DnB NOR: Sound operations and strengthened capital adequacy

DnB NOR achieved profits of NOK 3 577 million in the first half of 2009, a
reduction from NOK 4 480 million in the corresponding period in 2008.
Performance reflected sound operations and improved earnings from core
activities. The core capital ratio rose to 
7.3 per cent, from 6.9 per cent at end-June 2008.
"In light of the current economic downturn, we are satisfied with these
figures," says group chief executive Rune Bjerke. 
Mark-to-market adjustments which are not related to underlying operations had a
negative effect on the accounts. Total write-downs developed in line with
expectations, with high write-downs on loans and large impairment losses for
goodwill in the Baltic region. Developments in Norway were better than
anticipated. 
First half 2009
· Pre-tax operating profits before write-downs were NOK 9.6 billion (6.1)
· Profit for the period was NOK 3.6 billion (4.5)
· Profit after minority interests was NOK 4.3 billion (4.4)
· Earnings per share were NOK 3.22 (3.27)
· Return on equity was 10.8 per cent (11.8)
· The cost/income ratio, excluding impairment losses for goodwill, was 48.6 per 
· cent (58.7)
· The core capital ratio, including 50 per cent of interim profits, was 7.3 per
cent (6.9) 
Second quarter 2009
· Pre-tax operating profits before write-downs were NOK 3.5 billion (4.6)
· Profit for the period was NOK 0.6 billion (3.4)
· Profit after minority interests was NOK 1.2 billion (3.3)
· Earnings per share were NOK 0.90 (2.47)
· Return on equity was 6.0 per cent (18.1)
· The cost/income ratio, excluding impairment losses for goodwill, was 55.1 per 
· cent (49.0)
· The core capital ratio, including 50 per cent of interim profits, was 7.3 per
cent (6.9) 
Comparable figures for 2008 in parentheses.
Stable combined spread
Average net customer lending increased from NOK 1 026 billion in the April
through June period in 2008, to NOK 1 151 billion in the corresponding period
in 2009, though the upward trend levelled off through 2009. Average lending
spreads widened from 0.81 per cent to 1.60 per cent during the corresponding
period, reflecting higher credit risk margins in the market. Parallel to this,
there was a narrowing in deposit spreads. 
"Our spreads have been maintained in a low interest rate regime," says Rune
Bjerke. "Parallel to this, we continue to offer Norwegian housing loan
customers competitive terms. DnB NOR has reduced housing loan rates by 5.0
percentage points from October 2008." 
Losses in the Baltic region
"In spite of the write-downs on loans in the Baltic States, our previously
communicated estimates remain unchanged," says Rune Bjerke. The Group still
estimates that total write-downs in 2009 will reach NOK 8-10 billion. 
The operating loss recorded by DnB NORD was mainly due to impairment losses for
goodwill in Latvia and Lithuania and large write-downs on loans in the second
quarter and is the main reason for the decline in group profits. The
write-downs resulted from a major deterioration in the macroeconomic situation
in the region and significant fiscal tightening. Write-downs are expected to
remain high in DnB NORD over the next few quarters. 51 per cent of the
write-downs affect 
DnB NOR's shareholders.
Cost programme ahead of schedule
Operating expenses, adjusted for impairment losses for goodwill, rose by NOK
155 million from the second quarter of 2008. The number of full-time positions
was reduced by 208 during the same period, to 13 711. Adjusted for the
transition from operational to financial leasing in DnB NOR Finans, an increase
in IT development activity, a rise in performance-based pay and the transfer 
of financial consultants from Norway Post, there was a sight decline in costs.
The Group's cost programme was ahead of schedule, generating cost savings of
NOK 112 million compared with the second quarter of 2008. Operating expenses,
adjusted for impairment losses for goodwill, were brought down NOK 115 million
compared with the first quarter of 2009. 
Improved capital adequacy ratio
The core capital ratio was strengthened and represented 7.3 per cent at
end-June, up from 6.9 per cent a year earlier. 
"This is in line with our previously communicated ambition to continually work
to improve our core capital ratio," says Rune Bjerke. 
Profit target unchanged
During the second quarter, a number of restructuring processes and other
projects were implemented to help increase income and reduce costs. The
business area Retail Norway became operative on 1 July 2009 and will serve both
retail customers and small and medium-sized businesses in Norwegian regions.
The business area Large Corporates and International will ensure better
follow-up of the largest clients. 
"The Group has a good chance of strengthening income in the business areas
while reducing costs through streamlining measures," says Rune Bjerke.
"Business operations will generate sufficient capital to compensate for higher
write-downs. Pre-tax operating profits before write-downs were NOK 9.6 billion
in the first half of 2009, up from NOK 6.1 billion in the year-earlier period. 
The target of pre-tax operating profits before write-downs of NOK 20 billion in
2010 remains firm, as does the estimate for total write-downs of NOK 8-10
billion in 2009 and NOK 10-12 billion in 2010. 

Contact person:
Trond Bentestuen, group executive vice president, Marketing and Communications, 
tel.: +47 950 28 448