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4565
Poor results for Norwegian banks in 2008
statistikk
2009-02-27T10:00:00.000Z
Banking and financial markets
en
orbofrk, Financial corporations, accounts, banks, mortgage companies, finance companies, state lending institutions, period result, profit and loss accountFinancial institutions and other financial corporations, Banking and financial markets
false

Financial corporations, accounts, Q4 2008

As from 2016 the statistics is published with Banks and mortgage companies.

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Poor results for Norwegian banks in 2008

Profits in Norwegian banks in 2008 were NOK 6.5 billion lower than the high profits of 2007, which was a very good year. Banks’ profits in the fourth quarter of 2008 were NOK 3.0 billion lower than profits in the previous quarter.

Norwegian banks achieved a NOK 16.6 billion profit in 2008. This is a decrease of 28 per cent compared to the profit in 2007. Profits in the fourth quarter amounted to NOK 1.5 billion, which were the lowest since the fourth quarter of 2002. The fall in profit was mainly due to an increase in loan losses and an increase in net losses on securities and currency.

Loan losses amounted to NOK 1 billion in the third quarter of 2008 and rose to NOK 4.5 billion in the fourth quarter. This is one of the highest loan losses ever measured, and the highest experienced by Norwegian banks since the last quarter of 2002. Since the end of 2007, Norwegian banks’ loan losses have been about NOK 6.3 billion.

Banks. Selected items from the profit and loss statement. Q4 2005-Q4 2008

Banks. Net gain/-loss on securities and losses on loans. Q4 2002-Q4 2008

Banks. Selected items from the profit and loss statement. Q4 2002-Q4 2008. NOK million
 
  Net interest earnings Losses on loans Net gain on short-term papers,
bonds and other interest
bearing securities		 Profit and loss
for the financial period
 
Q4 2002 8 454 4 857  151 -291
Q1 2003 7 893 1 772  369 1 599
Q2 2003 8 100 2 210  536 2 381
Q3 2003 8 222 1 651  112 2 440
Q4 2003 7 680 1 498  153 3 069
Q1 2004 7 621  474  415 3 558
Q2 2004 7 864  236 -179 3 367
Q3 2004 8 433  232  144 4 127
Q4 2004 8 193  222  147 3 974
Q1 2005 8 042  142 -34 4 036
Q2 2005 7 822 -778  437 4 918
Q3 2005 8 384 -369 -70 4 988
Q4 2005 8 824 -324 3 5 700
Q1 2006 8 333 -289 -38 5 065
Q2 2006 9 313 -137 -127 4 799
Q3 2006 9 181 -528  210 5 007
Q4 2006 9 513 -399 -326 7 076
Q1 2007 9 498 7  323 5 358
Q2 2007 9 963  104  414 5 608
Q3 2007 11 088 21 -1 479 5 357
Q4 2007 11 166 32 -789 6 698
Q1 2008 11 823  323 -2 200 3 921
Q2 2008 11 230  429 1 171 6 580
Q3 2008 13 040 1 014 -1 638 4 588
Q4 2008 14 174 4 533 -1 482 1 507
 

Large net losses on securities

Norwegian banks experienced substantial net losses on securities and currency in the fourth quarter of 2008. Net losses on short-term papers, bonds and other interest-bearing securities were NOK 1.5 billion, while net losses on shares and other securities with variable returns amounted to NOK 1.4 billion. Norwegian banks’ net gains on currency and gold in the third quarter of 2008 were turned into net losses of NOK 2.5 billion in the fourth quarter. Total net losses on securities and currency for 2008 were NOK 1.2 billion.

Net gains on financial derivatives however increased from NOK 1.4 billion in the third quarter to NOK 4.3 billion in the fourth quarter last year. The net gains on derivatives were at one of the highest levels ever in the fourth quarter of 2008.

Net interest income is still high

Norwegian banks have experienced even higher net interest income levels in recent quarters, and this trend continued into the fourth quarter of 2008. Net interest income (interest income less interest costs) reached a substantial NOK 14.2 billion in the fourth quarter; an increase of NOK 1.2 billion from the third quarter. Total net interest income for 2008 was NOK 50.3 billion, which is an increase of 20.5 per cent compared to 2007.

The increase was primarily due to high interest income and other income on loans and receivables from customers and credit institutions caused by a continued increase in stocks of loans (see the credit indicator C2 ) and a high interest rate. Interest income on treasury bills, treasury bonds and other interest-bearing capital securities increased from NOK 3.9 billion in the third quarter to NOK 5.0 billion in the last quarter of 2008.

Increasing profits for mortgage companies

Norwegian mortgage companies’ profits for 2008 amounted to NOK 7.1 billion. This was due to a total net interest income for 2008 of NOK 4.1 billion, and a net gain on securities and currency which amounted to NOK 5.0 billion at the end of 2008.

The profits of Norwegian mortgage companies are strongly affected by the introduction of the International Financial Reporting Standards (IFRS), which can lead to fluctuations in book values for liabilities and assets at fair value. The profits of Norwegian mortgage companies are also affected by portfolio movements of loans between banks and mortgage companies. These companies are less exposed to losses on loans due to the fact that they have more secure loans than the banks.

Increased losses on loans in finance companies

Norwegian finance companies achieved a profit of NOK 91 million in the fourth quarter of 2008; a fall from NOK 412 million in the third quarter. The loan losses have risen gradually since the fourth quarter of 2006, and amounted to NOK 774 million in the fourth quarter of 2008. This was an increase of NOK 538 million compared to the third quarter. Net interest income in the finance companies in the fourth quarter totalled NOK 1.7 billion; a rise of almost 18 per cent compared to the level in the third quarter of 2008. Total profits for the Norwegian finance companies were NOK 1.4 billion, down from NOK 1.6 billion in 2007.

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