Financial institutions (discontinued), Q3 2006

The strong growth in the overall lending from the financial institutions is mainly due to the high growth in the banks’ lending to the public (municipalities, non-financial corporations and households), which increased by 3 per cent to NOK 1 718 billion during the third quarter of 2006. The banks’ lending to the public increased by 19.5 per cent during the last 12 months, and the increase is mainly caused by high growth rates in the house prices, high housing investments, and high business-sector investments. During the last 12 months period, deposits from the public increased by 14.4 per cent to NOK 1 052 billion. .

Falling interest margin

The interest margin in the banking sector keeps falling due to the high competition. 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 2.18 per cent at the end of the second quarter of 2006. The interest rate margin fell by 0.07 percentage points compared with last quarter.

Increased stock of securities

The value of investments in securities increased by 7.1 percent to NOK 1 210 billion during the third quarter of 2006. Furthermore, the 12 - months growth rate was 14 per cent at end of the third quarter of 2006. The value of investments in equities, units and primary capital certificates has increased by 27.5 per cent, while the value of investments in bonds has increased by 15.1 per cent since the end of the second quarter of 2005. Furthermore, the value of investments in certificates fell by 34.7 per cent during the same period. Bonds still have the largest share of the stock of securities by 65.5 per cent, while equities, units and primary capital certificates accounts for 29.5 per cent.

Increased total assets

Total assets for all financial institutions increased by 16.1 per cent to NOK 4 469 billion compared with the corresponding quarter last year. The total assets in banks’ increased by 20.5 per cent, while the total assets in insurance companies and finance companies increased by respectively 9.7 per cent and 11.1 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.