Weaker results for the banks

Norwegian banks’ profit as a share of average total assets was 0.08 per cent in the first quarter of 2020, according to updated figures from Banks and mortgage companies. Total comprehensive income for the period was NOK 4.2 billion, while other comprehensive income was NOK -0.7 billion.

Increased net interest income

The banks’ net interest income amounted to NOK 23.9 billion in the first quarter of 2020. This is NOK 2.6 billion more than in the same period in 2019. 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 0.41 per cent in the first quarter of 2020. This share is 0.01 percentage points higher than in the same period in 2019.

Increased losses on loans

The banks’ credit loss on loans amounted to NOK 11.1 billion in the first quarter of 2020. This is NOK 9.7 billion more than in the same period in 2019. As a share of total assets, the banks’ credit loss on loans was 0.22 per cent, which is 0.20 percentage points higher than in the first quarter of 2019. 

Credit losses on loans includes confirmed losses, other credit losses on loans that are not deducted from the balance sheet and unutilized credit lines. Out of the total credit losses on loans in the first quarter of 2020, only NOK 0.8 billion was confirmed losses, an increase of NOK 52 million compared to the first quarter of 2019. Other capitalized credit losses on loans amounted to NOK 9.8 billion, an increase of NOK 9.2 billion compared to the first quarter of 2019. The capitalized credit losses on loans includes both expected credit losses on loans valued at amortized cost and value changes due to credit risk changes on loans at fair value. Credit losses on unutilized credit lines was NOK 0.5 billion in the first quarter of 2020, compared to NOK 34 million in the same period last year.

The banks’ total net change in value and net gains on financial instruments in the first quarter of 2020 amounted to NOK 0.8 billion. This is NOK 1.5 billion lower than in the first quarter of 2019. It is fair to assume that the reduced net value and gains on financial instruments, as well as the increased credit losses on loans, can be considered consequences of an uncertain economic situation due to the corona virus pandemic.

Lower share of claims on customers and share of deposits

At the end of the first quarter of 2020, loans to and claims on customers were 52.0 per cent of the banks’ total assets. Compared with the first quarter of 2019, this share has decreased by 7.2 percentage points. Loans to and claims on credit institutions as a share of total assets has increased by 2.6 percentage points to 17.5 per cent, in the first quarter of 2020 compared to the first quarter of 2019.

The banks are mostly funded by deposits and interest-bearing securities. Deposits are the largest source of funding, with a share of 65.1 per cent of total assets by the end of the first quarter of 2020. The securities’ share of total assets was 12.7 per cent. Compared to the end of the first quarter of 2019, the deposits share of total assets has decreased by 5.8 percentage points, and the securities’ share decreased by 0.8 percentage points.

Increase in net interest income for the mortgage companies

Norwegian mortgage companies’ profit amounted to NOK 1.0 billion in the first quarter of 2020. This is NOK 0.4 billion less than in the first quarter of 2019. The profits share of total assets was 0.04 per cent.

The net interest income for mortgage companies amounted to NOK 4.4 billion in the first quarter of 2020. This is an increase of NOK 0.5 billion compared with the same period in 2019.

The mortgage companies are mostly funded by interest-bearing securities. By the end of the first quarter of 2020, the securities as a share of total assets was 74.2 per cent. This share is 4.1 percentage points lower than in the first quarter of 2019. By the end of the first quarter of 2020, 66.3 per cent of the mortgage companies’ debt securities was issued in foreign currency.