Charts
Financial Stability 2/07
Summary
Chart 1 Banks’ capital ratio and pre-tax profit as a
percentage of average total assets.1)
Annual figures. 1998 – 2006 and at 2007 Q3
1,5
Capital ratio (right-hand scale)
14
12
1,2
10
0,9
0,6
8
Profit before loan
losses and write-downs
(left-hand scale)
Profit after loan losses
and write-downs
(left-hand scale)
0,3
6
4
2
0
0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1)
Excluding branches of foreign banks in Norway
Source: Norges Bank
Chart 2 Banks’1) gross stock of non-performing
loans. Percentage of gross lending to sector.
Quarterly figures. 97 Q1 – 07 Q3
5
5
Enterprises
4
4
All sectors
3
3
2
2
1
0
1997
1) All
1
Households
0
1999
2001
banks in Norway
Source: Norges Bank
2003
2005
2007
Chart 3 Banks’ interest margin. Percentage
points. Quarterly figures. 87 Q1 – 07 Q3
6
6
5
5
4
4
3
3
2
2
1
1
0
1987
0
1990
1993
Source: Norges Bank
1996
1999
2002
2005
Chart 4 Credit to mainland Norway as a percentage
of mainland GDP. Quarterly figures. 87 Q1 –07 Q3
190
190
180
180
170
170
160
160
150
150
140
140
130
130
120
120
110
1987 1990 1993 1996 1999 2002 2005
110
Sources: Statistics Norway and Norges Bank
Chart 5 Real house prices. Indices. 1985 = 100.
Annual figures. 1985 – 20071)
240
180
Deflated by
house rent
Deflated by CPI
Deflated by
building costs
120
60
240
180
120
Deflated by disposable
income2)
0
60
0
1985 1988 1991 1994 1997 2000 2003 2006
First half of 2007
Disposable income less estimated reinvested dividends
for the period 2000-2005
1)
2)
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms, Statistics Norway and Norges Bank
Chart 6 Market value for offices in Oslo1)
and output gap. Price per square meter at constant
NOK-2007. Annual figures.
1982 – 2010
6
35 000
30 000
Output gap (right-hand scale)
4
25 000
2
20 000
0
15 000
Market value
(left-hand scale
10 000
1982 1986 1990 1994 1998 2002 2006 2010
1) Average
value for high-standard offices in central
parts of Oslo. At 30 June 2007
Sources: OPAK and Norges Bank
-2
-4
1 The financial institutions
Chart 1.1 Banks’1) assets and liabilities. Per cent .
30 September 2007
100
Foreign
assets
80
Customer
deposits
Other
Norwegian
assets
60
Deposits from
financial institutions
Lending to
Norwegian
households
40
Securities debt
20
Lending to
Norwegian
enterprises
0
Assets
Other liabilities
Equity
Liabilities
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
Chart 1.2 Banks’1) profit/loss in per cent of average
total assets. Annual figures 2002-2006. Q1- Q3 06
and 072)
4
4
3
3
2
2
1
1
0
0
-1
-1
-2
Q1- Q3
-3
-3
2002
2003
2004
Net interest income
Operating expenses
Write-downs etc.
1) All
2)
-2
2005
2006
2006
2007
Other operating income
Loan losses
Pre-tax profit/loss
banks excluding branches of foreign banks in Norway
Figures for 2007 are affected by transition to IFRS
Source: Norges Bank
Chart 1.3 OSEBX and sub-indices for banks on
the Oslo Stock Exchange1). 1 Jan 02 = 100. Daily.
figures. 1 Jan 02 - 29 Nov 07
350
350
Bank index
300
300
Primary capital
certificate index
250
250
200
200
150
150
100
100
OSEBX
50
0
2002
50
0
2003
2004
2005
2006
2007
Gjensidige NOR was moved from the primary capital certificate
index to the bank index and was included in OSEBX from
1)
13 September 2002
Source: Reuters (EcoWin)
Chart 1.4 Banks’1) capital ratio (Tier 1 + Tier 2)
and core capital ratio (Tier 1). Per cent.
Quarterly figures. 02 Q1 – 07 Q3
16
14
16
14
Capital ratio2)
12
12
10
10
8
8
Core capital ratio2)
6
4
2
6
If all banks were still
reporting according
to Basel I in 2007
0
mar.02 mar.03 mar.04 mar.05 mar.06 mar.07
1) All
4
2
0
banks excluding branches of foreign banks in Norway
2) In 2007Q1 eight banks reported according to Basel II. In Q2 and
Q3 the figure had increased to ten. Other banks reported according
to Basel I
Sources: Norges Bank and Kredittilsynet
Chart 1.5 Banks’1) total interest margin divided
into deposit and lending margin2). Percentage points.
End of quarter. 97 Q2 – 07 Q3
4
4
3,5
Total interest margin
3
3
2,5
2,5
2
2
Lending margin
1,5
1,5
1
0,5
1
0,5
Deposit margin3)
0
-0,5
1997
3,5
0
-0,5
1999
2001
1) All
2003
2005
2007
banks in Norway
and lending margins are measured against 3-month
money market rates
3) As interest rates on deposits can not be negative, the deposit
margin is low when money market rates are low
2) Deposit
Source: Statistics Norway
Chart 1.6 Banks’1) lending margins.
06 Q4 – 07 Q3. Percentage points
1
1
2006 Q4
0,8
2007 Q1
2007 Q2
0,6
2007 Q3
0,8
0,6
0,4
0,4
0,2
0,2
0
0
-0,2
-0,2
-0,4
-0,4
-0,6
-0,6
Repayment loans
Households Home equity
Non-financial
secured on
lines of credit
private enterprises
dwellings
1) All
banks in Norway
Sources: Statistics Norway and Norges Bank
Chart 1.7 Growth in banks’ and mortgage
companies’1) lending. 12-month growth.
Per cent. Monthly figures. Jan 00 – Oct 07
24
24
20
20
Retail sector
16
16
12
12
8
8
All sectors
4
Corporate sector
4
0
0
-4
2000 2001 2002 2003 2004 2005 2006 2007
-4
1) All
banks and mortgage companies in Norway
Source: Norges Bank
Chart 1.8 Growth in banks’ and mortgage
companies’1) lending to selected industries. Per
cent. Four-quarter growth. 02 Q1 – 07 Q3
30
30
Property
management and
commercial services
20
Construction and
utilities
20
Retail trade, hotel
and restaurant
10
10
0
0
Manufacturing
-10
2002
1) All
-10
2003
2004
2005
2006
banks and mortgage companies in Norway
Source: Norges Bank
2007
Chart 1.9 Norwegian banks’1) share of deposits.
Deposits from customers in per cent of lending to
customers. Quarterly figures. 00 Q1 – 07 Q3
80
80
75
75
70
70
65
65
60
60
55
55
50
2000 2001 2002 2003 2004 2005 2006 2007
50
1) All
banks except branches and subsidiaries of foreign banks in
Norway
Source: Norges Bank
Chart 1.10 Norwegian banks’1) funding sources.
Percentage of gross lending. Quarterly figures.
00 Q1 – 07 Q3
40
30
Deposits from retail sector
Deposits from
corporate sector
20
Bonds
Deposits / loans from
financial institutions
10
40
30
20
10
Notes and short-term paper
0
2000 2001 2002 2003 2004 2005 2006 2007
1) All
banks except branches and subsidiaries of foreign banks in
Norway
Source: Norges Bank
0
Figur 1.11 5- year yields on Norwegian government
and bank bonds. 3-month money market
(NIBOR) and treasury bill rates. Weekly figures.
3 Jan - 28 Nov 07. Per cent
7
6
Money market
Bank bonds
6
5
5
4
7
Treasury bills
3
Government bonds
4
3
2
2
1
1
0
jan.07
0
apr.07
jul.07
okt.07
Sources: Reuters (EcoWin) and DnB NOR Markets
Chart 1.12 Banks’1) liabilities by maturity.
Customer deposits are excluded. Per cent. Yearend 2004-2006, and Jun an Sep 2007
100
90
80
70
60
50
40
30
20
10
0
2004
2005
2006
Less than 1 month
1 - 3 months
1 - 5 years
More than 5 years
1) All
jun.07
sep.07
3 - 12 months
banks except branches and subsidiaries of foreign banks in
Norway
Source: Norges Bank
Figur 1.13 Norwegian banks’1) short-term
domestic debt2). Per cent of gross lending.
Quarterly figures 00 Q1– 07 Q3
25
20
25
Small banks 4)
20
15
15
Medium sized banks4)
10
5
10
DnB NOR 3)
0
2000 2001 2002 2003 2004 2005 2006 2007
1) All
5
0
banks except branches and subsidiaries of foreign banks in
Norway
2) Short-term paper debt, deposits and loans from other financial
institutions
3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken
4) The dividing line between small and medium-sized banks is NOK
10bn (measured by assets) at end-2006
Source: Norges Bank
Figur 1.14 Norwegian banks’1) short-term
foreign debt2). Per cent of gross lending.
Quarterly figures. 00 Q1 – 07 Q3
25
25
DnB NOR 3)
20
20
15
15
10
Medium-sized banks
4)
5
10
5
Small banks 4)
0
2000 2001 2002 2003 2004 2005 2006 2007
1) All
0
banks except branches and subsidiaries of foreign banks in
Norway
2) Short-term paper debt, deposits and loans from other financial
institutions
3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken
4) The dividing line between small and medium-sized banks is NOK
10bn (measured by assets) at end-2006
Source: Norges Bank
Chart 1.15 Selected funding sources for
Norwegian banks’1). 30 Sep 2007. In billions NOK
2000
2000
Bonds
1500
Short-term paper
1500
Deposits from financial inst.
1000
Deposits from customers
500
1000
500
0
0
NOK
1) All
Foreign currency
banks except branches and subsidiaries of foreign banks in
Norway
Source: Norges Bank
Chart 1.16 Norwegian banks’1) liquidity indicator
(ratio of stable funding sources to illiquid asets). Per
cent. Quarterly figures.
00 Q1 – 07 Q3
120
110
120
DnB NOR including foreign
branches, borrowers
and depositors
DnB NOR2)
100
90
110
100
Small banks3)
90
Medium-sized banks3)
80
2000 2001 2002 2003 2004 2005 2006 2007
1) All
80
banks except branches and subsidiaries of foreign banks in
Norway
2) DnB NOR Bank (excluding branches abroad) and
Nordlandsbanken
3) The dividing line between small and medium-sized banks is NOK
10bn (measured by assets) at end-2006
Source: Norges Bank
Chart 1.17 Life insurance companies’ buffer
capital1) and asset mix. Per cent of total assets.
Quarterly figures. 01 Q1 – 07 Q3
40
Bonds ”hold to maturity“ 2)
30
40
30
Bonds and shortterm paper
20
20
Equities and shares
Real estate
10
10
Buffer capital
0
2001
0
2002
2003
2004
2005
2006
2007
Buffer capital is defined as the sum of the security adjustment
reserve, supplementary provisions with an upward limit of one
year, and surplus of Tier 1 capital
2) From 2007 other bonds for permanent investment are also
included
1)
Source: Kredittilsynet
2 The macro-financial
environment
Chart 2.1 GDP growth abroad. Increase on
previous year in per cent. Forecasts for
2007 – 20091)
12
2006
2007
2008
2009
9
9
6
6
3
3
0
0
US
1)
12
Euro area Japan
China
Forecasts in Monetary Policy Report 3/07
Sources: IMF and Norges Bank
Trading
partners
Chart 2.2 12-month rise in house prices1) and
housing starts in the US. Monthly figures.
Jan 03 – Oct 07
2300
2100
20
Housing starts in 1000s
(left-hand scale)
15
1900
10
1700
1500
5
House prices (right-hand scale)
0
1300
1100
2003
1)
-5
2004
2005
2006
Median price in USD. Existing homes
Source: Reuters (EcoWin)
2007
Chart 2.3 House prices in Europe. 4-quarter rise.
Per cent. Quarterly figures. 98 Q1 – 07 Q3
35
30
35
Ireland
25
UK
Spain
Denmark
30
25
20
20
15
15
10
10
5
5
0
France
0
-5
-5
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Reuters (EcoWin)
Chart 2.4 Spread between money market rate
and expected key rate.1) 3-month maturity.
Percentage points. 1 Mai 07 – 29 Nov 07
1,25
1,25
UK
1
1
0,75
0,75
0,5
0,5
US
0,25
0
mai 07
Norway 2)
Euro area
jul 07
sep 07
nov 07
Expected key rates are measured by Overnight Indexed
Swaps (OIS)
2) Norges Bank’s projection
1)
Sources: Bloomberg and Norges Bank
0,25
0
Chart 2.5 Credit spread against government bonds
in the US and Europe. Percentage points. Daily
figures.1 Jan 02 – 29 Nov 07
12
12
High yield companies in
the US
9
9
Emerging economies, EMBI+
6
3
Europe, BBB
0
2002
2003
6
3
US, BBB
2004
Source: Reuters (EcoWin)
2005
2006
2007
0
2008
Chart 2.6 Global change in credit ratings of private
enterprises’ debt.1) Monthly figures.
Per cent. Jan 07 – Nov 07
100
100
90
90
80
80
Upgrades
70
70
60
60
50
50
40
40
30
30
20
Downgrades
20
10
0
jan 07
10
0
apr 07
jul 07
okt 07
Long-term and short-term credit ratings from S&P. Enterprises
and debt securities
1)
Source: Bloomberg
Chart 2.7 10-year government bond yield. Per cent.
Daily figures. 2 Jan 97 – 29 Nov 07
10
10
8
8
UK
Norway
6
6
4
4
Germany
US
2
0
1997
2
0
1999
2001
Source: Reuters (EcoWin)
2003
2005
2007
Chart 2.8 Equity indices. 2 Jan. 97 = 100.
Daily figures. 2 Jan 97 – 29 Nov 07
400
400
Norway OSEBX
300
300
Europe Stoxx
200
200
100
100
0
1997
US S&P 500
0
1999
2001
Source: Reuters (EcoWin)
2003
2005
2007
Chart 2.9 P/E for the US and Europe. Estimated
earnings over the last 12 months. Monthly
figures. Jan 96 – Sep 07
40
35
40
US S&P 500
Europe Stoxx
35
30
30
25
25
20
20
15
15
10
10
5
5
0
1996
0
1998
2000
2002
2004
2006
Sources: Reuters (EcoWin) and Norges Bank
Chart 2.10 Return on equity (x-axis) and the
valuation indicator P/B (y-axis). Oslo Stock
Exchange. Quarterly figures. 97 Q3 –07 Q3
2,9
2,9
07 Q3
2,6
2,3
2,3
2
2
Regression line
1,7
1,4
2,6
1,7
02 Q3 and Q4
1,4
1,1
0,8
-3 % 0 %
03 Q1
3%
6%
1,1
0,8
9 % 12 % 15 % 18 % 21 %
Sources: Reuters (EcoWin) and Norges Bank
Chart 2.11 Price indices of selected raw materials.
Daily figures. USD. 31.12.04 = 100. 1 Jan 03 –
29 Nov 07
250
250
225
225
Metal
200
200
Oil (Brent
Blend)
175
175
150
150
125
125
Raw material
index
100
75
50
2003
100
75
2004
2005
Source: Reuters (EcoWin)
2006
2007
50
2008
Chart 2.12 Household disposable real income1) and
consumption. Annual rise. Per cent.
Annual figures. 1997 – 2006
8
8
Income
Consumption
6
6
4
4
2
2
0
0
1997
2000
2003
1) Adjusted
2006
for estimated reinvested share dividends/redemption of
share capital for 2000 - 2006
Sources: Statistics Norway and Norges Bank
Chart 2.13 Projected key policy rate in the
baseline scenario with fan chart. Per cent.
Quarterly figures. 05 Q1 – 10 Q4
9
30% 50% 70% 90%
8
7
6
5
4
3
2
1
0
2005 2006 2007 2008 2009 2010
Source: Norges Bank
9
8
7
6
5
4
3
2
1
0
Chart 2.14 Household liabilities and assets. In
billions of NOK. 2007 Q2
7000
7000
Other claims
Securities
6000
5000
4000
Insurance reserves
Notes, coins and
bank deposits
3000
5000
4000
Housingwealth1)
2000
Other loans
1000
Liabilities
3000
2000
1000
Mortgages
0
1)
6000
0
Assets
Projections
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate
Agency Firms, Statistics Norway and Norges Bank
Chart 2.15 Household liabilities by type of loan. In
billions of NOK. Monthly figures
Jan 97 – Oct 07
1800
1600
Home equity lines of credit
1400
1200
Student loans Other loans
1000
800
600
400
Repayment loans secured on dwellings
200
0
jan.98 jan.00 jan.02 jan.04 jan.06
Source: Statistics Norway
1800
1600
1400
1200
1000
800
600
400
200
0
Chart 2.16 Indebted households by debt burden1).
Debt distributed after household debt burden.
Per cent. 2005
80
80
60
Households
Debt
60
40
40
20
20
0
0
Below 300 300-400 400-500 Over 500
Debt burden
1) Debt
burden is debt as a percentage of disposable income
Dispoable income is income less interest rates and taxes
Total debt was NOK 1 470 bn. Total number of households was
1.7 million
Sources: Statistics Norway and Norges Bank
Chart 2.17 Share of households with a debt burden
higher than 500%. By age and income1). Per cent.
2005
50
Age
68+
55-67
45-54
35-44
25-34
17-24
40
30
20
50
40
30
20
10
10
0
0
1-3
4-7
8-9
10
Income deciles
Huseholds are divided into 10 groups of the same size by
income after tax
1)
Sources: Statistics Norway and Norges Bank
Chart 2.18 Household saving and net lending as a
percentage of disposable income1,2). 1980 – 2006
10
10
Saving
5
5
0
0
-5
-5
-10
-10
-15
1980
Net lending
-15
1985
1990
1995
2000
2005
There is a break in the series between 1995 and 1996
for estimated reinvested share dividends for 2000 –
2005
1)
2) Adjusted
Sources: Statistics Norway and Norges Bank
Chart 2.19 House prices. 12-month rise and
annualised rise in 3-month centered moving average
in per cent. Monthly figures. Jan 98 – Oct 07
40
40
30
30
12-month rise
20
20
10
10
0
0
-10
-20
1998
Annualised rise in 3-month
centered moving average
-10
-20
2000
2002
2004
2006
Sources: Association of Real Estate Agents, ECON Pöyry,
Finn.no and Association of Real Estate Agency Firms
Chart 2.20 Seasonally adjusted monthly housing
turnover in thousands. Houses for sale as a share
of housing turnover.1) Housing turnover rate, new
houses in eastern Norway. Jan 03 – Oct 07
20
6
Housing turnover
(right-hand scale)
15
5
Turnover rate, new houses
(left-hand scale)
10
3
2
5
0
2003
1) Houses
4
Houses for sale as a share of
turnover(right-hand scale)
1
0
2004
2005
2006
2007
for sale and housing turnover rate are seasonally
adjusted
Sources: Association of Norwegian Real Estate
Agents,Association of Real Estate Agency Firms, ECON
Pöyry, Finn.no and Norges Bank
Chart 2.21 Long-term real interest rate1) and
normal real interest rate2. Per cent. House prices
deflated by house rent index in CPI. Indexed, 96
Q1 = 1. Quarterly figures. 96 Q1 – 07 Q3
6
6
5
Long-term real interest rate
5
4
4
3
3
2
1
0
1996
2
Interval for normal real interest
rate
1
House prices deflated by house rent
0
1998
2000
2002
2004
2006
1) Implicit
yield on 5-year government bonds in 5 years less longterm inflation expectations
2) The normal real interest rate is the level of the real interest rate
that is consistent with normal capacity utilisation
Sources: Statistics Norway, FINN.no, ECON Pöyry,
Association of Norwegian Real Estate Agents, Association
of Real Estate Agency Firms and Norges Bank
Chart 2.22 Real house prices, building costs and
land costs1). Indexed. 1985 = 100. Annual figures.
1985 – 2006
250
250
200
150
Average price per
square metre land
< 20 decares
House prices
100
200
150
100
Building costs
50
50
0
0
1985 1988 1991 1994 1997 2000 2003 2006
The series is based on Statistics Norway’s transfer of properties
index and includes unbuilt property for free market sale. The
series is not adjusted for location or site development
1)
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms and Statistics Norway
Chart 2.23 Actual and calculated1) house price
1000 NOK/sqm. Quarterly figures. 02 Q2 – 07 Q2
27
25
Actual house price
27
25
23
23
21
21
19
19
17
Calculated house price
17
15
15
13
2002
13
2003
2004
2005
2006
2007
Calculated house price is calculated by estimating the house
price model with data to 2002 Q2 and simulate forward using
actual values for the explanatory variables and calculated values
for house prices in the forecast period
1)
Sources: Association of Norwegian Real Estate Agents,
Association of Real Estate Agency Firms, FINN.no, ECON
Pöyry and Norges Bank
Chart 2.24 Four quarter rise in house prices.
Interest burden1). Per cent. Quarterly figures.
91 Q1 – 10 Q42)
25
20
House prices
(left-hand scale)
15
12
9
10
5
0
-5
6
Interest burden
(right-hand scale)
3
-10
-15
1991 1994 1997 2000 2003 2006 2009
0
Interest expenses after tax in percentage of liquid disposable
Income less estimated reinvested share dividend payments plus
Interest payments
2) Projections for 2007 Q1 – 2010 Q4 for interest burden and 2007
Q4 – 2010 Q4 for rise in house prices
1)
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms, Statistics Norway and Norges Bank
Chart 2.25 Debt burden1) and debt burden adjusted
for household general living expenses2). Annual
figures. 1987 – 20103)
250
800
200
700
Debt burden
(left-hand scale)
600
500
150
400
100
Adjusted debt burden
(right-hand scale)
50
0
1987
300
200
100
0
1991
1995
1999
2003
2007
1)Loan
debt as a percentage of liquid disposable income less
estimated reinvested share dividend payments
2) Disosable income less general living expenses as
calculated by the National Institute for Consumer Research (SIFO)
3) Projections for 2007 - 2010
Sources: Statistics Norway, SIFO and Norges Bank
Chart 2.26 Pre-tax return on total assets.1)
Norwegian limited companies.2) Per-cent.
Annual figures. 1988-2006
10
10
Median companies
0
0
Companies with weak results
(75 percentile)
-10
-20
Companies with very weak results
(90 percentile)
-30
-10
-20
-30
-40
-40
1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Pre-tax result as a percentage of total assets
Exclusive production of oil and gas, bank and insurance and
public services
1)
2)
Source: Norges Bank
Chart 2.27 Share of enterprises with negative results
before and after a 10 per cent strengthening of
NOK.1) Selected industries. Per cent. 2006
Export industries
Fishing
Shipping
Offshore
Before stronger NOK
Other industries
After stronger NOK
0
10
20
30
40
50
60
The projections assume that the share of turnover in each industry
that is related to exports is reduced by 10 per cent and the part of costs
of goods sold that is related to imports is reduced by 10 per cent
1)
Source: Norges Bank
Chart 2.28 Debt-servicing capacity1) in selected
industries.2) Per cent. Annual figures. 1999-2006
Total
Construction
Transport
Energy
Manufacturing and
mining
Retail trade
Shipping
Financial services
Commercial serv.
Fishing
Hotel, rest., travel
Offshore
Property
Telecommunications
2006
2005
'99-'04
0
1) Pre-tax
10
20
30
40
50
result before depreciation and write-downs as a
percentage of interest-bearing debt
2) Includes only enterprises with interest-bearing debt
Source: Norges Bank
60
Chart 2.29 Equity ratio in Norway and Euro
area. Annual figures. 1988-2006
50
40
Equity ratio
Euro area
50
Equity ratio
40
30
30
20
10
0
1988
Equity ratio adjusted for
cross-ownership and
intangible assets
1991
1994
Equity ratio adjusted for
cross-ownership1)
1997
20
10
2000
2003
0
2006
Total book equity minus total investments in Norwegian
enterprises in which the ownership interest is at least 20 per cent.
The ownership interest in Norwegian enterprises is based on
estimates
1)
Source: Norges Bank and ECB
Chart 2.30 Risk-weighted debt in various industries.1)
In billions of NOK. 2007
Property
Commercial services
Retail trade
Manufacturing and mining
Telecommunication
Hotel, rest. and travel
Other industries
Offshore
Shipping
Fishing
Energy
Construction
Transport
2)
Financial services
0,0
0,5
1,0
1,5
2,0
2,5
3,0
Probability of default multiplied by interest-bearing debt in each
enterprise, totalled for all enterprises in the industry
2) Includes property funds and private equity funds. Does not
include banks, mortgage companies, finance companies and
insurance companies
1)
Source: Norges Bank
Chart 2.31 Income and liquid assets. Norwegian
limited companies. In billions of NOK. Annual
figures. 1988-2007
3500
600
3000
500
2500
2000
1500
400
Income
(left-hand scale)
1000
300
assets1)
Liquid
(right-hand scale)
500
0
200
100
0
1988 1991 1994 1997 2000 2003 2006
The dotted line shows how large liquid assets would have been
if they had stayed at their historic level compared to income
1)
Source: Norges Bank
Chart 2.32 Liquid assets in excess of level
implied by higher turnover. In billions of NOK.
2007
140
120
100
80
60
40
20
31
9
9
10
12
Other industries
Shipping
Manufacturing and mining
Retail trade
Financial services
26
Commercial services
34
Commercial property
0
Source: Norges Bank
Chart 2.33 Net yield for offices in Oslo.1)
December 88 – June 07. Semi-annual figures.
Per cent
12
10
12
Net yield
10
8
8
6
6
4
10-years Government bonds
4
2
2
0
0
des.88 des.91 des.94 des.97 des.00 des.03 des.06
Net rental income / Market value. Offices of good standard
in central Oslo. It is assumed that the property owner’s costs
constituted 10 per cent of the rental income p.a.
1)
Source: Norges Bank (estimates) and OPAK
Chart 2.34 Average duration of rental contracts
at the time of agreement. Offices in Oslo. Annual
figures. 2000-2007
9
8
7
6
5
4
3
2
1
0
Average remaining duration of
all rental contract in the sample
2000 2001 2002 2003 2004 2005 2006 2007
1) At
30 Sept. 2007
Source: Eiendomsverdi
1)
9
8
7
6
5
4
3
2
1
0
Chart 2.35 Property companies’ debt to financial
institutions. Counties. In billions of NOK. 2007
Oslo
Rogaland
Hordaland
Møre og Romsdal
Akershus
Sør-Trøndelag
Vest-Agder
Other counties
New enterprises
Established before 2005
0
Source: Norges Bank
50
100
150
200
Chart 2.36 The relationship between expected
earnings and net interest-bearing debt. Enterprises
listed on Oslo Stock Exchange.1) Per cent. Quarterly
figures. 3Q 1997 – 3Q 2007
30
30
25
25
20
20
15
15
10
10
5
5
0
jan.97
0
1)
jan.99
jan.01
jan.03
jan.05
jan.07
OBX-enterprises, including oil/gas and banking/insurance
Sources: Reuters (EcoWin) and Norges Bank
Chart 2.37 Number of bankruptcies opened
as a percentage of total number of
enterprises. 1990 – 20101)
3,5
3,5
3,0
3,0
2,5
2,5
2,0
2,0
1,5
1,5
1,0
1,0
0,5
0,5
0,0
1990
1)
1994
1998
2002
2006
Projections for 2007-2010
Source: Statistics Norway and Norges Bank
0,0
2010
3 Outlook and challenges
Chart 3.1 The price of hedging credit risk1).
5-year CDS prices. Percentage points.
Daily figures. 1 Jan 04 – 29 Nov 07
2,0
2,0
Bear Sterns
1,8
1,8
1,6
1,6
1,4
1,4
Merrill Lynch
1,2
1,0
0,8
1,2
Northern Rock
1,0
European bank index
0,6
0,8
0,6
DnB NOR
0,4
0,4
0,2
0,2
0,0
jan.07
0,0
1) Bonds
mar.07
mai.07
jul.07
sep.07
rated BBB
Source: Bloomberg, Reuters (EcoWin) and
Thomson Datastream
nov.07
Chart 3.2 Credit risk premium on normal corporate
bonds1). 5-year maturity. Percentage points.
Daily figures. 1 Jan 04 – 29 Nov 07
2,50
2,50
2,25
2,25
2,00
2,00
1,75
US
1,50
1,75
1,50
1,25
1,25
1,00
1,00
0,75
0,75
0,50
Europe
0,50
0,25
0,25
0,00
jan.04 jul.04 jan.05 jul.05 jan.06 jul.06 jan.07 jul.07
0,00
1) Bonds
rated BBB
Source: Reuters (EcoWin)
Chart 3.3 Real house price index1), 1819=100,
trend2), and real house price gap in per cent.
Annual figures. 1946 – 2007
150
1600
Trend (left-hand scale)
1200
800
120
90
Real house price
(left-hand scale)
400
60
30
0
Gap (right-hand scale)
0
-30
1945 1955 1965 1975 1985 1995 2005
House prices index deflated by consumer price index. Projections
for 2007
2) The trend is calculated using a Hodrick-Prescott filter and a
recursive method on data for the period 1819-2007
1)
Sources: Statistics Norway and Norges Bank
Chart 3.4 Rental prices and market value for
offices in Oslo. Constant 2007-NOK.
June 86 – June 07
2500
2000
35000
Rental prices1)
(left-hand scale)
1500
1000
500
30000
25000
20000
Transactions price2)
(right-hand scale)
15000
10000
5000
0
0
1986 1989 1992 1995 1998 2001 2004 2007
1)
2)
Offices of good standard in central parts of Oslo
Centrally situated offices of normal good standard in the Oslo area
Source: OPAK
Chart 3.5 Households net lending and increase in
the banking sector’s net foreign debt. Billions of
2007-NOK. 1981 – 2007
200
150
Annual change in the banks’
net foreign debt2)
100
200
150
100
50
50
0
0
-50
Households net lending1)
-50
-100
-100
-150
-150
1981
1985
1989
1993
1997
2001
2005
Net lending from the credit market statistics adjusted for
estimated reinvested share dividends for 2000 – 2005. Figures
cover the period 1981 – 2006.
2) Changes in net debt and equity during the calendar year. The
change during the first three quarters of 2007 is annualised.
1)
Sources: Statistics Norway and Norges Bank
Box: Problems in some
foreign financial institutions
Chart 1 Share prices for financial institutions and
global finance equity index. 1 Jan 01 = 100. Daily
figures. 1 Jan 01 – 29 Nov 07
400
400
Countrywide
350
350
300
300
250
250
200
IKB
Northern Rock
200
150
150
100
100
Finance equity index
50
0
2001
2002
2003
2004
Source: Reuters (EcoWin)
2005
2006
2007
50
0
2008
Boxes
Problems in the US
residential mortgage
market
Chart 1 US mortgage-backed securities (MBS).
Outstanding volumes. In billions of USD.
2001-2006
6000
6000
5000
5000
4000
4000
3000
3000
2000
2000
1000
1000
0
0
2001
2002
Agencies
2003
2004
2005
2006
Other (investment banks)
Source: UBS, US Economic Perspectives (9 March 2007)
Chart 2 Default rates on US mortgages. Per cent of
lending. Quarterly figures. 98 Q1 – 07 Q2
16
16
14
14
12
Subprime
12
10
10
8
8
Total
6
4
6
4
2
Prime
0
2
0
des des des
98 99 00
Source: Bloomberg
des des des des des des
01 02 03 04 05 06
Chart 3 US mortgages. Billion USD. 31 Dec 2006
6000
Seconds
5000
Prime Jumbo1
6000
Subprime
5000
4000
Alt-A
4000
3000
Agencies
3000
2000
2000
1000
1000
0
0
Bank
Securities
Loan amount exceeds standard terms accepted by agencies.
Higher risk than standard terms.
1)
Source: UBS, US Economic Perspectives (9 March 2007)
Chart 4 US subprime mortgage-backed securities.
Credit spreads. First half 2006 vintage. Per cent.
Daily figures. 19 Jan 06 – 28 Nov 07
30
30
27
27
24
24
21
21
BBB-
18
18
15
15
12
12
A
9
9
6
6
3
AAA
0
jan 06
apr 06
jul 06
okt 06
Source: Lehman Brothers
jan 07
apr 07
jul 07
okt 07
3
0
Problems in the interbank
markets – central bank
liquidity
Chart 1 Banks’ total access to borrowing in
Norges Bank. Available liquidity for and turnover
in Norges Bank’s settlement system. Billions of
NOK. Quarterly figures. 03 Q2 – 07 Q3
250
250
Turnover
200
200
150
150
Liquidity
100
100
Banks’ access to borrowing
50
0
jun.03
50
0
jun.04
Source: Norges Bank
jun.05
jun.06
jun.07
Covered bonds
Chart 1 5-year bond yields on three euro
bonds. Daily figures. 29 June - 29 Nov 07
5,0
5,0
Bank bond
4,8
4,8
4,6
4,6
4,4
4,4
Covered bond
4,2
4,2
4,0
4,0
Government bond
3,8
3,8
3,6
3,6
26 jun
26 jul
26 aug
26 sep
26 okt
26 nov
Source: Bloomberg, Reuters (EcoWin) and Norges Bank
Stress testing of banks’
problem loans
Chart 1 House prices. 12-month rise in per cent.
Annual figures. 2002 – 20101)
20
20
15
15
10
Baseline
5
10
5
0
0
-5
-5
-10
-10
Stress scenario
-15
-20
2002
1)
2004
2006
2008
Projections for 2007-2010
Sources: Statistics Norway and Norges Bank
-15
-20
2010
Chart 2 Credit to households (C2). 12-month
growth in per cent. Annual figures. 2002 – 20101)
16
16
12
Baseline
8
8
4
0
2002
12
Stress scenario
2004
2006
2008
1) Annual
change in per cent measured by end-year stock.
Projections for 2007-2010
Sources: Statistics Norway and Norges Bank
4
0
2010
Chart 3 Banks’ losses on lending to households
and non-financial enterprises. Percentage of
lending to households and non-financial
enterprises. Annual figures. 2002 – 20101)
2
2
1,5
1,5
1
Stress scenario
0,5
0,5
0
-0,5
2002
1)
1
0
Baseline
2004
Projections for 2007-2010
Source: Norges Bank
2006
2008
-0,5
2010
Chart 4 Banks’ losses on loans to non-financial
enterprises in different industries. Share of total
losses. Stress test alternative. Annual figures.
2007 – 2010
100
Public sector
90
Business services
80
70
Commercial property
60
50
Transport
Hotels and restaurants
40
Retail trade
30
Construction
Power supply
20
Manufacturing
10
Agriculture and
fisheries
0
2007
2008
2009
2010
Source: Norges Bank
Chart 5 Projections of post-tax profit as a
percentage of average total assets in Norway’s five
largest banks1). Annual figures
1,5
1
0,5
1,5
1
Baseline
0,5
Stress scenario
0
0
-0,5
-0,5
3 per cent loan loss
-1
-1,5
2007
-1
2008
2009
-1,5
2010
DnB NOR Bank (excl. branches abroad), SpareBank 1
SR Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
SpareBank 1 Midt-Norge
1)
Source: Norges Bank
Chart 6 Projections of capital adequacy in per
cent in Norway’s five largest banks1). Annual
figures. 2007 – 2010
25
20
25
Baseline
Stress scenario
3 per cent loan loss
20
15
15
10
10
5
5
0
0
2007
2008
2009
2010
DnB NOR Bank (excl. branches abroad), SpareBank 1
SR-Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
SpareBank 1 Midt-Norge
1)
Source: Norges Bank