Hello everyone, welcome to DNB's pre-close call for the first quarter in 2023. Thank you all for participating. First of all, I would like tell you again the objective of this call is to remind you of what we have communicated that might have an effect on the first quarter results. We will also give you some public available statistics and update expectations from Norges Bank. I will go through the NII and the capital, then Anne will go through the rest of the P&L. Before I start on the NII, I would just like to remind you of what we have communicated around DNB and the situation in the banking industry that we have seen developed over the last two, three weeks. First of all, DNB Bank has no held-to-maturity portfolio.
DNB Bank bond portfolio are mark-to-market. No material interest rate risk. Fixed rate bonds are hedged through derivatives. We have also said in the fourth quarter that we have a diversified deposit base, and we had a stable development in volume in the fourth quarter. Over to the NII. First of all, I remind you that there are two days fewer than interest days than in the fourth quarter. That is equaling in minus NOK 250 million for the quarter. Minus NOK 250 million due to fewer interest days. Looking at the FX, we have seen that the average Norwegian krone development has weakened by approximately 2%, so we'll have a small positive effect on the FX.
Just remind you, that is the average FX change that we use. On the volume side, we see that on the household credit volume, that we see a gradual lower demand for household credit. We saw that the 12 months growth rate in February 2022 was 4.9%, while in February 2023, the 12 months rate was 4%, down from 4.9. We also from Statistics Norway hear that from December to February 2023, we have had a growth of +0.3%. The expectations from Norges Bank in regards the household credit growth for the year 2023 is 3.7%.
On the corporate side, activity level is holding up well, and Statistics Norway said that the year-over-year from 12 months growth rate in February was 9%, and the month-over-month from January to February was 1%. That was a little bit about the volume and the market in total. Going over to the margins and the expected rate hikes and effects of the expected rate hikes, we will see tailwind from the rate hikes we had in the second half of 2022. In Q4, we saw approximately two-thirds of these effects. That means that approximately one-third of effects we will see now in Q1. In addition, we had a rate hike in December with effect from the 30th of January of 25 basis points.
Two months affected in the Q1, we have communicated that the annual effect is expected to be NOK 1.2 billion. We also at Norges Bank raised the rates in March with 25 basis points, where we are increasing our rates with effect from the 11th of May. The rate going forward, Norges Bank is expected 2 more rate hikes of 25 basis points, one in May and one in June, and reach a top of 3.5%. We see also that the Norges Bank is seeing a decline when we get into the end of 2024. Over to capital. In Q4, we had a CET1 ratio of 18.3%. FSA's expectation end of March is 17%. That includes the full countercyclical buffer.
Just remind you that we bought back 0.5% of the share buybacks or that we announced from the tenth of March. We will, you can expect us, we believe that we will ask the AGM for another 3.5% also this year. For back to the share buybacks that we had in that we bought after the reporting of the fourth quarter, it was amounted to. Yeah, I'll get back to that today. Okay, let's go over to the remaining part of the P&L, Anne.
Sure. Starting out commission and fees. Investment banking services, as I'm sure you remember, typically sees a seasonally lower activity level in the 1st quarter compared to the 4th. Real estate brokerage, we see from market statistics that activity is holding up better, year to date than what we expected and what the market overall expected in the 2nd half of last year. In asset management, we see from market statistics in Norway, that there was a positive market inflow per February statistics, which is the most recent, recently available statistics. As you all know, there has been significant volatility in the markets after end February. Please keep that in mind.
On the money transfer side, we see that we have stabilized at a higher post-pandemic level, but we might see some seasonal effects in the first quarter, given that both Q3 and Q4 are high activity quarters with regards to money transfers. Moving on to the table title, net gains on financial instruments at fair value in our fact book. First, customer revenues in DNB Markets or FICC income, we see that activity levels are holding up very well. With regards to the mark-to-market effects on the AT1 and the basis swaps, we will announce those shortly after quarter end, as we usually do, so you should have them in time before submitting your pre-consensus estimates. Just a reminder, the outstanding AT1 dollar amount is $850 million.
Moving on to costs, keep in mind that we typically see somewhat lower activity in the first quarter, compared to the fourth. All else equal, this implies a somewhat lower cost level. As stated with our Q4 release, approximately NOK 500 million of Q4 costs were activity driven and constituted some recurring items. The market expectations to salary inflation in Norway for 2023 is now at 5.1%. This was the most recent release from Norges Bank recently. As we've said previously, we expect to come in somewhat higher than this due to the composition of our staff. We're still awaiting the central wage negotiations in Norway, which are expected to conclude in the month of April.
Even though our cost base is primarily exposed to the Norwegian economy, we do have some exposure to international inflation levels through third-party contracts. Finally, a reminder on pension expenses. The normalized level for pension expenses in a quarter is around NOK 4, the closed defined benefit compensation scheme is primarily linked to the development in global equities. Impairments and asset quality. We generally are comfortable with our portfolio still. For the fourth quarter, we had not yet seen signs of stress. We still had low request levels for installment holidays and no significant drawdowns on deposits in the fourth quarter. Obviously, we continue to monitor this very closely. Impairments, as you well know, will vary from quarter to quarter, depending both on ECL model adjustments and/or company specific events, as you've seen in the past quarters.
We clearly see more uncertainty, going forward, given the macroeconomic outlook, and it would be natural to see some more company, specific events. Again, we do not yet see any systemic areas of concern in our, portfolio. Do you have anything to add to that?
Yes, just a couple of more things on the, on the capital side. Just remind you of the FX sensitivity. We have seen a weakening of the Norwegian kroner, if you look at end-to-end period, of approximately 7%. We say that the sensitivity of 10% change in FX will have an effect on the CET ratio of somewhere between 20-25 basis points. In addition, we expect that the dividend from DNB Life will be effective in the first quarter and will have an effect of around 6-7 basis points.
Good. I think that was it. just a kind request at the end, to please submit your consensus estimates to Julie by, close of business on April 13th. With that, Happy Easter to those who celebrate, and, we'll speak soon.
Thank you.