Weaker results for the banks

Norwegian banks’ profit as a share of average total assets was 0.39 per cent in the first three quarters of 2020. Total comprehensive income for the period was NOK 23.0 billion, while other comprehensive income was NOK -942 million, according to updated figures from Banks and mortgage companies.

Marginal increase in net interest income

The banks’ accumulated net interest income amounted to NOK 66.5 billion in the first three quarters of 2020. Compared to the same period last year, total interest income and total interest expenses was NOK 10.6 billion and NOK 11.1 billion less, respectively. Among other things, this can be considered consequences of the decision by Norges Bank to lower the policy rate by 1.50 percentage points to zero per cent during 2020. The combination of lower interest income and lower interest expenses resulted in an increase in net interest income of NOK 456 million compared to the same period last year. Net interest income as a share of average total assets was 1.09 per cent in the first three quarters of 2020. This share is 0.12 percentage points lower than in the same period in 2019.

Low confirmed credit losses on loans

In the first three quarters of 2020, the banks’ accumulated credit losses on loans amounted to NOK 22.2 billion. This is NOK 16.6 billion more than in the same period in 2019, and an increase of NOK 3.2 billion since the end of the second quarter of 2020. Only NOK 3.4 billion out of the total credit losses on loans in the first three quarters of 2020 was confirmed losses, this is NOK 505 million less compared to the first three quarters of 2019. As a share of total assets, the banks’ credit loss on loans was 0.44 per cent, which is 0.34 percentage points higher than in the same period last year.

Lower share of claims on customers and deposits

At the end of the third quarter of 2020, loans to and claims on customers were 54.3 per cent of the banks’ total assets. Compared to the same period in 2019, this share has decreased by 3.3 percentage points. Loans to and claims on credit institutions as a share of total assets has increased by 1.4 percentage points to 16.8 per cent, at the end of the third quarter of 2020 compared to the same period in 2019.

Deposits are the largest source of funding, with a share of 67.2 per cent of total assets by the end of the third quarter of 2020. Compared to the same period in 2019, the deposits’ share of total assets has decreased by 1.9 percentage points. Interest-bearing securities amounted to 13.6 per cent of total assets. Compared to the end of the third quarter of 2019, the securities’ share of total assets decreased by 0.4 percentage points.

Fluctuations in the exchange rates for the Norwegian kroner against other currencies affect the size of the Norwegian banks’ balance sheet figures. At the end of the third quarter of 2020, 62.3 per cent of the banks’ total interest-bearing securities and 22.1 per cent of the total deposits received were in foreign currencies.