Equity story December 2017
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E Operating in a robust Norwegian economy Positive GDP growth and low unemployment rates Norwegian GDP growth Per cent Unemployment rate by county Nov. 2016 vs. Nov. 2017, year-on-year 6 5 4 3 Nov. 2016 Nov. 2017 2 1 0-1 -2 Lower Source: Statistics Norway Mainland GDP, year-on-year Slight increase Significant increase 2
Norway is in a strong financial position Use of fiscal and monetary policy measures reduces volatility Norwegian sovereign wealth fund 2001-2017 National budget s structural non-oil deficit NOK billion (2017 prices) NOK, billion 9,000 NOK, billion 1,400 350 8,000 1,200 300 7,000 6,000 5,000 4,000 3,000 2,000 1,000 800 600 400 200 250 200 150 100 71 1,000 0 50 0-200 2001 2003 2005 2007 2009 2011 2013 2015 2017* 0 2002 2005 2008 2011 2014 2017 Market value of fund (lhs) Net cash flow from oil-related industries (rhs) Financial returns incl. dividends (rhs) 4 per cent return on the fund capital Structural non-oil deficit *Nov. 2017 Source: Norwegian Ministry of Finance, Norges Bank 3
DNB is market leader in Norway Retail market per 3Q2017 Loans from financial institutions Deposits Policyholders' funds Mutual fund investments 25% 30% 43% 32% Corporate market per 3Q2017 Loans from financial institutions Deposits Policyholders' funds 1) Mutual fund investments 23% 38% 20% 23% DNB's market shares 1) Includes public sector 1) Includes the public sector. Source: Statistics Norway and Finance Norway Source: Statistics Norway and Finance Norway 4
DNB portfolio and income split Total Income Split 3Q 2017 Distribution of exposure at default by industry segments 3Q 2017 Other income 5 % Other corporate customers 4 % Commercial real estate 10 % Shipping 5 % Oil, gas and offshore 6 % Power and renewables 2 % Net gains on financial instruments at fair value 8 % Healthcare 2 % Public sector 2 % Net Comission and fees 17 % NII 70 % Mortgages and other exposures, personal customers **) 51 % >80 per cent of income from Norway Residential property 5 % Services 2 % Fishing and fish farming 2 % Trade 3 % Manufacturing 4 % Technology, media and telecom 2 % 5
Transforming the way we do business building future infrastructure, digital services and platforms Personal Advisors Mobile banking New services APIs Cloud platform with applications Core systems The illustration is conceptual 6
The road ahead: Financial ambitions towards year-end 2019 > 12 per cent ROE Overriding target > 50 per cent payout ratio Dividend policy < 40 per cent C/I ratio Key performance indicator ~16.1 per cent CET1 ratio* as capital level *Based on transitional rules 7
ROE > 12 per cent towards year-end 2019 Return on equity Per cent NOK billion 200 180 169 184 192 160 150 140 120 100 80 60 40 81 11% 103 14% 114 11% 118 12% 133 13% 14% 14% 10% 11% 15.5% >12% 20 0 2009 2010 2011 2012 2013 2014 2015 2016 Sept. 2017* Average equity (lhs) ROE ROE ambition ROE using peer average equity *ROE annualised adjusted for MTM effects and gains from the carve out of Vipps. Average equity year to date. 8
A return on equity above 12 per cent remains our main priority Bridge to ROE > 12 per cent towards year-end 2019 Basis points 50-70 bps 30-50 bps >12.0% 60-80 bps ~10.6%* STRATEGIC BUSINESS INITIATIVES INVESTMENT BANKING CUSTOMER INCOME FROM DNB MARKETS DEFINED CONTRIBUTION AND ASSET MANAGEMENT PAYMENT INITIATIVES ROE YTD 3Q2017 Core business initiatives Strategic business initiatives Cost initiatives Cost of risk run rate ~17 bps ** ROE 2019 NON-LIFE INSURANCE *Adjustments for MTM effects and gain from the demerger of Vipps **Basis point of EAD 9
Profitable volume growth will improve return on equity Positive Norwegian macro outlook supports our growth ambition of 3-4% Strong volume growth for personal customers and SMEs Loans to customers (NOK billion) and portfolio composition (per cent) Approaching normalised volume growth as LCI rebalancing continues at a slower pace 936 955 1,009 Profitable volume growth for personal customers, SMEs and core LCI customers is expected to continue Rebalancing in LCI continues, but at a slower pace 62% 64% 67% 562 533 486 Continue reduction in exposure to shipping and oil-related industries 38% 36% 33% Personal customers and SMEs Large corporates and international customers 3Q15* 3Q16 3Q17 *Adjusted for organisational changes in DNB Finans 10
Stable margins over time despite low interest rate environment Optimising margins in a competitive market Positive outlook for key policy rate provides greater flexibility 1.45 1.50 1.44 1.38 1.44 A large portion of our portfolio can be repriced 90% of mortgages and 30% of SME loan book can be repriced 0.98 A marginal portion of the deposit book in NOK is fixed-rate, whereas 75% of total NOK deposits can be repriced 0.50 0.50 SMEs and large corporates have individually priced margins Net interest margin (per cent) Key policy rate* (per cent) *Source: Norges Bank 11
Revenue growth from strategic business initiatives will build return on equity Revenues from strategic business initiatives have increased by 42% since 2012 NOK billion 5.9 CAGR ~7% 6.6 6.8 7.0 5.0 5.2 2012 2013 2014 2015 2016 2017E* Non-life insurance Defined contribution and asset management Investment banking *2017 annualised per 3Q 12
Cost efficiency is becoming more important to remain competitive in a changing landscape Reduced cost/income ratio from 56% to 43.8% over the past 10 years Revenue per FTE** NOK million, 2016 47 49 54 52 50 4.7 34 38 40 42 42 19 19 19 20 21 22 21 22 21 22 43.8 % 3.0 3.4 2.8 2.9 3.2 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E* DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Income (NOK billion) Costs (NOK billion) C/I (%) *2017 annualised per 3Q **Source: Arctic Securities 13
Portfolio quality: Rebalancing in LCI* results in a less cyclical portfolio 2.2 per cent of DNB s portfolio is exposed to the offshore industry Total loan portfolio EAD NOK 1 895 billion As at 30 September 2017 Reduced exposure in cyclical industries Exposure at default, NOK billion 4% 23% Oil, gas and offshore 2015 Sept. 2017 45% 3.8% 2.2% 4.8% 10% 166 118 Shipping 2015 Sept. 2017 7% Residential mortgages Other corporate customers Manufacturing Oil, gas and oilfield services 134 92 Offshore Shipping Commercial real estate Consumer finance *Large Corporates & International 14
Revised impairment guiding up to year-end 2018 Impairment approaching normalised levels Impairment guiding 2016-2018 3 000 1.2 2 500 1.0 2 000 0.8 2017-2018: Around 17 basis points of EAD 1 500 0.6 1 000 0.4 500 0 0.2 0.0 Impairment levels will vary from quarter to quarter -500 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17-0.2 Reassessed impairment and recoveries Net individual impairment Change in collective impairment Total impairment in relation to average volumes, annualised 15
DNB is in a new phase after years of capital build-up Well positioned for future regulatory changes CET1 ratio * above the target level for year-end 2017 Per cent Leverage ratio is well above the requirement Per cent at end-september 2017 ~ 16.1 16.3 7.1 Management buffer ~ 1.0 Pillar 2 ~ 1.6 4.9 4.7 4.7 4.4 4.1 Countercyclical buffer ~ 1.6 General capital requirement 12.0 CET1 ratio target CET1 ratio 30 Sept. 2017 DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 *Based on transitional rules, including 50 per cent of interim profits. 16
ensuring a high payout capacity Distribution of excess capital: Nominal increase in cash dividend combined with share buybacks Dividend per share and pay-out ratio NOK 50% 5.7 3.8 4.5 Dividend policy: > 50 per cent payout ratio Stable and increasing cash dividend per share 2.0 2.1 2.7 25% 25% 25% 30% 30% 1.5 Buybacks: Completed 1.0 per cent of registered shares 1) 2) DNB may decide to initiate further buybacks up to the approved limit of 1.5 per cent 2011 2012 2013 2014 2015 2016 Dec. 2017* Pay-out ratio, per cent Dividend per share Buybacks per share, incl. government shares to be redeemed** *As at 14 December 2017. **We have completed two buyback programmes totalling 1.0 per cent of outstanding shares. According to an agreement, the Norwegian government will redeem shares on a proportionate basis so that its current holding will remain unchanged at 34 per cent. 17
DISCLAIMER - CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS The statements contained in this presentation may include forward-looking statements such as statements of future expectations. These statements are based on the management s current views and assumptions and involve both known and unknown risks and uncertainties. Although DNB believes that the expectations reflected in any such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results, performance or events may differ materially from those set out or implied in the forward-looking statements. Important factors that may cause such a difference include, but are not limited to: (i) general economic conditions, (ii) performance of financial markets, including market volatility and liquidity (iii) the extent of credit defaults, (iv) interest rate levels, (v) currency exchange rates, (vi) changes in the competitive climate, (vii) changes in laws and regulations, (viii) changes in the policies of central banks and/ or foreign governments, or supra-national entities. DNB assumes no obligation to update any forward-looking statement. 19