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 OSLO, Norway, Aug. 17 /PRNewswire/ -- Den norske Bank announced today that it recorded an operating profit of Norwegian Krone (NOK) 218 million for the first six months of the year, an improvement of NOK 1.4 billion over the first half of last year. In the second quarter this year the bank achieved profits of NOK 353 million, compared to losses of NOK 135 million in the first quarter.
 "The positive results are very gratifying, and developments in performance seem to have reached a turning point. Improved net interest income and strong gains on securities as a result of the decline in interest rates, and a marked improvement in the efficiency of operations are the main factors behind the positive results, but loan losses are also moving in the right direction," said group managing director Finn A. Hvistendahl.
 "The improvement in performance provides a sound basis for a gradual increase of private capital in the bank. If developments in the next few months bear out the current trend, these efforts could already be started up this autumn," said Mr. Hvistendahl. "The half-year figures also indicate a change for the better within the Norwegian business sector," said Mr. Hvistendahl. "Losses on loans to small- and medium-sized companies in general have been cut in half relative to the same period last year, and are now lower than they have been for some time. Relatively few previously healthy loans required loss-provisions during the first half of the year."
 Mr. Hvistendahl added that the decline in the demand for credit appeared to have leveled off. "This indicates that the Norwegian economy is in the process of stabilizing, which will have a positive impact on the bank's income levels. I therefore believe cautious optimism is warranted with respect to future developments, even though greater improvement is required before the situation can be characterized as normal," he said.
 Solid Net Interest Income
 Net interest income for the first half-year was NOK 2,643 million, corresponding to 2.87 percent of average total assets. This represents an improvement of 0.46 percentage points over the first half of last year. Hvistendahl said: "The improvement in net interest income reflects the decline in money market rates. It is gratifying that we have managed to enhance net interest income despite repeated reductions in interest rates in favor of the customers with loans in the bank. Low interest rates also make it easier for the bank to bear the burden of problem loans."
 Substantial Securities Gains and Reserves
 Other operating income in the first six months was NOK 1,871 million, an improvement of NOK 780 million over the first half of last year. Larger profits on the bank's bond and short-term share portfolios represent a major factor in the improvement, however, income also received a boost from increased earnings on securities trading and payment transfers. During the first six months of the year, reserves totaling NOK 324 million have built up on the bank's bond and equity holdings, which have not been taken to income.
 Steady Reduction of Costs
 First-half operating expenses were NOK 2,251 million, down NOK 172 million relative to the first six months of 1992. "This represents a reduction of 7.1 percent," said Mr. Hvistendahl. "The bank has cut costs steadily every year since 1988. Based on fixed prices, this represents a reduction in costs of close to 40 percent during the five- year period.
 "I know of no other large bank which can point to similar cost- effectiveness. This has strengthened Den norske Bank's position in the gradually increasing competition from foreign banks. In this connection I would like to emphasize the enormous effort put forth by the bank's employees during the banking crisis. Importance is now placed on maintaining the high level of efficiency we have achieved and continuing to enhance these gains even though the bank shows a profit."
 Loan Losses Remain High
 Net loan losses amounted to NOK 1,993 million in the first half of 1993, on a level with the first half of 1992. In the second quarter, however, losses came to NOK 820 million, down by NOK 353 million from the first quarter. Total losses on loans remain high, although in the segment comprising small- and medium-sized companies losses have been reduced to NOK 426 million in the first half of this year, compared with NOK 855 million in the first half of 1992.
 Loan losses so far this year stem largely from commitments where prolonged negative developments have made it necessary to increase previous loan-loss provisions. A substantial portion of commitments previously evaluated as doubtful loans, but on which interest had been paid, were reclassified as non-performing loans during the first six months. This led to an increase in the volume of net non-performing loans during the period, from NOK 11,590 million at the end of last year to NOK 12,119 million as at June 30, 1993.
 Capital Ratio of 9.5 Percent
 At the end of the first half of the year, Den norske Bank had a capital ratio of 9.5 percent, based on a risk-weighted volume of NOK 157.1 billion. Net profits to date this year have not been included in the calculations. The capital ratio at the end of last year was 8.8 percent.
 -0- 8/17/93
 /CONTACT: Glenda Tefre, corporate communications department of Den norske Bank, in Oslo, 47-22-48-15-98/

CO: Den norske Bank ST: IN: FIN SU: ERN

PS -- NY032 -- 3480 08/17/93 10:57 EDT
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Publication:PR Newswire
Date:Aug 17, 1993

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