Equity story February 2018 1
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2007 2008 2010 2011 2012 2013 2014 2015 2016 2017e 2018e 2019e 2020e 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018e 2019e 2020e 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Positive macroeconomic development in Norway - decline in housing prices slowing down Mainland GDP and unemployment rate Per cent Mainland business investments 1Q08=100, three quarters moving average Housing prices Index, 2006=100 6 130 240 2 400 5 4 120 110 100 200 160 2 000 1 600 3 90 120 1 200 2 1 80 70 60 80 40 800 400 0 50 0 0 (1) (2) Mainland GDP, YoY Household disposable income, NOK billion (rhs) Unemployment rate Average housing prices (lhs) Source: Statistics Norway, Eiendomsverdi, Real Estate Norway, Finance Norway, Datastream/DNB Markets 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 NOK billion 400 9 000 1 400 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 200 1 000 800 600 400 200 71 300 200 100 1 000 0 0-200 2001 2003 2005 2007 2009 2011 2013 2015 2017* Market value of fund (lhs) Net cash flow from oil-related industries (rhs) Financial returns incl. dividends (rhs) 2002 2005 2008 2011 2014 2017 4 per cent return on the fund capital Structural non-oil deficit 0 *Nov. 2017 Source: Norwegian Ministry of Finance, Norges Bank 3
DNB is the market leader in Norway Retail market Loans from financial institutions Deposits Policyholders' funds Mutual fund investments 25% 29% 43% 33% Corporate market Loans from financial institutions Deposits Policyholders' funds 1) Mutual fund investments 23% 38% 20% 25% DNB's market shares 1) Includes the public sector 1) Includes the public sector. Source: Statistics Norway and Finance Source: Statistics Norway Norway and Finance Norway 4
Norway is a digital front runner enabling change 96% of Norwegians use the Internet 6% of payments are made in cash No. 1 global ICT infrastructure 91% of Norwegians use online banking services 5
We have transformed our retail distribution through digitalisation Mobile platform driving growth in digital banking Annual visits to our digital platforms million Transforming our branch network Number of branch offices 220 1 2 9 49 113 156 200 244 198 187 156 141 116 73 83 85 86 83 92 83 80 57 57 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017 Desktop Mobile 6
Transforming the way we do business building future infrastructure, digital services and platforms Personal advisers Mobile banking New services APIs Cloud platform with applications Core systems The illustration is conceptual 7
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 year-end 2017 ~ 16.1 16.4 7.2 Management buffer ~ 1.0 Pillar 2 ~ 1.6 5.2 5.2 5.2 4.6 4.4 Countercyclical buffer ~ 1.6 General capital requirement 12.0 CET1 ratio target CET1 ratio 31 Dec. 2017 DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 *Based on transitional rules 8
Dividend per share increased by 25 per cent to NOK 7.10 Dividend per share and payout ratio Dividend per share (NOK) Payout ratio (per cent) 8.00 7.10 75 73% 6.00 5.70 4.50 55 3.80 4.00 50% 2.70 2.10 35 2.00 30% 30% 25% 25% 0.00 15 2012 2013 2014 2015 2016 2017 Cash dividend of 55 per cent and total distribution to shareholders of 73 per cent of profits in 2017 Completed buy-backs for 1.0 per cent of registered shares 1) 2) and announced a third programme for 0.5 per cent in accordance with the authorisation given at the Annual General Meeting in April 2017 The proposed dividend of NOK 1.5 billion from DNB Livsforsikring (75 per cent of profits) will strengthen DNB s total payout capacity from April 2018 Dividend per share (lhs) Total payout ratio (rhs) 1) Including the agreed share to be redeemed by the Norwegian government to keep its holding unchanged at 34 per cent 2) The Norwegian FSA has approved the authorisation, provided that the targeted capital level is met and that the sum of the amounts spent on dividends and the repurchase of shares does not exceed 75 per cent of the annual profit for 2016 9
DNB portfolio and income split Distribution of exposure at default by industry segment 4Q 2017 Commercial real estate 10 % Shipping 5 % Oil, gas and offshore 6 % Oil, gas and offshore 2) 6 % Net gains on financial instruments at fair value 9 % Total income split 4Q 2017 Other income 5 % tgages and other osures, personal customers **) 54 % Power and renewables 2 % Healthcare 2 % Public sector 4) 1 % Fishing and fish farming 2 % Trade 3 % Net Commission and fee 17 % Net interest income 69 % Residential property 5 % Technology, media and telecom 2 % Manufacturing Residential property 5 % 3) 5 % >80 per cent of income from Norway 10
A return on equity above 12 per cent remains our main priority > 12 per cent towards year-end 2019 Bridge to ROE 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 points of EAD 11
Strong growth for personal customers and SMEs, while rebalancing continues in LCI LCI rebalancing continued at a high pace in 4Q. Expected to continue at a slower pace in 2018 The deposits-to-loans ratio was slightly up Lending growth was 1.5 per cent in 2017. Expected growth of 3-4 per cent in 2018 Loans per customer segment 1) NOK billion Average loans and deposits in the customer segments 1) NOK billion 706 747 1 435 1 412 1 412 1 424 1 417 1 410 1 438 1 431 1 439 455 410 266 291 926 912 914 924 913 953 957 952 949 Personal customers SMEs Large corporates and international customers 31 Dec. 2016 31 Dec. 2017 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Performing loans Deposits 1) Excluding Baltics 12
Stable margins over time despite low interest rate environment Optimising margins in a competitive market Net interest margin and key policy rate Per cent Positive outlook for the key policy rate provides greater flexibility 1.49 1.46 1.37 1.46 A large portion of our portfolio can be repriced 1.45 90% of mortgages and 30% of SME loan book can be repriced 0.75 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 13
Revenue growth from strategic business initiatives will build return on equity Revenues from strategic business initiatives have increased by 41% since 2012 NOK billion CAGR 7.2% 7.2 7.5 7.9 6.5 5.6 5.7 2012 2013 2014 2015 2016 2017 IBD fees Other customer revenues Markets Asset management and defined contribution Non-life insurance 14
Cost efficiency is important to remain competitive in a changing landscape Reduced cost/income ratio from 56% to 44% over the past 10 years Leading in revenue per FTE Cost/income NOK billion Revenue per FTE* NOK million, 2016 47 49 54 52 51 4.7 40 38 34 19 19 19 42 42 20 21 22 44,2% 22 23 21 21 3.0 3.4 2.8 2.9 3.2 2008 2009 2010 2011 2012 2013 2014 2015 2016 Total income Total costs C/I (%) *Source: Arctic Securities 2017 DNB Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 15
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 group loan portfolio EAD NOK 1 877 billion As at 31 December 2017 Reduced exposure in cyclical industries Exposure at default, NOK billion Oil, gas and offshore 2015 2017 Offshore 2 % Oil, gas and oilfield services 4 % Manufacturing 4 % Shipping 5 % Other corporate customers 18 % Mortgages and other exposures, personal customers 52 % 166 109 Shipping 2015 2017 Residential property 5 % Commercial real estate 10 % 134 88 *Large Corporates & International 16
Reduction in non-performing and doubtful loans Impairment and non-performing loans 0.37 13 982 0.31 14 928 0.61 20 685 0.56 22 589 0.45 25 654 0.15 0.15 23 078 23 567 0.22 19 172 0.10 17 277 31 Dec. 2015 31 March 2016 30 June 2016 30 Sept. 2016 31 Dec. 2016 31 March 2017 30 June 2017 30 Sept. 2017 31 Dec. 2017 Net non-performing and net doubtful loans and guarantees (NOK million) Total impairment in relation to average volumes, annualised Impairment guiding 2016-2018 17
ROE > 12 per cent towards year-end 2019 Return on equity Per cent NOK billion 200 180 169 184 194 160 150 140 120 100 80 60 40 81 10.6 % 103 13.6 % 114 118 11.4 % 11.7 % 133 13.1 % 13.8 % 14.5 % 10.1 % 10.8 % >12% 20 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 Average equity (lhs) ROE ROE ambition 18
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 19
Shareholder distribution Top 20 shareholders 3Q17 to 4Q17 Ownership according to nationality as at 31 December 2017 Shares in 1 000 Ownership in per cent Change from 3Q17 Norwegian government/ministry of Trade, Industry and Fisheries 1) 553 792 34.2 0.0 DNB Savings Bank Foundation 130 001 8.0 0.0 Folketrygdfondet 99 893 6.2-2.2 Fidelity International 30 055 1.9 1.6 BlackRock Institutional Trust Company, N.A. 28 526 1.8 1.0 The Vanguard Group, Inc. 27 252 1.7 3.9 Deutsche Asset Management Investment GmbH 26 705 1.7 7.8 Schroder Investment Management Ltd. (SIM) 18 908 1.2-10.1 Capital World Investors 18 043 1.1 4.9 MFS Investment Management 16 538 1.0-1.1 T. Rowe Price Associates, Inc. 15 846 1.0-4.1 Storebrand Kapitalforvaltning AS 15 646 1.0-3.5 KLP Forsikring 15 395 1.0-3.9 DNB Asset Management AS 14 467 0.9-0.1 Janus Henderson Investors 13 489 0.8 0.8 SAFE Investment Company Limited 13 217 0.8-1.1 State Street Global Advisors (US) 12 900 0.8 2.5 Nordea Funds Oy 11 209 0.7-2.1 Edinburgh Partners Limited 11 086 0.7-3.1 Columbia Threadneedle Investments (UK) 11 067 0.7 4.6 Total largest shareholders 1 084 035 67.0 Other shareholders 534 014 33.0 Total 1 618 049 100.0 Luxembourg 4.8% UK 8.9% US 18.7% International investors: 43% Other international 10.3% Other Norwegian 15.0% Norwegian government/ministry of Trade, Industry and Fisheries 34.2% DNB Savings Bank Foundation 8.0% Norwegian investors: 57% The owners of shares in nominee accounts are determined on the basis of third-party analyses. 1) DNB has completed two buy-back programmes totalling 1 per cent of outstanding shares. According to an agreement, the Norwegian government will redeem shares on a proportional basis so that its current holding will remain at 34 per cent. 20
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