Summary. Chart 1 Banks' 1) pre-tax operating profit/loss on ordinary activities as a percentage of...

Summary

0.0

0.5

1.0

1.5

2.0

1994 1996 1998 2000 2002 20040.0

0.5

1.0

1.5

2.0

Chart 1 Banks'1) pre-tax operating profit/loss on ordinary activities as a percentage of average total assets (ATA)2)

1) Parent bank, excluding foreign branches2) Quarterly figures. Annualised

Source: Norges Bank

-2-1012345678

1987 1991 1995 1999 2003-2-1012345678

Chart 2 Household borrowing rate after tax deflated by consumer price inflation1) and inflation expectations. Per cent

1) CPI excluding energy products until 1995, Norges Bank's calculations for CPI adjusted for taxes changes and excluding energy products until 2000 Q2, after that CPI-ATE

Deflated by consumer price inflation

Deflated by inflation expectations

2) Set equal to the inflation target of 2.5 per cent

Sources: Statistics Norway and Norges Bank

-5

0

5

10

15

1997 1998 1999 2000 2001 2002 2003 2004-5

0

5

10

15

Non-financial enterprises

Households

Chart 3 Credit to mainland non-financial enterprises. 12-month growth. Per cent

Source: Norges Bank

Chart 4 Bankruptcies. Seasonally adjusted figures Index. 1998 Q4 = 100

1)Turnover and employment in last normal operating year for bankrupt entities


0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 20030

50

100

150

200

250

300

350

Number employed1)

Number of bankruptcies

Turnover 1)

Chart 5 Prices for commercial properties.Index, 2000 = 100

Source: Statistics Norway

50

75

100

125

150

1996 1998 2000 2002 200450

75

100

125

150

0

10

20

30

40

50

60

70

1990 1992 1994 1996 1998 2000 2002 20040

10

20

30

40

50

60

70

Chart 6 Bank lending to households and enterprises.1) Per cent of gross lending to households, municipalities and non-financial enterprises

Enterprises

Households

1) Excluding branches of foreign banks. Monthly figures

Source: Norges Bank

Chapter 1

0

2

4

6

8

10

12

14

16

1997 1998 1999 2000 2001 2002 20030

2

4

6

8

10

12

14

16

Households


Chart 1.1 Average growth1) in credit to households and non-financial enterprises. Per cent

1) Non-weighted average of data for Germany, Australia, the Netherlands, the UK, the US, Sweden and Denmark. Annual growth in loans and other securities from domestic and foreign sources

Sources: OECD, national statistics offices and central banks, Norges Bank

0.0

0.2

0.4

0.6

0.8

1.0

1988 1992 1996 2000 20040

1

2

3

4

5

Chart 1.2 Average GDP growth1), and banks' loan losses1) as a percentage of total assets

1) Non-weighted average of data for Germany, France, the UK, Italy, Spain, the Netherlands, Norway, Sweden, Denmark, Finland and Switzerland. OECD's forecasts for 20042) Selection of the largest banks. The figures for Norway cover all banks

Sources: Bankscope, OECD, Statistics Norway and Norges Bank

Real GDP growth (right-hand scale)

Loan losses (left-hand scale)

0 20 40 60 80 100 120

Mainl. Norway

US

Germany

Spain

Netherlands

Japan

UK

Australia

2003

1990

1980

Chart 1.3 Outstanding mortgages as a percentage of GDP

Sources: IMF and Norges Bank

0.0

0.4

0.8

1.2

1.6

2.0

Oct 00 Apr 01 Oct 01 Apr 02 Oct 02 Apr 03 Oct 03 Apr 04 Oct 040.0

0.4

0.8

1.2

1.6

2.0

1) Selected US stock exchanges. First Tuesday in April and October

Source: Commodity Futures Trading Commission

Chart 1.4 Contract volume in the futures markets for oil and gas.1) In millions of contracts

Total number of active contracts

Banks' long positions

Banks' short positions

80

100

120

140

160

180

200

Jan 03 May 03 Sep 03 Jan 04 May 04 Sep 0480

100

120

140

160

180

200

Source: EcoWin

Chart 1.5 International equity indices.Indexed, 01.01.03 = 100

Japan, Topix

Europe, Stoxx

Norway OBX

US, S&P 500

1) Based on earnings estimates one year ahead for companies in the S&P 500 index and most companies on the Oslo Stock Exchange

Sources: EcoWin and I/B/E/S Datastream

Chart 1.6 The ratio between share price and expected earnings1) (P/E) for listed companies. Monthly figures and 10-year average

0

5

10

15

20

25

30

1994 1996 1998 2000 2002 20040

5

10

15

20

25

30

US

Norway

Source: EcoWin

Chart 1.7 Yield on 10-year government bonds. Per cent

3

4

5

6

7

8

2000 2001 2002 2003 20043

4

5

6

7

8

Norway

UK

Germany

US

75

100

125

150

175

200

225


100

125

150

175

200

225

1) Weighted average of the telecom index and the IT index

Source: EcoWin

Chart 1.8 Sub-indices on the Oslo Stock ExchangeIndexed, 01.01.03 = 100

Energy

Benchmark index(OSEBX)

Banks

Manufacturing

ICT1)

0

5

10

15

20

25

30


5

10

15

20

25

30

Chart 1.9 Implied volatility on the Oslo Stock exchange based on the OBX index. Per cent

Source: Oslo Stock Exchange

Chart 1.10 Default probabilities for Norwegian banks.1) Per cent

Source: Moody's KMV

0

1

2

3

2000 2001 2002 2003 20040

1

2

3

25 percentile

Median

75 percentile

1) Probability of default within 3 years

50

100

150

200

250


100

150

200

250

Sources: Datastream and EcoWin

Chart 1.11 Oil prices, energy index and the overall market excluding oil companies. Norway and globally. Indexed, 01.01.03 = 100

50

100

150

200

250

50

100

150

200

250

Norway energy

Global excl. oil

Oil price

Global energy

Norway excl. oil

Chapter 2

-30

-15

0

15

30

45

1999 2000 2001 2002 2003 2004-30

-15

0

15

30

45

Total2)

Personal financial situation

Norwegian economy

1) Indicates the share with a positive assessment of the current situation and outlook for the future less the share with a negative assessment2) Includes expectations of major procurements

Source: TNS Gallup

Chart 2.1 Consumer confidence indicator.1) Unadjusted figures

-10

-5

0

5

10

15

1999 2000 2001 2002 2003 2004-10

-5

0

5

10

15

Chart 2.2 Business climate index. Seasonally adjusted diffusion index1)

1) A value of less than 0 implies that the majority of industrial leaders expect a weaker outlook in the next quarter

Source: Statistics Norway

Source: Norges Bank

80

100

120

140

160

180

1987 1990 1993 1996 1999 200280

100

120

140

160

180

Financial assets/debt

Chart 2.3 Household financial assets1) and housing wealth2) as a percentage of debt

2) Projections for housing wealth for 2004 Q1 and Q2

1) Break in the statistics for 1995 Q4

Housing wealth/debt

-10123456789

10

1999 2000 2001 2002 2003 2004-1012345678910

Net financial investment (NB)Net fixed investment (SN)

Chart 2.4 Household net investment in financial assets (net lending) and net investment in fixed assets as a percentage of disposable income


1) Projections for 2004 based on figures for 2004 Q1 and Q2

1)

-15

-10

-5

0

5

10

15

20

25

1991 1994 1997 2000 2003-15

-10

-5

0

5

10

15

20

25

Chart 2.5 House prices and rental prices. 4-quarter growth. Per cent

House prices

Rental price

Sources: Norwegian Association of Real Estate Agents (NEF), Association of Real Estate Agency Firms (EF), Finn.no, Norges Bank and Statistics Norway

0

40

80

120

160

1987 1990 1993 1996 1999 20020

40

80

120

160

Decile 1-6

Decile 10

Chart 2.6 Gross financial capital as a percentage of household debt (financial reserves) by after-tax income decile

Decile 7-9

1) Excluding insurance claims


0

50

100

150

Decile 1-6 Decile 7-9 Decile 10 Total

0

50

100

150

Employees All households

1) Excluding insurance claims


Chart 2.7 Gross financial capital1) as a percentage of debt (financial reserves) by socioeconomic status and after-tax income. 2002

0

50

100

150

200

250

Decile 1-6 Decile 7-9 Decile 10 Total0

50

100

150

200

250Employees All households


Chart 2.8 Debt as a percentage of disposable income (debt burden) by socioeconomic status and after-tax income. 2002

100

120

140

160

180

200

1987 1991 1995 1999 2003 2007100

120

140

160

180

200

Chart 2.9 Household debt burden1)

Sources: Norges Bank

Debt burden

1) Loan debt as a percentage of disposable income less the return on insurance claims (liquidi disposable income)

0

2

4

6

8

10

12

1987 1991 1995 1999 2003 20070

2

4

6

8

10

12

Chart 2.10 Household interest burden1) and household borrowing rate after tax

1) Interest expenses after tax as a percentage of liquid disposable income plus interest expenses

Source: Norges Bank

Interest burden

Borrowing rate after tax

Chart 2.11 Key figures for the enterprise sector.1) Annual figures. Per cent

0

20

40

60

80

100

1989 1991 1993 1995 1997 1999 2001 20030

4

8

12

16

20Pre-tax return on equity

Return on total assets

Equity ratio(left-hand scale)

Source: Norges Bank

1) Limited companies excluding enterprises in the oil and gas industry, financial industry and the public sector2) Interest on debt calculated as the ratio between interest expense and total debt

Interest on debt2)

0

200

400

600

800

1,000

1,200

1995 1996 1997 1998 1999 2000 2001 2002 20030

200

400

600

800

1,000

1,200

Long-term debt

Retained earnings

Current liabilities

Paid-in capital

Chart 2.12 Enterprise debt and equity financing. Holdings. In billions of NOK

1) Non-financial enterprises except public sector

Source: Norges Bank

0

10

20

30

40

1989 1991 1993 1995 1997 1999 2001 20030

10

20

30

40

Chart 2.13 Enterprise1) net investment in capital assets and supply of new internal capital from operations. Percentage of mainland GDP

Net investmentin capital assets

Of which in fixed assets and intangible assets

New internal capital

1) Non-financial enterprises except enterprises in the oil and gas industry and the public sector

Source: Norges Bank

0

10

20

30

40

50

60

70

80

1987 1990 1993 1996 1999 2002 20050

100

200

300

400

500

600

700

800

1) Except enterprises in the oil and gas industry and shipping2) Debt as a percentage of cash surplus3) Interest expense as a percentage of cash surplus + interest expense


Interest burden3)

(left-hand scale)

Debt burden2)

(right-hand scale)

Chart 2.14 Debt and interest burden in non-financial enterprises.1) Per cent

0

100

200

300

400

500

600

1994 1995 1996 1997 1998 1999 2000 2001 2002 20030

400

800

1,200

1,600

Manufacturing1)

Wholesale and retail trade

Commercial services

Chart 2.15 Debt burden in selected industries. Per cent of cash surplus

2) Excluding shipbuilding and mining

Source: Norges Bank

Property management(right-hand scale)

0

5

10

15

20

25

1999 2000 2001 2002 2003 20040

1

2

3

4

5

6

Chart 2.16 Turnover of bankrupt enterprises, total (left-hand scale) and for selected industries (right-hand scale). Annual figures. In billions of NOK

Manufac-turing

Total

Property management2)

Construction

1) Annualised figures based on seasonally adjusted figures for the first three quarters of the year2) Property management, commercial services and rental activities



1)

Chart 2.17 Predicted bankruptcy probabilities1) for non-financial enterprises.2) Per cent

0

1

2

3

4

5

6

1989 1991 1993 1995 1997 1999 2001 20030

1

2

3

4

5

6

1) Probability of bankruptcy within 3 years2) Except enterprises in the oil and gas industry and public sector3) The level of bankruptcy probabilities in 2003 has been adjusted for unavailable accounts

Source: Norges Bank

Median enterprise

80 percentile

3)

Chart 2.18 Risk-weighted debt1) in per cent of bank debt in selected industries and total

0.0

0.5

1.0

1.5

2.0

1999 2000 2001 2002 20030.0

0.5

1.0

1.5

2.0

1) Risk-weighted debt = probability of bankruptcy multiplied by bank debt2) Non-financial enterprises except enterprises in the oil and gas industry and the public sector3) Excluding shipbuilding and mining4) The level in 2003 has been adjusted for unavailable accounts

Source: Norges Bank

Commercialservices

Total2)

Property management

Manufacturing3)

4)


Chart 2.19 Rentals for office premises in large Norwegian cities. Index. 2nd half 1999 = 100

Source: Dagens Næringsliv

50

75

100

125

150

1999 2000 2001 2002 200350

75

100

125

150

Trondheim

Central Oslo,high standard

Stavanger, centrally located

Bergen

Chapter 3

Chart 3.1 Banks'1) profit/loss. Percentage of average total assets

-3-2-101234

1999 2000 2001 2002 2003 2003Q1-Q3

2004Q1-Q3

-3-2-101234

Net interest income Other operating incomeOperating costs Loan lossesWrite-down Pre-tax profit/loss

1) Excluding branches of Norwegian banks abroad. Including branches of foreign banks in Norway

Source: Norges Bank

0.0

0.5

1.0

1.5

2.0

1999 2000 2001 2002 2003 20040.0

0.5

1.0

1.5

2.0

Chart 3.2 Banks' holdings of gross non-performing loans to households and enterprises. Percentage of gross lending to municipalities, the non-financial sector and households

Households

Enterprises

1) Excluding branches of Norwegian banks abroad. Including branches of foreign banks in Norway

Source: Norges Bank

Chart 3.3 Development in banks' lending rates and Norges Bank's sight deposit rate. Per cent

Sources: Norges Bank and Cicero

0

2

4

6

8

10

Sep 02 Dec 02 Mar 03 Jun 03 Sep 03 Dec 03 Mar 04 Jun 04 Sep 040

2

4

6

8

10

New mortgage-backed loans (80% loan to asset value ratio)

Non-financial private corporations

Households

NB's sight deposit rate

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

1997 1998 1999 2000 2001 2002 2003 2004-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

Chart 3.4 Banks'1) losses on loans 2) to different sectors. Percentage of total lending

Others3)


1) Norwegian commercial and savings banks and branches of foreign banks in Norway2) Recorded losses excl. changes in unspecified loss provisions3) Financial institutions, central government and national insurance administration, municipal sector and foreign4) At 30 September. Estimate

Source: Norges Bank

Households

4)

0

2

4

6

8

10

12

1999 2000 2001 2002 2003 20040

2

4

6

8

10

12Bonds (foreign currency) Bonds (NOK)

Equities etc. Short-term paper

Chart 3.5 Banks' securities holdings current assets by item. Percentage of total assets

1) Excluding branches of foreign banks

Source: Norges Bank

Chart 3.6 Banks' financial assets and liabilities by residual maturity.1) September 2004. Percentage of total assets

1) Excluding branches of foreign banks. Some assets (equities/units and real capital etc.) and liabilities (equity capital etc.) which do not have a maturity are excluded

Source: Norges Bank

-70

-50

-30

-10

10

30

50

< 1 mo. 1-3 mos 3-12 mos 1-5 yrs > 5 yrs-70

-50

-30

-10

10

30

50

AssetsCustomer depositsLiabilities excl. customer deposits

Chart 3.7 Liquidity at the start of the day and turnover in NBO. Average. In billions of NOK (left-hand scale) and as a ratio (right-hand scale)

Source: Norges Bank

02468

10121416

05:00 07:00 09:00 11:00 13:00 15:00 17:000246810121416

Chart 3.8 Average use of borrowing facility through the day. 2-13 August 2004. In billions of NOK

Source: Norges Bank

Average

Average + one standard deviation

70

80

90

100

110

120

130

1999 2000 2001 2002 2003 200470

80

90

100

110

120

130

1) Excluding branches of foreign banks

Chart 3.9 Developments in banks' liquidity indicator

DnB NOR2)

Nordea3) and Fokus Bank

Source: Norges Bank

Other commercial banks

2) Postbanken and Nordlandsbanken included

Other savings banks

3) The increase in 2003 Q4 is due to changes in Nordea's accounts reporting. The indicator for Nordea is more comparable with that of other banks after the change

0

5

10

15

20

25

30

1999 2000 2001 2002 2003 20040

5

10

15

20

25

30

Chart 3.10 Banks'1) short-term foreign debt.2) Per cent of gross lending

Other commercial banks

Nordea and Fokus Bank

1) Excluding branches of foreign banks2) Deposits and loans from other financial institutions and notes and short-term paper

DnB NOR3)

3) Postbanken and Nordlandsbanken included

Source: Norges Bank

Other savings banks

-0.3

0

0.3

0.6

0.9

1.2

1999 2000 2001 2002 2003 2003Q1-Q3

2004Q1-Q3

-0.3

0

0.3

0.6

0.9

1.2


Chart 3.11 Mortgage companies' profit/loss.Percentage of average total assets

Source: Norges Bank

Chart 3.12 Finance companies' profit/loss. Percentage of average total assets

Source: Norges Bank

-6

-3

0

3

6

9

1999 2000 2001 2002 2003 2003Q1-Q3

2004Q1-Q3

-6

-3

0

3

6

9


-15-10-505

10152025

1999 2000 2001 2002 2003 1st half2003

2nd half2004

-15-10-50510152025

Premium income Net income from fin. assets

Compensation Change in insurance allocations

Res. before alloc. to cust. and tax Value-adj. res. before alloc. to cust. and tax

Chart 3.13 Insurance companies' results (annualised percentages). Percentage of average total assets

Source: Norges Bank

Chart 3.14 Nordic financial groups' results before tax. Q1-Q3 2004. Percentage of average total assets (ATA)

-0.2 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

DnB NOR

SEB

FöreningsSp.bk

Nordea Bank

Danske Bank

SHB

Bank Market Pension/Ins. Other1) Market activities/Asset management. Incl. Earnings from investment portfolios for Danske Bank 2) Incl. Asset management for FöreningsSparbanken

Source: Financial groups' quarterly reports

2)

(Tot..res. 0.75%)

(0.52%)

(0.74%)

(0.91%)

(0.50%)

(0.94%)

1)

Derivatives markets are expanding

Chart 1 Daily turnover in the Norwegian forward exchange market1) by counterparty. In billions of USD

0

2

4

6

8

10

12

1995 1998 2001 20040

2

4

6

8

10

12

Norwegian financial institutions Foreign financial institutionsNon-financial customers

1) Covers outright forwards and foreign exchange swaps

Source: Norges Bank

Chart 2 Daily turnover in the Norwegian interest rate derivatives market1) by counterparty. In billions of NOK

0

10

20

30

40

1995 1998 2001 20040

10

20

30

40

Norwegian financial institutions Foreign financial institutionsNon-financial customers

1) Covers FRAs, interest rate swap agreements and interest rate options

Source: Norges Bank

Use of a central counterparty in the settlement of financial

instruments

Firm A Firm C

Firm B Firm D

Firm A Firm C

Firm B Firm D

CCP

Without central counterparty

With central counterparty

Is there a connection between house prices and banking crises?

Chart 1 The house price gap. 1831-2003


-40-30

-20-10

0

1020

3040

1830

1850

1870

1890

1910

1930

1950

1970

1990

-40-30

-20-100

1020

3040

Relationship between the results of companies listed on the Oslo

Stock Exchange and of the Norwegian enterprise sector as a

whole

0102030405060708090

100

Listed companies All limited companies0102030405060708090100

Chart 1 Shares of total operating income in 2002, by industry. Per cent

Wholesale and retail trade and

services

Manufacturing

1) Operating income from the groups Norsk Hydro and Aker Kværner is distributed by industry in accordance with the companies' annual reports. Other groups are classified according to the industry code of the parent company

Source: Norges Bank

Oil and gas

Financial

Other

1)

0

5

10

15

20

25

30

1992 1994 1996 1998 2000 2002 20040

5

10

15

20

25

30

Chart 2 Pre-tax1) return on equity in Norwegian companies2) 1992-2004. Per cent

Quarterly reports of listed companies3)

Listed companies

1) Key figures for 2003 have not been adjusted for accounts that are not yet available2) All Norwegian limited companies except banks, insurance and Statoil3) Based on quarterly figures from Statistics Norway, where 2004 is estimated on the basis of the weighted average of Q1 and Q2


All limited companies

How do enterprises hedge against exchange rate

fluctuations?

Chart 1 Types of currency hedging. Share of all enterprises with currency exposure. Per cent

- Use foreign currency derivatives

- Borrow or invest capital in foreign currency

- Purchase factor inputs in product-invoicing currency

- Invoice foreign customers partly or entirely in NOK

- Have moved or plan to move some operations abroad

- Other

One or more types of currency hedging

No currency hedging

61 %

43 %

43 %

31 %

9 %

3 %

91 %

9 %

Source: Norges Bank

0 20 40 60 80 100

Chart 2 Income and costs in foreign currency. Share of all enterprises with currency exposure. Per cent

0 % 1 -25 %

25 -50 %

50 -75 %

75 -100 %

0 %

1 -25 %

25 -50 %

50 -75 %

75 -100 %

Share of costs in foreign currency

Shar

e of

inco

me

in fo

reig

n cu

rrenc

yApproximately the same share of income and costs in foreign currency

Source: Norges Bank

6-8 %1-2 % 11-14 % > 20 %

Share of all enterprises with currency exposure

0

20

40

60

80

100

Enterprises distributed by net exposure

Enterprises distributed by size

0

20

40

60

80

100

Small

Medium-sized

LargeNet foreign currency income

Net foreign currency costs

Chart 3 Use of derivatives by various enterprise categories. Share of all enterprises with currency exposure in each category that use derivatives. Per cent

Other

1)

1) Enterprises with net foreign currency income have a larger share of income than costs in foreign currency. Enterprises with net foreign currency costs have a larger share of costs than income in foreign currency. Other enterprises have approximately equal shares of income and costs in foreign currency

Source: Norges Bank

0

20

40

60

80

100

0-3 mo. 3-6 mo. 6-12 mo. 1-3 years

Over 3years

0

20

40

60

80

100

Chart 4 Share of all derivatives users that use derivatives with various maturities. Per cent

Source: Norges Bank

Risk associated with loans to small enterprises

and the new capital adequacy framework

Standardised approach

Internal ratings-based

approach

Large enterprises

SMEs

Corporate portfolio SMEs

Risk weight:20%-

150%

75%

Retail formulae

Corp. formula without discount

Corp. formula with

discount

Debt > € 1m

Debt < € 1m

Credit rated

Income < € 50m

Income > € 50m

100%Not credit rated

Chart 1 The structure of the new capital adequacy regulations

Can incl. SMEs withdebt < € 1m

Retail portfolio

Large enterprises

0

1

2

3

4

5

6

7

1988 1990 1992 1994 1996 1998 2000 20020

1

2

3

4

5

6

7

Chart 2 Bankruptcy probability for SMEs and large enterprises. Average. Per cent

1) SMEs with total bank debt of under EUR 1m and total income of under EUR 50m (the 2 groups have approximately the same average)2) Enterprises with total bank debt of over EUR 1m3) Enterprises with total income of over EUR 50m

Source: Norges Bank

SME1)

Large2)

Large3)

012345678

1988 1990 1992 1994 1996 1998 2000 2002012345678

Chart 3 Bankruptcy probability in selected industries. SMEs.1) Average. Per cent

1) Non-financial limited companies with total bank debt of less than EUR 1m. The total number of enterprises in 2003 is 44 908. The shipbuilding industry has the lowest number of enterprises, at 197

Source: Norges Bank

Industries:TravelWholesale and retail tradeShipbuildingConstructionManufacturing (excl. shipbuilding) Commercial services

Summary. Chart 1 Banks' 1) pre-tax operating profit/loss on ordinary activities as a percentage of...

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