Financial institutions (discontinued), Q4 2005

The growth rate in banks’ lending to the public (municipalities, households and non-financial corporations) has continued to increase since the second quarter of 2003, and it was 6 per cent during the fourth quarter of 2005. Total lending to the public from all financial institutions increased by 4.2 per cent to NOK 2 085 billion during the fourth quarter of 2005; however, the annual growth rate was 13.9 per cent. Furthermore, deposits from the public increased by 9.9 per cent to NOK 919 billion since the end of the fourth quarter of 2004.

Falling interest margin

The interest rate margin is defined as the difference between the weighted average interest rates on NOK loans to the public and weighted average interest rates on deposits from the public. Norges Bank reports that the banks' interest rate margin was 2.42 per cent at the end of the fourth quarter of 2005. The interest rate margin fell by 0.07 percentage points compared to the last quarter.

Increased stock of securities

The value of investments in securities increased by 16.2 per cent to NOK 1 080 during the 12-month period. The growth is mostly due to the strong development in the Norwegian security market throughout 2005. The value of investments in equities, units and primary capital certificates increased by 27.4 per cent, while the value of investments in bonds and certificates increased by 13.7 per cent and 1 per cent respectively since the end the fourth quarter of 2004. Bonds still have the largest share of the stock of securities by 64.7 per cent. The value of investments in securities, measured as share of total assets, has been relatively stable the last 12 month.

Increased total assets

Total assets for all financial institutions increased by 16.9 per cent to NOK 3 986 billion compared with the corresponding quarter 2004. The total assets in banks’ increased by 19.4 per cent, while the total assets in insurance companies and finance companies increased by 13.1 per cent, during the same period. Total assets indicate the size of the financial institutions. Therefore, banks’ are the leading financial institution in Norway, measured by total assets, followed by insurance companies and finance companies.