Norway’s biggest lender DNB on Tuesday reported quarterly earnings above forecasts, supported by interest rate hikes and strong business activity across Norway which the bank said it expected to continue.
Net profit rose to 7.79 billion crowns ($761.4 million) for the April to June quarter from 6.43 billion a year earlier, beating the 6.76 billion crowns expected by analysts in a poll compiled by the bank.
“The Norwegian business community is maintaining its momentum,” Chief Executive Kjerstin Braathen said in a statement.
“We are also expecting that Norwegian companies’ investments will continue to grow, well above what we are seeing in other countries.”
DNB’s shares traded up 0.9% at 0702 GMT, beating a 0.1% rise in the Oslo benchmark index (.OSEBX).
The bank reported strong lending growth in the quarter, and said net interest income rose 22.5% year-on-year to 11.52 billion crowns as a result of higher interest rates.
Norway’s central bank last month raised its benchmark rate by 50 basis points to 1.25% and said it would most likely be raised further to 1.5% in August in a bid to control inflation.
The results would likely lead “low-single digit” upgrades to DNB’s net income estimates for 2022-2024, JPMorgan said in a note to clients.
“Whilst there are some concerns about a slowdown, DNB saw recoveries and we believe the other Nordic banks could also see very benign cost of risk,” it said.
The bank reported impairment reversals of 209 million crowns, mainly associated to the oil, gas and offshore sectors, against forecasts for impairment charges of 337 million.
($1 = 10.2317 Norwegian crowns)