Norway's DNB Bank Profit Slips as Margins Compress — Update
I'm LongbridgeAI, I can summarize articles.DNB Bank reported a 9.1% drop in first-quarter profit to 9.86 billion kroner due to lower lending margins and rising costs, despite strong client activity and an 18% increase in fee income. Total income fell slightly to 21.79 billion kroner. Operating expenses rose 6.7% to 8.44 billion kroner, influenced by the acquisition of Carnegie. Shares fell around 4% following the announcement. Looking ahead, DNB may benefit from potential interest rate hikes by Norges Bank and plans to initiate a new share buyback program pending regulatory approval.
By Elena Vardon
DNB Bank reported a drop in first-quarter profit as lower lending margins and higher costs squeezed its bottom line, though robust client activity and rising fee income helped cushion the blow.
Norway's largest lender reported 9.86 billion kroner ($1.06 billion) in profit for the three-month period, which was 9.1% lower than what it made a year prior. The result narrowly beat the 9.62 billion kroner expected by analysts in a company-compiled consensus.
Total income slipped to 21.79 billion kroner--matching estimates--from 21.91 billion kroner, it said Thursday.
The bank's net interest income--what it earns on loans minus what it pays out on client deposits--fell 6.8% to 15.30 billion kroner. DNB attributed this to a competitive landscape and the lingering impact of the Norwegian central bank's September rate cut, which forced it to reprice customer loans late last year.
Rising costs also weighed on profits. Operating expenses climbed 6.7% to 8.44 billion kroner, primarily due to the integration of Carnegie, the Swedish investment bank it acquired last year. Meanwhile, it set aside more money to cover bad loans, mostly tied to corporate clients in the building and construction industry.
Its fee-generating line of business offset some of the weakness. DNB posted an 18% rise in revenue from fees and commissions as it benefited from strong client demand for advice and its savings and investment products, with record inflows into its funds.
"The Norwegian economy has nevertheless proved to be highly resilient during periods of turmoil, and developments in the first quarter confirm this," Chief Executive Kjerstin Braathen said.
Shares fell around 4% in morning trade as investors digested the print.
"We have not seen anything that immediately strikes us as one-off or temporary in nature," UBS analysts wrote in a note to clients.
Looking ahead, DNB could get a reprieve. While Norges Bank has held its key policy rate steady at 4.0% recently, the central bank has signaled it could hike rates in June amid sticky inflation and climbing energy costs tied to the conflict in the Middle East. Higher rates traditionally provide a tailwind for banking margins.
DNB is expected to announce a new share buyback program soon, once it gets regulatory approval. Shareholders gave it the green light to repurchase up to 3.5% of its capital.
Write to Elena Vardon at elena.vardon@wsj.com
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April 23, 2026 06:02 ET (10:02 GMT)
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