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DNB - DNB ASA News Story

NOK179.35 -0.2  -0.1%

Last Trade - 12/05/21

Large Cap
Market Cap £23.98bn
Enterprise Value £55.88bn
Revenue £5.01bn
Position in Universe 30th / 1832

UPDATE 1-Norway's banks need to retain bulk of earnings -regulator

Wed 22nd April, 2015 11:05am
(Adds detail, background) 
    OSLO, April 22 (Reuters) - Norway's banks need to retain the 
bulk of their earnings as the risk of financial instability is 
increasing and the rapid rise in household debt may be 
unsustainable, the financial regulator said on Wednesday. 
    The prospects of a longer period of low interest rates and 
ample access to credit could lead to continued high growth in 
house prices and residential mortgage debt but this would not be 
sustainable, increasing systemic risk, the regulator said. 
    "Developments in the housing and credit markets have 
increased the risk of financial instability," Morten Baltzersen, 
the head of the Financial Supervisory Authority (FSA), said. 
    "This underscores how important it is for banks to continue 
to improve their financial position by retaining the bulk of 
their net profit." 
    DNB  DNB.OL , Norway's biggest bank, has said it aims to 
return to a 50 percent payout ratio by 2016 or 2017 after years 
of holding back earnings to meet Norway's capital requirements. 
It will pay out 30 percent of its 2014 earnings as dividend this 
    Norway has one of the highest levels of household debt in 
the world at around 200 percent of disposable income. 
    Baltzersen said that the drop in oil prices has had little 
impact on output and employment but a lasting fall could have a 
major negative impact on the economy. 
    "There is considerable uncertainty tied to developments 
ahead, and particularly for the oil price and the wider effect 
this has for the economy," he told a news conference. 
    High household debt, and rapid increases in house prices, 
prompted the central bank to surprise by not cutting interest 
rates at its last policy meeting, in March.   
    The FSA proposed in March new tighter regulations for the 
country's banks -- which are heavily exposed to the oil and gas 
industry -- in a bid to cool the housing market.  ID:nL6N0WJ0ZK  
 (Reporting by Camilla Knudsen; Writing by Stine Jacobsen; 
Editing by Susan Fenton) 
 ((stine.jacobsen@thomsonreuters.com; +47 23 31 65 98; Reuters 
Messaging: stine.jacobsen.thomsonreuters.com@reuters.net)) 
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