DNB Bank ASA

Hello and welcome to the D&D Q3 conference call. Please note this conference is being recorded and for the duration of the call, your lines will be on listen only. However, you will have the opportunity to ask questions. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you'll be connected to an operator. I will now hand you over to your host, Rowan Helland, to begin today's conference. Thank you.

Thank you very much, and a warm welcome to all of you. Welcome to D&D's analyst call for the third quarter. Here in Oslo, we are, in addition to Kerstin and Ida, we have head of personal customers, Maria-Erik Bløvall, and head of D&D Carnegie, Alex Oppstad. Before we start the Q&A session, Ida will give you the highlights for the quarter. Ida?

Thank you, and hello everyone, and thanks for taking the time to listen in to this call and participate. The Norwegian economy continues to perform well, and we're also seeing that the recent updates stemming in terms of new data points shows that GDP growth will be higher than what was expected before. GDP growth this year is expected to come in at 1.8%, and then continue to grow around 1.3%, 1.5% in the coming years. Mainland corporate investments continues also to show a positive outlook, and also more importantly, when looking at the surveys done with the corporate customers and the corporates overall around Norway, shows a very positive sentiment. We noted higher real wages last year and also continue to see that real wages are expected to increase also this year, of course, supporting both purchasing power but also lending growth overall. Unemployment levels remain low at around 2%, and that is, of course, also positive when looking at the potential in terms of loan growth going forward as well as consumption ahead. The Norwegian Central Bank has decreased the key policy rate twice by 25 basis points and now has a key policy rate of 4%. Our economists believe that there will be one further rate cut in June next year, which means that we will level out on a key policy rate of 3.75, a very healthy level also for an economy such as Norway. When turning to the quarter, we delivered a solid third quarter result with a return on equity of 15.8%. Earnings per share of 6.98, an uptick of 2.8% from the last quarter, and year-to-date earnings per share of 20.81. In the quarter, we saw net interest income coming down by 1%, impacted by the key policy rate, customer repricing, and product mix effect. We saw a positive and profitable loan growth in all customer segments, but mainly pointing to personal customers increasing by 0.4%. Corporate banking Norway being relatively stable this quarter, also due to the fact there wasn't any major uptick in terms of new builds of houses. Large corporates increased by 0.5%, but underlying in that portfolio, there were significantly more movements than what you can see in those numbers. So, actually, the activity picked up also during the quarter. On deposits, we saw an increase of 0.6%, a seasonal decrease in personal customers, an increase in corporate customer. Norway also sees no link to the public sector. Underlying SMB customers, we had an uptick in deposits of 2%. Large corporates had an uptick in deposits of 8.5%, driven by one less tax payment within the oil industry. We continue to see a good and solid and well-diversified fee platform. Net commission is up 28.9% from the corresponding quarter last year. Underlying asset under management growth was $54 billion in the quarter, net $15 billion due to the fact that we also divested the Holberg portfolio in the quarter. There's also a strong activity and investment banking pipeline moving into the fourth quarter, but also good activity on the equity capital market side, not the least, as well as debt capital markets in the quarter, where we saw a significant uptick towards the end of the quarter. Our credit portfolio continues to be robust and well diversified. 99.4% of the portfolio is stage 1 and 2. Of the total impairment provisions taken this quarter of 862 million, Poland accounts, the legacy portfolio in Poland accounts for 281 million and the model adjustment of the expected credit loss model impacting stage one and two in personal customers as well as corporate customer in Norway amounts to 150 million. That means that the underlying impairment provisions of the portfolio, customer portfolio, is 431 million. There are no systematic changes in the portfolio, and overall, both the personal customer segment as well as the corporate customer segment are performing well and show a very solid development. Core equity tier one of 17.9%, 135 basis points, above the regulatory expectation also taking into account that we today launched a new share buyback program of one percent in addition to the one that was completed during the third quarter so with that thank you for your attention and we open up for questions thank you as a reminder if you would like to ask a question please press one on your telephone keypad