Norway's biggest bank plunges after missing estimate
OSLO: DNB ASA dropped after third quarter profit disappointed with income from its trading desk declining.
Norway’s biggest bank’s third quarter net income failed to rise from a year earlier, ending at 5.44 billion kroner (US$652mil) and missing a 5.67 billion-krone analyst estimate compiled by the bank.
Shares fell as much as 6.8%, the most since April 25, and were down 5.1% as of 9:43 am in Oslo, making it the worst performer on the STOXX 600 Banks Index.
DNB’s profit miss was “driven by weaker fees and trading and a modest miss on costs, partially offset with sno impairments this quarter,” Pawel Dziedzic, an analyst at Goldman Sachs, wrote in a note. “All in all, we see this as a weaker than expected set of results and expect the share price to underperform peers today.”
A strong economy boosted by rising oil prices helped the bank increase lending to both households and businesses.
It made “significant reversals” of loan losses in the oil and gas sector of 500 million kroner, paring losses for the quarter to a “modest” 11 million kroner, according to the report. That was offset by a drop in profit for its markets division to 345 million kroner from 835 million kroner a year earlier.
We are seeing “a strong momentum in the Norwegian economy, a higher oil price, increasing investments and wage growth and unemployment numbers pointing in the right direction. A healthy development in the economy means lower losses in the banks. At the same time, the prospect of higher interest rates has had a favora- ble and calming effect on housing prices,” chief executive officer Rune Bjerke said in a statement.
Norway’s largest mortgage lender is now adjusting to higher interest rates after the central bank raised rates in September.
Market activity in bonds and stock sales is cooling after a boom. — Bloomberg