Printer Friendly


 OSLO, Norway, Oct. 26 /PRNewswire/ -- Den norske Bank recorded a profit of Norwegian kroner (NOK) 720 million after loan losses for the first nine months of the year, of which NOK 503 million represented third-quarter profits. Loan losses have been reduced and developments in non-performing assets show signs of improvement.
 "We have reason to be pleased with these results, even while acknowledging the one-off effects of the fall in interest rates," said Group Managing Director Finn A. Hvistendahl. Preparations for a share capital increase are under way. "The current market valuation of the bank indicates that the government will be able to recover all of the capital provided to Den norske Bank, and possibly more," said Mr. Hvistendahl.
 "The major goal of Norway's largest bank will now be to fully recover its former strength and the confidence of the Norwegian and international capital markets. To achieve this, the bank's core capital must be strengthened," said Finn A. Hvistendahl.
 In his budget presentation to the Storting (parliament), the minister of finance cleared the way for preparations for a share capital increase. Mr. Hvistendahl said that Den norske Bank has recently been in touch with several brokerage firms in Norway and abroad.
 "To create the soundest possible foundation for a share capital increase, an offering will take place in 1994 at the earliest, after the 1993 annual accounts have been approved by the bank's general meeting," said Finn A. Hvistendahl. "Preparations have just begun, and no decisions have been made with respect to the size and structure of the share capital increase."
 Operating profits tripled
 Operating profits before loan losses in the first nine months of the year came to NOK 3,296 million, nearly tripling the corresponding figure for last year of NOK 1,155 million. The increase in profits stems from a substantial rise in securities gains, improved net interest income and lower operating expenses.
 Net interest income was NOK 4,011 million, or 2.93 percent of average total assets. This represents an improvement of 0.67 percentage points on the same period of 1992.
 Other operating income was NOK 2,648 million for the first nine months of the year, double that of the year-earlier period. So far this year, the bank has accumulated unrealized profits on shares totaling NOK 259 million, which have not been taken to income.
 "Allowing for the large number of non-performing loans and continued high loan losses, I expect results for the full year to be good," said Group Managing Director Finn A. Hvistendahl. "As interest rates stabilize and the competition for deposit and loan customers grows even more fierce, the bank's net interest income will come under pressure. Nonetheless, I hope it will be possible to maintain this income at a satisfactory level over the next few months."
 Mr. Hvistendahl added that low interest rate levels will have a positive impact on customers' financial situation, which should gradually lead to lower loan losses for the bank.
 Reduced costs
 For the period January through September, Den norske Bank's total operating expenses amounted to NOK 3,363 million, NOK 241 million lower than for the same period last year. Since 1988, Den norske Bank Group has reduced costs by NOK 1.8 billion on an annual basis, representing about 40 percent in fixed prices.
 Group Managing Director Hvistendahl emphasized that there is still a potential for cost savings. "The rationalization of routines will be continued," he said, "and the need for extra resources to handle problem loans will lessen with time."
 Decline in loan losses and non-performing assets
 Net loan losses so far this year amount to NOK 2,534 million, down NOK 754 million on the year-earlier period. In the third quarter, loan losses were NOK 541 million, compared with NOK 1,173 million and NOK 820 million in the first and second quarters, respectively.
 The volume of non-performing loans at the end of the third quarter was NOK 11.6 billion after loan-loss provisions. The corresponding figure at the end of the second quarter was NOK 12.1 billion.
 The improvements achieved during 1993 result primarily from a slower rise in new doubtful loans. The underlying trend for doubtful and non-performing loans combined has been positive throughout the year, a fact substantiated in the third quarter by the reduction in the volume of non-performing loans.
 For private customers and small and medium-sized companies in Norway, loan losses have declined steadily compared with 1992. In the corporate division, which includes activities in London, New York and Singapore in addition to shipping and the large corporate segment in Norway, loan losses in 1993 have remained at a high level. However, third-quarter developments have proved positive compared with the first two quarters of the year. Loan losses on operations outside Norway amount to NOK 330 million so far this year.
 Capital adequacy at 9.7 percent
 At the end of September, Den norske Bank's capital adequacy in accordance with Norwegian rules was 9.7 percent, based on risk-weighted assets of NOK 154.4 billion. Profits for the year to date have not been included in the calculations. Core capital represented 4.1 percent of capital adequacy at the end of the third quarter. If current profits for the year had been included, the core capital ratio would have been 4.5 percent at the end of September.
 -0- 10/26/93
 /CONTACT: Gina Fladmoe, corporate communications department of Den norske Bank, Oslo, 47-22-48-15-98/

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

TW -- NY015 -- 6760 10/26/93 09:19 EDT
COPYRIGHT 1993 PR Newswire Association LLC
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:PR Newswire
Date:Oct 26, 1993

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters