Weaker results for the banks

Norwegian banks’ profit as a share of average total assets was 0.24 per cent in the first half of 2020. Total comprehensive income for the period was NOK 13.7 billion, while other comprehensive income was NOK -1.3 billion, according to updated figures from Banks and mortgage companies.

Increased net interest income

The banks’ net interest income amounted to NOK 45.7 billion in the first half of 2020. This is NOK 2.6 billion more than in the same period in 2019. Net interest income as a share of average total assets was 0.75 per cent in the first half of 2020. This share is 0.05 percentage points lower than in the same period in 2019.

Increased losses on loans

The banks’ credit loss on loans amounted to NOK 18.9 billion in the first half of 2020. This is NOK 16.2 billion more than in the same period in 2019, and an increase of NOK 7.8 billion since the end of the first quarter of 2020. As a share of total assets, the banks’ credit loss on loans was 0.37 per cent, which is 0.32 percentage points higher than in the first half 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 half of 2020, only NOK 2.1 billion was confirmed losses, this is NOK 99 million less compared to the first half of 2019. Other capitalized credit losses on loans amounted to NOK 15.9 billion, an increase of NOK 15.7 billion compared to the first half of 2019. Credit losses on unutilized credit lines was NOK 0.9 billion in the first half of 2020, an increase of NOK 0.6 billion compared to the same period last year.

Lower share of claims on customers

At the end of the first half of 2020, loans to and claims on customers were 53.9 per cent of the banks’ total assets. Compared to the first half of 2019, this share has decreased by 2.9 percentage points. Loans to and claims on credit institutions as a share of total assets has decreased by 1.4 percentage points to 15.5 per cent, in the first half of 2020 compared to the first half of 2019.

Lower share of deposits and interest-bearing securities

The banks are mostly funded by deposits and interest-bearing securities. Deposits are the largest source of funding and amounted to NOK 4 182 billion in the first half of 2020, which constitutes a share of 68.3 per cent of total assets by the end of the first half of 2020. Deposits from customers and credit institutions stand for a share of 47.0 per cent and 21.3 per cent of total assets, respectively. Compared to the end of the first half of 2019, the deposits’ share of total assets has decreased by 2.8 percentage points.

Interest-bearing securities amounted to NOK 733 billion in the first half of 2020, which constitutes 12.0 per cent of total assets. Compared to the end of the first half of 2019, the securities’ share of total assets decreased by 1.5 percentage points.

Increased F-loans

Norwegian banks can also be funded by interbank loans and F-loans. Due to the market situation, Norges Bank extended the F-loan arrangement in March 2020 and has offered extraordinary F-loans to banks, with different maturities and given interest rates. The banks’ balance sheet showed outstanding F-loans amounting to NOK 203 billion at the end of the first quarter of 2020, and NOK 125 billion at the end of the second quarter of 2020.

Interbank loans amounted to NOK 114 billion in the first half of 2020, where NOK 92 billion was loans from foreign credit institutions. It should be noted that some of the foreign interbank loans to Norwegian banks could originate from foreign parent companies.