Good results for banks

Norwegian banks’ profit before tax as a share of average total assets was 0.57 per cent in the 1st half of 2017; 0.02 percentage points higher than in the same half in 2016, according to the statistics Banks and mortgage companies.

Increased net interest income

In the 1st half of 2017, the banks’ net interest income amounted to NOK 37.5 billion. This is NOK 3.1 billion higher than in the same half in 2016. The increase is due to a higher increase in total interest income than in total interest expenses. Net interest income as a share of average total assets was 0.75 per cent in the 1st half of 2017. In the same half in 2016, this share was 0.05 per cent lower.

Higher net gains and lower loss on loans

Banks’ total net change in value and net gains on securities, currency and other financial instruments were NOK 2.8 billion in the 1st half of 2017; an increase of NOK 0.9 billion compared to the 1st half of 2016. In the 1st half of 2017, the loss on loans was NOK 1.9 billion; a decrease of NOK 3.5 billion from the same half in 2016. As a share of total assets, the banks’ loss on loans in the 1st half of 2017 was only 0.04 per cent, a decrease of 0.07 percentage points from the same half in 2016.

Higher share of claims on customers and share of deposits

At the end of the 1st half of 2017, loans to and claims on customers were 56.9 per cent of the banks’ total assets. Compared to the end of 1st half of 2016, this share has increased with 2.2 percentage points. Loans to and claims on credit institutions as a share of total assets decreased by 1.9 percentage points in the same period to 16.2 per cent.

The banks are mostly funded by deposits and certificates and bonds. Deposits are the largest source of funding, with a share of 70.7 per cent of total assets by the end of the 1st half of 2017, while the certificates and bonds’ share of total assets was 12.2 per cent. Compared to the end of the 1st half of 2016, the deposits share of total assets has increased by 2.7 percentage points, while the certificates and bonds’ share fell by 0.7 percentage points.

Fluctuations in the exchange rates for the Norwegian krone against other currencies affect the size of the Norwegian banks’ balance sheet figures. At the end of the 1st half of 2017, 54.2 per cent of the banks’ total bonds and 26.2 per cent of the total deposits received were in foreign currencies.

Lower results for the mortgage companies

Norwegian mortgage companies’ pre-tax profit was NOK 2.9 billion in the 1st half of 2017; a decrease from NOK 3.4 billion in the 1st half of 2016. The pre-tax profits share of total assets was 0.14 per cent in the 1st half of 2017; 0.03 percentage points lower than in the 1st half of 2016.

The lower result in the 1st half of 2017 was mainly due to a negative trend in total net change in value and net gains on securities, currency and other financial instruments. The net interest income for mortgage companies amounted to NOK 8.1 billion in the 1st half of 2017; an increase of NOK 0.5 billion as compared to the 1st half of 2016.