DNB Bank ASA

everyone, and welcome to the presentation of the fourth quarter results for DMB. And also welcome to everyone watching the stream. And as the new finance minister of Norway said yesterday, it's good to see you all again. We don't have planned any fire drills today, but if the fire alarm should go off, please use the exits in the back and in the front to your left. Our CEO, Kerstin Brotten, is ready to present the highlights from the quarter, and our CFO, Ida Lerne, will go into the details thereafter. Kerstin, the floor is yours.

Thank you, Even, and a very good morning to all of you, and welcome to this fourth quarter results, but it's also the delivery of the full year results for 2024. 2024 and the fourth quarter was yet another year and period where the Norwegian economy continued to show its resilience. And we are both grateful and I would say humbled by the increasing trust that customers put in us. And I am very proud of the team and their relentless efforts to work to deliver customer value every day, which in aggregate results in the very strong numbers that we deliver today. The return on equity for the quarter comes in at 19%. Needless to say, well above our minimum target of 14%, also well above if we deduct for the extraordinary impact by taxes. It still stands at 16.1%, representing profitable growth in all areas, driven by stable margins and an increased activity across product areas. NII is up by 3.7% from the previous quarter. Again, growth across all customer areas and stable margins to customers in the quarter. Commission and fees, an all-time high delivery in a fourth quarter this period behind us. A particular strong performance in investment banking division and D&B markets, but a positive contribution from all product areas across that category. Asset quality remains robust. We take impairments of 157 million in the quarter, a very low number, and this represents a robust portfolio that remains well diversified. capital is a rock solid with 19.4 core equity tier one ratio earnings per share are up more a little more than 18 compared to the previous year the capital and earnings per share in combination provides the foundation for the board to propose a dividend per share of 16.75 kroner per share, which is an increase of 75 cents, or öre, if you will, per share compared to last year, and fully in line with our dividend policy. The Norwegian economy remains solid, as do the outlook. We do expect a higher growth this year to come in GDP in the area of 1.5%. Increasing activity in construction of houses as well as increasing consumption are expected to be the key drivers. And increased consumption comes on the back of an expectation that most people will have an increase in their disposable income this year. Unemployment is expected to remain low. It has remained around 2%, might move to 2.2%, but in that area, all in all, most people will have a job in Norway. Inflation has come down. We do expect it to continue to come down gradually, but, however, at a slower pace than we have seen in the previous year. DNB Markets has made a revision to its economic forecasts with regards to the path for the interest rate that they published last week. They have maintained their expectation that there will be three rate cuts during 2025, which will take the key policy rate to 3.75. But thereafter, they expect the key policy rate to remain at 3.75 throughout the remainder of the forecasting period. I guess it's no surprise to you that we will also signal that the uncertainty level is higher than normal, given the geoeconomic situation, given ongoing discussions on trade and the changing situation globally on security, and remind you that the Norwegian economy is a small and open economy and that we will be impacted by the development that happens outside of Norway. A few highlights on the customer areas for the full year that I would like to share. All customer area shows a growth in activity throughout the year in combination with profitable growth both on lending and deposits, which leads to an increase in pre-tax profits across the three segments. Lending growth for the full year stands at 5.1% and growth in deposits by 4.3%. A few things that stand out from each area. Personal customers, after a slower start to the year, we've seen a tremendous increase in activity, taken a lot of steps to improve the customer offering, and we ended in the best mortgage growth quarter in the fourth quarter that we have seen in seven years. Activity level has been high, in particular on the savings side, where 51 out of 52 weeks in 2024, Norwegians saved more, and we saw an increasing number of savings agreements. We continue to drive innovation and launched two new offerings to Pay, both Vips to Pay and Apple Pay in the fourth quarter, as a continued improvement of the customer offering. Corporate customers in Norway, I would like to highlight the growth, 3.7% in a year where there is low to no construction activity in the housing area. A growth in deposit of 13.1% clearly signals the strengthened positions that we have towards the public sector. And a growth in non-interest-related income of 18%. illustrates the increased activity across a broad spectrum of products, but in particular, an increasing activity and cooperation with D&B markets. Large corporate and international is referred to as our growth platform, where we also originate to distribute and turn the capital quickly around. It has proven its ability to be our growth platform in 2025. We continue to scale the business outside of Norway, in particular in the Nordics, but also in the energy sector. Very high activity on cross-sell, also D&B markets to be highlighted, as well as wealth management as very active areas. For all three areas, and maybe more in particular corporate customers and large corporates, robust asset quality, decreased applications for installment deferrals in personal customers, improved grade migration across the corporate sectors signals that the asset quality is very robust. We continue to grow the business, in particular in D&B markets and wealth management that we have alluded to as the growth engines, if you will, in commission and fees. And this year, 2024, they both deliver an all-time high result. Assets under management up by 183 billion from the end of 2023, and the majority of the increase stems from retail customers, thus they also deliver very stable margins. Customer revenue from D&B markets, again at an all-time high, up 19% from the full year 2023. particularly strong contribution from IBD up more than 40% compared to the prior year as well as FIC up 13.6% where equity is a more stable category but still well performing. We do maintain a clear clear lead position across many sectors, parts of the markets that is important to us. Corporate finance is one of them, as well as advisory services, both in ECM and M&A. We do look forward to the opportunities that we are still excited to see to offer our customers a broader and better service specter. Once we joined forces with Carnegie, we have received several approvals and are closing in on closing the Carnegie transaction in the near future. This shows the development for the past five years. We have highlighted our unique position in a very attractive environment. And we do like to run our business focusing primarily on organic growth while also increasing our non-interest related activity faster than our balance sheet. The year 2024, we have delivered yet again on that, and this results in a growth in pre-tax profit of 16% compared to the prior year. As you can see, cost income is a flat development compared to the prior year. Efficiency is important for us, not only to deliver on our return on equity target, but also to deliver a competitive offering to customers. Share buyback further enhances the development in earnings per share, which are up slightly more than pre-tax profit of 18.2% from the previous year. Daily, we are driven by the ambition to innovate to customers and scale customer value, as well as by the opportunity to provide a positive impact to society. Approximately 50% of the dividend that the board proposes to pay for the year 2024 goes back to the Norwegian society at large, and we are particularly motivated by the 2.2 billion that we are proposing to pay to the DNB Savings Foundation for them to distribute to release good powers into society. We also strongly believe in the driving of customer loyalty through data and understanding their needs. And this is why we're also pleased to see that 46% of Norwegians use our digital interfaces in some way to service their needs in finance. And we relentlessly continue to focus on combating financial crime, where we've also said that we do see an increase in attempts to commit fraud. But we are stopping the vast majority of these attempts, and we stopped an aggregate 2.1 billion of our customers' money from being stolen during the year 2024. And again, yes, we're much about technology, but even more about people, and that will remain so even in the age of AI. And we are continuously working to be an attractive employer and are motivated to see that both economists and technologists as well as legal students continue to prefer and choose DNV as their employer. Lastly, but not leastly, we remain strongly committed to our dividend policy that remains unchanged. The proposal of the board to pay 16.75 is fully in line with our dividend policy of increasing the nominal amount per share per year. expect the board to apply for an approval in general from the General Assembly to increase share buybacks, and we'll continue to consider using this as a tool to optimize around the desired capital position. And with that, I'd like to hand over to Ida to take you through more of the details.

Thank you, Kerstin, and a warm welcome to everyone. So I would now like to go through the fourth quarter in a bit more details. There were increased activity across all customer segments in the quarter, and we saw volume loan volumes coming up 2.5% or 1.9% currency adjusted. We note a good momentum in the personal customer segment, where lending volumes grew by 0.8%. In corporate customer Norway, we also saw a very positive development in the quarter, with developments of volumes with 1.4%. In large corporate, we noted another quarter with strong activity level and volumes were up 7% or 4.7% currency adjusted. Also, when looking at deposit volumes, we saw positive development in the quarter, up 4.7%, personal customers up 1.3%, and corporate customers up 7.3%, driven both by small and medium-sized enterprises, but also, more importantly, also public sector. Volumes in LCI were up 7% in the quarter. We continue to maintain a strong deposit to loan ratio within the customer segments at 74.3% in the quarter. The net interest margin was up by four basis points, now amounting to 194 basis points. This is driven by increased volume, high financing activity, and positive contribution from treasury effects in the quarter. Please keep in mind that there is some seasonal variability here in the quarter, where refinancing activity tends to be higher in the fourth quarter compared to the first quarter and the third quarter. As you can see from the right hand side of this slide, the combined spreads in the customer segments are stable, affected by lower money market rates, some mixed effects on deposits account, as well as strong and but still rational competition in the market. NII increased by $589 million, up 3.7% in the quarter. We see effects from spreads, volumes, and currency, increasing NII by $193 million in the quarter. And as mentioned on the previous slide, we saw high refinancing activity in the quarter, increasing NII by $182 million from amortization effects and fees. Treasury effect related to liquidity management was high in the quarter, increasing NII by 173 million. In addition, NII increased by 41 million from interest on equity, reflecting a stable key policy rate environment. Our fee platform, as Kerstin pointed to in her presentation, remains strong and well diversified, reflected in the solid performance across all product areas in the quarter. In addition to what you can see on the slide behind me, there is continued strong contribution from FICC, found under financial instruments, and D&B Life, also found under other income. When turning more specifically into commission and fees, we note an all-time high fourth quarter with an increase of 12.3% from the corresponding quarter last year. Real estate broking was up 10%. We noted increased income from residential real estate broking, reflecting the higher market activity overall. Investment banking was up 31.7%, the strong results driven by high activity across the board, but I would particularly point to investment banking and debt capital markets as being specifically strong this quarter. Asset management and custodial services was up by 3.4%, but this is compared with an extraordinary strong fourth quarter in 2023. There is a continued growth in asset under management, up 183 billion over the year, and we noted positive net inflow from both retail as well as institutional customers, and further positive development in the number of savings schemes from our personal customers. We also continue to see a positive trend when it comes to trade finance, and therefore guarantee commissions are up by 11.7%. Money transfer and banking services was up 4.1%, supported by a high international travel activity among our customers. Sale of insurance products was up by 12.2%, so continued positive development in the defined contribution pensions. Now moving on to costs, which were impacted by one-off expenses as we announced also around capital market stay related to the reduction of full-time employees. This in the quarter amounts to 427 million. There was also a seasonally high activity reflecting the 222 million in increased costs associated with variable salaries, travel, as well as training expenses. Over to the portfolio quality, which remains robust and well diversified, with 99.3% of the portfolio in stage one and two. In the personal customer portfolio, which accounts for approximately 50% of exposure at default, we see no negative developments to speak of. For the corporate customers in Norway, as well as large corporate and international, impairment provisions amounted to 44 million and 58 million, respectively. The portfolios remain solid and well diversified. We remain very comfortable with the credit quality in the portfolio, but please bear in mind that losses will vary from quarter to quarter. Let's move on to capital. Our core tier one capital ratio remains strong at 19.4%, 280 basis points above the regulatory expectation at 16.6. The board proposes a cash dividend of 16.75 kroner up from 16 kroner in 2023. As the dividend payout ratio is somewhat lower than the average over the past three years, which has been deducted throughout the year, you will see a restatement in the fourth quarter, meaning that you have a positive impact on the quarter one capital ratio of 20 basis points in the fourth quarter, similar to what we saw last year. The core T1 capital ratio was also positively impacted by profit generation in the quarter, repayment of excess capital from the D&B life insurance business of 1.5 billion, and also positive development in risk exposure amounts. This is somewhat offset by an AT1 redemption, as well as the increase in operational risk, which comes as a consequence of increased average income over the past three years. Leverage ratio remains strong at 6.9%, well above the regulatory requirement of 3%. With a core tier one capital ratio of 19.4%, a leverage ratio of 6.9%, our capital positions remains strong. We are well positioned to meet upcoming regulatory headwinds, such as CRR3, estimated to have a negative effect on the core tier one capital ratio of 20 basis points, as well as the increased risk weight floors on the mortgage lending, estimated to have a negative effect of approximately 70 basis points. And on top of that, the expectation and estimated effect of around 120 basis points related to the Carnegie acquisition. When taking all of these elements into account, we are still at a very comfortable level when it comes to our core tier one capital ratio or capital position and remains committed to our dividend policy. With that, I would like to thank you for your attention and open up for questions.