Charts

Financial Stability 1/08

Summary

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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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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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1987 1990 1993 1996 1999 2002 2005 20080

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Source: Statistics Norway

Chart 3 Banks’ interest margin. Percentage points. Quarterly figures. 87 Q1 – 08 Q1

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35,000

1983 1987 1991 1995 1999 2003 2007

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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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1997 1999 2001 2003 2005 2007

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Total credit

Non-financial enterprises1

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Households2)

1) All foreign credit to mainland Norway is assumed granted to enterprises2) Household domestic credit

Source: Statistics Norway

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1992 1994 1996 1998 2000 2002 2004 2006

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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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1990 1992 1994 1996 1998 2000 2002 2004 2006

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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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2002 2003 2004 2005 2006 2007 2008

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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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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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Capital raised

Source: Bloomberg

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Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08

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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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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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Jan-07 May-07 Sep-07 Jan-08 May-08

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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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1990 1993 1996 1999 2002 2005 2008

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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

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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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2008 2009 2008 2009 2008 2009 2008 2009

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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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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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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

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1998 2000 2002 2004 2006 2008

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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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des.06 mar.07 jun.07 sep.07 des.07 mar.08

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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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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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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

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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

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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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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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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

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2000 2002 2004 2006 2008

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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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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)

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2000 2001 2002 2003 2004 2005 2006 2007 2008

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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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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)

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1

Non-financialprivate enterprises

Households Home equity lines of credit

Repayment loanssecured ondwellings

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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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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

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1997 2000 2003 2006

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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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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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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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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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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

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1997 1999 2001 2003 2005 2007

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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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2006 2007 2008 2009 2010 2011

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Source: Norges Bank

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Chart 3.3 Equity indices, Oslo Stock Exchange. Daily figures. 1 Jan 07 – 29 May 08. 1 Jan 07=100.

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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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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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Source: Oslo Stock Exchange

Banks and financial institutions 2007

Non-financial enterprises 2008

Non-financial enterprises 2007

Banks and financial institutions 2008

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Liabilities Assets

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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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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)

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1998 2000 2002 2004 2006

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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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2000 2001 2002 2003 2004 2005 2006 2007

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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

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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

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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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1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006

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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

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Young first-timehomebuyers

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Increasing debt With debt All0

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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

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Percentile financial wealth

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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

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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

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1985 1988 1991 1994 1997 2000 2003 2006

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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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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)

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1987 1991 1995 1999 2003 2007 2011

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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