EU FINANCIALS: DNB Q1 25 Earnings
Small credit positive. DNB beats revenue expectations, both interest and non-interest income adding to the surprise. Strong YoY gains in fee & commissions also notable, as are lower provisions and NPLs.
• CET1 of 18.5% is -0.9% vs Q4 2024. The Carnegie purchase subtracted -1.2%. Retained profits (after distributions added 0.5%)
• Net Revenue NOK21.9bn vs est. NOK21.6bn (-4.1% QoQ / 7.4% YoY)
• Net Interest Income NOK16.4bn vs est. NOK16.3bn (1.7% QoQ / 5.7% YoY)
• Commission & Fee Income NOK3.5bn vs est. NOK3.3bn (15.2% QoQ / 29.5% YoY)
• Net Trading Income NOK1.2bn vs est. NOK0.9bn (-28.3% QoQ / 0.6% YoY)
• Total Non-Interest Expenses NOK7.9bn vs est. NOK7.8bn (6.4% QoQ / 8.6% YoY)
• Loan Loss Provision NOK0.4bn vs est. NOK0.5bn (141.2% QoQ / 26.9% YoY)
• Net Income NOK10.8bn vs est. NOK10.3bn (-10.8% QoQ / 6.3% YoY)
• CET1 Fully loaded 18.5% vs est. 18.7%
Valuation & Performance
The DNBNO Sr Non-Pref curve is notable flatter than some peers. Tier 2 (which only received a 1 notch down adjustment for DNBNO) look in line
3 Month Performance (05/06/25 - 02/07/25)
DNBNO Sr Preferred +8bp, € Banks +12bps
DNBNO Sr Non Preferred +23bps, € Banks +22bps
DNBNO Tier 2 +29bps, € Banks +32bps
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Historical bullets
US TSYS: Extending Lows
- Risk-on tone gathering some momentum in the last couple minutes -- no obvious headline trigger, however, as Tsys extend lows with TYM5 marking 111-19 (-15), just above initial technical support at 111-15.5 (Low Apr 7), while stocks extend recent highs -- SPX emini climb to 5224.75 high, 5208.75 last (+111.5).
- Cross asset, Gold back over 3,000 at 3009.5 last, Crude makes mild gain (WTI +.30 at 61.0), Bbg US$ index -3.22 at 1268.34.
OUTLOOK: Price Signal Summary - Reversal Exposes Key Support In Gilts
- In the FI space, a bull cycle in Bund futures traded in a volatile manner Monday. For now, a bull cycle remains in play and a pullback is considered corrective. A fresh short-term cycle high yesterday signals scope for a continuation of the uptrend. The contract has cleared 131.14, 76.4% of the Feb 28 - Mar 11 bear leg. This strengthens the bullish condition and opens 132.56, the Feb 28 high. Initial firm support to watch lies at 129.15, the 20-day EMA.
- A sharp sell-off in the Gilt futures contract highlights a strong reversal of the recent bull cycle between Mar 27 - Apr 7. A continuation down would expose the next key support located at 90.55, the Mar 27 low. Clearance of this level would confirm a full reversal of the Mar 27 - Apr 7 rally. On the upside, a resumption of gains would initially open 92.70 and 93.38, the 38.2% and 61.8% retracement of the Apr 7 high-low range.
US: Bessent-White House Talked What Countries To Prioritise In Trade Negotiation
Treasury Secretary Scott Bessent, speaking to CNBC confirms that President Donald Trump will be personally involved in tariff negotiations. Says that any trade negotiations in the future are not as a result of the volatility in financial markets, but 'massive inbound calls' from other countries.
- Says that 'everything is on the table' with regard to what can be negotiated on tariffs, referring specifically to a question on European VAT.
- Bessent says conversations have happened in the White House with regard to what countries to prioritize in trade talks. "If there are solid proposals, we can end up with good deals."
- Bessent: "It would be a mistake for anyone to think [Trump doesn't have the upper hand]."
- Using a poker analogy, Bessent says China is escalating the trade war while "playing with a pair of twos [a weak hand]".
- Bessent says that he was "not involved" in the calculation of the numbers of 'reciprocal' tariffs.
