Financial corporations, accounts, Q2 2014

At the end of the 2nd quarter of 2014, banks 'quarterly pre-tax profit amounted to NOK 12.5 billion. This is an increase of NOK 1 billion compared to the same quarter last year. Stable growth in net interest income and higher other operating income offset a decline in the net gains on securities and currency. The result for Norwegian banks in the 2nd quarter of this year amounted to 0.29 per cent of banks' total assets and was the same as in the previous quarter. In comparison, the profit before tax in the 2nd quarter last year amounted to NOK 11.5 billion or 0.29 per cent of banks' total assets.

Increase in net interest income

Norwegian banks’ net interest income as the difference between interest income and interest expenses amounted to NOK 14.5 billion in the 2nd quarter of 2014. This is an increase of NOK 785 million compared to the same period last year and was mainly due to higher interest income. As a share of total assets, the net interest income was 0.34 per cent in the 2nd quarter of 2014, up from 0.32 per cent in the quarter before.

Positive net gains on foreign exchange and securities

Norwegian banks' net gain on securities and currency was NOK 1.6 billion in the 2nd quarter of 2014. This is NOK 198 million lower than the same quarter last year and NOK 1.6 billion lower than in the 1st quarter this year.

Net gains and losses are affected by fluctuations in the fair value of assets and liabilities, as well as fluctuations in exchange rates and the value of financial derivatives.

Lower losses on loans

Losses on loans amounted to NOK 1.3 billion in the 2nd quarter this year. Losses on loans were NOK 531 million lower than in the 2nd quarter of last year. As a share of total assets, losses on loans were 0.03 per cent in the 2nd quarter of this year.

Improved quarterly results for mortgage companies

Norwegian mortgage companies' pre-tax profit increased from NOK -429 million in the 1st quarter this year to NOK -171 million in the 2nd quarter this year. As a share of total assets, Norwegian mortgage companies' negative pre-tax profit amounted to 0.01 per cent.

Norwegian mortgage companies’ net interest income amounted to NOK 4.8 billion in the 2nd quarter this year, down from NOK 5.1 billion in the 1st quarter this year. The net interest income as a share of total assets fell from 0.33 per cent in the 2nd quarter of last year to 0.27 per cent in the 2nd quarter of this year. Norwegian mortgage companies' losses on loans are still very low, and amounted to NOK 53 million by the end of the 2nd quarter this year.

A large contribution to the negative result for Norwegian mortgage companies was the net losses on securities and foreign exchange, which amounted to NOK 2.5 billion in the 2nd quarter this year. Losses on treasury bills, bonds and interest-bearing capital securities were NOK 5.1 billion, while losses on foreign exchange currency amounted to NOK 554 million. These losses were offset by gains in other financial instruments of NOK 3.1 billion in the same period. Compared to the 2nd quarter last year, the net losses on securities and currency were NOK 836 million higher in the same quarter last year. As a share of total assets, the net losses on securities increased from 0.10 per cent to 0.14 per cent from the 2nd quarter of 2013 to the 2nd quarter this year.

Good quarterly result for Norwegian finance companies

Norwegian finance companies' quarterly pre-tax profit increased from NOK 0.9 billion in the 1st quarter to NOK 1.4 billion in the 2nd quarter this year. As a share of total assets, this is equivalent to an increase from 0.65 per cent to 1.00 per cent respectively.

The net interest income of Norwegian finance companies has been stable and amounted to nearly NOK 1.8 billion in the 2nd quarter this year. Losses on loans of Norwegian financial companies fell from NOK 183 million in the 1st quarter to NOK 167 million in the 2nd quarter this year. As a share of total assets, losses on loans amounted to 0.12 per cent in the 2nd quarter this year.