DNB earnings miss as lower net interest income weighs (updated)
UPDATE 3-DNB earnings miss as lower net interest income weighs Adds share move in paragraph 2, details on competition in paragraph 6, CEO quotes in paragraph 7-8
By Jagoda Darlak and Agnieszka Gosciak
July 14 (Reuters) - Norway's largest bank DNB DNB.OL reported slightly weaker-than-expected second-quarter earnings on Tuesday, as lower net interest income offset growth in loans and deposits.
Shares in DNB fell 3% after net profit came in at 9.82 billion crowns, just below the 9.85 billion expected by analysts.
Net interest income fell 6.3% to 15.13 billion crowns, missing expectations of 15.40 billion crowns, as competition and narrower lending spreads continued to weigh on profitability.
DNB said profitable growth in loans and deposits helped support earnings during the quarter, but narrower lending spreads and strong competition weighed on net interest income.
However, DNB said the repricing following Norges Bank's May rate increase would start taking effect from mid-July, potentially providing support to earnings in coming quarters.
Competition in Norway remains fierce across both mortgage and corporate markets as a wave of consolidation among Norwegian savings banks challenges DNB's dominance.
"We do see competitive pressure across the market that impacts both structures and price," CEO Kjerstin Braathen said on a conference call.
She added that competitive pressure was unchanged from the previous quarter and described the market as "rational".
Norway's central bank last month kept its policy interest rate on hold at 4.25% after raising it in May and said it expected to raise rates further.
In a separate statement, DNB said it would start a share buyback programme of up to 1% of its shares.
(Reporting by Jagoda Darlak and Agnieszka Gosciak-Rabalska; editing by Matt Scuffham and Bartosz Dabrowski)