Financial institutions (discontinued), Q1 2006

The banks’ lending to the public (municipalities, households and non-financial corporations) increased by 4.5 per cent during the first quarter of 2006. The growth is mainly caused by high growth rates in the house prices, high housing investments, and high business-sector investments.

Deposits from the public increased by 12.5 per cent to NOK 970 billion, while the banks’ borrowing from abroad rose with 45.5 per cent to NOK 745 billion during a 12 months period. Total lending to the public from all financial institutions increased by 3.1 per cent to NOK 2 150 billion during the first quarter of 2006, whereas the annual growth rate was 14.5 per cent.

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 2.29 per cent at the end of the first quarter of 2006. The interest rate margin fell by 0.09 percentage points compared to last quarter.

Increased stock of securities

The value of investments in securities increased by 17.5 per cent to NOK 1 150 during the 12 months period. The growth is mainly due to the strong development in the Norwegian security market throughout 2005. The value of investments in equities, units and primary capital certificates has increased by 43.5 per cent, while the value of investments in bonds has increased by 10.5 per cent since the end of the first quarter of 2005. However, the value of investments in certificates fell by 7.5 per cent during the same period. Bonds still have the largest share of the stock of securities by 63 per cent, while equities, units and primary capital certificates accounts for 31 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 15.8 per cent to NOK 4 132 billion compared with the corresponding quarter last year. The total assets in banks’ increased by 20.9 per cent, while the total assets in insurance companies and finance companies increased by respectively 14.2 per cent and 6.6 per cent, during the same period. Total assets indicate the size of the financial institutions. Thus, banks’ consolidates their position as the leading financial institution in Norway, followed by insurance companies and finance companies.