DNB reports growing profits and activity

Norwegian financial group DNB ASA (OSE:DNB) reported growing profits, strong deposit growth and low write-downs for Q2 2012 this morning. By far the biggest bank in Norway had pre-tax operating profit before write-downs of almost 6.7 billion NOK and reported profit for the period of 4.58 billion, both considerably above comparison period and analysts’ expectations. Some of that came from reversal of a negative effect from derivatives in Q1 2012 to a positive effect of over a billion. Insurance and Asset Management was the lone exception regarding the business areas.

Home mortgages demand is strong and the bank believes that Norwegian housing market remains robust. This is helped by heavy investments in oil, gas and energy sectors. There have been a lot of contrasting views on this. Lending to small-and medium sized businesses has also grown quickly, which is a marked difference from many other peers in Europe. Situation in the Baltic countries seems to be improving. Many segments within the shipping industry are still facing difficulties. Common Tier 1 capital ratio at the end of June had grown to 9.6 per cent.