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Charts Financial Stability 1/08

This chart provides an overview of various financial stability indicators including money market rates, capital ratio, interest margin, market value, credit growth, non-performing loans, household debt, credit spreads, default rates, share prices, and bank lending practices.

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Charts Financial Stability 1/08

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  1. Charts Financial Stability 1/08

  2. Summary

  3. Chart 1Spread 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 12-month 3-month 1-month 1) The expected key rate is represented by the Overnight Indexed Swap (OIS) Sources: Bloomberg and Norges Bank

  4. Chart 2 Banks’ capital ratio and pre-tax profit as a percentage of average total assets.1) Annual figures. 1998 – 2007 Capital ratio (right-hand scale) Profit before loan losses and write-downs (left-hand scale) Profit after loan losses and write-downs (left-hand scale) 1) Excluding branches of foreign banks in Norway Source: Norges Bank

  5. Chart 3 Banks’ interest margin. Percentage points. Quarterly figures. 87 Q1 – 08 Q1 Source: Statistics Norway

  6. 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 at December 2007 Output gap (right-hand scale) Market value (left-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

  7. Chart 5 12-month growth in credit to mainland Norway.Per cent. Jan 1997 – Mar 2008 Non-financial enterprises1) Households2) Total credit 1) All foreign credit to mainland Norway is assumed granted to enterprises 2) Household domestic credit Source: Statistics Norway

  8. Chart 6 Banks’ gross stock of non-performing loans and reported loan losses1). Percentage of gross lending. Quarterly figures. 92 Q1 – 08 Q1 Non-performing loans Loan losses, annualised 1) Excluding branches of foreign banks in Norway Source: Norges Bank

  9. Chart 7 Household debt as a percentage of disposable income. Annual figures. 1990 – 2007 Denmark Iceland UK Norway US Sweden Finland 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

  10. 1 International banks and financial markets

  11. Chart 1.1 Credit spreads between government bonds in the US and Europe. Percentage points. Daily figures. 10 Apr 02 – 29 May 08 High-yield companies in the US Emerging economies, EMBI+ US, BBB Euro area, BBB Source: Reuters EcoWin

  12. Chart 1.2 Default rates on US mortgages. Per cent of lending. Quarterly figures. 98 Q1 – 07 Q4 Subprime Total Prime Source: Bloomberg

  13. 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) UK US Euro area Norway 2) 1) Expected key rates are measured by Overnight Indexed Swaps (OIS) 2) Norges Bank’s projection Sources: Bloomberg, Reuters and Norges Bank

  14. Chart 1.4 Writedowns and credit losses together with capital raised for selected international banks. In billions of USD. Jan 07 – 29 May 08 Source: Bloomberg

  15. Chart 1.5 Share prices for selected international banks. 1 Jan 07 = 100. Daily figures. 1 Jan 07 – 29 May 08 Source: Bloomberg

  16. Chart 1.6 CDS prices for selected US and European banks. Basis points. Daily figures. 1 Jan 07 – 29 May 08 Source: Bloomberg

  17. Chart 1.7 Share prices for the biggest bond insurers. USD.1 Jan 07 – 29 May 08 Ambac MBIA Source: Bloomberg

  18. 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 For commercial buildings For large and medium-sized enterprises For household mortgages2) 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

  19. 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 enterprises For household mortgages 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

  20. Chart 1.10 GDP growth. Forecasts for 2008 at different points in time. Increase on previous year in per cent. US UK Euro area China Source: Consensus Economics

  21. Chart 1.11 House prices in US and Europe. 12-month rise. Per cent. Monthly figures. Apr 03 – May 08 Denmark Spain UK Ireland US Source: Reuters EcoWin

  22. 2 Norwegian financial institutions

  23. Chart 2.1 Banks’1)assets and liabilities. Per cent. 31 March 2008 Assets exposed to market risk Other assets Customer deposits Loans from financial institutions Lending to households Securities debt Lending to enterprises Other liabilities Equity 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

  24. Chart 2.2 Selected funding sources for Norwegian banks1). Percentage of gross lending. Quarterly figures. 98 Q1 – 08 Q1 Deposits from customers in foreign currency Deposits from customers in NOK Market funding in foreign currency Market funding in NOK 1) All banks except branches and subsidiaries of foreign banks in Norway Source: Norges Bank

  25. Chart 2.33-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 Money market Treasury bills Deposit rate Sources: Norges Bank and Statistics Norway

  26. Chart 2.6 Selected funding sources for Norwegian banks1). In billions of NOK. Year-end 2003 – 2007 and March 2008 NOK Foreign currency 1) All banks except branches and subsidiaries of foreign banks in Norway Source: Norges Bank

  27. Chart 2.7 Norwegian banks’¹) and mortgage companies’ funding sources. Percentage of gross lending. Quarterly figures. 00 Q1 – 08 Q1 Bonds Deposits from retail sector Deposits / loans from financial institutions Deposits from corporate sector Notes and short-term paper 1) All banks except branches and subsidiaries of foreign banks in Norway Source: Norges Bank

  28. Chart 2.8 Norwegianbanks’1) market funding by maturity.Per cent. 06 Q4 – 08 Q1 1) All banks except branches and subsidiaries of foreign banks in Norway Source: Norges Bank

  29. 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

  30. 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) DnB NOR2) Medium-sized banks3) 1) All banks except branches and subsidiaries of foreign banks in Norway 2) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken 3) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006 Source: Norges Bank

  31. Chart 2.11 Norwegian banks’¹) short-term foreign debt²). Per cent of gross lending. Quarterly figures. 00 Q1 – 08 Q1 DnB NOR3) Medium-sized banks4) Small banks4) 1) All banks except branches and subsidiaries of foreign banks in Norway 2) Short-term paper, deposits and loans from other financial institutions 3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken 4) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006 Source: Norges Bank

  32. Chart 2.12 Norwegian banks’¹) liquidity indicator (ratio of stable funding sources to illiquid assets). Per cent. Quarterly figures. 00 Q1 – 08 Q1 DnB NOR2) DnB NOR including foreign branches, borrowers and depositors Small banks3) Medium-sized banks) 1) All banks except branches and subsidiaries of foreign banks in Norway 2) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken 3) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006 Source: Norges Bank

  33. Chart 2.13 Banks’1) total interest margin divided into deposit and lending margin2). Percentage points. End of quarter. 97 Q4 – 08 Q1 Total interest margin Lending margin Deposit margin3) 1) All banks in Norway 2) Deposit and lending margins are measured against 3-month money market rates Source: Statistics Norway

  34. Chart 2.14 Banks’1) lending margins. Percentage points. 07 Q2 – 08 Q1 1) All banks in Norway Sources: Statistics Norway and Norges Bank

  35. Chart 2.15 Banks’1) profit/loss in per cent of average total assets. Annual figures 2002 – 2007. 07 Q1 and 08 Q1 Q1 1) All banks excluding branches of foreign banks in Norway Source: Norges Bank

  36. Chart 2.16 Banks’1) gross stock of non-performing loans. Percentage of gross lending to sector. Quarterly figures. 97 Q1 – 08 Q1 Enterprises All sectors Households 1) All banks in Norway Source: Norges Bank

  37. Chart 2.17 Banks’¹) Tier 1 capital ratio²). Per cent. Quarterly figures. 02 Q1 – 08 Q1 Small banks4) Medium-sized banks4) DnB NOR3) Measured according to the Basel I framework 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 reports 3) DnB NOR Bank (excluding branches abroad) and Nordlandsbanken 4) The dividing line between small and medium-sized banks is NOK 10bn (measured by assets) at end-2006 Source: Norges Bank and Kredittilsynet

  38. Chart 2.18 Growth in banks’ and mortgage companies’¹) lending. 12-month growth. Per cent. Monthly figures. Jan 00 – Apr 08 Corporate sector Retail sector All sectors 1) All banks and mortgage companies in Norway Source: Norges Bank

  39. Chart 2.19 Probabilities of bank failures). 75 and 90 per cent percentiles.2) Quarterly figures. 00 Q1 – 08 Q1 75% 90% 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

  40. Chart 2.20 Life insurance companies’ buffer capital1) and asset mix. Per cent of total assets. Quarterly figures. 01 Q1 – 08 Q1 Bonds "hold to maturity“2) Bonds and short-term paper Equities and shares Real estate Buffer capital 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 capital 2) From 2007 other bonds for permanent investment are also included Source: Kredittilsynet

  41. 3 The Norwegian macro-financial environment

  42. Chart 3.1 Household real disposable income1) and consumption2). Annual growth. Per cent. 1997 – 2007 Income Consumption 1) Adjusted for estimated reinvested share dividends for 2000 – 2005 and redemption/reduction of equity capital for 2006 – 2007 2) Includes consumption in non-profit organisations Sources: Statistics Norway and Norges Bank

  43. 30% 50% 70% 90% Chart 3.2 Projected key policy rate in the baseline scenario with fan chart. Per cent. Quarterly figures. 06 Q1 – 11 Q4 Source: Norges Bank

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

  45. Chart 3.5 Aggregated bond issues registered at Oslo Stock Exchange. Monthly figures. Billion NOK Banks and financial institutions 2007 Banks and financial institutions 2008 Non-financial enterprises 2007 Non-financial enterprises 2008 Source: Oslo Stock Exchange

  46. Chart 3.6 Household liabilities and assets In billions of NOK. 2007 Q4 Other claims Securities Insurance reserves Notes, coins and bank deposits Housing wealth1) Other loans Mortgages 1) Projections Sources: Association of Norwegian Real Estate Agents, ECON Pöyry, Finn.no, Association of Real Estate Agency Firms, Statistics Norway and Norges Bank

  47. Chart 3.7 Credit to households. 12-month growth in percent. Monthly figures. Jan 98 – Mar 081) Mortgages Domestic credit to households Other loans 1) Break in the series in December 2005 Source: Statistics Norway

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