international equity and balanced funds, four 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 September 2001, DnB Investor launched three new fixed- income funds to expand its range of money market and bond funds. The company offers a total of ten fixed-income funds aimed at private and institutional investors. By the end of the third quarter, DnB Investor had also established a new technology fund.
Assets under management in DnB Investor were NOK 24.9 billion at end-September 2001, down from NOK 29.5 billion at end-December 2000. Equity and balanced funds declined by NOK 4.9 billion during the nine-month period, while bond and money-market funds rose by NOK 0.3 billion. Net new inflows totalled NOK 53 million
Asset management fee income for DnB Investor in the third quarter of 2001 was NOK 87 million, compared with NOK 120 million for the third quarter last year, an decrease of NOK 33 million.
Management fees are calculated on the funds on a continuing basis (fees range from 35 to 200 basis points depending on the type of fund). Sales commissions depend on the amount invested (up-front fees from 70 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 varies from 0 to 100 basis points.
39 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
DnB Investor - mutual funds 30 Sept. 31 Dec. 31 Dec. 31 Dec. 1) Amounts in NOK million 2001 2000 1999 1998 Equity funds (Norwegian) 5 581 7 807 7 948 3 146 Equity funds (international) 5 311 7 768 6 130 3 134 Money-market funds 11 718 11 478 8 578 6 325 Balanced funds and bond funds 2 302 2 455 2 599 1 569 Total mutual funds 24 911 29 507 25 255 14 174 1) Figures do not include Postbanken
DnB Group's market share of the Norwegian mutual fund market 30 Sept. 31 Dec. 31 Dec. 31 Dec. Per cent 2001 2000 1999 1998 Equity funds (Norwegian) 17.3 16.9 15.2 14.9 Equity funds (international) 16.5 17.3 21.4 21.0 Balanced funds 45.5 44.3 40.4 34.1 Fixed-income funds 6.6 5.0 9.7 7.3 Money-market funds 26.6 33.8 38.2 36.0 Total market share 20.3 20.7 21.2 20.4
Total Norwegian mutual fund market, net new subscriptions
NOK million Per cent 30.0 12 000 25.0 21.2 10 000 20.4 20.7 20.3 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 Jan.-Sept. 2001 Equity funds Balanced funds Fixed-income and money-market funds DnB Group's market share of total mutual fund market (per cent)
40 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Portfolio management Asset management incorporates the management of individually designed investment portfolios by DnB Kapitalforvaltning ASA. 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 the total policyholders' funds.
• DnB Kapitalforvaltning is one of the leading discretionary asset managers in Norway • At 30 September 2001, DnB Kapitalforvaltning managed NOK 67.2 billion on behalf of clients, down from NOK 68.1 billion 30 September 2000 • New sales in 2001 amounted to approximately NOK 2.1 billion to a broad range of clients, both directly and through consultants • The company carries out discretionary asset management (NOK 10.3 billion) on behalf of private individuals (6 per cent), corporates (16 per cent), pension funds (55 per cent), the public sector (16 per cent) and trusts (7 per cent) • Vital's policyholders' funds under management total NOK 57 billion. This includes NOK 1.9 billion of Vital Link’s unit linked funds.
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 14.1 billion, for 1 843 clients. During last year DnB PrivatBank was transferred from the Retail Banking area to the Asset management and Life insurance area of the Group, reflecting the strategic focus on the unit's asset management business. 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.
41 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Retail banking
Retail Banking includes the following units: Postbanken, DnB Retail, Postbanken Eiendomsmegling, DnB Eiendom, the Internet banks and the telephone banks. The figures reported includes DnB Kort. The business area is headed by Petter Jansen, Group Executive Vice President.
Comments on operating performance in the first three quarters of 2001 Pre-tax operating profits before taxes were NOK 849 million in the January through September period 2001, a rise of NOK 3 million compared with the same period of 2000. The sale of Postbanken’s Clearing House during the first quarter provided a gain of NOK 151.5 million for Retail Banking. The rise in net interest income can be ascribed to higher lending volumes. Interest spreads, however, contracted due to fierce competition and higher money market rates. Other income was affected by weak stock market developments and the shift from manual to electronic payment services.
There was a NOK 11.6 billion rise in average lending compared with the previous year, while deposits remained stable. Lending growth represented residential mortgages secured within 60 per cent of the loan assessment. In addition, sales of equity-linked bonds reached NOK 889 million, bringing the total volume of such investments to NOK 3.2 billion as at 30 September 2001.
Operating expenses rose by NOK 107 million from the first nine months of 2000 to 2001, reflecting the strong focus on sales of the Group’s products through the postal network. Moreover, the development of web-based service concepts pushed up operating expenses compared with the previous year. During 2001, Retail Banking has implemented a number of measures to reduce costs, which are expected to ensure cost savings in the coming accounting periods, especially within information technology. Further measures to reduce cost levels within internal operations are in the offing, resulting, among other things, from new credit procedures.
Private individuals
Average volumes in September 2001 Gross lending: NOK 115.9 billion 1) Deposits: NOK 87.3 billion
1) Guarantees not included
Market shares 30 June 31 March 31 Dec. 30 Sept. 30 June 2001 2001 2000 2000 2000 Of total lending to households 1) 16.8 16.7 16.7 16.7 16.7 - of which commercial and savings banks 20.8 20.6 20.6 20.7 20.7 Of household savings 2) 23.7 24.0 24.3 24.7 25.1 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, foreign institutions 2) Including bank deposits, mutual funds and premiums paid on individual life insurance policies
Source: Norges Bank, Statistics Norway, DnB
42 Supplementary information 3rd quarter 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 52 000 of the smallest businesses • Serving around 165 500 customers by telephone payment service (telegiro), carrying out 2.1 million payment transactions in the first nine months. • More than 225 600 customers subscribe to customer benefits programmes • More than 387 000 clients use the Group's Internet banks, carrying out more than 9.5 million payment transactions over the Internet in the first nine months.
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. index-based 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% 4%
60-80% 22%
74% 94% Residential mortgages 0-60%
1) Classified according to percentage of appraised value Residential real estate broking
Through DnB Eiendomsmegling AS ("DnB Eiendom") and Postbanken Eiendomsmegling AS ("Postbanken Eiendomsmegling"), 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 30 September 2001, DnB Eiendomsmegling had 44 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 2000 with an aggregate of 13 416 property sales in 2000. For the first nine months of 2001, DnB Eiendom had 4 972 sales and Postbanken Eiendomsmegling 6 256 sales, compared with 4 803 and 5 687 for the first nine months last year respectively. In addition to brokerage income, the real estate brokerage also generates business for other members of the DnB Group in the form of housing loans and savings.
43 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Corporate banking
Corporate Banking includes the following units: Large Corporates, Shipping, Small and Medium-sized Corporates, DnB Finans and DnB Næringsmegling. 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 150.6 billion Bond issues: NOK 45.0 billion Guarantees, average: NOK 30.2 billion Loan syndications: NOK 30.0 billion
Comments on operating performance in the first three quarters of 2001 The business area achieved a nearly 13 per cent increase in pre-tax operating profits before losses com- pared with the first nine months of 2000, which can be attributed to strong income growth parallel to stable cost levels. While there was controlled growth in high-quality credits, brisk activity ensured healthy income from other sources. Pre-tax operating profits totalled NOK 2.6 billion for the first nine months of 2001, up from 2.3 billion a year earlier.
Net interest income rose by 6.6 per cent from the first three quarters of 2000 to 2001, in spite of several factors which had a negative impact on profits. These included the introduction of new rules as of 1 July 2000 for handling transfers between customer accounts as well as an improvement in asset quality, which depresses margins. Due to strong competition, lending spreads in the small and medium-sized business segment have contracted compared with the same period of 2000, though there was a slight improvement during the third quarter. Deposit spreads also narrowed compared with the previous year. The settlement of previous non-performing commitments also affected net interest income through partial coverage of previously unrecorded overdue interest.
Other operating income showed an overall healthy trend, rising by NOK 101 million from 2000 to 2001. The increase includes Corporate Banking’s NOK 86 million share of profits on the sale of Postbanken’s Clearing House. The business area’s share of gains on the sale of DnB’s holding in Moelven Industrier was NOK 99 million.
Corporate Banking’s operating expenses showed a reduction from 2000 to 2001. The integration of DnB and Postbanken’s organisations and systems solutions in the corporate sector has provided major savings.
Reversals on previous losses and loan-loss provisions came to NOK 166 million for the first nine months of the year, compared with reversals of NOK 145 million in 2000. Corporate Banking’s credit portfolio still reflects high quality, though export-oriented businesses must be expected to face greater problems due to the international economic situation. For the same reason, reversals on previous loan-loss provisions cannot be expected to continue at the same level as before.
Corporate banking market shares 30 June 31 March 31 Dec. 30 Sept. 30 June 2001 2001 2000 2000 2000 Of total lending to corporates 1) 9.8 9.9 9.5 9.6 9.8 - of which commercial and savings banks 24.7 24.5 24.1 24.7 24.7 Of deposits to corporates 2) 24.8 25.5 25.3 26.6 26.3 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, foreign institutions 2) Savings and commercial banks
44 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Large corporates
Average volumes in September 2001 Gross lending: NOK 47.6 billion Guarantees: NOK 16.9 billion Deposits: NOK 36.8 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 bankers while an additional 30 per cent use one or more of the products provided by the DnB Group • Selling approximately 5.7 product clusters to lead clients (DnB is the main bankers), and 3.4 product clusters, where DnB is in second position • Internationally the 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 Finance >75 bp Trade Expected loss 25-75 bp 5% 14% 12% Public sector 13% Oil/gas/ 5% supply 16%
21% 5% Real estate Power 83% Industry 4% 23% Expected loss Telecom/IT < 25 bp Manu- facturing
1) Expected exposure at default
45 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Shipping
Average volumes in September 2001 Gross lending: NOK 30.7 billion Guarantees: NOK 7.4 billion Deposits: NOK 15.7 billion
Business profile • Provides 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
1 000 -500
-700 Profit before losses 0 Net profit Net losses 1993 1994 1995 1996 1997 1998 1999 2000 Jan- -900 Sept 2001 1993 1994 1995 1996 1997 1998 1999 2000
1) Average volumes for the last month of each period
• The percentage of other income has increased from 27 per cent of total income in 1993 to 47 per cent in 2000
46 Supplementary information 3rd quarter 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 finance, cash management, treasury products and foreign exchange • Contribute to DnB's return on equity by increasing profits before losses and keeping losses at a minimum level
Lending according to segment 1) Risk classification of portfolio
Expected loss Other non- >75 bp shipping Other Offshore shipping 3% 9% Expected loss 19% 25-75 bp 7% 17%
Chemical 10% 14% Tanker 5% Shuttle 6% 11% 80% Product 13% 6% Ro/ Container/ PCC Expected loss Dry cargo Cruise/Ferry/ <25 bp Passenger
1) Expected exposure at default
47 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Small and medium-sized businesses
Average volumes in September 2001 Gross lending: NOK 63.5 billion Guarantees: NOK 5.9 billion Deposits: NOK 43.9 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 (turnover terms: medium-sized > NOK 15 mill, small < NOK 15 mill and Næringsliv Direkte < NOK 40 mill) • DnB is the leading bank 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/Postbanken 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
Primary sector Expected loss Public Energy >75 bp 5% 12% 7% 10% Expected loss Services Manu- 25-75 bp 10% facturing 16% 20%
20% 70% Property/ 18% Real estate 9% Trade 3% Expected loss <25 bp Services Building and construction
48 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Factoring, leasing, vendore and car financing and commercial real estate broking
DnB Finans AS DnB Finans, a wholly-owned subsidiary of Den norske Bank ASA, is one of the leading finance companies in Norway in both the corporate and retail segments with a market share of 21 per cent at the end of June 2001.
Major activities in DnB Finans' corporate segment include factoring services and leasing of vehicles, machinery and equipment in addition to a substantial business in car leasing, contract hire and fleet management, as well as vendor financing programmes to suppliers of capital goods. The main product in the retail market is car financing with optional payment protection insurance.
The company has 347 full-time positions, with branch offices throughout Norway and distribute its products through its 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 nine months period ended 30 September 2001 was 158,3 million, compared with 156,7 million for the same period last year. Total assets at 30 September 2001 amounted to NOK 13,7 billion compared with year-end figure of NOK 12.7 billion.
DnB Næringsmegling AS DnB Næringsmegling AS, a wholly-owned subsidiary of Den norske Bank ASA, is a leading real estate broker for urban business premises. The company was established in 1995 and has offices in Oslo and Bergen. DnB Næringsmegling 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 2000 DnB Næringsmegling was involved in 92 transactions for a total value of NOK 3 174 million, compared with 62 transactions totalling NOK 993 million in 1999.
49 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Capital markets
DnB Markets includes 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 a part of DnB Markets though profits and losses for these units are not recorded under this business area. The business area is headed by Audun Bø, Group Executive Vice President.
DnB Markets is the capital markets arm of DnB, providing a wide range of investment and securities services. Staff represents 450 full-time positions, of which 30 are in the international branches.
Comments on operating performance in the first three quarters of 2001 In spite of negative and turbulent market conditions, DnB Markets showed satisfactory performance during the first nine months of the year as well as in the third quarter alone. Revenues totalled NOK 1 454 million for the January through September period, up 11 per cent from NOK 1 307 million in 2000. Pre-tax profits totalled NOK 815 million, a 19 per cent increase from NOK 688 million in the year- earlier period. Income on customer business amounted to NOK 979 million, on a level with the figure for 2000.
Income on customer business in FX and interest rate derivatives rose to NOK 420 million, from NOK 340 million in 2000, stemming from increased sales of these products in volatile markets. An analysis recently published by central banks and the BIS shows that turnover in the Norwegian foreign exchange market rose by 46 per cent from April 1998 to April 2001, parallel to a 19 per cent decline in international markets. The global trend reflects the introduction of the euro and consolidation in the banking industry, while the Norwegian figure reflects 33 per cent growth in Norwegian exports and imports during this period, as well as the fact that the Norwegian krone will remain a separate currency.
Product range • Investment products • Foreign exchange, money market instruments and derivatives • Fixed-income instruments and loan syndications • Nordic equities, research and corporate finance services • Securities and custodial services • 24-hour service through operations in Oslo, New York and Singapore • 10 regional sales desks in Norway • Internet service
Market position in Norway • Market leader in Norway for investment and securities services • 28 per cent of total income for Norwegian investment firms in the first half of 2001 • Number one provider of structured investment products in Norway (equity-linked bonds etc.) • Number one provider of derivatives in Norway • Number one arranger of the syndicated loans for Norwegian borrowers • Book runner for approximately 20 per cent of all domestic issues of bonds and commercial paper • 25 per cent market share for (turnover of) 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 approximately 45 per cent of companies, 20 per cent of fixed income securities issued and 160 000 investors • Strengthened its no.1 position within Norwegian kroner after the Postbanken merger
50 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
Key figures - third quarter 2001 • Revenues of NOK 433.5 million, down 1 per cent from NOK 437.8 million in the same quarter last year (3Q00) • Pre-tax profit decreased 4 per cent to NOK 224.7 million, from NOK 233.9 million in 3Q00 • Market making/trading revenues of NOK 98.1 million, up NOK 10.3 million (12 per cent) compared with 3Q00, despite the negative effect of the widening credit spread on the bank's fixed-income holdings in 3Q01 • Total customer revenues of NOK 308.0 million, down NOK 16.1 million (5 per cent) from 3Q00 due to lower activity and declining income on investment products, especially equities brokerage • Customer revenues of NOK 157.9 million from FX and interest rate derivatives, up NOK 49.7 million (46 per cent) on 3Q00 due to increased sales/demand for both FX and interest rate instruments in volatile markets • Customer revenues of NOK 52.6 million from investment products (primarily securities sales), down NOK 60.2 million (53 per cent) compared with 3Q00 due to significantly lower activity, reflecting the negative stock market trend • Customer revenues of NOK 56.8 million from corporate finance, down NOK 3.9 million (6 per cent) on 3Q00 • Customer revenues of NOK 40.7 million from securities services, down NOK 1.8 million (4 per cent) from 3Q00 due to lower activity in securities markets
Income distribution DnB Markets 1) Income from customer business DnB Markets
NOK million NOK million 600 1 500 1 391
488 478 1 250 500 461 4Q 1 060 412 406 389 979 400 1 000 338 333 848 324 4Q 308 777 3Q 3Q 300 750 543 492 500 3Q 200 500 2Q 149 145 2Q
88 98 2Q 100 71 250
1Q 1Q 1Q 0 0 3Q00 4Q00 1Q01 2Q01 3Q01 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
Number of days up to 30 September 2001 with income at different intervals
Days 45 44
40 38
35 29 29 30
25 23
20
15
10 7 6 7 6 5 2 1 00000000 0 11 0 0 More 2 500 5 000 7 500 -7 500 -7 000 -5 500 -2 10 000 12 500 15 000 17 500 20 000 22 500 25 000 -25 000 -25 500 -22 000 -20 500 -17 000 -15 500 -12 000 -10 NOK thousand
51 Supplementary information 3rd quarter 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 (figures in DnB Kort reported in Retail banking) IT and Human Relations. The area is headed by Evlyn Raknerud, Group Executive Vice President.
Outsourcing and sale of operations in the first three quarters of 2001 Clearing House In March 2001, Postbanken’s Clearing House was taken over by the Banks’ Central Clearing House, as a part of creating economics of scale for the DnB Group within paper based payment services. Den norske Bank’s sale of Postbanken’s Clearing House to the Banks’ Central Clearing House provided a gain of NOK 311 million in the Accounts of Den norske Bank. The recorded gain in the Group accounts was NOK 237 million, reflecting the Group’s 23.6 per cent holding in the Banks’ Central Clearing House. 145 full-time positions were eliminated due to the sale.
Cash-handling operations In the second quarter, DnB established a cash handling company, Kontanthåndtering AS, 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. The agreement implies that EDB Business Partner and Telenor will take over both ownership and operating responsibility for the bank’s IT operations, including equipment, buildings and around 195 employees in Oslo and Bergen. The resulting sales gain 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.
Electronic services and cash management • 80 per cent of more than 170 million payment transactions made in the first three quarters of 2001 were carried out electronically • 19 000 customers use PC-based payment solutions (DnB Telebank or Alfa-XS) • Approximately 165 500 customers use telephone payment services (telegiro). An average of some 7 670 transactions per day were made in the first nine months of 2001 • 5 917 applications for loans were received in the first nine months of 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 the only Norwegian bank linked to both the EU's euro real- time gross settlement system (Target) and the payment system between banks (Chaps Euro). The links to
52 Supplementary information 3rd quarter 2001 3. DnB Group and business areas 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 of transactions 26 24 22 4Q 20 4Q 3Q 18 16 3Q 14 3Q 12 2Q 10 2Q 8 2Q 6 4 1Q 1Q 2 1Q 0 1996 1997 1998 1999 2000 2001
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 1 662 000 cards had been issued by the DnB Group. During the first nine months of 2001, 84 000 new credit cards were issued, compared with 69 000 issued cards in the same period of 2000.
During the second half of 2000, DnB Kort took over product responsibility and management of consumer loans to retail customers through DnB Forbruksfinansiering (DnB consumer finance). In March 2001, the company also took over the consumer loans sold through Postbanken. Both these products have proved very successful, and at end-September 2001, more than 15 000 loans had been granted.
DnB Kort recorded operating profits of NOK 89.8 million in the first nine months of 2001. NOK 2.3 million in additional costs was charged to the accounts as a result of new legislation regarding VAT on services effective as of 1 July 2001. Total assets were NOK 3.6 billion and NOK 2.5 billion at end- September 2001 and 2000 respectively.
Number of credit cards issued
Thousands
1 600
1 400
1 200 821 863 803 1 000 702
800 603
600
400 737 781 799 550 634 200
0 31 Dec. 31 Dec. 31 Dec. 31 Dec. 30 Sept. 1997 1998 1999 2000 2001 Postbanken Den norske Bank
53 Supplementary information 3rd quarter 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 387 000 Internet banking clients had signed up by the end of September • More than 9.5 million payment transactions were made in the first three quarters of 2001, compared with 4.9 million in the first three quarters of 2000 • DnB Markets Online has currently more than 18 000 online equities customers • Online cutomers trade about four times more frequently than offline customers but in smaller lot sizes (average trade is approximately NOK 50 000). • The Online research site publish daily morningreports and more extensive companyreports • Vital Skade online (non-life insurance) offered to postbanken.no Internet banking clients • e-invoice via e-mail and into Internet banking offered • Trading in mutual funds started in June 1999 • About 80 per cent of factoring clients were users of the Telefactor system by the end of Sept 2001 • Wap and SMS-message banking available for both DnB and Postbanken clients
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 549 companies with about 71 500 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.
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 1357911135791113579 81012246810122468 1999 2000 2001 19992000 2001 Postbanken.no DnB.no
54 Supplementary information 3rd quarter 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. The company's managing director is Hans Petter Evensen (formerly with DnB). DnB and Norway Post each hold 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, of which 105 million has been paid in as at 30 September 2001.
Netaxept has for the last three months focused on sales and marketing activities and has so far signed 20 netshops and some of them are the major players in Norway. 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, putting user certificate on SIM cards. Users are offered the choice of charging their SmartCash account, debet their bank account or to use their creditcard, as all these 3 payment methods are offered as alternatives. Payments may now be made by mobile phone, over the Internet or via interactive TV. The product was comercially launched in the Norwegian market in the beginning of October this year. More info on www.smartpay.no
Atento - joint venture between DnB, Telenor, Ergo Group and Accenture In February 2001, DnB, Telenor Business Solutions, Ergo Group and Accenture formed a new company, which will establish and operate an electronic infrastructure and marketplace for business to business (B2B) commerce. The organisations have signed a shareholders agreement and developed a business plan consistent with the goals identified in an earlier announcement. The company's B2B services are expected to reduce purchasing costs for those public and private sector clients buying its services. The company will initially develop and establish its purchasing system for its parent companies. During 2001 the four owners will become 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.
55 Supplementary information 3rd quarter 2001 3. DnB Group and business areas
56
Section 4 Shareholder information
57 Supplementary information 3rd quarter 2001 4. Information on the DnB share
Equity-related data
Key figures
30 Sept. 1) 2000 1999 1998 1997 2001 Shares outstanding at end of period (1 000) 772 174 2) 778 658 778 658 640 500 640 500 3) Average number of shares acc.basis (1 000) 775 879 2) 778 658 675 039 640 500 640 500 2) Average number of shares fully diluted (1 000) 4) 781 716 781 400 - - - Earnings per share (NOK) 4.12 5.16 4.08 2.05 4.04 EPS fully diluted (NOK) 4.09 2) 5.14 - - - Price/earnings ratio 5) 6.01 9.21 8.20 12.82 8.61 Dividend per share (NOK) n.a. 2.25 1.75 1.35 1.75 Dividend yield (per cent) 5) n.a. 4.74 5.32 5.13 5.03 Equity per share (NOK) 34.77 30.71 27.84 24.24 23.51
1) Pro forma 2) Including the effect of holding 6 484 420 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 26 654 796 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 and annualised EPS
Share price development
NOK DnB actual 55 DJ STOXX Bank Pan-Europe Index (rebased)
50
45
40
35
30 02.01. 23.01. 13.02. 06.03. 27.03. 19.04. 11.05. 01.06. 22.06. 13.07. 02.08. 23.08. 13.09. 04.10. 25.10.
58 Supplementary information 3rd quarter 2001 4. Information on the DnB share
Shareholder structure as at 30 September 2001
Major shareholders
Shares in 1 000 Ownership in %
Government Bank Investment Fund 368 158 47.28 Folketrygdfondet 21 544 2.77 Chase Manhattan Bank, clients NOM 21 472 2.76 State Street Bank NOM 20 339 2.61 Goldman Sachs int. equity, nontreaty NOM 15 528 1.99 The Northern Trust, treaty NOM 13 210 1.70 Chase Manhattan Bank, omnibus NOM 10 907 1.40 Orkla ASA 10 907 1.40 Bankers Trust, US treaty NOM 10 501 1.35 Fidelity Funds, Europe 9 636 1.24 Boston Safe dep & Trust NOM 9 435 1.21 Bank of New York, Equity repo. 8 014 1.03 Storebrand Livsforsikring - P980 6 927 0.89 Chase Manhattan Bank, BGI NOM 6 704 0.86 DnB Holding ASA 6 484 0.83 Mutual Discovery Fund 6 298 0.81 DnB Employee Fund 6 225 0.80 Arendals Fossekompani ASA 6 195 0.80 Fidelity Funds, low 6 130 0.79 Fidelity Funds, Nordic 5 775 0.74 Total 20 largest 570 389 73.25 Other 208 269 26.75 Total 778 658 100.00
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 30 September 2001
Foreign investors 23% Foreign investors 33% Norwegian Norwegian 61% government 47% government 16%
Other 20% Norwegian Other investors Norwegian investors
59 Supplementary information 3rd quarter 2001 4. Information on the DnB share
60
Section 5 The Norwegian economy
61 Supplementary information 3rd quarter 2001 5. The Norwegian economy
The Norwegian economy
Key macro-economic indicators
2000 2001 2002 2003 Per cent GDP growth - Norway, total 2.3 1.9 2.7 1.7 - Mainland Norway 1.8 1.3 2.1 2.1 Private consumption 2.4 1.9 2.8 2.8 Gross fixed investment (1.1) (1.8) 2.7 0.1 Inflation (CPI) 3.1 3.2 1.9 2.4 Savings ratio 1) 7.7 8.0 8.4 8.7 Unemployment rate 3.4 3.4 3.4 3.2 Current account 2) 14.3 13.8 11.8 9.3 Net foreign assets 2) 23.0 35.6 46.8 56.6 General government budget balance 2) 14.9 15.6 14.0 13.3 1) Per cent of disposable income 2) Per cent of GDP Source: Statistics Norway, Norges Bank, Ministry of Finance
Financial market growth
31 Dec. 31 Dec. 31 Dec. 31 July Percentage change from previous year 1998 1999 2000 2001 Credit 1) Total 13.5 9.1 13.5 10.3 - of which commercial and savings banks 11.9 9.3 14.5 10.1 Total retail market 7.7 9.3 12.1 12.1 Total corporate market 17.1 8.9 14.4 9.3
Savings 4) Total 2) 4.3 13.2 10.8 7.1 - of which commercial and savings banks 6.8 11.0 10.3 9.7 Total retail market 3) 3.5 15.4 10.5 5.8 Total corporate market 3) 4.9 13.2 12.0 11.1 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 June
62 Supplementary information 3rd quarter 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 230 per barrel in 2001, NOK 200 in 2002 and NOK 152 in 2005. (The oil price in September 2001 was NOK 232 per barrel)
63 Supplementary information 3rd quarter 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
3 --- Forecast --- 90 1983 85 87 89 91 93 95 97 99 01 03
Source: Norges Bank
Private non-financial enterprises Interest-bearing debt as a percentage of cash surplus minus interest expenses 1)
Per cent Private non-financial enterprises 600 (incl. petroleum and shipping)
500
400
300
200 Debt in mainland enterprises as a percentage of operating profit in other market-oriented industries 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.
Market-oriented industries are all production units which generate more than 50 per cent of income from sales in the market.
64