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Banks are protesting violently because it has become more difficult to obtain loans.
Norges Bank recently announced that banks will strengthen lending practices for new clients. Therefore, it becomes more difficult for new clients to obtain loans. But Norway’s largest bank, DNB, did not recognize it in this picture.
– This is not suitable for us. DNB is open to all new mortgage clients, and it has not become more difficult than usual to obtain loans for Norwegian consumers with us, both for new and existing clients, says market leader Ingjerd Blekeli Spiten.
“We grew throughout 2019, and we also have ambitions to grow with good customers in 2020,” says Lars Sætre, director of communications for Handelsbanken.
When Nettavisen confronts CEO Snorre Storset in Nordea Norway with the Norges Bank investigation, he responds:
Also read: Interest rates: Banks can further reduce
Unchanged practice
– We have not said it ourselves, we have not changed our credit practices. We are experiencing good demand for credit and we increased our loans in the first quarter by a total of NOK 9.4 billion. Over the past year, we increased loans to the retail market by NOK 14 billion.
– So you don’t want to reach out to new customers?
– No, but we are looking a little more today when the client should have intermediate financing: what it could mean for each client to have two loans for six months, if a difficult financial situation arises. So, we recommend selling before buying a new home.
Norges Bank informs Nettavisen that they are asking banks standardized questions so that they can follow developments over time. Norges Bank does not ask banks to explain their responses,
In the first quarter, Nordea Norway had an annualized mortgage growth of 4.0 percent, that is, a growth of 1 percent in the quarter. During the first three banking months of the year, Nordea Norway gained 10,800 new private clients.
– What do you mean about the demand for loans for private clients?
– Of course, we still see a lot of uncertainty in the property market, but the market works well. There will be demand for mortgages in the future.
– But the fear of falling house prices in the future, and it is necessary Mortgage Regulation?
– We are in a special situation in which several people have been granted the right to deduct interest, and with more exceptions than normal regulations. We believe that house prices will drop somewhat, Storset responds.
Also read: banks lower interest rates differently; this may demand it now
inertia
– We saw during the oil crisis five years ago that house prices fell between 5 and 10 percent in the most exposed parts of the country.
The Norwegian head of Nordea believes that house prices in Oslo may have fallen a little more than the figures show, but there is a certain inertia in the system that has not yet been captured by statistics. In addition, Nordea Norway will not require new rates from mortgage applicants due to a somewhat lower price level.
Long market rates have fallen, so banks now offer record low fixed rates at approx. 2 percent if you set the interest rate for 3 to 5 years ahead.
But despite these low interest rates, Nordea sees no significant change in demand for fixed-rate loans. The ratio you choose to set the mortgage interest rate in Nordea is approx. 5 percent
Also read: The experts of the real estate market: this is more important than ever (+)
individually
Nordea Norway recently signed a large collective agreement with the large organization Unio, where members are offered very good terms, at the official interest rates that the Nordea states at Finansportalen.no.
– Do you really need to be a member of a large organization to get the best conditions?
– We do an individual evaluation of each client, and it is not necessary to be a member of a large organization to obtain competitive conditions. There may be situations where, depending on the general relationship with the bank, customers receive a lower interest rate.
– Are you careful to gain market share in today’s most uncertain market?
– We see that we are taking market shares in both the corporate and private markets. There was a flattening in the private market towards the end of last year, but we have taken it again.
– In the corporate market, we have taken market shares, and the loan portfolio has grown by 15 percent since the first quarter of last year. But now we are doing more analysis of commercial clients to see if they are really viable after the crown crisis. In some cases, being more open about the fact that more debt does not meet your challenges, and then we say no.
Nordea gained new corporate clients from January to March 2000, and according to Storset, there has been a broad approach. Nordea’s credit growth was 6.8% in the first three months of the year.
Also read: Nordea has received 60,000 loan repayment requests
Lose more in Norway
And so far the losses are not dramatic as a result of the crown crisis, on the contrary. The entire Nordea Group had net losses in the first quarter of 154 million euros, NOK 1,730 billion. We are talking about some promises of a total loan portfolio of EUR 324 billion, up from NOK 3.8 billion.
But in Norwegian operations, net loss provisions amounted to NOK 930 million. Therefore, Nordea Norway represents a disproportionate share of the losses in the group in view of the proportion that they represent in the large Nordea group.
“Losses are a combination of established losses and management’s assessment of losses that may occur in the near future,” says Storset.
You do not want to specify how much of the losses have occurred now and how much will take into account future provisions. Loss assessments are conducted on an ongoing basis and consist of individual provisions for customers and more group loss provisions for industries.
Offshore frames
– Norway is special, with the fall in the price of oil. It particularly affects the offshore industry, which was on the way to improvement, but never managed to fully recover after the previous recession. Now the industry is being hit by lower oil investments, and therefore there have been additional loss provisions in Norway that have not been matched in the other Nordea countries, Storset says.
– How much do you fear the trend of loss in the future as a result of the crown crisis?
– We have said that there is too much uncertainty about this now and therefore too early to put more figures on it.
– Do you fear the long-term effects of the coronavirus?
– When it comes to the long-term effect, our economists have said that the level of activity is gradually decreasing, and by the end of the year, speed has almost returned. But unemployment will be 1-2 percentage points higher than before the crown eruption, so it will have an effect for several years.
Therefore, there may be some reduction in the demand for loans. Eika Group chief economist Jan Ludvig Andreassen forecast negative credit growth in Norway over the summer against Nettavisen.
Dominated optimist
– In summary, how do you evaluate prospects?
– The world will not sink, I am optimistic by nature. But it is incredibly important to get the wheels rolling again. Together with our corporate clients, we begin to plan the next phase, we must help companies to help them become winners again.
– I am a good optimist, says Storset.
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