Financial corporations, balance sheet, July 2011

Banks finance their operations through different sources of credit, such as deposits, inter-bank loans, bond debt, short-term security loans and loans from the Norwegian Central Bank. Customer deposits are often regarded as the most stable of these financing sources. The deposit-loan ratio is the amount of a bank’s loans divided by the amount of its deposits at any given time.

At end-July 2011, the bank’s total deposits amounted to NOK 1 687 billion. This is an increase of NOK 110 billion, or 7 per cent, compared to the corresponding period last year. Increased deposits from the household sector contributed to the increasing deposit-loan ratio. However, this increasing ratio is also influenced by the transfer of loan portfolios from banks to mortgage companies. The portfolio transfer is an effect of the introduction of covered bonds issued by mortgage companies.

Increased deposits from the household sector

At end-July 2011, the deposit-loan ratio for the household sector was 79.3 per cent, which is an increase of 3.9 percentage points from July 2010. For the period July 2010 to July this year, deposits from the households increased from NOK 819 billion to NOK 876 billion. This represents a 7 per cent growth throughout the past 12 months. During the same period, lending to the household sector increased by 1.7 per cent, from NOK 1 086 billion to NOK 1 104 billion.

Unchanged deposit-loan ratio for corporations

At end-July this year, the deposits from non-financial corporations were NOK 535 billion, which represents a 12-month growth of 6.3 per cent. The deposit-loan ratio in this sector has remained relatively stable at about 60 per cent over the past 12 months. During the last month, the deposit-loan ratio has marginally risen to 60.6 per cent, after a 1.9 percentage point decline in June this year.

Increase in inter-bank loans in July

Norwegian banks’ total inter-bank loans reached NOK 750 billion at end-July 2011; an increase from NOK 686 billion in June. Inter-bank loans constituted 57.1 per cent of the bank’s total market funding in July, which implies a growth of 2.3 percentage points over the last month. A large share of the inter-bank loans stems from foreign banks. In July, loans from foreign banks constituted 92.3 per cent of the total inter-bank loans. Over the last month, inter-bank loans from foreign banks rose by 10 per cent, while the growth in inter-bank loans from domestic banks was only 3 per cent. However, the share of loans in NOK versus foreign currency remains relatively stable. In the last 12 months, inter-bank loans in NOK constitute 45-50 per cent of total loans.