charts financial stability 1/08
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Charts Financial Stability 1/08. Summary. Chart 1 Spread between money market rates with different maturities and expected key policy rate 1) . Average for the US, the euro area and the UK. Percentage points. Daily figures. 1 Jan 07 – 29 May 08. 12-month. 3-month. 1-month. - PowerPoint PPT PresentationTRANSCRIPT
Charts
Financial Stability 1/08
Summary
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Jan-07 May-07 Sep-07 Jan-08 May-08
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Chart 1 Spread between money market rates with different maturities and expected key policy rate1). Average for the US, the euro area and the UK. Percentage points. Daily figures. 1 Jan 07 – 29 May 08
1-month
12-month3-month
1) The expected key rate is represented by the Overnight
Indexed Swap (OIS)
Sources: Bloomberg and Norges Bank
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0.3
0.6
0.9
1.2
1.5
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
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Chart 2 Banks’ capital ratio and pre-tax profit as a percentage of average total assets.1) Annual figures. 1998 – 2007
1) Excluding branches of foreign banks in Norway
Source: Norges Bank
Profit after loan losses and write-downs (left-hand scale)
Profit before loan losses and write-downs (left-hand scale)
Capital ratio (right-hand scale)
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3
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5
6
1987 1990 1993 1996 1999 2002 2005 20080
1
2
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5
6
Source: Statistics Norway
Chart 3 Banks’ interest margin. Percentage points. Quarterly figures. 87 Q1 – 08 Q1
10,000
15,000
20,000
25,000
30,000
35,000
1983 1987 1991 1995 1999 2003 2007
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-2
0
2
4
6
Chart 4 Market value for offices in Oslo1). Price per square metre at constant 2007 NOK. Output gap2). Per cent. Annual figures. 1983 – 2010
Market value(left-hand scale)
Output gap (right-hand scale)
1) Average value for high-standard offices in central Oslo.
Value as at June.2) Projections for 2007 – 2010
Sources: OPAK and Norges Bank
Market value at December 2007
Chart 5 12-month growth in credit to mainland Norway.Per cent. Jan 1997 – Mar 2008
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8
12
16
20
24
28
1997 1999 2001 2003 2005 2007
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8
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Total credit
Non-financial enterprises1
)
Households2)
1) All foreign credit to mainland Norway is assumed granted to enterprises2) Household domestic credit
Source: Statistics Norway
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1
3
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7
9
11
1992 1994 1996 1998 2000 2002 2004 2006
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7
9
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Chart 6 Banks’ gross stock of non-performing loans and reported loan losses1). Percentage of gross lending. Quarterly figures. 92 Q1 – 08 Q1
Loan losses, annualised
Non-performing loans
1) Excluding branches of foreign banks in Norway
Source: Norges Bank
1) The figures are not necessarily comparable because countries may have different definitions and institutional arrangements
Sources: OECD, Sveriges Riksbank, Danmarks Nationalbank,Sedlabanki Island, Finlands Bank and Norges Bank
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50
100
150
200
250
300
1990 1992 1994 1996 1998 2000 2002 2004 2006
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250
300
Denmark
Norway
Sweden
Iceland
US
Finland
UK
Chart 7 Household debt as a percentage of disposable income. Annual figures. 1990 – 2007
1 International banks and financial markets
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9
12
2002 2003 2004 2005 2006 2007 2008
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3
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9
12
Chart 1.1 Credit spreads between government bonds in the US and Europe. Percentage points. Daily figures. 10 Apr 02 – 29 May 08
Source: Reuters EcoWin
Emerging economies, EMBI+
High-yield companies in the US
Euro area, BBB
US, BBB
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98 99 00 01 02 03 04 05 06 07
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Prime
Subprime
Chart 1.2 Default rates on US mortgages. Per cent of lending. Quarterly figures. 98 Q1 – 07 Q4
Total
Source: Bloomberg
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Jun-07 Oct-07 Feb-08 Jun-08 Oct-08
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Chart 1.3 Spread between money market rate and expected key policy rate. 3-month maturity. Percentage points. Daily figures. Historical (from 1 June 07) and forecasts (at 29 May 08)
Norway 2)
US
UK
Euro area
1) Expected key rates are measured by Overnight Indexed Swaps (OIS)2) Norges Bank’s projection
Sources: Bloomberg, Reuters and Norges Bank
Chart 1.4 Writedowns and credit losses together with capital raised for selected international banks. In billions of USD. Jan 07 – 29 May 08
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Ban
k of
Am
eric
a
Citi
grou
p
HS
BC
JPM
orga
nC
hase
Mer
rill L
ynch
Mor
gan
Sta
nley
Roy
al B
ank
ofS
cotla
nd
UB
S
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1
2
3
4
5Writedowns and credit losses
Capital raised
Source: Bloomberg
20
40
60
80
100
120
Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08
20
40
60
80
100
120
CitigroupHSBCMerrill LynchUBS
Chart 1.5 Share prices for selected international banks. 1 Jan 07 = 100. Daily figures. 1 Jan 07 – 29 May 08
Source: Bloomberg
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Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
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Citigroup
Merrill Lynch
UBS
HSBC
Chart 1.6 CDS prices for selected US and European banks. Basis points. Daily figures. 1 Jan 07 – 29 May 08
Source: Bloomberg
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60
80
100
Jan-07 May-07 Sep-07 Jan-08 May-08
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20
40
60
80
100
Source: Bloomberg
Chart 1.7 Share prices for the biggest bond insurers. USD.1 Jan 07 – 29 May 08
MBIA
Ambac
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20
40
60
80
100
1990 1993 1996 1999 2002 2005 2008
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80
100
Chart 1.8 Surveys on bank lending practices. US. Net share of banks that have tightened their credit standards.1) Per cent. Quarterly figures. 90 Q1 – 08 Q1
1) Difference between the share of banks that have tightened and the share of banks that have eased their credit standards.2) Up to and including 06 Q1, the figures apply to all household mortgages. Thereafter, the figures apply to prime mortgages.
Source: US Federal Reserve
For household mortgages2)
For large and medium-sized enterprises
For commercial buildings
-20
0
20
40
60
2003 2004 2005 2006 2007 2008-20
0
20
40
60
Chart 1.9 Surveys on bank lending practices. Euro area. Net share of banks that will tighten their credit standards.1) Per cent. Quarterly figures. 03 Q1 – 08 Q1
For household mortgages
For enterprises
1) Difference between the share of banks that will tighten and the share of banks that will ease their credit standards.
Source: European Central Bank
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3
6
9
12
2008 2009 2008 2009 2008 2009 2008 2009
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3
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9
12
Apr 2007
Oct 2007
May 2008
US UK Euro area China
Chart 1.10 GDP growth. Forecasts for 2008 at different points in time. Increase on previous year in per cent.
Source: Consensus Economics
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10
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20
25
30
2003 2004 2005 2006 2007
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25
30
Chart 1.11 House prices in US and Europe. 12-month rise. Per cent. Monthly figures. Apr 03 – May 08
Spain
Source: Reuters EcoWin
US
Denmark
UK
Ireland
2 Norwegian financial institutions
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20
40
60
80
100
Assets Liabilities
Chart 2.1 Banks’1) assets and liabilities. Per cent. 31 March 2008
1) All banks in Norway. Norwegian banks’ foreign subsidiaries
and branches abroad are not included in the statistical basis
Sources: Statistics Norway and Norges Bank
Assets exposed to market risk
Equity
Securities debt
Lending to enterprises
Lending to households
Customer deposits
Loans from financial institutions
Other assets
Otherliabilities
0
30
60
90
120
1998 2000 2002 2004 2006 2008
0
30
60
90
120
Deposits from customers in foreign currency
Market funding in foreign currency
Market funding in NOK
Deposits from customers in NOK
1) All banks except branches and subsidiaries of foreign banks in Norway
Source: Norges Bank
Chart 2.2 Selected funding sources for Norwegian banks1). Percentage of gross lending. Quarterly figures. 98 Q1 – 08 Q1
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6
7
des.06 mar.07 jun.07 sep.07 des.07 mar.08
0
1
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7Money market
Treasury bills
Deposit rate
Chart 2.3 3-month money market (NIBOR) and treasury bill rates. Weekly figures. Average deposit rate of all banks in Norway. Quarterly figures. 3 Jan 07 – 28 May 08
Sources: Norges Bank and Statistics Norway
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jan.07 apr.07 jul.07 okt.07 jan.08 apr.08
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Government bonds
Bank bonds
Sources: Norges Bank, Reuters Ecowin and DnB NOR Markets
Chart 2.45-year yields on Norwegian government and bank bonds. Weekly figures. 3 J an 07 – 28 May 08
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Oct-04 Oct-05 Oct-06 Oct-07
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DnB NOR
Source: DnB NOR Markets
Chart 2.5 Indicative spreads between the interest rate on 5-year bank bonds and 5-year interest rate swap agreements. Selectedbanks. Weekly figures. Percentage points. 6 Oct 04 – 28 May 08
Sparebank 1 banker and Sparebanken Vest
Nordea Bank Norge
0
300
600
900
1200
1500
'03 '04 '05 '06 '07 '08Mar
'03 '04 '05 '06 '07 '08Mar
0
300
600
900
1200
1500Bonds
Short-term paper
Deposits / loans from financialinstitutions
Deposits from customers
Chart 2.6 Selected funding sources for Norwegian banks1). In billions of NOK. Year-end 2003 – 2007 and March 2008
1) All banks except branches and subsidiaries of foreign banks
in Norway
Source: Norges Bank
NOK
Foreign currency
0
10
20
30
40
50
2000 2001 2002 2003 2004 2005 2006 2007 2008
0
10
20
30
40
50
Notes and short-term paper
Bonds
1) All banks except branches and subsidiaries of foreign banks in Norway
Source: Norges Bank
Chart 2.7 Norwegian banks’¹) and mortgage companies’ funding sources. Percentage of gross lending. Quarterly figures. 00 Q1 – 08 Q1
Deposits / loans from financial institutions
Deposits from retail sector
Deposits from corporate sector
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90
100
des.06 mar.07 jun.07 sep.07 des.07 mar.08
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Less than 1 month 1 - 3 months3 - 12 months 1 - 5 yearsMore than 5 years 1
1) All banks except branches and subsidiaries of foreign banks in Norway
Source: Norges Bank
Chart 2.8 Norwegian banks’1) market funding by maturity.Per cent. 06 Q4 – 08 Q1
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20
40
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0 20 40 60Assets
Ma
rke
t fu
nd
ing
0
20
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60Norway's five largest banks
Chart 2.9 Norwegian banks’1) assets and market funding with maturity of less than 12 months. Per cent of total assets. Mar 2008
1) All banks except branches and subsidiaries of foreign banks in Norway
Source: Norges Bank
50
55
60
65
70
75
80
85
2000 2002 2004 2006 2008
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55
60
65
70
75
80
85
Medium-sized banks3)
DnB NOR2)
1) All banks except branches and subsidiaries of foreign banks in Norway2) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken3) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006
Source: Norges Bank
Chart 2.10 Norwegian banks’¹) share of deposits. Deposits from customers in per cent of lending to customers. Quarterly figures. 00 Q1 – 08 Q1
Small banks3)
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15
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25
30
2000 2001 2002 2003 2004 2005 2006 2007 2008
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5
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Small banks4)
DnB NOR3)
Chart 2.11 Norwegian banks’¹) short-term foreign debt²). Per cent of gross lending. Quarterly figures. 00 Q1 – 08 Q1
1) All banks except branches and subsidiaries of foreign banks in Norway2) Short-term paper, deposits and loans from other financial institutions3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken4) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006
Source: Norges Bank
Medium-sized banks4)
80
90
100
110
120
2000 2001 2002 2003 2004 2005 2006 2007 2008
80
90
100
110
120
Chart 2.12 Norwegian banks’¹) liquidity indicator (ratio of stable funding sources to illiquid assets). Per cent. Quarterly figures. 00 Q1 – 08 Q1
1) All banks except branches and subsidiaries of foreign banks in Norway2) DnB NOR Bank (excluding branches abroad) and
Nordlandsbanken3) The dividing line between small and medium-sized banks is NOK
10bn(measured by assets) at end-2006
Source: Norges Bank
DnB NOR including foreign branches, borrowers and depositors
DnB NOR2)
Small banks3)
Medium-sized banks)
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0
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1
1,5
2
2,5
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3,5
4
1997 1999 2001 2003 2005 2007
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Chart 2.13 Banks’1) total interest margin divided into deposit and lending margin2). Percentage points. End of quarter. 97 Q4 – 08 Q1
1) All banks in Norway2) Deposit and lending margins are measured against 3-monthmoney market rates
Source: Statistics Norway
Total interest margin
Lending margin
Deposit margin3)
-0,6
-0,4
-0,2
0
0,2
0,4
0,6
0,8
1
Non-financialprivate enterprises
Households Home equity lines of credit
Repayment loanssecured ondwellings
-0,6
-0,4
-0,2
0
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0,4
0,6
0,8
12007 Q2 2007 Q3
2007 Q4 2008 Q1
Chart 2.14 Banks’1) lending margins. Percentage points. 07 Q2 – 08 Q1
1) All banks in Norway
Sources: Statistics Norway and Norges Bank
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-1
0
1
2
3
4
2003 2004 2005 2006 2007 2007 2008
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Net interest income Other operating incomeOperating expenses Loan lossesWrite-downs etc. Pre-tax profit/loss
Chart 2.15 Banks’1) profit/loss in per cent of average total assets. Annual figures 2002 – 2007. 07 Q1 and 08 Q1
1) All banks excluding branches of foreign banks in Norway
Source: Norges Bank
Q1
0
1
2
3
4
5
1997 2000 2003 2006
0
1
2
3
4
5
1) All banks in Norway
Source: Norges Bank
Households
All sectors
Enterprises
Chart 2.16 Banks’1) gross stock of non-performing loans. Percentage of gross lending to sector. Quarterly figures. 97 Q1 – 08 Q1
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18
2002 2003 2004 2005 2006 2007 2008
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3
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9
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Small banks4)
DnB NOR3)
Chart 2.17 Banks’¹) Tier 1 capital ratio²). Per cent. Quarterly figures. 02 Q1 – 08 Q1
1) All banks excluding branches of foreign banks in Norway 2) In 2007 Q1 eight banks reported according to Basel II. As from 2008 Q1 all banks are required to report according to Basel II. The 2008 Q1 figures are based on official first-quarter reports3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken4) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006
Source: Norges Bank and Kredittilsynet
Medium-sized banks4)
Measured according to the Basel I framework
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0
4
8
12
16
20
24
2000 2001 2002 2003 2004 2005 2006 2007 2008
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0
4
8
12
16
20
24Corporate sector
All sectors
Chart 2.18 Growth in banks’ and mortgage companies’¹) lending. 12-month growth. Per cent. Monthly figures. Jan 00 – Apr 08
1) All banks and mortgage companies in Norway
Source: Norges Bank
Retail sector
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2000 2001 2002 2003 2004 2005 2006 2007 2008
75% 90%
Chart 2.19 Probabilities of bank failures). 75 and 90 per cent percentiles.2) Quarterly figures. 00 Q1 – 08 Q1
1) All banks excluding branches of foreign banks in Norway 2) 75 (90) per cent of the banks are within the 75 (90) percentile
Source: Norges Bank
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10
20
30
40
2001 2002 2003 2004 2005 2006 2007 2008
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20
30
40
1) Buffer capital is defined as the sum of the securities adjustment
reserve, supplementary provisions with an upward limit of one year, and surplus of Tier 1 capital2) From 2007 other bonds for permanent investment are also included
Source: Kredittilsynet
Chart 2.20 Life insurance companies’ buffer capital1) and asset mix. Per cent of total assets. Quarterly figures. 01 Q1 – 08 Q1
Real estate
Buffer capital
Bonds "hold to maturity“2)
Bonds and short-term paper
Equities and shares
3 The Norwegian macro-financial environment
Chart 3.1 Household real disposable income1) and consumption2). Annual growth. Per cent. 1997 – 2007
0
2
4
6
8
1997 1999 2001 2003 2005 2007
0
2
4
6
8
1) Adjusted for estimated reinvested share dividends for2000 – 2005 and redemption/reduction of equity capital
for2006 – 20072) Includes consumption in non-profit organisations
Sources: Statistics Norway and Norges Bank
Income
Consumption
Chart 3.2 Projected key policy rate in the baseline scenario with fan chart. Per cent. Quarterly figures. 06 Q1 – 11 Q4
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7
8
9
2006 2007 2008 2009 2010 2011
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Source: Norges Bank
30% 50% 70% 90%
Chart 3.3 Equity indices, Oslo Stock Exchange. Daily figures. 1 Jan 07 – 29 May 08. 1 Jan 07=100.
60
70
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100
110
120
130
140
150
jan. 07 mar. 07 mai. 07 jul. 07 sep. 07 nov. 07 jan. 08 mar. 08 mai. 08
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110
120
130
140
150
Industrials and Materials OSEBX
Consumer goods Energy
Financials
Source: Reuters Ecowin
Chart 3.4Risk premium1 Norwegian bonds. 5- year maturity. Indicative price. Per cent. Weekly figures. 2 J an 02 – 28 May 08
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0.2
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0.8
1
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2002 2003 2004 2005 2006 2007 2008
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0.4
0.6
0.8
1
1.2
1) Distance to mid-swap
Source: DnB NOR Markets
Non-financial Enterprises
Banks
Chart 3.5 Aggregated bond issues registered at Oslo Stock Exchange. Monthly figures. Billion NOK
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30
40
50
60
70
80
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec0
10
20
30
40
50
60
70
80
Source: Oslo Stock Exchange
Banks and financial institutions 2007
Non-financial enterprises 2008
Non-financial enterprises 2007
Banks and financial institutions 2008
0
1000
2000
3000
4000
5000
6000
7000
Liabilities Assets
0
1000
2000
3000
4000
5000
6000
7000
Mortgages
Other loans
Housing wealth1)
Notes, coins and bank deposits
Insurance reserves
SecuritiesOther claims
Chart 3.6 Household liabilities and assets In billions of NOK. 2007 Q4
1) Projections
Sources: Association of Norwegian Real Estate Agents,ECON Pöyry, Finn.no, Association of Real Estate
AgencyFirms, Statistics Norway and Norges Bank
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6
8
10
12
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16
1998 2000 2002 2004 2006 2008
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16
Mortgages
Domestic credit to households
Other loans
1) Break in the series in December 2005
Source: Statistics Norway
Chart 3.7 Credit to households. 12-month growth in percent. Monthly figures. Jan 98 – Mar 081)
0
50
100
150
200
250
1998 2000 2002 2004 2006
0
50
100
150
200
250
Source: Statistics Norway
Chart 3.8 Household debt growth and investment in financial assets1) by investment instrument. Sum last four quarters. In billions of NOK. Quarterly figures. 97 Q1 – 07 Q4
Securities and other claims
Insurance reserves
Debt growth
Notes, coins and bank deposits
1) Investment in financial assets is adjusted for reinvested share dividends for 2000 – 2005 and redemption/reduction of equity capital 2006 – 2007
Chart 3.9 Household saving as a share of disposable income. Per cent. Annual figures. 2000 – 2007
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-2
0
2
4
6
8
2000 2001 2002 2003 2004 2005 2006 2007
-4
-2
0
2
4
6
8
1) Adjusted for estimated reinvested share dividends for 2000 – 2005
and redemption/reduction of equity capital for 2006 – 2007
Sources: Statistics Norway and Norges Bank
Saving ratio1)
Saving ratio excl. share dividends
-5
0
5
10
15
20
25
30
35
40
0
3000
6000
9000
12000
15000
18000
2000 2001 2002 2003 2004 2005 2006 2007 2008
Detached houses (left-hand scale)
Semi-detached and terraced houses(left-hand scale)
Housing starts for multi-dwelling buildings (right-hand scale)
Apartments (left-hand scale)
Chart 3.10 House prices by type of dwelling. 4-quarter rise. Per cent. 00 Q1 – 08 Q1. Housing starts for multi-dwelling buildings. Number. Yearly figures. 2000 – 2007
Sources: Association of Norwegian Real Estate Agents, Association of Real Estate Agency Firms, ECON Pöyry, Finn.no and Statistics Norway
0
5000
10000
15000
20000
25000
30000
35000
40000
2000 2001 2002 2003 2004 2005 2006 2007
0
5000
10000
15000
20000
25000
30000
35000
40000
Building completionsIncrease in the number of households
Source: Statistics Norway
Chart 3.11 Building completions and increase in the number of households. Yearly figures. 2000 – 2007
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100
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800
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
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800
Cost of living
Interest rates
Margin
Chart 3.12 Post-tax income excluding share dividends distributed by expense item and margin. Households excluding self-employed. In billions of 2006-NOK. 1986 – 2006
Sources: Statistics Norway, National Institute for Consumer Research and Norges Bank
0
50
100
150
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250
300
350
400
450
500
Young first-timehomebuyers
First-timehomebuyers
Increasing debt With debt All0
10
20
30
40
50
60
70
80
90
100
Chart 3.13 Debt burden1) in selected household groups at end-2006. Households excluding self-employed. Per cent
Debt burden (left-hand scale)Share of total debt(right-hand scale)
Sources: Statistics Norway and Norges Bank
1) Debt as a percentage of disposable income adjusted for estimated redemption/reduction of equity capital
0
5
10
15
20
25
30
35
40
0 10 20 30 40 50 60 70 80 90 100
Percentile financial wealth
0
5
10
15
20
25
30
35
40
Debt
Gross financial wealth
Sources: Statistics Norway and Norges Bank
Chart 3.14 Distribution of gross financial wealth and related debt at end-2006. Households excluding self-employed. Per cent
13
15
17
19
21
23
25
27
2003 2004 2005 2006 2007 2008
13
15
17
19
21
23
25
27
Chart 3.15 Actual and calculated1) house price. 1000 NOK/sq. m. 03 Q1 – 08 Q1
Sources: Association of Norwegian Real Estate Agents, Association of Real Estate Agency Firms, FINN.no, Econ Pöyry and Norges Bank
Calculated house price
Actual house price
1) Calculated house price is calculated by estimating the house price model with data up to 2004 Q1 and simulating forward by using actual values for the explanatory variables and calculated values for house prices in the forecast period
0
60
120
180
240
1985 1988 1991 1994 1997 2000 2003 2006
0
60
120
180
240
Deflated by house rent
Deflated by building costs
Deflated by hourly wages
Deflated by CPI
Chart 3.16 Real house prices. Indices. 1985 = 100. Annual figures. 1985 – 2007
Sources: Association of Norwegian Real Estate Agents, Association of Real Estate Agency Firms, FINN.no, Econ Pöyry, Statistics Norway and Norges Bank
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-5
0
5
10
15
20
25
0
3
6
9
12
1991 1994 1997 2000 2003 2006 2009
Chart 3.17 Four-quarter rise in house prices. Interest burden1). Per cent. Quarterly figures. 91 Q1 – 11 Q42)
1) Interest expenses after tax as a percentage of liquid disposable
income adjusted for estimated share dividends for 2000 – 2005 and
redemption/reduction of equity capital for 2006 – 2011 plus interest
expenses2) Projections for 2008 Q2 – 2011 Q4
Sources: Association of Norwegian Real Estate Agents, ECON Pöyry,
Finn.no, Association of Real Estate Agency Firms, Statistics Norway
and Norges Bank
House prices(left-hand scale)
Interest burden (right-hand scale)
0
100
200
300
400
500
600
700
1987 1991 1995 1999 2003 2007 2011
0
50
100
150
200
250
Chart 3.18 Debt burden1) and debt burden adjusted for household general living expenses2). Annual figures. 1987 – 20113)
Debt burden (right-hand scale)
Adjusted debt burden (left-hand scale)
Loan debt as a percentage of liquid disposable incomeadjusted for estimated reinvested share dividends for
2000 - 2005 and redemption/reduction of equity capital for
2006 – 20112) Disposable income less general living expenses as
calculatedby the National Institute for Consumer Research (SIFO)3) Projections for 2008 – 2011
Sources: Statistics Norway, SIFO and Norges Bank
0 10 20 30 40 50 60 70 80 90 100
Telecom
Commercial property
Hotels andrestaurants
Fisheries
Business services
Retail trade
Manufacturing
Construction
2005
2006
2007
Chart 3.19 Debt-servicing capacity1) for different industries.
Per cent. Yearly figures. 2005 – 20072)
1) Ordinary results before tax, write-downs and depreciation as a percentage of bank debt and bonds. Non-financial firms,mainland Norway. Group-financed firms are not included. 2) Projections for 2007 are based on a sample of financialstatements that were submitted early
Source: Norges Bank
-80
-40
0
40
80
0
10
20
30
40
50
1999 2000 2001 2002 2003 2004 2005 2006 2007
Net sales income Debt growth
Wage costs Financial income
Financial costs Debt-servicing capacity
Source: Norges Bank
1) See footnote 1, Chart 3.182) Net sales income is defined as sales income less the
cost ofgoods sold, operating costs and change in inventories3) Projections for 2007 are based on a sample of
financialstatements that were submitted early
Chart 3.20 Debt-servicing capacity1). Levels (right-hand scale) and contribution to relative changes (left-hand scale) from growth in debt, income and costs2). Per cent. 1999 – 20073)
-30
-20
-10
0
10
20
30
mar. 02 mar. 03 mar. 04 mar. 05 mar. 06 mar. 07 mar. 08
-30
-20
-10
0
10
20
30
Chart 3.21 Key ratios for non-financial firms listed on Oslo Stock Exchange1) Per cent. Quarterly figures. 2002 Q1 – 2008 Q1
1) Sample consisting of 171 listed firms. Projections for 2008 Q1
are based on a smaller sample (OBX index). 2) Ordinary results before tax as a percentage of book equity3) Operating results as a percentage of sales
Return on equity2)
Operating margin3)
Sources: Statistics Norway and Norges Bank
-10
0
10
20
30
jan. 02 jan. 03 jan. 04 jan. 05 jan. 06 jan. 07 jan. 08
-10
0
10
20
30
Chart 3.22 Credit to major debt-holding industries from Norwegian financial institutions. 12-month growth. Per cent. Jan 04 – Mar 08
1) Includes financial services
Source: Statistics Norway
Commercial property and business services 1)
Manufacturing
Retail trade
-20
-15
-10
-5
0
5
10
15
20
0
10
20
30
40
50
1999 2000 2001 2002 2003 2004 2005 2006 2007
Equity injected Retained earnings
Writedowns Debt growth
Equity share Equity share
Chart 3.23 Equity share of total assets1) (right-hand scale) and contribution to relative changes (left-hand scale) from debt growth, retained earnings, writedowns and equity injected. Per cent. 1999 – 2007
Source: Norges Bank
1) 2)
1) Non-financial firms. Mainland Norway2) Only firms with bank debt included
-5
-4
-3
-2
-1
0
1
2
3
4
5
0
20
40
60
80
100
120
Dec-85 Dec-88 Dec-91 Dec-94 Dec-97 Dec-00 Dec-03 Dec-06
Chart 3.24 Rental price and market value (right-hand scale) of offices.1) Real indices (1985=100). Yield (left-hand scale).2) Per cent. Half-year series. 1985 – 2007.
1) High standard offices centrally located in Oslo2) Rental price net of owner costs as a percentage of market
value 3) Measured as a percentage deviation from 10-year
government bondsSources: Statistics Norway, OPAK and Norges Bank
Rental price
Market value
Yield3)
-1
0
1
2
3
4
5
1997-2007 1987-2007 Low discountrate
High discountrate
-1
0
1
2
3
4
5
Oslo Bergen
Chart 3.25 Rental prices for offices in Oslo and Bergen. Average annual growth in selected periods and equilibrium expectations1) for future growth rates assuming different discount rates. Per cent
1) Rental growth needed to equal the present value of rental
income equal to market value. Nominal discount rate after
tax (28 per cent) is set at 5.1 (6.65) per cent. The discount
rate may reflect 75 per cent leverage,1.5 (3) per cent credit
margin, 5 per cent market premium, equity beta 0.57, and
risk free rate 5 (6) per cent
Sources: Norges Bank and OPAK
Expected growth rates
Historical growth rates
25
30
35
40
45
50
feb. 06 aug. 06 feb. 07 aug. 07 feb. 08
25
30
35
40
45
50
Chart 3.26 Expected earnings for firms listed on Oslo Stock Exchange. Earnings in 2008 and 2009.1) NOK per share. Monthly figures. Feb 06 – Apr 08
1) Estimates given by market analysts at different points in time
Expectations for 2009
Expectations for 2008
Source: Reuters EcoWin
0
25
50
75
100
125
150
175
00 01 02 03 04 05 06 07 08
0
25
50
75
100
125
150
175
Deposits
Borrowing facilities
1) 2008: Average for the last day of the months January-April
Source: Norges Bank
Chart 3.27 Banks’ deposits with and borrowing facilities at Norges Bank. In billions of NOK. Average daily observation. 2000 – 20081)
4 Outlook and challenges
Chart 4.1 Credit risk premium on corporate bonds rated BBB.5-year maturity. Percentage points. 1 Jan 2007 – 29 May 2008
Source: Reuters EcoWin
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
US
Europe
Chart 4.2 Deposit-to-loan ratio in credit institutions1) in Nordic countries. Deposits from customers as a percentage of lending to customers. 2001 – 20072)
1) Includes banks, mortgage companies and other creditinstitutions2) Break in time series between 2005 and 2006
Sources: Nordic Banking Structures report (2006), EU Banking Sector Stability report (November 2007) and Norges Bank
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 2005 2006 20070
10
20
30
40
50
60
70
80
90
100
Sweden
Iceland
Denmark
Norway
Finland
Chart 4.3 12-month rise in house prices1) and housing starts2) in the US. Jan 2004 – Apr 2008
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2004 2005 2006 2007 2008
-10
-5
0
5
10
15
20
House prices (right-hand scale)
Housing starts (left-hand scale)
1) Rise in median prices for existing homes in per cent2) In million homes
Source: Reuters EcoWin
1) All banks excluding foreign branches in Norway and banks with a capital adequacy ratio above 30 per cent
Source: Norges Bank
Chart 4.4 Banks’1) capital adequacy ratio and lending to commercial property as a share of gross lending.As at 2007 Q4. Per cent
0
5
10
15
20
25
30
0 5 10 15 20 25 30
0
5
10
15
20
25
30
Share of lending to commercial property
Ca
pita
l ad
eq
ua
cy r
atio
Lower bound for capital adequacy ratio
Boxes
Stress testing of banks losses and results
-20
-15
-10
-5
0
5
10
15
20
2003 2005 2007 2009 2011
-20
-15
-10
-5
0
5
10
15
20
Chart 1 House prices. Year-on-year rise. Per cent1)
1) Projections for 2008 – 2011
Sources: Association of Real Estate Agents, ECON Pöyry, FINN.no, Association of Real Estate Agency Firms and Norges Bank
Baseline
Stress scenario
Chart 2 Banks’ lending rate1)
0
2
4
6
8
10
2003 2005 2007 2009 2011
0
2
4
6
8
10
Baseline
Stress scenario
1) Projections for 2008 – 2011
Sources: Statistics Norway and Norges Bank
-2
0
2
4
6
8
10
12
14
2003 2005 2007 2009 2011
-2
0
2
4
6
8
10
12
14
Chart 3 Credit to households (C2). Year-on-year growth.1) Per cent2)
Baseline
Stress scenario
1) Change in stock measured at end of year2) Projections for 2008 – 2011
Sources: Statistics Norway and Norges Bank
Chart 4 GDP mainland Norway. Year-on-year growth. Per cent1)
-2
0
2
4
6
8
2003 2005 2007 2009 2011
-2
0
2
4
6
8
Baseline
Stress scenario
1) Projections for 2008 – 2011
Sources: Statistics Norway and Norges Bank
Chart 5 Banks’ losses. Percentage of gross lending. Annual figures1)
-0.5
0
0.5
1
1.5
2
2.5
3
2003 2005 2007 2009 2011
-0.5
0
0.5
1
1.5
2
2.5
3
Baseline
Stress scenario
1) Projections for 2008 – 2011
Source: Norges Bank
-1.5
-1
-0.5
0
0.5
1
1.5
2007 2008 2009 2010 2011
-1.5
-1
-0.5
0
0.5
1
1.5
Baseline
Stress scenario
1) DnB NOR Bank (excl. branches abroad), SpareBank 1
SR Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
SpareBank 1 SMN2) Projections for 2008 – 2011
Source: Norges Bank
Chart 6 Post-tax profit in Norway’s five largest banks1). Percentage of average total assets. Annual figures2)
0
4
8
12
16
2007 2008 2009 2010 2011
0
4
8
12
16
Baseline Stress scenario
Capital requirement
Chart 7 Capital adequacy in Norway’s five largest banks1). Per cent. Annual figures2)
1) DnB NOR Bank (excl. branches abroad), SpareBank 1
SR Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
SpareBank 1 SMN2) Projections for 2008 – 2011
Source: Norges Bank
2007 2008 2009 2010 2011
0
10
20
30
40
50
60
70
80
90
100Other industries
Real Estate
Retail trade
Transport andcommunication
Business services
Construction
Manufacturing
Chart 8 Expected loss in stress scenario. By industry. Percentage of total loss.
Source: Norges Bank
0
5
10
15
20
25
30
35
40
45
1988 1992 1996 2000 2004 2008
0
5
10
15
20
25
30
35
40
45
Chart 9 Debt-servicing capacity.1) Historically and in the stress scenario. Real estate firms and all industries except real estate2). 1988 – 20113)
1) Pre-tax results, depreciation and writedowns as apercentage of interest-bearing debt2) Non-financial enterprises. Mainland Norway3) Projections for 2007 – 2011
Source: Norges Bank
Other industries
Real estate
0
5
10
15
2004 2007 2010 Base 2010 Stress 2010 Stresswith increasedcost of living
0
5
10
15
Sources: Statistics Norway, National Institute for Consumer
research and Norges Bank
Households
Debt
1) Margin = after tax income – standard cost of living– interest payments – calculated repayments (20 year)
Chart 10 Percentage of households with negative margin1) and debt in households with negative margin as a percentage of total debt.
0
5
10
15
Home owners withdebt burden > 5
First home buyers Net depositors All
0
5
10
15
Chart 11 Debt in households with negative margin in selected group. Percentage of group debt. Stress scenario. 2010
1) Debt-to-disposable-income ratio
Sources: Statistics Norway and Norges Bank
1
Norges Bank’s survey of Bank Lending
-60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
Q4 2007 Q1 2008 Q2 2008 Q4 2007 Q1 2008 Q2 2008
Source: Norges Bank
Total Commercial real estate
1) Net percentage balances are calculated by weighting together
the responses in the survey. The blue bars show developments
over the past quarter. The orange diamonds show expectations
over the next quarter. The orange diamonds have been moved
forward one quarter 2) Negative net percentage balances indicate tighter creditstandards
Chart 1 Change in credit standards for approving loans to non-financial corporations. Net percentage balances1), 2). Quarterly figures. 07 Q4 – 08 Q1
-60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
Q42007
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Source: Norges Bank
Funding
Chart 2 Factors affecting credit standards for approving loans to non-financial corporations. Net percentage balances1), 2). Quarterly figures. 07 Q4 – 08 Q1
1) See footnote 1 in Chart 1 2) Negative net percentage balances indicate that the
factorcontributes to tighter credit standards
Economic outlook
Sector-specific outlook
Banks’ appetite for
risk
-60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
Q42007
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Equity requirements
Lending margins Fees
Collateral requirements
Chart 3 Change in loan conditions for non-financial corporations. Net percentage balances1), 2).
Quarterly figures. 07 Q4 – 08 Q1
1) See footnote 1 in Chart 12) Positive net percentage balances for lending margins
indicatehigher lending margins. Positive net percentage
balances forlending margins, equity requirements, collateral
requirementsand fees indicate tighter credit standards
Source: Norges Bank
-60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
Q42007
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Source: Norges Bank
1) See footnote 1 in Chart 12) Negative net percentage balances indicate tighter
creditstandards 3) Negative net percentage balances indicate that the
factorcontributes to tighter credit standards
Economic outlook
Credit standards2)
Banks’ appetite for
risk
Factors affecting credit standards3)
Chart 4 Change in credit standards for approving loans to households. Factors affecting credit standards. Net percentage balances1). Quarterly figures. 07 Q4 – 08 Q1
Funding
-60
-40
-20
0
20
40
60
-60
-40
-20
0
20
40
60
Q42007
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Q407
Q1 Q208
Maximum loan-to-income ratio
Lending margins
Interest-only periods
Maximum loan-to-value ratio
1) See footnote 1 in Chart 12) Positive net percentage balances for lending margins
indicatehigher lending margins and therefore tighter credit
standards.Negative net percentage balances for maximum LTI
ratio,maximum LTV ratio and use of interest-only periods
indicatetighter credit standards
Source: Norges Bank
Chart 5 Change in loan conditions for households. Net percentage balances1), 2). Quarterly figures. 07 Q4 – 08 Q1