Earnings Call: Q3 2025

Oct 22, 2025

Good morning, everyone, and welcome. Welcome to everyone also watching us on the stream. This will be the presentation of our third-quarter results in the DNB Group, and we are looking forward to presenting the results for you. Kjerstin and Ida will go into the details shortly. The emergency exits are in the front to your left and in the back, but there are no planned drills today. If there is a fire alarm, it's for real. There will be questions later, both here in the audience and possible to ask questions for those watching on the stream. I'll just leave the floor to you, Kjerstin, to get on with it. Thank you very much, Even, and a very good morning to all of you, and a warm welcome to this presentation of our third-quarter results. We are presenting a strong set of numbers reflecting the summer season, where a couple of months are slower for parts of the activity of our business, but overall, a steep and increasing activity towards the end of the quarter. The Norwegian economy continues to do well, and this is well reflected both in the customer activity across our business, but also in the robustness of our portfolio. I wanted to start by sharing a few highlights from the quarter. The first one actually after the quarter, because only a few days into the fourth quarter, the transaction related to listing Verisure on the Stockholm Stock Exchange closed. We had the honor of being a global joint leader of this transaction, and it was the largest listing in Stockholm in more than 25 years, the largest listing in Europe since 2022, and it marks the strengthened brand and platform we have with DNB Carnegie. Our assets under management continue to grow to a record level: NOK 1,579 billion, driven by market valuation and net inflow, and we continue to grow despite having sold whole bag in the quarter. One of the key drivers is successfully launching new products. We have launched four new products so far this year, and this has driven NOK 5 billion of net inflow. Making life easier and simpler for our customers is something that we always strive for, and this quarter we have launched several new initiatives. One of them, a fully digital process, not only to register your company, but also onboard your company in the bank, and each of these processes saving our customers 18 days in the process. By using, amongst others, artificial intelligence, we are also simplifying the customer journey across services and across our platforms, and this has, within the last year, led to an 18% reduction in the number of service enquiries by our customers. As usual, I do think it's appropriate for me to give a big shout out to the organization that works so hard every day to deliver on our mission to make life easier and the economy better for our customers at large. Now, maybe over more to the numbers. Return on equity for the quarter at 15.8%, which is well above our targeted return of minimum 14%. The net interest income in the quarter is down by 1% compared to the previous quarter. This number is positively impacted by growth both on the lending side and the deposit side, and offset by repricings that have been done and taken effect during the quarter, as well as product mix effects. Net commission and fee income, a strong 28.9% increase from the corresponding quarter last year. Key engines or drivers, if you will, are investment banking and asset management. In investment banking, we see high activity across ECM, DCM, and a somewhat lower contribution from M&A this quarter. Asset management, already referred to, record numbers and attractive both market valuations and net inflow into the business. Another area that stands out very positively this quarter are our activities on the insurance side, both in the life insurance and the non-life insurance. Costs are down, reflecting our continuous efforts to increase efficiency and scale. We have a robust and well-diversified portfolio across industries and geographies. We do take impairments of NOK 862 million this quarter, but it is important to highlight that impairments on the underlying activity are NOK 431 million, which corresponds to a cost of risk of 8 basis points. Core equity tier 1, 17.9%, 135 basis points headroom to the FSA expected level, and this number also reflects a deduction of 40 basis points related to the additional 1% share buyback that was announced earlier today. Earnings per share up 2.8% from the previous quarter, year to date a total of NOK 6.98, year to date NOK 20.81, a solid platform to continue to deliver on our dividend policy. A few comments on the Norwegian economy. New data and economic update have shown that growth was higher than thought, actually, in the first half of the year, so the growth estimates for the year have been updated and are now believed to come in at around 1.8%, a very healthy level of growth, and it's expected to stay roughly at this level for the coming years. Unemployment remains low, and the regional business survey that is published by the central bank supports both the growth outlook and the unemployment with a very positive result. Inflation continues to move down, with lower inflation, high wage growth. We see drivers for increased consumer spending, which is an important driver for further economic growth. The central bank decided to cut rates for a second time in September this year. Ahead in the forecasting period, the expectations of DNB Carnegie are for one more rate cut to take place, and that to take place in June next year, taking the key policy rate level to 3.75%, and thereafter stay at that level for the remainder of the forecasting period. Needless to remind you, the world is an uncertain place these days with geopolitical tension around us. More importantly, the robustness and the resilience in the Norwegian economy continue to be very visible, and this is what matters the most for our business. A few highlights from the main business areas. An additional strong quarter from personal customers, 2.7% growth in lending year over year, and a quarter where there's been a high interest from customers in not only financing new homes, but also looking for a new bank, and many of them selecting DNB and our S-Banking brand, who have had the strongest growth in a quarter, in a month that they have seen for more than 15 years. Attractive revenue on other income, strong cost discipline, and very low losses lead to attractive return on capital of 19.6% for personal customers. In corporate customers Norway, volumes at the end of the quarter are relatively flat. They do increase if we look at the average volumes throughout the quarter, and the underlying activity and growth across regions are positive, with growing demand and growing volumes, driven primarily by seafood and somewhat energy. There is a solid contribution from other income, in particular on the life insurance and defined contribution pension this quarter. Also here, cost discipline, certain customer-specific impairments have been taken, but even so, a return on allocated capital of above 20% for this part of our business. In large corporates, pre-tax profits are down compared to the previous quarter, and the second quarter is usually a slower quarter, in particular in other income, where we are comparing to a record high quarter, third quarter 2024, which was also impacted by positive market-to-market effects. Volumes are up by half a percentage point. Underlying activity is, however, stronger in the business. There's also been a high activity in refinancing typical transactions related to bridge to bonds, which indicates a strong activity related to new business to get to the half percentage point growth. Year over year, growth on lending here is 10.2%. A solid contribution from other income, certainly on ECM again and DCM, but also here we see the lower contribution from M&A. Wealth management revenue in this area continues to grow. In the Nordics, we are building on our strengthened growth platform. If we take DNB Carnegie and look at the rolling 12-month revenue, it's up by 12.3% compared to last year. This is driven, of course, by the Carnegie acquisition, but also high activity on the ECM and DCM side. Equity capital markets are open. We do see an increasing number of RFPs and mandates coming in, and we are expecting to see more of the business materializing after having been pushed out in time after the trade turmoil earlier this year. Wealth management, again, we see a revenue compared to last year that is up by 26.8%, a key driver, obviously market valuation, but also very attractive flows into the business, and of course, the acquisition of Carnegie with Carnegie Fonder and private banking in Sweden that broadens our platform. I would like to highlight that even more importantly than this quarter is the strengthened growth platform that we have across these two business areas. The position stands out very strongly with a clear leading position as the Nordic investment bank. We have done three of the, we have been a leader in three of the four largest IPOs in Europe so far this year, and in equity research, we hold the number one position in 16 out of 21 sectors and are among top three in the remaining sectors. For assets under management, it's a broader platform, well positioned for further growth. It's time for me, for the last time, to welcome my co-pilot for several years onto the stage for the last time, and it is also more than appropriate for me on behalf of DNB to thank Ida for her service and commitment to our activity, our business, and our shareholders for many, many years across different roles where she has added substantial value in so many characters. Ida, the stage is yours. Thank you, Kjerstin, and thank you to the entire team for allowing me to be here for 18 years. It has definitely been the best 18 years of my life so far, so thank you all. Now moving over to the third quarter, we note good activity across the group, with currency-adjusted profitable loan growth of 0.3%. We continue to see a good momentum in the personal customer segment, where the lending volumes were up 0.4%, and as Kjerstin pointed to, with an uptick of growth towards the end of the quarter. Corporate customer Norway was stable in terms of lending volumes, but this segment is, of course, also impacted by the fact that there continues to be low activity in the construction of new houses, which is usually a strong engine for growth in the corporate customer area. Large corporate and international are up 0.5%. This does, however, not fully reflect the underlying development in the portfolio, where we're seeing several larger bridge-to-bond transactions being taken out in the quarter and good momentum in terms of new businesses. Currency-adjusted deposits were up 0.6%. The decrease of 1.8% in the personal customer segment is driven by seasonality. The reduction is, however, lower than what is usual for a third quarter and should also be seen in connection with this good increase we're seeing in assets under management from the retail customers. Corporate customers are down 3.9%. This is driven by a seasonal effect related to the public sector, where there is no monthly contribution from the state to the municipalities in August, but it is so for the remaining months of the year. The underlying deposit growth in corporate customer Norway is actually up 2%, which is, of course, a positive testament to the momentum in the overall society. Large corporate and international saw an increase by 8.5%, predominantly driven by the fact that there was only one petroleum tax payment in the quarter. We continue to maintain a strong deposit-to-loan ratio within the customer segments of 73.6% in the quarter. Net interest margins were affected by interest on equity and other NII and are down by 5 basis points. Combined spreads are stable. The underlying development in combined spreads is somewhat weaker than what can be seen here, related to product mix effects and continued strong but rational competition in the market. For instance, large corporates, we noted a high margin bridge bonds, as mentioned before, being replaced by lower margin loans. In the corporate customer area, we also saw a decrease in low margin deposits stemming from the public sector being replaced by larger, higher margin deposits from the SMB segment. Net interest income decreased by NOK 162 million in the quarter. Volume growth and FX effects increased NII by NOK 142 million, and one additional interest day contributed positively by NOK 129 million. Spreads are affected by the rate cut, product mix effects, as mentioned before, and continued strong but rational competition in the market. Interest on equity is down by NOK 202 million, affected by changes in the money market rates and lower average equity following the dividend payment made in May, as well as the concluded share buyback program. In the fourth quarter, we will see full effects from the first repricing being implemented 25th of August, as well as partial effects of the second repricing being implemented mid-November. We continue to benefit from a robust and well-diversified fee platform. Customer activity picked up throughout the quarter, and in addition to what you can see on this slide, we are also noting positive momentum from the DNB life insurance business, as well as the non-life insurance company Fremtind, as you can see on other income. Net commission and fees on this slide are up NOK 878 million, or 28.9%, from an all-time high third quarter last year. Real estate broking was up 9%, reflecting the higher activity in the real estate market. Investment banking services were up by 73%, driven by the inclusion of Carnegie and strong deliveries within equity capital markets and growing so also from debt capital markets. In M&A, as Kjerstin Braathen mentioned, activity was lower than what was noted in the similar quarter last year, but particularly related to the maritime industries as well as energy. In investment banking, we note a solid pipeline within equity capital markets as well as debt capital market, where several transactions already have been completed in the fourth quarter, and more mandates are expected to come. Asset management and custodial services were up 67%. There was a continued growth in assets under management in the quarter, net up NOK 15 billion when adjusted for the sale of the Holberg divestment. Underlying assets under management was up NOK 54 million in the quarter, and we noted positive net inflow from both personal customers, the retail segment, as well as institutional customers. We continue to see a positive development in terms of the number of long-term savings schemes. Guaranteed commissions were down by 6%, driven by lower demand for trade finance. Money transfer and banking services were down by 19%. The positive contribution that we're seeing from the seasonally higher transaction and international travel activity was offset by costs and reduced contribution from banking services. Banking services were among other things impacted by fewer cars being sold from DNB Finance and also insurance premium costs related to exposures in large corporate and international. The latter is a tool used for capital efficiency, increased originate and distribute, and also generates overall profitability to the group. Sale of insurance products was up by 21%, supported by continued good income from defined contribution in our life insurance business and positive development also in the non-life insurance business. Moving on to costs, where operating expenses are down by NOK 242 million, reflecting seasonally lower activity. Fixed salaries are down by NOK 126 million quarter on quarter. NOK 45 million of these are related to seasonal effects in our Swedish operation, where the vacation days are deducted from previously accrued costs. The rest relates to fewer full-time employees in the group. This quarter also includes one-off costs amounting to NOK 55 million, of which NOK 25 million relates to the announced decrease in the number of full-time employees in our operations area and NOK 30 million to the integration of Carnegie. Over to portfolio quality, which remains robust and is well-diversified, with 99.4% being in stage one and two. We note impairment provisions totaling NOK 862 million in the quarter. NOK 150 million of these relate to an update of our expected credit loss model. This impacts impairment provision in stage one and two in the personal customer segment as well as in the corporate customer segment. In addition to that, we have taken NOK 281 million of further impairments related to our legacy portfolio in Poland. Impairment provision, as Kjerstin Braathen mentioned, in the underlying portfolio amounts to NOK 431 million, equivalent to a cost of risk of 8 basis points. The overall portfolio in the personal customer segment, as well as in the corporate customer segments, is strong with no signs of deteriorated quality. In the personal customer segments, there are fewer customers with installment holidays and defaulted loans today than what we saw a year ago. In the corporate customer segments, we have fewer customers on watchlist, and we continue to see a good momentum. The impairment provisions in stage three for corporate customer Norway relate to customer-specific situations in the same sectors as we pointed to before, namely real estate related. The overall portfolio quality here continues to be sound and robust, with a limited portion of the exposure in high risk. We remain comfortable with our credit quality in the overall portfolio. Now moving on to capital. The core equity tier 1 ratio is strong at 17.9%, 135 basis points above the regulatory expectation. The core equity tier 1 was positively impacted by profitability, 30 basis points, which was offset by the increased risk weight floors in the residential mortgage portfolio, leading to a reduction, as announced previously, of 60 basis points. We finalized the previous share buyback program during the quarter and are today announcing a new 1% share buyback program, impacting the core equity tier 1 by 40 basis points this quarter. Leverage ratio remains strong at 6.3%, well above the regulatory requirement of 3%. With a core equity tier 1 of 17.9% and a leverage ratio of 6.3%, our capital position remains strong and enables us to continue to deliver on our dividend policy. Summing up, we deliver a strong set of results in the third quarter reflected in these key numbers. Return on equity came in at 15.8%, earnings per share at NOK 6.98, 2.8% increase from the last quarter, cost income at 37.4%. With that, I thank you for your attention, and we now open up for Q&A. Thank you so much, Ida. Thank you, Kjerstin. This is the last chance you have to ask Ida difficult questions. Any questions from the audience? To Ida? Yes, Roy from Arctic. Wait for the microphone. Thank you. Roy Tilly from Arctic Securities. A couple of questions just on the customer revenues in DNB Markets. They were a bit down year on year and also the year before. Is that expected or are you surprised? That's the first question. I think there's NOK 700 million this quarter, so it's 20% down versus Q3 2024. On the activity levels after the September rate cut, I remember after the June rate cut, you had a record high activity on mortgages. How was this in September? Was it the same or less this time around? I can start there. One more, actually. On Poland, just the legacy portfolio, can you just remind us how big is that portfolio? How big is the provisions now, and should we see more? Great. Thank you, Roy. I'll do the two first ones, and Ida can do the latter. Third quarter, DNB Carnegie is a good quarter, but it's a lower quarter than the same quarter last year. We see strong areas such as DCM, equity capital markets, and DCM particularly on the investment grade side. If you look at customer revenues, it's also on the fixed side that there is lower activity, lower activity related to interest hedging, and somewhat lower on FX. These are natural volatility for that part of the business, I would say. As for M&A, it's typically the part of the business that varies from quarter to quarter. Third quarter last year, particularly active, driven by, as Ida was saying, the maritime sector and transactions in the energy sector, an exceptionally high quarter for us, and this piece was lower in the third quarter. There's nothing that stands out that we would like to comment. Rather, emphasize the strong growth platform and that this business needs to be seen over a longer time than a quarter, and we're very happy with the development and what we see going into the fourth quarter. Activity level after September was also very strong. Hard to say if it's exactly at the same level, but we continue to see that customers are focused on what their terms are, where they do their banking, and we think that's a very positive thing. It's healthy competition, and it does remain rational. Of course, we were delighted to see that so many customers wanted to come in and join S-Banking, but even in the DNB brand, we have seen a 10% increase in financing certificates, so this is a strong September and end to the quarter for all of our business in the customer segment related both to pricing but also to the offering at large. In terms of the loan book in Poland, we have a total loan book of NOK 3.7 billion, of which we've taken accumulated impairments of NOK 1.6 billion as of today. What's important to say, and I'll give you a bit more details in terms of the portfolio, 88% of the portfolio is Euro loans and only 2.3% is Swiss franc loans, which is more exposed in terms of the recent developments we've seen in terms of rulings from the court. The reason why we're taking larger impairment this quarter as well as last quarter and the quarter before that is not due to the fact that the customers are changing in terms of behaviour or anything like that. It's related to our proactivity towards the customers where we've tried different solutions really to find a long-term solution here, which is impacting the impairment provisions but not underlying development in the portfolio. We are continuously monitoring the development and are comfortable with the impairment provisions that we've taken overall related to this portfolio as of today. Thank you very much. Thank you. You can pass the mic to Thomas Midteide from DNB Bank. Yes, good morning. On the capital, this big difference between your posted core equity tier 1 ratio and FSA expectation, should we expect that to come down over time, let's say the next two couple of years? That's the first question. Second, as you pointed out, there are sliding large corporate lending margins. Is this a trend that we should expect to continue throughout the next few quarters? Thank you. In terms of the core equity tier 1, you're right, we have a good buffer, 135 basis points per the regulatory expectation. What needs to be also taken into account when looking at this number is that we have a pillar 2 guidance of 125 basis points within that expectation, which is significantly higher than our Swedish peers, which I believe is around 50 basis points. We have a buffer on top of the buffer, so to say, and therefore we are also very well capitalized where we are today, and that's also why we are launching a new share buyback program. We haven't changed our dividend policy. That stays firm. We're going to continue to focus on an increased nominal cash dividend year on year and utilize share buybacks as a flexibility tool to optimize the capital position. Where we are today, I would say that we are very well capitalized again. In terms of LCI and the lending margins, as I pointed to and Kjerstin also mentioned, we're seeing some movements within the portfolio in terms of larger bridge-to-bonds, which have higher margins being taken out in the quarter and being replaced by lower margin and also low risk in large corporates. In addition to that, there is a fierce competition out there. There is a lot of very solid, well-capitalized banks out there, which of course also has an impact in terms of the overall market developments. This quarter is predominantly the impact of the fact that we're shifting large portions of transactions, which are different in terms of lending margins. We do not see a basis to be able to call it a trend. Thank you. Thank you. Any more questions? Herman Zahl from Pareto, just behind you. Thank you. Just on the competition within personal customers currently, since lending spreads are up by 16 basis points, it seems like you have given some more repricing downwards than would be suggested by the conventional 25 bps and your communicated repricing effective date. You're not growing that much in the quarter either. I know you're stating and saying that competition remains rational, but would you say it's less rational than it has been historically? The key theme is that it is rational, but it is slightly intensifying. I think we've been very clear on that, and I think it's well known that the magnitude of liquidity in the market at the moment surpasses demand. However, I believe it's important to be cautious while reading spread movements and directly transferring them to repricing movements, as the margins in the statistics are based on the money market rates, and they move. Bear in mind that we've had two rate cuts within a relatively short period of time, and you will see lag effects just as we did on the way upwards. You will see lag effects as money market rates tend to move prior to the adjustment from the central bank, and again, there's a lag before the price adjustments become effective into our numbers. There is competition. I would qualify the growth in the quarter as attractive given what we've seen statistically and given what we see in September and given what we see also in the wider market. This is a quarter where I at least am very happy with the performance of the team and reiterate that year on year is a growth of 2.7%, and it's at profitable conditions. Given that some of the more challenger banks within personal customers have grown quite strongly since the rate cuts, could you give some color on how the S-Banking volumes have developed since the June rate cut? We do not give sort of details across our brands. We believe the key importance and our priority is to deliver profitable growth in the area, and that is what we do this quarter. When looking at %, it is important to keep in mind that we have doubled the volumes of the second largest player in the market, and there's a strong culture for amortising in the Norwegian market. Just keeping volumes means having a very high level of activity and growing volumes even beyond that, and we are grateful and appreciative of the fact that so many new customers choose to bring their business to us. Thank you. Thank you. Any questions from the online audience? No. There's one more from Roy, please. Simon Brun, ABG, please go ahead. Thank you. Just a question on your costs for the quarter. Ida, I think you mentioned that was mainly driven by the drop quarter on quarter, mainly due to seasonal effects, but I think Kjerstin, you said there's also some structural aspects of it in your introduction. Which one is it in relation to that? You have a NOK 3 billion cost savings program ongoing until 2027. Can you say something about how you're tracking towards that with close to one year already done? I would say in terms of your first question, both are right. When I talk about it, it was more quarter on quarter where we're seeing the seasonality effect, and that's more to also talk about what we're seeing in the fourth quarter, which is expected to have a higher seasonal element into it. What Kjerstin Braathen talks about is, of course, that we continuously work on cost efficiency. We use digitalization and increased automation. That's also one of the reasons why you're seeing a decrease in full-time employees in the operations area, as it is driven by increased automation and efficiency. In addition to that, we are now kind of benefiting from the full impact of the reduction of 500 full-time employees that we launched last year or announced last year, which is, of course, also impacting long term in terms of the underlying cost development. When you're talking about the NOK 3 billion, this is something that we embed in how we do business on an everyday basis, and cost efficiency is really embedded in our culture and continues to be a very important tool also when looking at competitiveness, not the least in the mass market and both on the personal customer side, but also on the corporate customer side. Yeah, trying to quantify how you track it. I would say we're tracking in line with what we expected, actually a bit kind of better than that, being said that we then decreased the number of full-time employees already this year by 500. Thank you very much. Roy, you had one more question. Thank you. Just a question on insurance. I saw the Fremtind results in the quarter. They were 76.4% combined ratio. They're tracking well below the target they had for 2025. I know it's kind of a benign summer quarter for insurance, but it's starting to get very profitable again. Two questions. Firstly, is this the level you expected? Are you happy? Secondly, if it's good enough, are you prepared to start taking some volumes again? Do you think kind of is the premium hikes behind us now? Will competition increase, or is there still more to do? In terms of the non-life insurance business, I think what we have seen and Fremtind is also showing their results today. I would say that the team under Hege's influence has done a tremendous job in terms of focusing on increased profitability, cost efficiency, and also focusing even more so on the distribution through the banks. This is also what we're seeing this quarter, a closer collaboration between the Personal Customer segment with Maria, as well as the Corporate Customer segment with Marianne, in terms of how we can collaborate even better in terms of selling more towards our customer and making it even more digital and more seamless for the customers. We're seeing a positive uptake on the non-life insurance company business for DNB as well this quarter, and I hope that that will continue also with the strong sentiment and the driver we're seeing from Hege and the team in Fremtind. Thank you. All right. Thank you. I haven't seen any more questions in the audience, so we will close this session, and for the journalists in the room, there will be time to meet management after this session. Today we are rigging for the DNB Next Conference tomorrow outside, so the journalist interviews will be in the area just behind us. Thank you so much for joining us online and physically, and have a nice Wednesday. Thank you.