Oct. 27 (Bloomberg) -- DnB NOR ASA, the Nordic region’s second-largest bank, reported a 19 percent drop in third-quarter profit after writing down more bad loans.
Net income fell to 2.49 billion kroner ($639 million) from 3.08 billion kroner a year earlier, Oslo-based DnB said in a statement today. That missed the 2.71 billion-kroner mean estimate of 14 analysts surveyed by Bloomberg. Loan losses jumped to 1.17 billion kroner from 643 million kroner.
“There was an increase in collective writedowns due to weaker economic conditions in some industries and higher writedowns on the home-mortgage portfolio in Latvia,” the company said.
Norway, which has a $530 billion sovereign-wealth fund, has been shielded from the worst of the euro area’s debt crisis as unemployment holds below 3 percent and the oil and gas industry helps fuel an economic expansion. This has allowed banks such as DnB NOR, the country’s biggest, to benefit from lower risk premiums than the rest of Europe, the Financial Supervisory Authority said last month. Still, the regulator said loan losses in Norway may rise because of a “substantial setback” in the global economy.
Net interest income, the difference between what DnB earns from lending and what it pays on deposits, rose 7 percent to 6.39 billion kroner in the quarter. The lender said its core Tier 1 capital ratio, a key measure of financial strength, fell to 9.3 percent at the end of the quarter from 9.7 percent a year earlier.
The company said it has no government bonds that will need to be written down.
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