Norwegian banks’ pre-tax profit amounted to NOK 54.3 billion in 2016. This is an increase of NOK 5.2 billion from 2015.
Norwegian banks’ profit before tax as a share of average total assets was 1.02 per cent in 2016; about the same as in 2015.
Increased net interest income
In 2016, the banks’ net interest income amounted to NOK 70.4 billion. This is NOK 5.8 billion higher than in the previous year. The increase is mainly due to lower total interest expenses. Net interest income as a share of average total assets was 1.32 per cent in 2016. In 2015, this share was 0.04 percentage points lower.
Higher net gains and loss on loans
Banks’ total net change in value and net gains on securities, currency and other financial instruments were NOK 7.1 billion in 2016; an increase of NOK 6.8 billion compared to 2015. In 2016, the loss on loans was NOK 12.2 billion; an increase of NOK 7.6 billion from 2015. As a share of total assets, the bank’s loss on loans in 2015 was only 0.23 per cent, an increase of 0.13 percentage points from 2015.
Stable share of claims on customers and share of funding
At the end of 2016, loans to and claims on customers were 55.9 per cent of the banks’ total assets. Compared to the end of 2015, this share was nearly unchanged. Loans to and claims on credit institutions as a share of total assets decreased by 1.9 percentage points in the same period.
The banks’ are mostly funded by deposits and certificates and bonds. Deposits are the largest source of funding, with a share of 68 per cent of total assets by the end of 2016, while the certificates and bonds’ share of total assets was 13 per cent. Compared to the end of 2015, the deposits’ share of total assets has increased by 0.5 percentage points, while the bonds’ share fell by 0.4 percentage points.
Fluctuations in the exchange rates for the Norwegian kroner against other currencies affect the size of the Norwegian banks’ balance sheet figures. At the end of 2016, 58.4 per cent of the banks’ total bonds and 28.4 per cent of the total deposits received were in foreign currencies.
Weaker results for the mortgage companies
Norwegian mortgage companies’ pre-tax profit was NOK 4.9 billion in 2016; a decrease from NOK 11.6 billion in 2015. The pre-tax profits share of total assets was 0.24 per cent in 2016, a decrease of 0.54 percentage point from 2015.
The lower result in 2016 was mainly due to a negative trend in total net change in value and net gains on securities, currency and other financial instruments, but also due to lower net interest income. The net interest income for mortgage companies amounted to NOK 14.4 billion in 2016; a decrease from NOK 17.6 billion in 2015.
Source: SSB / Norway Today