DNB sees another year of challenge in Norway

Rune Bjerke, group CEO of the DNB group, Norway’s biggest financial services provider, has commented at the ongoing ONS 2016 oil and gas sector industry conference that he sees another tough year ahead for Norwegian businesses before the economy starts to turn by the end of 2017 into 2018.

Bjerke’s comments were reported by local business daily Dagens Næringsliv, which added that the bank sees some 50 key problem clients amongst its 230,000 business customers currently on its books. Most of these are in the oil and gas sector, which has been hit hard by the fall in global prices for hydrocarbons in recent times.

Even when the oil price rises, it can take time for this to feed through in terms of factors such as investment decisions, DN reports Bjerke saying.

According to data from FE, there are some 11 funds in its Offshore Mutual universe that have more than 50% exposure to Norway. Over the past three years, these have tended to provide positive returns in euros, although in the near term they have also performed generally speaking well in terms of returns denominated in euros.

Over the three-year period to 30 August, NOK has generally weakened against the euro and the dollar, which suggests that the returns from funds have been higher still in local currency. The link to oil is ever present on the local stock market: Statoil figures as a key holding in many of the funds identified, reflecting its dominant position by market capitalisation value versus other Norwegian companies.

The response of the broader Norwegian economy to improvements in the global oil price, as noted by Bjerke, is therefore both encouraged and challenged by developments at Statoil. Recently, it announced a new investment plan for its large Johan Sverdrup field. Norwegian authorities have approved a new development plan worth some NOK99bn – down NOK24bn from an earlier plan. Key to this, however, is that Statoil has also stated that the breakeven price for the field’s production has been lowered to $25 per barrel. Total investment in the field is estimated at some NOK140bn-170bn ($17bn-20.5bn).

Funds 1m 3m 6m 1yr 3yr (return in %)
Storebrand Vekst in EU 4.33 6.78 27.49 33.93 44.20
Storebrand Optima Norge A in EU 4.10 1.17 11.44 6.58 21.50
Storebrand Norge in EU 2.41 0.44 11.49 6.85 16.66
Odin Norge NOK in EU 2.81 0.85 10.28 5.79 15.53
Storebrand Aksje Innland in EU 2.96 0.33 10.76 5.27 9.65
Nordea 1 Norwegian Equity E NOK in EU 1.95 2.08 12.88 8.42 8.65
Storebrand Verdi in EU 2.35 -1.55 7.40 5.54 8.36
Storebrand Stat A TR in EU 1.36 1.56 3.37 2.59 0.21
KBC Renta Nokrenta Cap in EU 1.36 1.91 3.51 2.65 -1.22
Nordea 1 Norwegian Bond E NOK in EU 1.25 1.55 3.74 1.64 -3.16
Nordea 1 Norwegian Kroner Reserve E NOK in EU 1.65 0.30 3.04 0.47 -10.81


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