Chart 1.1 Risk premiums 1 on European and US corporate bonds. Basis points. 1 January October 2017

Transcription

1 Chart 1.1 Risk premiums 1 on European and US corporate bonds. Basis points. 1 January October Investment grade corporations US Investment grade corporations Europe High-yield corporations US High-yield corporations Europe ) Interest rate differential against German and US government bonds. Source: Thomson Reuters

2 Chart 1.2 Price/earnings ratio for US equities (S&P 5). 1 Percent. January 196 October Price/earnings ratio for US equities Average for the period ) Shiller P/E. Price divided by a ten-year average for inflation-adjusted earnings. Source: Robert Shiller

3 Chart 1.3 Growth in GDP and inflation in the US and euro area. Percent GDP growth US GDP growth euro area Projections Inflation US Inflation euro area ) Projections from Monetary Policy Report 3/17 for Sources: International Monetary Fund (IMF) and Norges Bank

4 Chart 1.4 Non-financial sector debt as a share of GDP. Percent. At year-end Public sector Non-financial corporations Households AE¹) EM²) All AE EM All AE EM All AE EM All ) Advanced economies (AE). 2) Emerging markets (EM). Sources: Bank for International Settlements (BIS), International Monetary Fund (IMF) and Organisation for Economic Cooperation and Development (OECD)

5 Chart 1.5 Leverage ratios for European banks. Percent. At 217 Q2 Estonia Croatia Bulgaria Greece Poland Ireland Latvia Slovenia Romania Lithuania Cyprus Hungary Slovakia Malta Portugal Finland Norway Austria Luxembourg Spain Great Britain Italy Czech Republic Belgium France Germany Netherlands Sweden Denmark Q2 EU average Source: European Banking Authority (EBA)

6 Chart 1.6 Change in Common Equity Tier 1 (CET1) capital ratios of the largest euro-area banks.contribution from change in CET1 capital and riskweighted assets. Percentage points. 215 Q2 217 Q Contribution from change in CET1 capital Contribution from change in risk-weighted assets Change in CET1 capital ratio Q2 216 Q2 216 Q2 217 Q2 -.5 Source: European Banking Authority (EBA)

7 Chart 1.7 Household debt ratio, interest burden and debt service ratio. 1 Percent Q1 217 Q Debt ratio (left-hand scale) Debt service ratio (right-hand scale) Interest burden (right-hand scale) ) The debt ratio is loan debt as a percentage of disposable income. The interest burden is calculated as interest expenses as a percentage of disposable income plus interest expenses. The debt service ratio includes, in addition to interest expences, estimated principal payments on an 18-year mortgage. Disposable income is adjusted for estimated reinvested dividend income for 2 Q1 25 Q4 and reduction of equity capital for 26 Q1 212 Q3. For 215 Q1-217 Q2 disposable income excluding dividends is used. Sources: Statistics Norway and Norges Bank

8 Chart 1.8 Debt as a share of after-tax income. By age of main income earner. Percent Sources: Statistics Norway and Norges Bank

9 Chart 1.9 Residential and commercial property prices. 1 Index Q4 = Q1 217 Q Residential property, countrywide nominal prices Residential property, countrywide real prices Commercial property, central Oslo² nominal prices Commercial property, central Oslo² real prices ) Residential property prices and the GDP deflator are seasonally adjusted. Semi-annual commercial property prices are linearly interpolated. Commercial property prices to end ) Estimated prices for centrally located high-standard office space in Oslo. Sources: Dagens Næringsliv, Eiendomsverdi, Finn.no, OPAK, Real Estate Norway, Statistics Norway and Norges Bank

10 Chart 1.1 House prices relative to disposable income. 1 Index Q4 = Q1 217 Q Crises House prices/disposable income House prices/disposable income per capita (aged 15 74) ) Disposable income adjusted for estimated reinvested dividend income for and reduction of equity capital for 26 Q1 212 Q3. Growth in disposable income excluding dividend income is used for 215 Q1 217 Q2. Sources: Eiendomsverdi, Finn.no, Norwegian Association of Real Estate Agents (NEF), Real Estate Norway, Statistics Norway and Norges Bank

11 Chart 1.11 Annual house price inflation. 1 Percent. January 21 September Norway Oslo Bergen Trondheim Stavanger Tromsø ) The national and regional indexes are calculated using different methods and are therefore not comparable. Sources: Eiendomsverdi, Finn.no, Norwegian Association of Real Estate Agents (NEF), Real Estate Norway, Statistics Norway and Norges Bank

12 Chart 1.12 Housing starts and households in Norway. Number of dwellings and change in number of households Housing starts Change in number of households ) Projections for housing starts and change in number of households for 217. Sources: Statistics Norway and Norges Bank

13 Chart 1.13 US prime money market funds' holdings in selected Nordic banks. Three-month moving average. In billions of USD. January 211 September Handelsbanken Nordea SEB DNB Sources: Office of Financial Research and Norges Bank

14 Chart 1.14 Liquidity Coverage Ratio (LCR). Norwegian banks. Weighted average. Percent. 214 Q3 217 Q Large banks Medium-sized banks Small banks Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 5 Source: Finanstilsynet (Financial Supervisory Authority of Norway)

15 Chart 1.15 Common Equity Tier 1 (CET1) capital ratio and CET1 capital as a share of total assets. Norwegian banks. 1 Percent and 217 Q CET1 capital ratio (without transitional rule) CET1 capital ratio (with transitional rule) CET1 capital / total assets Q Q2 1) Consolidated figures are used for banks that are banking groups. For the other banks, parent bank figures are used. Nordea is removed from the series as it was converted into a branch in 217. Source: Finanstilsynet (Financial Supervisory Authority of Norway)

16 Chart 1.16 Lending 1 by all banks and mortgage companies. Percent. At 3 June % Norwegian retail market - Residential mortgage loans 5% 12% 47% Norwegian retail market - Other loans Commercial real estate and construction Remaining corporate market Foreign customers 15% 3% Other loans 1) Total lending of NOK 5 14bn. Source: Norges Bank

17 Chart 1.17 Criteria for systemically important financial institutions. 1 Total assets as a share of GDP and share of domestic loan market. Large banks in Norway. Percent. At end DNB Bank Kommunalbanken SpareBank 1 SR-Bank SpareBank 1 SMN Sparebanken Vest Sparebanken Hedmark Santander Consumer Bank SpareBank 1 Nord-Norge Nordea Eiendomskreditt Sparebanken Sør Share of domestic loan market (lower scale) Total assets as a percentage of mainland GDP (upper scale) ) Required level (1% for total assets as a share of GDP and 5% market share) indicated by dashed line. Source: Finanstilsynet (Financial Supervisory Authority of Norway)

18 Chart 1.18 The main driver behind the rise in prices before peaks. 1 Number of peaks Reduced yield² Higher rents ) Based on data for rents, yield and prices for 58 European cities. Peaks are price maxima followed by a fall of 2% or more. 2) Yield is used as an indicator of cost of capital. Sources: CBRE Group and Norges Bank

19 Chart 1.19 Average reduction in yield and risk-free rate. 1 Percentage points and 211 Q2 216 Q Reduction in yield -3 Reduction in risk-free rate -4 Peaks from Q2 216 Q2-4 1) Based on data for rents, yield and prices for 58 European cities. 2) From five years before and until peak. Peaks followed by a correction in prices of more than 2%. Sources: CBRE Group and Norges Bank

20 Chart 1.21 Number of reported incidents at Norwegian financial undertakings. Yearly average Operational incidents Security incidents 151 Source: Finanstilsynet (Financial Supervisory Authority of Norway)

21 Chart 2.1 Return on equity after tax. Four-quarter moving weighted average. Percent. 215 Q3 217 Q Norwegian banks¹ European banks² German banks Danish banks UK banks Italian banks Swedish banks Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 1) Weighted average of DNB Bank, Nordea Bank Norge (to 216 Q4), SpareBank 1 SR-Bank, Sparebanken Vest, SpareBank 1 SMN, Sparebanken Sør (from 216 Q1), SpareBank 1 Østlandet (from 216 Q3) og SpareBank 1 Nord-Norge. 2) 198 European banks. Sources: European Banking Authority (EBA), Norwegian banking groups' quarterly and annual reports and Norges Bank

22 Chart 2.2 Estimated contributions to changes in banks' 1 return on equity. Four-quarterly moving average. Percent. 215 Q4 217 Q3 2 1 Net interest income Labour costs Loan losses Equity Ratio Other operating income Other operating costs Taxes Pre-tax profit Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 1) Weighted average of DNB Bank, Nordea Bank Norge (to 216 Q4), Sparebank 1 SR-Bank, Sparebanken Vest, SpareBank 1 SR-Bank, Sparbanken Vest, SpareBank 1 SMN, Sparebanken Sør (from 214 Q1), SpareBank 1 Østlandet (from 216 Q3) and SpareBank 1 Nord-Norge. Sources: Banks' quarterly reports and Norges Bank -2

23 Chart 2.3 Loan losses 1 as a share of gross loans. Annualised. All banks and mortgage companies. Percent Q1 217 Q Loan loss ratio Average ) Annual figures to end of 1991, converted to quarterly figures. 2) Preliminary figures for 217 Q3. Source: Norges Bank

24 Chart 2.4 Banks' interest margin. All banks and mortage companies in Norway. Percent. 29 Q1 217 Q Sources: Statistics Norway and Norges Bank

25 Chart 2.5 Common Equity Tier 1 (CET1) 1 ratios for Norwegian banks 2 and Pillar 1 CET1 requirements. Percent Minimum requirement Capital conservation buffer Systemic risk buffer Buffer for systemically important banks Countercyclical buffer Common Equity Tier 1 (CET1)¹ ) With transitional rule (Basel 1 floor). 2) All banking groups except branches of foreign banks in Norway. Sources: Ministry of Finance and Norges Bank

26 Chart 2.6 Common Equity Tier 1 (CET1) ratios for large Norwegian banks at 217 Q2. 1 Requirements and targets by end-217. Percent 2 15 CET1 capital ratio Capital target Pillar 2 requirement Pillar 1 requirement DNB² SpareBank 1 SR-Bank Sparebanken Vest SpareBank 1 SMN Sparebanken Sør SpareBank1 Østlandet SpareBank 1 Nord-Norge 1) Half of 217 earnings to date have been added to CET1 capital. 2) The Pillar 1 requirement for DNB is calculated from a weighted average of the countercyclical buffer requirements in the countries in which the bank operated at end-216. Sources: Banking groups' quarterly reports, Finanstilsynet (Financial Supervisory Authority of Norway) and Norges Bank

27 Chart 2.7 Change in Common Equity Tier 1 (CET1) ratios 1 for Norwegian banks. 2 Decomposed. Percent Contribution from changes in risk-weighted assets Contribution from changes in CET1 capital Change in CET1 ratio ) With transitional rule (Basel 1 floor). 2) Six largest Norwegian IRB-banks. Sources: Banks' annual reports and Norges Bank -1

28 Chart 2.8 Dividend payout ratio for the largest Norwegian banks. Percent SpareBank 1 SR-Bank Sparebanken Vest SpareBank 1 SMN Sparebanken Sør SpareBank 1 Nord-Norge SpareBank 1 Østlandet DNB Bank ) Actual dividends for 215 and 216. Expected dividends for 217 and 218 (consensus estimate of analysts). Sources: Arctic Securities, Bloomberg and DNB Markets

29 Chart 2.9 Credit to Norwegian non-financial enterprises from banks and mortgage companies. Contribution to twelve-month change by banking group. Percent. January 214 September DNB Other Norwegian banks Nordea Other branches All banks and mortage companies ) Premliminary figures for September 217. Source: Norges Bank -2

30 Chart 2.1 Leverage ratios and Common Equity Tier 1 (CET1) capital ratios 1 for large Norwegian and Nordic banking groups. Percent. At 217 Q DNB Largest savings banks² Leverage ratio CET1 capital ratio Nordea Handelsbanken SEB Swedbank Danske Bank ) Includes half of after-tax profit for 217 Q1 Q3. 2) Weighted average of the six largest Norwegian regional savings banks. Sources: Banks quarterly reports, Finanstilsynet (Financial Supervisory Authority of Norway) and Norges Bank

31 Chart 2.11 Common Equity Tier 1 (CET1) ratio for large Norwegian and Nordic banking groups. With and without Basel I transitional rule 2. Percent. At 217 Q DNB Largest savings banks³ Nordea CET1 capital ratio without floor CET1 capital ratio with floor Handelsbanken SEB Swedbank Danske Bank ) Including half of the after-tax profit for 217 Q1 Q3. 2) Under the transitional rule, risk-weighted assets may not be lower than 8% of what they would have been under Basel I. 3) Weighted average for the six largest Norwegian regional savings banks. Sources: Banks' quarterly reports, Finanstilsynet (Financial Supervisory Authority of Norway) and Norges Bank

32 Chart 2.12 Banks' 1 loan losses to enterprises as share of total corporate lending. Contribution by sector. Percent Oil-related industries² Agriculture, forestry and power supply Fishing and fish farming Services and transport³ Manufacturing, mining and quarrying⁴ Commercial real estate Construction Wholesale and retail trade, hotels and restaurants ) All banks in Norway except subsidiaries of foreign banks. 2) International shipping (incl. non oil-related), oil services and oil extraction. Also includes mining and quarrying and transport for ) Transport has been moved to other sectors for because the sector also contains oil-related businesses from ) "Mining and quarrying" has been moved to oil-related sectors for because the sector also contains oil-related businesses from 214. Source: Norges Bank -.2

33 Chart 2.13 Banks' loan losses, bank debt held by bankrupt enterprises and estimated bankruptcy-exposed bank debt. Percent Banks' loan losses¹ Bank debt held by bankrupt enterprises² Estimated bankruptcy-exposed bank debt³ ) Loan losses as a share of total corporate lending. Loans to oil-related industries, agriculture, forestry and power supply in Chart 2.12 are excluded for comparability. 2) Recognised bank debt held by enterprises registered as bankrupt 1 2 years after the last financial statement submitted as share of total bank debt. 3) Model projections for 217 and 218. Source: Norges Bank

34 Chart 2.14 Change in bankruptcy-exposed bank debt from the previous year. Contribution from each explanatory variable. Percentage points. Total for all industries Compositional effects¹ Change in economic indicators Change in accounting variables Change in credit ratings Total change in bankruptcy-exposed bank debt ) Effects of population changes, changes in enterprises' debt ratios by sector and change in the debt ratio of each sector. Source: Norges Bank -.1

35 Chart 2.15 Estimated bankruptcy-exposed bank debt by industry as a share of total corporate lending. Percent Wholesale and retail trade, hotels and restaurants Construction Commercial real estate Manufacturing, mining and quarrying Services and transport Fishing and fish farming ) Model projections for 217 and 218. Kilde: Norges Bank

36 Chart 2.16 Credit gap. Total credit mainland Norway 1 as a share of mainland GDP. Deviation from estimated trend. 2 Percentage points Q1 217 Q Credit gap 216 Q ) The sum of C2 households and C3 non-financial enterprises for mainland Norway (all non-financial enterprises pre-1995). C3 non-financial enterprises comprise C2 nonfinancial enterprises and foreign debt for mainland Norway. 2) Trend estimated using a one-sided Hodrick-Prescott filter on data from 1975 Q4 to 217 Q2, augmented with a simple projection. Lambda = 4. Sources: International Monetary Fund (IMF), Statistics Norway and Norges Bank

37 Chart 2.17 Loan losses as a share of gross loans to the sector. Macro bank. Percent ¹ Enterprises, scenario 1 Enterprises, scenario 2 Households, scenario 1 Households, scenario ) Projections for 217 Q3 221 Q4. Historical loss distribution is used to allocate loan losses to enterprises and households. Sources: SNL Financial, Statistics Norway and Norges Bank

38 Chart 2.18 Common Equity Tier 1 (CET1) capital ratio in the stress scenarios and CET1 requirements under Pillar 1 and Pillar 2. 1 Percent Minimum requirements Buffer for systemically important banks Capital conservation buffer Systemic risk buffer Countercyclical capital buffer Weighted Pillar 2 requirements Scenario 1 Scenario ) Requirements for the banks in the stress tests are weighted by their risk-weighted assets. 2) Projections for 217 Q3 22 Q4. Sources: SNL Financial and Norges Bank

39 Chart 2.19 Macro bank's capital buffers and capital adequacy 1 in the stress scenarios. Measured by Common Equity Tier 1 (CET1) capital. Percentage points Decrease in capital adequacy in scenario 1 Decrease in capital adequacy in scenario 2 Buffer above total requirements Countercyclical buffer Capital conservation buffer Systemic risk buffer Decrease in capital adequacy Macro bank capital buffer 1) Decrease in CET1 ratio from 217 Q4 to 221 Q4. Sources: SNL Financial and Norges Bank

40 Chart 2.2 Common Equity Tier 1 (CET1) capital ratio in the stress scenarios and CET1 requirements under Pillar 1. Percent Minimum requirements Factor of Factor of.2 Factor of.4 Factor of.6 Scenario 1 Scenario ) Projections for 217 Q3 221 Q4. Sources: SNL Financial and Norges Bank

41 Chart 2.21 Changes in bank lending in stress scenario 1 to comply with adjustments to Pillar 1 and Pillar 2 capital requirements. 1 Index. 217 = Spread across banks in the stress scenario with unchanged countercyclical buffer at 2% Spread across banks in the stress scenario if countercyclical buffer is set at % Macro bank lending excluding adjustments ) Based on each bank's total requirements under Pillar 1 and Pillar 2. 2) Projections for Sources: Finanstilsynet (Financial Supervisory Authority of Norway), SNL Financial and Norges Bank

42 Chart 2.23 Loan losses as a share of gross loans in stress scenario 1. Including and excluding assumed effects of IFRS 9. Percent Scenario 1 excluding assumed effects of IFRS 9 Scenario 1 including assumed effects of IFRS ) Projections. Sources: Statistics Norway and Norges Bank

43 Chart 2.24 Macro bank's Common Equity Tier 1 (CET1) capital ratio in stress scenario 1. Including and excluding effects of IFRS 9. CET1 requirements under Pillars 1 and 2. 1 Percent Minimum requirements Scenario 1 excluding IFRS 9 Scenario 1 including IFRS 9 Total requirements under Pillars 1 and 2 Total Pillar 1 requirements ) Requirements for banks in the stress test are weighted by the banks' risk-weighted assets. 2) Projections for 217 Q3 22 Q4. Sources: SNL Financial and Norges Bank

44 Chart 3.1 Risk premiums in Norway. Spread over three-month Nibor. Five-year maturity. Basis points. 7 January October Senior bonds Covered bonds Source: Nordic Bond Pricing

45 Chart 3.2 Funding structure. 1 Norwegian banks and covered bond mortgage companies. Percent. 28 Q1 217 Q2 1 Equity and other regulatory capital Other debt² 1 8 Short-term paper Customer deposits in other currencies Bonds Customer deposits in NOK ) Not consolidated. Adjusted for the swap arrangement. Nordea Bank Norge is excluded from 217 Q1. 2) Other debt includes intra-group debt, financial derivatives, repurchase agreements etc. Source: Norges Bank

46 Chart 3.3 Outstanding wholesale funding in Norway. 1 By currency. Percent. January 27 September Senior NOK Senior EUR Senior USD Senior other Covered bonds NOK Covered bonds EUR Covered bonds USD Covered bonds other ) Norwegian banks and covered bond mortgage companies. Sources: Bloomberg and Stamdata

47 Chart 3.4 Maturity of investments in US prime money market funds. Average. Number of days. January 213 September Weighted average life (WAL) Weighted average maturity (WAM) Source: Investment Company Institute

48 Chart 3.5 Total assets of US prime money market funds. In billions of USD. January 211 September Source: Office of Financial Research

49 Chart 3.7 Turnover repurchase agreements. 1 In billions of NOK. January 212 September Government bonds Covered bonds ) Government bond turnover does not include repurchase agreements between government bond primary dealers and Norges Bank. Sources: Oslo Børs and Norges Bank

50 Chart 3.8 Stock of liquid assets by type of asset. Norwegian banks and covered bond mortgage companies. After haircut. In billions of NOK. 3 June Central banks Government securities Local government etc. Covered bonds Norwegian municipalities etc. Other NOK EUR USD Source: Finanstilsynet (Financial Supervisory Authority of Norway)

51 Chart 3.9 Liquidity Coverage Ratio (LCR). All Norwegian banks. Percent. July 214 June Total NOK Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Source: Finanstilsynet (Financial Supervisory Authority of Norway)

52 Chart 3.1 Lending to customers. Four-quarter growth. Percent. 21 Q1 217 Q Large traditional banks¹ and branches of foreign banks Small and medium-sized traditional banks Specialised consumer credit banks ) Large traditional banks are banks with lending volumes above NOK 3bn at 217 Q2. Source: Statistics Norway

53 Chart 3.11 Interest margins. 1 Percent. 21 Q1 217 Q Large traditional banks² and branches of foreign banks Small and medium-sized traditional banks Specialised consumer credit banks ) Average lending rate minus average deposit rate for domestic customers, weighted by amount lent and deposited. 2) Large traditional banks are banks with lending volumes above NOK 3bn at 217 Q2. Source: Norges Bank

54 Chart 3.12 Default rate. Total loan defaults as a share of gross loans to customers. Percent. 21 Q1 217 Q Large traditional banks¹ and branches of foreign banks Small and medium-sized traditional banks Specialised consumer credit banks ) Large traditional banks are banks with lending volumes above NOK 3bn at 217 Q2. Source: Statistics Norway

55 Chart 3.13 Return on total assets. 1 Four-quarter weighted moving average. Percent. 21 Q1 217 Q2 4 3 Large traditional banks² and branches of foreign banks Small and medium-sized traditional banks Specialised consumer credit banks ) Profit after tax as a percentage of average total assets over the past four quarters. 2) Large traditional banks are banks with lending volumes above NOK 3bn at 217 Q2. Source: Norges Bank

56 Chart 3.14 Distribution of debt and equity. Percent. End of year Guaranteed deposits Non-guaranteed deposits Bonds and short-term paper Other liabilities Other regulatory capital Equity Large traditional banks² Small and intermediate traditional banks Specialised consumer credit banks 1) At 217 Q2. 2) Large traditional banks are banks with lending volumes above NOK 3bn at 217 Q2. Source: Norges Bank

57 Chart 3.15 Guaranteed deposits under EU rules. 1 Share of all customer deposits. 2 Percent. 217 Q2 1 Guaranteed deposits Non-guaranteed deposits Large traditional banks³ Small and medium-sized traditional banks Specialised consumer loan banks 1) Total of all deposits up to EUR 1. 2) Includes only bank reporting total deposits of less than EUR 1. 3) Large traditional are banks with lending volumes above NOK 3bn at 217 Q2. Source: Norges Bank

58 Chart 3.16 Assessment of market liquidity, first six months of 217. Average of respondents. Scale: 1 (poor) 2 3 (fair) 4 5 (very good) Treasury bills 3.6 Government bonds 3.6 Covered bonds 4.5 Unsecured bonds and short-term paper issued by banks and mortgage companies 3.9 Bonds and short-term paper issued by non-financial corporations 3.5 Bonds and short-term paper issued by local governments Source: Norges Bank

59 Chart 3.17 Volume that can be traded in the secondary market without causing appreciable price movements. Median of respondents. In millions of NOK. 217 H Treasury bills 775 Government bonds 4 Covered bonds 5 Unsecured bonds and short-term paper issued by banks and mortgage companies Bonds and short-term paper issued by non-financial corporations Bonds and short-term paper issued by local governments Source: Norges Bank

60 Chart 3.18 Assessment of market liquidity, from 216 H2 to 217 H1. Average of respondents. Scale: 1 (much poorer) 2 3 (unchanged) 4 5 (much better) Treasury bills 2.9 Government bonds 3.1 Covered bonds Unsecured bonds and short-term paper issued by banks and mortgage companies Bonds and short-term paper issued by non-financial corporations Bonds and short-term paper issued by local governments Source: Norges Bank

61 Chart 4.1 Share of households with secondary dwellings by age. With and without rental income. Percent With rental income Without rental income Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank

62 Chart Loan-to-value (net debt/house value) ratio. 2 Percent. 21 and All First-home buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners 1) Diamonds indicate the median, bars indicate the 25th 75th percentile, lines indicate the 5th 95th percentile. Tenants are excluded because they are not homeowners. 2) Net debt is total debt excluding student loans less bank deposits. Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank -2

63 Chart 4.3 Average age of first-home buyers and percentage of homeowners under the age of Share of homeowners (left hand scale) Age (right hand scale) Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank

64 Chart Debt-to-income (total debt/gross income) ratio. Percent. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 1) Diamonds indicate the median, bars indicate the 25th 75th percentile, lines indicate the 5th 95th percentile. Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank

65 Chart Debt-servicing capacity. Margin as the number of monthly incomes after interest and principal repayments 2 and standard consumption expenditure. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 12 1) Diamonds indicate the median, bars indicate the 25th 75th percentile, lines indicate the 5th 95th percentile. Note that the vertical scale is inverted. 2) Applies to LTV ratios above 6 percent. Principal payments set at 2.5% of debt less student loans. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank

66 Chart 4.6 Credit risk measured as the share of debt among households with LTV ratio 1, DTI ratio 2 and debt-servicing capacity 3 exceeding critical levels. Percent. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 1) Net debt exceeding the market value of the dwelling. 2) Debt exceeding five times gross income. 3) Margin below one month's after-tax income. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank

67 Chart 4.7 Consumer debt 1 as a share of the category's total debt. Percent. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners 1) Debt where the ratio of interest expenses to average debt over the past two years exceeds two times banks' average lending rate. Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank Tenants

68 Chart 4.8 Credit risk measured as the share of debt among households whose LTV ratio 1, DTI ratio 2 and debt-servicing capacity 3 exceed critical levels and that hold consumer debt. Percent. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 1) Net debt exceeding the market value of the dwelling. 2) Debt exceeding five times gross income. 3) Margin below one month after-tax income. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank

69 Chart 4.9 Risk of shifts in consumption. Share of households with high LTV ratio 1, high DTI ratio 2 or low debt-servicing capacity 3. Percent. 21 and All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 1) Net debt exceeding the market value of the dwelling. 2) Debt exceeding five times gross income. 3) Margin below one month's after-tax income. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank

70 Chart 4.1 Sensitivity analysis for credit risk. Share of households that exceed critical levels of the LTV ratio 1, DTI ratio 2 and debt-servicing capacity 3, given an increase in interest rates and a fall in house prices. Percent Interest rate increase, 5 percentage points Decline in house prices, 15% Both All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants 1) Net debt exceeding the market value of the dwelling. 2) Debt exceeding five times gross income. 3) Margin below one month's after-tax income. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank

71 Chart 4.11 Sensitivity analysis for risk of shifts in consumption. Share of households that exceed critical levels of the LTV ratio, DTI ratio and debt-servicing capacity, given an increase in interest rates and a fall in house prices. Percent Interest rate increase, 5 percentage points Decline in house prices, 15% Both All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners 1) Net debt exceeding house market value. 2) Debt exceeding five times gross income. 3) Margin below one month's after-tax income. Sources: Norwegian Mapping Authority, SIFO, Statistics Norway and Norges Bank Tenants

72 Chart Average debt in 21 and the increase to 215. Decomposed change. In thousands of 215 NOK Debt in 21 Propensity and ability to borrow Variables² Residual contribution All First-time buyers Home movers Secondary home owners Younger homeowners Older homeowners Pensioners Tenants - 5 1) Each group is analysed seperatly. The groups are mutually exclusive. See main text for definition of each group. 2) After-tax income in 215 NOK, real housing wealth in 215 NOK, rural/urban location and age variables. Sources: Norwegian Mapping Authority, Statistics Norway and Norges Bank

73 Chart 4.13 Probability of purchasing a first home. Contributions from own household and parents' income. 1 Percentage points Own household (left hand scale) Parents (right hand scale) After-tax income in thousands of NOK 1) The shaded area indicates a 95 percent confidence interval. Sources: Statistics Norway and Norges Bank

74 Chart 4.14 Average contribution of financial assistance from parents to the probability of buying a first home. 1 Percentage points ) The shaded area indicates a 95% confidence interval. Sources: Statistics Norway and Norges Bank

75 Chart 1 Lending market shares in the Norwegian banking sector. 1,2 Percent. At 3 June 217 9% 13% 29% 1% 1% 2% 9% Retail market DNB Bank Other branches of foreign banks in Norway Eika Alliance Other commercial banks Corporate market Nordea SpareBank 1 Alliance Other savings banks 1) All banks and mortgage companies in Norway. 2) See Table 2. Source: Norges Bank

76 Chart 2 Gross domestic lending to the non-financial sector by credit source. In billions of NOK. At 3 June Banks and mortgage companies¹ Public lending institutions Finance companies Bonds and short-term debt Other sources 1) All banks and mortgage companies including Eksportfinans. Source: Statistics Norway

77 Chart 3 Lending 1 by all banks and mortgage companies. Percent. At 3 June % Norwegian retail market - Residential mortgage loans 5% 47% Norwegian retail market - Other loans Corporate market 26% Foreign customers 4% Other loans 1) Total lending of NOK 5 14bn. Source: Norges Bank

78 Chart 4 Lending to the corporate market 1 by all banks and mortgage companies. Percent. At 3 June 217 9% 7% 6% Primary industries Manufacturing 46% 1% 6% 5% Construction Retail trade, hotels and restaurants Shipping Services 11% Commercial real estate Other industries² 1) Total corporate loans NOK 1 351bn. 2) Other industries comprise Oil service, Other transportation, Electricity and water supply and Extraction of natural resources. Here, Oil service is narrowly defined. Source: Norges Bank

79 Chart 5 Balance sheet 1 of Norwegian-owned banks and covered bond mortgage companies. 2 Percent. At 3 June Cash and claims on the central bank Notes and other debt 1 Claims on credit institutions 8 Financial instruments Deposits from central banks and credit inst. Deposits from foreign customers 8 6 Other assets Bonds 6 Loans to customers 4 Deposits from Norwegian customers Assets Equity and subordinated debt capital Liabilities 1) Intercompany items between banks and mortgage companies are not eliminated. 2) All banks and mortgage companies excluding subsidiaries and branches of foreign banks in Norway. Source: Norges Bank