– Struggling a bit – E24

Recently, DNB’s maligned Sbanken concept lowered the interest rate on mortgages. Analysts believe the central bank may have to do the same.

DNB’s interest income fell, and according to the bank, the flattening is taking place in line with the fact that interest rates appear to have reached their peak.

– There was a surprisingly large decrease in the volume on the private side, says analyst at Nordea Markets, Ulrik Ardal Zurcher, to E24.

DNB and other banks have raised lending rates at a rapid pace in line with Norges Bank’s interest rate hikes. Banks tend to make more money when interest rates rise.

– In Norway and Sweden, we have seen historically that the banks should not show negative lending growth for a long time, before there is a cut in prices, he says.

The analyst says this is the third quarter in a row with rather weak growth for DNB.

– They are struggling a bit to be competitive, it seems. Then you can speculate whether they have to do something about the pricing of mortgages, says Zurcher.

– Disagree

E24 meets DNB CEO Kjerstin Braathen after she presented the quarterly report for the first quarter at the bank’s head office in Oslo.

When asked about the analyst’s claim that DNB might be struggling with competitiveness, the chief executive replies as follows:

– Yes, I can’t comment on what he thinks, beyond saying that I don’t agree with him. We have received repeated proof that we have good prices, including in a good number of overviews that you have published in E24, says Braathen.

– Considering that Sbanken lowered the interest rate: Why can’t that happen throughout DNB?

– We have many different price points in our portfolio. And we have just completed a major technical integration of Sbanken. We are therefore happy to be able to give something back to customers in the form of an interest rate cut. It comes on top of the very good prices Sbanken already had for lending.

– We are grateful that the customers have been patient with us. A lot of them are still with us going forward, says Braathen.

DNB adds that Sbanken and DNB are two different brands with different assumptions for their prices.

Criticism and interest rate cuts

Sbanken has recently received massive criticism from its own customers following DNB’s acquisition.

Recently, DNB’s Sbanken concept cut the mortgage interest rate by 0.15 percentage points.

– Our customers are extremely committed. We have carried out many changes that the customers have not asked for. This means that customers have less trust in us than before. What we wanted to do was give something that is simple, concrete proof that we value the customers who are still with us, said Sbanken director Øyvind Thomassen.

Thousands of frustrated customers have been waiting to move their fund and share savings accounts from Sbanken to other banks and platforms.

E24 has previously written about ex-customer Kjetil Svenheim, who has been waiting over two months for a move.

– Was the interest rate cut a crisis measure?

– Absolutely not. We were competitive before but wanted to give them something back considering they were dragged through a lot. But it is a price we can defend based on the extremely efficient business concept, says Thomassen.

If DNB is to avoid following in the same footsteps with interest rate cuts to capture customers, a strong housing market is the key, believes Zurcher in Nordea Markets. Rising house prices can make it more tempting to get a loan to buy a house.

– If we get some momentum on the housing market, we can hope for DNB’s part that it will help, he says.