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OSLO (Thomson Financial) - Norway's biggest bank DnB NOR ASA posted very strong third-quarter profit before tax of 4.498 bln nkr compared with 3.558 bln nkr for the same period last year, well above market expectations, as the bank reported continued good progress in its main operations.
Market consensus was for DnB to report pretax profit of of 4.126 bln nkr.
DnB NOR's net interest income came in at 4.663 bln nkr against 3.911 bln for the same period last year.
According to a survey of analysts conducted by TDN Finans, net interest income which represents the bank's core lending operations was expected at 4.337 bln nkr and compared with the 3.91 bln nkr posted for the third quarter last year.
Return on equity for the quarter was 21.8 pct compared with 18 pct for the third quarter last year.
Analysts said they were delighted with the results and said the net interest income performance was particularly strong.
'The results overall were exceptionally good and I would would focus particularly on net interest income,' said First Securities analyst Nils Christian Oyen.
'Margins, instead of falling, are on the rise again and credit growth was risk,' he added.
Analyst Terje Fatnes at Enskilda said the performance was comfortably above market expectations.
'It is a very good set of figures. I think it will be well received by the market,' he added.
The bank said in a statement that its overall financial performance reflected strong growth in lending and deposits and continued loan write-downs on loans and guarantees.
It added that the performance was also sustained by a strong Norwegian economy combined with general favourable market developments for the group.
'We also observe that the decline in interest spreads has levelled off and that net interest income shows a sound trend,' said chief executive Rune Bjerke.
The latest performance builds on the solid one achieved the previous quarter.
In August, DnB NOR shares moved higher after the group posted second-quarter net interest income and other key numbers which were above expectations, delighting analysts. The bank said in a statement that profits were boosted by income growing faster than costs, the soundness of the investment portfolio and low writedowns.
Bjerke said at the time that the bank was seeing strong development in all markets and that 2007 was developing into a good year.
In October, DnB NOR presented new financial targets with pretax operating profits before write-downs of 20 bln nkr in 2010 based on a 10 pct average annual rise in profits and a minimum 16 pct return on equity from 2008.
A new cost programme is also aiming to cut the group's costs by 1 bln nkr annually with full effect from 2010.
'We have set ambitious targets for growth and cost developments in the years to come and have made good progress in preparing for a continued rise in profits in the group's Norwegian as well as international operations,' Bjerke said in a statement on Thursday. patrick.mcloughlin@thomson.com pm/slj COPYRIGHT Copyright Thomson Financial News Limited 2007. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.