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DNB Quarterly Profit Rises on Higher Rates, Strong Economy

OSLO, July 12 (Reuters) - Norway's largest bank DNB said on Wednesday momentum was still good across much of the Norwegian business sector as it reported a bigger-than-expected rise in quarterly earnings helped by a robust economy and higher interest rates.

Net profit rose 19% to 9.46 billion crowns ($918 million) against analysts' average forecast of 9.05 billion crowns, according to a poll compiled by the bank.

The result was due to profitable volume growth and higher interest rates, DNB said.

Norway's central bank was the first major central bank to begin raising policy rates, from zero, in September 2021. Last month, it lifted its key policy rate to a 15-year high of 3.75%, and expects to keep raising it.

"We're growing in both the personal and corporate customer market," CEO Kjerstin Braathen said in a statement.

Danske Bank, the third biggest player in the Norwegian market, said last month it would exit the Norwegian retail market to focus on large businesses in the Nordic country instead, a move Braathen said highlighted fierce competition.

"We don't comment on potential M&A opportunities but we note that Danske has put their business up for sale - we do see it as a sign of the strong competitive environment," Braathen told a conference call.

Net interest income increased 4.3% to 15.2 billion crowns, above analysts' average forecast of 15.1 billion.

DNB booked impairment provisions of 871 million crowns in the quarter, mainly related to a legacy portfolio in Poland. In the year-earlier period, DNB reversed impairments by 209 million crowns.

It made impairment provisions on financial instruments in the commercial real estate sector of 66 million crowns.

DNB's shares were down 0.9% at 0830 GMT, underperforming the European banking sector index, which was up 0.9%.

($1 = 10.3059 Norwegian crowns)

Reporting by Victoria Klesty Editing by Anna Ringstrom and Mark Potter

Source: Reuters

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