DNB 4Q23 Results; Small Miss, Few Credit Positives Besides Oil

DNB (DNB NO) 4Q23 results this morning were muted, marginally below consensus and likely a marginal credit negative (but oil has spiked in the last week).

• Revenues were NOK19.99bn (+8% y/y but consensus was 20.68bn), costs were only up 4% but loan losses rose to NOK920m (only 18bp, up 4bp y/y but cons: 891m). Net profit was NOK9.02bn (-9% y/y) against 9.07bn expected.
• CET1 ratio was 18.2% (down 10bp on Sep-23) and total capital was 22.5% (20bp lower). NPLs are low in absolute terms but have ticked back up (117bp of loans from 101bp at Sep-23).
• Outlook comments are more muted here, talking about a soft landing in Norway, reduced activity levels in 4Q23 so safe to assume there’s little upgrade for equity holders here. Moreover, the payout ratio (incl. buybacks) was 91% in FY23 and commentary includes “strong commitment” to equity payout; we take this as something of a credit negative.

The equity is broadly flat YTD (up around 5% from the Oct-23 lows) and the cash curve has tightened marginally. Recent rises in oil prices are certainly helpful to DNB and it remains low risk but there’s little credit positive to see here.

Conf call is 1230 London time at https://events.webcast.no/dnb/zaEeS9WUTiwEQDAw15I3/6WH4VvvQ7AZr1dYQ8cTU (presser at 0830).