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Investing.com -- Shares of DNB Bank (OSLO:DNB) climbed 3.1% following the release of its quarterly financial report, which showed a net profit surpassing consensus estimates by 27%. The Norwegian bank reported a net profit of NOK 12,675 million, driven by a lower tax charge and pre-tax profits that were 6% higher than expected.
The bank’s pre-provision profits were 2% better than anticipated, with net interest income (NII) up by 3% due to profitable volume growth, with loans increasing by 7%. The net interest margin (NIM) rose by 4 basis points to 1.94%. Additionally, commissions and fees reached an all-time high in the fourth quarter, exceeding expectations by 3%. This was attributed to strong income growth in DNB Markets and in asset management and pensions.
However, trading income was significantly lower at NOK 372 million, falling short of the consensus forecast of NOK 1,145 million due to negative mark-to-market adjustments. On the expense side, DNB Bank managed to perform better than expected, even including a NOK 427 million restructuring expense.
Impairments were also lower than analyst predictions, with a cost of risk (CoR) of 3 basis points versus the anticipated 12 basis points. The bank experienced a lower tax expense, primarily affected by changes in the estimated debt interest distribution between the US and Norway, resulting in a higher interest deduction in Norway and an increase in tax-exempt income.
The bank’s capital position strengthened, with a common equity tier 1 (CET1) ratio of 19.4%, which is 40 basis points higher quarter-over-quarter and above the consensus estimate of 19.0%. The increase was influenced by retained earnings, a net reversal related to the proposed dividend payout ratio, and a repayment of excess capital from DNB Livsforsikring.
DNB Bank announced a final dividend per share (DPS) of NOK 16.75, which was marginally above the consensus estimate of NOK 16.7. The robust financial performance and solid capital position underpinned investor confidence, leading to the uptick in the bank’s stock price.
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