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DNB expects positive 1.5B kroner impact from repricing

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DNB expects positive 1.5B kroner impact from repricing

Norwegian bank DNB Bank ASA has made interest rate adjustments on consumer products, following a central bank rate hike, that are expected to have an annual positive impact of about 1.5 billion kroner on its interest income.

Norges Bank raised the policy rate to 0.25% from 0% in September as the economy recovers from the COVID-19 pandemic and may raise it further in December.

DNB said the impact of its consumer rate changes would be effective from mid-November. On a conference call to discuss third-quarter earnings, CEO Kjerstin Braathen said repricings were made in the personal customers business segment, where more than 90% of the loan book has floating rates, and on the small and medium-sized enterprises side. The adjustments impacted both the bank's assets and liabilities.

The estimated 1.5 billion kroner impact after the 25-basis-point central bank rate hike is slightly higher than historical estimates of the impact of similar rate changes, partly due to the bank's higher levels of deposits, according to Braathen.

DNB reported profit attributable to shareholders of 6.66 billion kroner for the third quarter, compared to 5.29 billion kroner a year ago. Net interest income stood at 9.77 billion kroner, up from 9.30 billion kroner.

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The Norwegian economy has fully reopened and economic activity is now higher than it was before the pandemic, the bank said.

For 2021-2023, DNB expects lending volumes to be between 3% and 4%, net commissions and fees to increase annually by 4% to 5%, and the cost-to-income ratio to be below 40%.

The board has decided to pay a dividend of 9.00 kroner per share for 2020.

As of Oct. 21, US$1 was equivalent to 8.35 Norwegian kroner.