Financial corporations, accounts, Q2 2013

As a share of total assets, the profit before tax increased from 0.22 per cent in the 1st quarter of 2013 to 0.29 per cent in the 2nd quarter of 2013. The banks’ pre-tax profit increased by 8.9 per cent compared to the same period last year.

Slight growth in net interest income

Net interest income, measured as the difference between interest income and interest expenses, was NOK 13.8 billion in the 2nd quarter of 2013. Thus, the net interest income was 6.1 per cent higher than in the 1st quarter this year. The net interest income as a share of total assets was 0.34 per cent in the 2nd quarter of 2013; an increase from 0.32 per cent in the previous quarter. The interest income was NOK 31.8 billion in the 2nd quarter this year, up from approximately NOK 31.1 billion in the 1st quarter. The net interest income growth stems from higher interest income received from lending, certificates and bonds and lower total interest costs.

Increase in gains on currency

Net gains on securities and currency for Norwegian banks increased from NOK 1.2 billion in the 1st quarter to NOK 1.8 billion in the 2nd quarter this year. This is lower than in the 2nd quarter last year when the net gains on securities and currency amounted to NOK 2 billion. The increase in net gains on currency contributed to this growth by 58.9 per cent. There was also a significant drop in net gains on certificates, bonds and other fixed income securities. As a share of total assets, the net gains on securities and currency increased from 0.03 per cent to 0.05 per cent from the 1st to the 2nd quarter this year, and were about the same level as in the 2nd quarter last year. These net gains and losses have been affected by fluctuations in the fair value of assets and liabilities as well as exchange rates and financial derivatives.

Losses on loans

Norwegian banks’ losses on loans increased from NOK 0.9 billion to NOK 1.8 billion from the 1st to the 2nd quarter of 2013. As a share of total assets, banks’ losses on loans were 0.04 per cent in 2nd quarter, up from 0.02 per cent in the 1st quarter.

Positive results for mortgage companies

The results for mortgage companies have improved compared to previous periods. The pre-tax profit increased from NOK -1.2 billion in the 1st quarter to NOK 1 billion in the 2nd quarter this year. The gains from derivatives increased from NOK -3.8 billion in the 1st quarter to NOK 0.5 billion in the 2nd quarter, and contributed to the positive trend. Simultaneously, net losses on certificates and bonds moderate this positive development with a fall from NOK -1.5 billion in the 1st quarter to NOK -3.3 billion in the 2nd quarter. As a share of total assets, mortgage companies’ pre-tax profit was 0.06 per cent in the 2nd quarter.

Mortgage companies' net interest income increased from NOK 4.1 billion in the 1st quarter to NOK 4.7 billion in the 2nd quarter. As a share of total assets, the net interest income was 0.27 per cent in the 2nd quarter, up from 0.24 per cent in the previous quarter.

Mortgage companies’ losses on loans have increased, but are still low. Measured as a share of total assets, losses on loans were 0.03 per cent in the 2nd quarter, and remained at the same level as in the previous quarter. In the 2nd quarter of 2013, losses on loans amounted to NOK 55 million.

Moderate growth for finance companies

Profit before tax for finance companies amounted to NOK 885 million in the 2nd quarter of 2013, up from NOK 827 million in the 1st quarter. Measured as a share of total assets, the pre-tax profit was 0.69 per cent. This shows an improvement in results for finance companies. As a share of total assets, pre-tax profit has varied between 0.54 and 0.68 per cent in the last five quarters.

Simultaneously, there was a slight growth in net interest income by 4.4 per cent compared to the previous quarter this year. Net interest income amounted to NOK 1.7 billion in the 2nd quarter and has remained nearly at the same level for the last five quarters. As a share of total assets, net interest income was 1.31 per cent in the 2nd quarter this year.