The Bank Norwegian Group (the Group) reported profit after tax in the third quarter of NOK 276.1 million compared with NOK 367.8 million in the second quarter and down from NOK 500.6 million in the same quarter last year. The decrease from the previous quarter is mainly caused by higher administrative expenses from provision for legal and financial advisors’ fees related to the offer from Nordax Bank AB (publ) (Nordax), negative change in value of shares and lower interest income due to sale of two portfolios of non-performing loans in the quarter. This was partly offset by gains from the sale of non-performing loan portfolios lowering provisions for loan losses in the quarter. Net interest income amounted to NOK 1 151 million, a decrease of NOK 32.2 million from the second quarter. The reduction is mainly explained by lower interest income due to the sale of non-performing loan portfolios in Norway and Denmark in the quarter and lower income from certificates and bonds mainly in Norway, partly offset by reduced interest expense on deposits in Norway.
Return on equity ended at 10.1%, compared with 13.3% in the previous quarter. The return on assets was 1.9%, compared with 2.5% in the previous quarter.
The total capital ratio was 28.8%, the core capital ratio was 26.8% and the CET1 ratio was 25.7%, including set aside 60% of net result to dividend for 2021 compared to our internal CET1 target of 17.5%. The Board of Directors was authorised by the AGM in April 2021 to resolve a distribution to the shareholders of up to NOK 1 per share after 1 October 2021, in addition to the dividend of NOK 5 approved and paid out in May 2021. As one of the conditions for the completion of the offer from Nordax for the purchase of all the shares in Bank Norwegian is that Bank Norwegian shall not make, or resolve to make, any distributions to its shareholders, the Board of Directors has resolved that no further distributions will be made. This led to improved capital rations with approximately 49bp at the end of the quarter.
In the quarter the Bank sold two portfolios, in July the non-performing instalment loans portfolio in Denmark and in September a non-performing instalment and credit card loans portfolio in Norway. Adjusted for the portfolio sales this quarter, the currency adjusted loan growth was positive with NOK 277.4 million. Broken down by product the currency adjusted loan growth for instalment loans was NOK 21.4 million, adjusted for portfolio sales in Norway and Denmark, compared with NOK -318.9 million in the previous quarter. The positive growth was mainly derived from increased new sales. The currency adjusted loan growth for credit cards was NOK 256.0 million, adjusted for the portfolio sale in Norway, compared with NOK 294.2 million in the previous quarter, adjusted for the portfolio sales in Sweden and Denmark. Instalment loans amounted to NOK 27 498 million and credit card loans amounted to NOK 10 213 million.
“I am glad to see that instalment loan sales in all four countries have increased to the highest level in the last six quarters. Credit card usage is increasing both in domestic consumption and increased usage abroad. The third quarter represents the first quarter since the pandemic started where we have growth in lending balances, adjusted for currency and the portfolio sales. In the quarter the Bank sold two portfolios, in July the non-performing instalment loans portfolio in Denmark and in September an instalment and credit card loans portfolio in Norway, reducing the stage 3 volume ratios. The net result from the portfolio sales was positive and gives additional comfort to our loan loss provisioning model”, says Interim CEO and CFO Klara Lise Aasen.
Customer deposits were reduced by NOK 918.8 million compared with a decrease of NOK 366.9 million in the second quarter and was NOK 38 224 million at the end of the third quarter. Currency adjusted growth was NOK -870.0 million compared with NOK -845.7 million in the previous quarter. As in the second quarter, Norway continues to be the main source of the decrease in deposits following deposit rate reductions, with a decrease of NOK 1 430 million in the quarter.
At the end of the quarter, the last piece of the puzzle of regulatory approval was obtained for Nordax Bank AB (publ) (Nordax) to continue the process of buying Bank Norwegian. Together with Nordax, Bank Norwegian will be the largest Nordic specialist bank with a combined total lending of approximately NOK 70 billion. We look forward to joining forces to form and develop the most professional specialist bank in the Nordic region and expansion in Europe.
On 25 October the Bank announced it has entered the Spanish market, and on 26 October the first loan was paid out. The Bank expects to go live in Germany soon.
Through the last periods adverse effects from COVID-19, the BN Group have maintained its strong financial position with high profitability, very strong capitalization and high levels of liquid assets. The Bank is prepared for growth with launch in both Spain and Germany in the fourth quarter and with expected higher activity in the Nordics. Together with Nordax we are confident that this will provide long-term profitable growth and high earnings.
For further information, see the full reporting material for the quarter at: https://www.banknorwegian.no/OmOss/InvestorRelations
For any questions please contact:
Interim CEO and CFO, Klara-Lise Aasen; phone: +47 47635583; e-mail: email@example.com
Head of Treasury, Mats Benserud; phone: +47 95891539; e-mail: firstname.lastname@example.org
Press contact; Head of Communication and Sustainability, Melita Ringvold; phone +47 95121983; e-mail: email@example.com
This information is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act
- Report for the third quarter 2021 Bank Norwegian Group
- Bank Norwegian Group third quarter 2021 results presentation