Norway’s largest bank, DNB, has reported more huge profits in its second quarter and described itself as one of the world’s “most solid” banks. That didn’t stop investors from dumping shares, though, with the value of DNB’s stock diving 3.5 percent on Thursday.
DNB’s shares were recovering on Friday, up 1.1 percent by midday, after analysts said the plunge in share price wasn’t justified. Newspaper Dagens Næringsliv (DN) reported that analysts pegged the plunge to higher loan losses (NOK 554 million, as opposed to the NOK 356 million expected) but otherwise the bank reported strong results.
Operating revenues rose to NOK 11.95 billion, up from NOK 11.79 billion in the same quarter last year, while operating profits were up around 10 percent, to NOK 6.7 billion from NOK 6.1 billion last time. Pre-tax profits were NOK 6.16 billion, up from NOK 5.18 billion.
The results come after massive cost-cutting and DNB’s controversial decision to raise interest rates, thus passing on the cost of firming up its capital base to its customers. Bank executives stressed that customers are well-served by the bank’s financial strength but even many politicians have complained that the bank’s cost-cutting and price hikes have been excessive.
DNB’s chief executive Rune Bjerke, a longtime Labour Party ally of former prime minister Jens Stoltenberg, seemed optimistic about the prospects for both the bank and Norway’s economy, commenting that cyclical ups and downs had been more moderate than feared. DNB has a goal of boosting lending by 3-4 percent this year.