DNB falls after weak results – Aftenposten

DNB had a profit of approximately 4.6 billion for the second quarter, there are half a billion less than the same quarter last year. It is weaker than expected.

The results lead to DNB’s shares fall. Tuesday morning they had fallen 8.70% but ended at 7.57%. It is the largest fall since 2012, and therefore pull down the rest of the Oslo Stock Exchange.

The Bank believes that loan losses will likely exceed 6 billion this year, higher than previously estimated, but hold on to estimate that losses will not be more than 18 billion over the next three years.

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Still satisfied

– We are satisfied with this result, despite that historically low interest rates and an increase in losses affecting the figures. Norwegian economy is solid, although some business sectors related to the oil sector is still in transition, says DNB, Rune Bjerke, in a stock exchange release.

– The result for the quarter was weaker than expected, and write-downs on loans the main reason for it. The numbers have remained fairly well for several quarters, but now there is a huge discrepancy. The question is whether it is due this quarter or something else, says Matti Ahokas analyst at Danske Bank to Bloomberg.

Nervous foreigners

That decline was so large may be because the market was taken by surprise that the losses in the oil sector comes earlier than expected, says investment economist at Nordnet Tom Hauglund.

– DNB had guided for 2015 a loan losses of 3 billion, but already there are 2.4 billion. This makes especially the foreigners concerned, and its we on the pattern of trade on the exchange, says Hauglund Aftenposten.

It’s rare he has seen that only foreigners who sell as much as today. Hauglund think the problem will continue, but not that it necessarily is the start of something much worse.

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Hauglund believe that banks will not take losses before the oil companies do not have enough cash flow to manage operating costs, and it is not happening yet.

– Many oil companies live yet on old orders. But this will overtake them when rigs and boats going by contract in the coming years. When banks can make a big issue in 2018-2020, he said.

Investment economist believes that the same problem with loan losses will apply several banks with exposure to the oil sector, Nordea, SEB and Danske Bank.