Financial corporations, accounts, Q3 2007

Norwegian banks have achieved unprecedented net interest income levels in every quarter since the forth quarter of 2006, and preliminary figures for the third quarter of 2007 show that this trend continues. Net interest income (interest income less interest costs) reached a substantial NOK 11.5 billion, an increase of NOK 1.6 billion, or 16.2 per cent compared to the second quarter. This represents the highest growth in net interest income since the first quarter of 2000. The increase is primarily due to increased interest income and other income on loans and receivables from customers and credit institutions, caused by a continued high growth rate in loans and a higher interest rate.

Large net losses on securities and currency in the third quarter

Norwegian banks have had net gains on securities and currency since the forth quarter of 2002. The net gain has amounted to NOK 1.5 billion on average in the three previous quarters. In the third quarter of 2007, however, the banks experienced net losses on securities and currency amounting to NOK 266 million. Losses on short-term papers, bonds and other interest bearing securities amount to NOK 1.3 billion, which together with decreasing net gains on currency, from NOK 1.5 billion to NOK 224 million from the second to the third quarter, had a large impact on bank profits. The increasing losses on short-term papers, bonds and currency are most likely related to the recent turbulence in the international financial markets, caused by the problems in the subprime market.

Small decrease in profits

Third quarter profits amounted to NOK 5.4 billion. This is an increase of NOK 0.4 billion compared to the corresponding quarter last year, but a decrease of NOK 0.1 billion from the second quarter of 2007. In the three previous quarters, high net interest income and large net gains on securities and currency were the main contributors to the strong results. Despite an all-time high net interest income and minor losses on loans, third quarter profits decreased. The decrease in profits is largely due to the fact that the banks had net losses on securities and currency for the first time since the third quarter of 2002.

Tables

Published tables