Lysbilde 1 - Norges Bank

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Transcript Lysbilde 1 - Norges Bank

Charts FS 1/06

Chart 1 Banks’ Tier 1 capital ratio and pre-tax profit as a percentage of average total assets 1) . Annual figures. 1998 – 2005 1.5

10 Tier 1 capital ratio (right-hand scale) 1.2

8 0.9

Profit before loan losses (left-hand scale) 6 0.6

0.3

Profit after loan losses (left-hand scale) 2 4 0 1998 1999 2000 2001 2002 2003 2004 2005 0 1) Excluding branches of foreign banks in Norway Source: Norges Bank

Chart 2 Banks’ interest margin. Percentage points. Quarterly figures. 87 Q1 – 06 Q1

7 8 3 4 5 6 1 2 0 1987 1990 1993 1996 1999 2002 2005 0 1 2 3 4 5 8 6 7

Source: Norges Bank

Chart 3 Credit to mainland Norway. In percentage of mainland GDP. Quarterly figures. 87 Q1 – 05 Q4

180 180 170 160 170 160 150 140 130 120 110 1987 1990 1993 1996 1999 2002 2005 150 140 130 120 110

Sources: Statistics Norway and Norges Bank

Chart 4 Credit to mainland Norway. 12-month growth in per cent. Monthly figures. Jan 97 – Apr 06

28 24 20 16

Households 2) Total credit (C3)

12 4 8 0

Non-financial enterprises 1)

-4 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 0 -4 4 8 12 28 24 20 16

1) enterprises 2) All foreign credit to mainland Norway assumed given to Household domestic debt Source: Norges Bank

Chart 5 House prices (annual rise) and credit to households (C2, change in stock at the end of the year). Per cent. Annual figures. 1992 ― 2009 1) 15 10 5 0 House prices Credit 15 10 5 0 -5 -5 -10 1992 1996 2000 1) Projections for 2006 ― 2009 2004 2008 -10 Sources: Statistics Norway, ECON, FINN.no, Association of Norwegian Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF) and Norges Bank

Chart 6 Equity ratio and pre-tax return on equity for companies listed on Oslo Stock Exchange 1) . Per cent. Quarterly figures. 04 Q1 – 05 Q4

50 40 30 20 10 -10 0 -20 2002

Equity ratio

2003

Return on equity

2004 2005 10 0 -10 -20 50 40 30 20

1) Companies registered in Norway with the exception of banks, insurance companies, Statoil and Hydro Sources: Statistics Norway, Statoil, Hydro and Norges Bank

Chart 1.1 Forecasts for GDP growth abroad 1) . Increase on previous year in per cent 10 8 6 2005 2007 2006 2008 4 2 0 US Euro area Japan China Trading partners 0 1) Forecasts in Inflation Report 1/06. Updated projections will be published in IR 2/06. Sources: IMF, EU Commission, Consensus Forecasts and Norges Bank 10 4 2 8 6

Chart 1.2 International equity indices. 1 Jan 05 = 100. Daily figures. 3 Jan 00 – 30 May 06

190 170 150

Europe Stoxx Norway OSEBX Japan Topix

130 110 90 70 50

US S&P 500

30 2000 2001 2002 2003 2004 2005 2006 190 170 150 130 110 90 70 50 30

Source: Reuters EcoWin

Chart 1.3 International equity indices. 1 Jan 05 = 100. Daily figures. 3 Jan 05 – 30 May 06

190 170

Norway OSEBX Japan Topix

190 170 150 150 130 110 90 2005

Source: Reuters EcoWin Europe Stoxx US S&P 500

2006 130 110 90

Chart 1.4 Forward-looking P/E 1) for equity indices in Europe and the US. Yearly figures. 2000 - 2007 30 30 25 Europe US 25 20 20 15 15 10 5 0 2000 2002 2004 2006 10 5 0 1) Based on expected earnings at the beginning of the year Source: Reuters EcoWin

Chart 1.5 Household debt burden as percentage of disposable income. Annual figures. 1990 – 2004/2005

250 250

Netherlands

200 200

Iceland

150

Denmark

150

Norway

100

UK

100

US Sweden

50 1990 1992 1994 1996 1998 2000 2002 2004 50

Sources: OECD, BIS, Bank of England, Sveriges Riksbank, Danmarks Nationalbank, Sedlabanki Island and Norges Bank

Chart 1.6 Rise in house prices in selected countries. Annual average rise in per cent. 2001-2005 18.0

16.0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

2001 - 2005 2005 Denmark Norway Sweden US UK Source: Reuters EcoWin 6 4 2 10 8 0 18 16 14 12

80 Chart 1.7 Indicator for housing starts and annual sale of new homes in the US in thousands. Monthly figures. Jan 95 – May 06 1500 70 60 1250 1000 50 40 30 1995 New homes sale (right-hand scale) 1997 1999 2001 Housing starts 1) (left-hand scale) 2003 2005 750 500 250 1) Sentiment indicator from National Association of Home Builders (NAHB). Higher values correspond to higher expectations. 50 corresponds to neutral sentiments.

Source: Reuters EcoWin

Chart 1.8 Balance of payments on current account. Projections 2006. Billions of USD 1200 1000 800 600 Others UK Euro area except Germany Statistical divergence Germany Switzerland, Norway, Sweden, Denmark Japan China 400 US Middle East 200 Others 0 Source: IMF Deficit Surplus

10 Chart 1.9 Implicit 5-year government bonds in 5 years. Weekly figures. Per cent. 1 Jan 95 – 26 May 06 UK 10 8 Norway 8 US 6 6 4 Germany 2 1995 2000 Sources: Reuters EcoWin and Norges Bank 2005 4 2

Chart 1.10 Prices for gold, base metals (Brent Blend). 1 Jan 05 = 100. Daily figures. 1 Jan 00 – 30 May 06 1) and oil

250

Base metals

200 250 200 150 100

Oil

150 100

Gold

50 50 0 2000 2001 2002 2003 2004 2005 2006

1) LMEX. Index based on the prices of six base metals Source: Reuters EcoWin

0

Chart 1.11 Issuance of CDOs. Billions of USD. Yearly figures. 1995 - 2005

300 250 200 300 250 200 150 100 150 100 50 0 1995 1997 1999 2001 2003 2005 0

Source: IMF

50

Chart 1.12 Price 1) for hedging against credit events related to loans issued by Icelandic banks. Basis points. Daily figures. 1 Feb 06 – 30 May 06

100 90 80 70

Landsbanki

60 50 40 30 20

Feb 06 Mar 06 Apr 06 Glitnir Kaupthing May 06

60 50 40 30

Jun 06

20 100 90 80 70

1) Based on the premium in CDS-contracts on 5-year bonds Source: Thomson Datastream

Chart 2.1 Credit as a percentage of GDP. Quarterly figures. 87 Q1 – 05 Q4

180 170

Total credit to mainland Norway 2)

160 150 140 140 130 120

Credit from domestic sources (C2) 2) Total credit (C3) 1)

110 1987 1990 1993 1996 1999 2002 2005 130 120 110 180 170 160 150

1) 2) Percentage of GDP Percentage of mainland GDP Source: Norges Bank

Chart 2.2 Output gap 1) and oil price 2) . Annual figures. 1996 - 2009 4 3 2 1 0 -1 Output gap (left-hand scale) Oil price (right-hand scale) -2 1996 1999 2002 2005 2008 1) 2) Difference between actual and potential mainland GDP. Deviation in per cent. Projections 2006 – 2009 from Inflation Report 1/06 Brent Blend crude oil in USD. Spot price. Figures for 2006 – 2009 are forward prices on light crude oil as of 30 May 2006 Sources: Statistics Norway, Reuters EcoWin and Norges Bank 90 80 70 60 50 40 30 20 10 0

Chart 2.3 Housing turnover and housing starts in thousands. 12-month growth in house prices in per cent. Time needed to sell a dwelling measured in number of days. Monthly figures. Jan 99 – Apr 06 60 50 40 30 Housing turnover (total over past 12 months) Time needed to sell a dwelling 20 10 Housing starts (total over past 12 months) 20 10 0 House prices 0 -10 1999 2000 2001 2002 2003 2004 2005 2006 -10 60 50 40 30 Sources: Statistics Norway, ECON, FINN.no, Association of Norwegian Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF) and Norges Bank

Chart 2.4 Deflated house prices. Indexed, 1985=100. Annual figures. 1985-2005

200 150

Deflated by house rent Deflated by building costs Deflated by CPI

200 150 100 100 50

Deflated by disposable income 1)

0 1985 1988 1991 1994 1997 2000 2003 0 50

1) Disposable income less estimated reinvested dividends from 2000 Sources: Statistics Norway, NEF, EFF, ECON and FINN.no

Chart 2.5 Credit to households. 12-month growth in per cent. Jan 98 – Apr 06

16 14 -2 0 2 4 12 10 6 8

Mortgage loans Domestic credit to households Other loans

1998 1999 2000 2001 2002 2003 2004 2005 2006 16 14 2 4 0 -2 6 8 12 10

Source: Norges Bank

Chart 2.6 Household debt by type of loan. Billions of NOK. 1996, 2000 and 2006 1) 1600 1400 Mortgage loans Other loans 1428 bn 1200 1000 800 600 400 200 0 587 bn 809 bn 1996 2000 2006 1) By the end of March 2006 Source: Norges Bank

Chart 2.7 Average debt per household in indebted households by age group. In thousands of 2005-NOK. 1986-2005 1)

900 750 600 450

35-44 25-34 45-54 Total

900 750 600 450 300

55-66 17-24

150

67-80

0 1986 1990 1994 1998 2002

80-

300 150 0

1) Estimates for 2004 and 2005 Sources: Statistics Norway and Norges Bank

Chart 2.8 Household saving ratio. Per cent. Yearly figures. 1996 – 2005

14 12 10 8

National accounts unadjusted National accounts adjusted 1)

6 4 2 0 1996 1998

National accounts + NB adjusted 1, 2)

2000 2002 2004 2 0 6 4 14 12 10 8

1) Adjusted for estimated reinvested dividends from 2000 2) Norges Bank’s figures on net financial investments combined with Statistics Norway’s figures on fixed investments Sources: Statistics Norway and Norges Bank

Chart 2.9 Household financial assets by financial instrument. Billions of NOK. Quarterly figures. 95 Q4 – 05 Q4 2000 2000 1600 1200 Insurance reserves Other 800 Securities 400 Coins, notes and bank deposits 0 1996 1998 Source: Norges Bank 2000 2002 2004 0 1600 1200 800 400

Chart 2.10 Household net financial wealth. Billions of NOK. Quarterly figures. 95 Q4 – 05 Q4 500 Net financial wealth 500 400 Accumulated revaluations 400 300 300 200 100 Accumulated net financial investments 0 1995 1997 Source: Norges Bank 1999 2001 2003 2005 0 200 100

Chart 2.11 Model projections and uncertainty for house prices.

1) 4-quarter rise. Per cent. 03 Q1 – 09 Q4 20 20 15 10 5 15 10 5 -5 0 30% 50% 70% 90% 0 -5 -10 2003 2004 2005 2006 2007 2008 2009 1) The bands in the fan chart indicate different probabilities for developments in house prices. The probabilities are computed based on factors such as the deviations between estimated and actual developments in house prices during the period 90 Q2 – 05 Q4 -10 Sources: NEF, EFF, FINN.no, ECON and Norges Bank

200 180 160 140 Chart 2.12 Household debt burden 1) . Per cent. Quarterly figures. 87 Q1 – 09 Q4 240 220 120 100 1987 1991 1995 1999 2003 1) Loan debt as a percentage of liquid disposable income less estimated reinvested dividends 2007 160 140 120 100 240 220 200 180 Source: Norges Bank

Chart 2.13 Household nominal and real debt. Total (in billions) and per household (in thousands). 1987-NOK. Yearly figures. 1987 - 2009 1)

2000 1600

Nominal debt Debt deflated by CPI

1200

Nominal debt per household

800 400

Debt deflated by CPI per household

0 1987 1991 1995 1999 2003 2007

1) Projections for 2006-2009 Sources: Statistics Norway and Norges Bank

2000 1600 1200 800 400 0

Chart 2.14 Household interest burden 1) Quarterly figures. 87 Q1 – 09 Q4

14

. Per cent.

14 12 10

High inflation scenario

8 8 4 6

Baseline scenario

2 2 0 1987 1991 1995 1999 2003 2007 0

1) Interest expenses after tax as a percentage of liquid disposable income less estimated reinvested dividends plus interest expenses

4 6 12 10

Source: Norges Bank

Chart 2.15 The sight deposit rate in the baseline scenario with fan chart. Per cent. Quarterly figures. 04 Q1 – 09 Q4 8 7 6 30% 50% 70% 90% 3 2 5 4 High inflation scenario 1 Baseline scenario 0 2004 2005 2006 2007 2008 2009 Source: Norges Bank 3 2 1 0 8 5 4 7 6

18 16 Chart 2.16 Household debt-servicing in per cent of income 1) . Quarterly figures. 87 Q1 – 09 Q4 20 20 18 16 14 12 10 1987 1991 1995 1999 2003 2007 1) Estimated repayment and interest expenses as a percentage of liquid disposable income less estimated reinvested dividends plus interest expenses. Part payments defined as 1/20 of remaining debt per year 10 14 12 Source: Norges Bank

Chart 2.17 Key figures for enterprise sector 1) . Annual figures. Per cent. 1989 – 2005 2) 100 80 Equity ratio (left-hand scale) Pre-tax return on equity 60 Borrowing rate Return on total assets 40 20 16 12 8 20 4 0 1989 1991 1993 1995 1997 1999 2001 2003 2005 0 1) industry, financial sector and holding companies 2) Limited companies excluding enterprises in the oil and gas Figure for 2005 estimated on the basis of already submitted annual accounts from 9200 firms Source: Norges Bank

Chart 2.18 Probability of default for large enterprises 1) . Per cent. Monthly figures. Jan 00 – Apr 06 16 90 percentile 14 12 10 8 6 75 percentile 4 2 Median enterprise 0 2000 2001 2002 2003 2004 2005 2006 4 2 0 16 14 8 6 12 10 1) Non-financial enterprises with annual turnover exceeding NOK 70 m. Probability of default within a year Source: Moody’s KMV

Chart 2.19 Bankruptcy rate and interest burden 1) in non-financial enterprises 2) . Annual figures. 1991- 2009 3)

4 3.5

3 2.5

2

Interest burden (right-hand scale)

1.5

30 1

Bankruptcy rate (left-hand scale)

20 0.5

0 10 1991 1994 1997 2000 2003 2006 2009 0 80 70 60 50 40

1) Interest expenses in percentage of cash surplus.

Cash surplus = gross product – labour costs + net financial income 2) 3) Off-shore activities and international shipping excluded Projections for 2006 - 2009 Sources: Statistics Norway and Norges Bank

Chart 2.20 Growth in credit to mainland enterprises. 12-month growth. Per cent. Monthly figures. Jan 02 – Apr 06 20 20 16 Domestic credit 16 12 12 4 8 Total credit 4 8 -4 -8 0 -12 2002 Credit from foreign sources 2003 2004 2005 2006 0 -4 -8 -12 Source: Norges Bank

Chart 2.21 Emission of shares on the Oslo Stock Exchange. Billions of NOK. Yearly figures. 1997 – 2006 1) 25 20 15 10 5 0 45 40 35 30 1997 1999 2001 2003 2005 5 0 25 20 15 10 45 40 35 30 1) In 2006, January - April Source: Oslo Stock Exchange

Chart 2.22 Share of enterprises with dividend payments by probability of bankruptcy. Per cent. Annual figures. 2003 – 2005 1)

70 70 60 60 50 40

2003 2004 2005

50 40 30 20 30 20 10 0

0 - 0,5 0,5 - 1 1 - 2 2 - 3 Bankruptcy probability in per cent 3 >> 1) Estimate for 2005 based on a sample of already submitted annual accounts from 9200 firms

0 10

Source: Norges Bank

Chart 2.23 Changes in transaction price for offices in Oslo and employment. Price per square metre in constant 2005-prices and percentage deviation from trend. Annual figures. 1980-2005 35,000 6 Price for offices (left-hand scale) 5 30,000 25,000 20,000 Employment (right-hand scale) 1 2 3 4 15,000 10,000 0 -1 -2 -3 1980 1984 1988 1992 1996 2000 2004 Sources: OPAK and Norges Bank

4 5 0 3 1 2 8 6 7 9 Chart 2.24 Net rental yield on commercial property 1) and 10-year interest rate swap. Per cent. Annual figures 1995-2003. Monthly figures Jan 04 – Jan 06 9 Net rental yield on commercial property 8 6 7 4 5 10-year swap rate 0 3 1 2 1995 2000 Feb-04 Jul-04 Dec-04 May-05 Oct-05 1) Net rental yield on investments in the prestige segment according to Akershus Eiendom (prior to Jan 04) and DnB NOR Næringsmegling (from Jan 04) Sources: Reuters EcoWin, Akershus Eiendom and DnB NOR

Chart 2.25 Selected sub-indices on the Oslo Stock Exchange. 30 Nov 05 = 100. Daily figures. 2 May 05 – 30 May 06 170 170 Consumer staples 145 Energy 145 OSEBX 120 120 95 70 May 05 Finance Aug 05 95 Manufacturing/Materials Nov 05 Feb 06 May 06 70 Source: Reuters EcoWin

Chart 2.26 Expected earnings in 2007 for listed companies. 30 Nov 05 = 100. Monthly figures. Jan 05 - May 06

120 120

Japan

110

US

110 100 100 90

Europe

90 80 70 Jan 05

Norway

Jul 05

Source: Reuters EcoWin

Jan 06 80 70

Chart 2.27 Implied volatility in various equity markets. Daily figures. 1 Jan 04 – 30 May 06 35 30 Europe (Stoxx) Norway (OBX) 25 20 15 10 5 2004 US (S&P 500) 2005 2006 Sources: Reuters EcoWin and Oslo Stock Exchange 20 15 5 10 35 30 25

100 90 80 70 60 50 40 30 20 10 0 Chart 2.28 Enterprises’ assessments of the largest risk related to future profitability 1) . In per cent Industry Construction Retail trade Services Wage costs Stronger NOK Changed external conditions Costs of intermediary goods Oil price Lower demand Interest rates Competition Other 1) Survey conducted by Norges Bank’s regional network in March 2006 Source: Norges Bank 100 90 80 70 60 50 40 30 20 10 0

-1 4 3 2 1 0 -2 -3

Chart 3.1 Banks’ 1) profit/loss in percentage of average total assets Q1

2001 2002 2003 2004 2005 2005 2006

Net interest income Operating expenses Write-down etc.

Other operating income Loan losses Pre-tax profit/loss

4 3 2 1 0 -1 -2 -3

1) Excluding branches of foreign banks in Norway Source: Norges Bank

Chart 3.2 OSEBX and sub-indices for banks on the Oslo Stock Exchange 1) . 1 Jan 01 = 100. Daily figures. 3 Jan 01 - 30 May 06 350 350 300 Primary capital certificate index 300 250 200 Bank index 250 200 150 100 50 0 2001 2002 2003 OSEBX 2004 2005 2006 150 100 0 50 1) Gjensidige NOR was moved from the primary capital certificate index to the bank index and was included in OSEBX from 13 Sept 02 Source: EcoWin Reuters

0 1 2 3 4 5 Chart 3.3 Banks’ 1) gross stock of non-performing loans. Percentage of gross lending to sector. Quarterly figures. 96 Q1 – 06 Q1 5 Enterprises 4 All sectors 3 2 1996 1998 1) All banks in Norway Source: Norges Bank 2000 2002 Households 2004 2006 0 1

3.5

3 2.5

Chart 3.4 Banks’ 1) total interest margin split into deposit and lending margin 2) . Percentage points. Quarterly figures. 96 Q1 – 06 Q1

4 4

Lending margin Total interest margin

3 3.5

2.5

2 1.5

1 0.5

0 1996 1998

Deposit margin

2000 2002 2004 2006 2 1 0 1.5

0.5

1) 2) All banks in Norway Moving average over the past four quarters Source: Norges Bank

Chart 3.5 Norwegian banks’ and Tier 1 capital ratio. Per cent. Quarterly figures. 02 Q1 – 06 Q1 1) capital adequacy 14 Capital adequacy 12 10 8 Tier 1 capital ratio 4 6 2 0 2002 2003 2004 2005 2006 0 2 4 6 14 12 8 10 1) Excluding branches of foreign banks in Norway Source: Norges Bank

Chart 3.6 Growth in banks’ and mortgage companies’ 1 ) lending to the corporate sector. 12-month growth. Per cent. Monthly figures. Dec 03 – Apr 06 40 30 Fokus Bank 2) and Handelsbanken 20 10 10 0 All banks and mortgage companies 0 -10 Dec 03 Mar 04 Jun 04 DnB NOR 2) and Nordea Norge 2) Sep 04 Dec 04 Mar 05 Jun 05 Sep 05 Dec 05 Mar 06 -10 1) 2) All banks and mortgage companies in Norway Included mortgage companies in the same financial group Source: Norges Bank 40 30 20

Chart 3.7 Banks’ and mortgage companies’ 1) lending to selected industries. Four-quarter growth. Per cent. 02 Q1 – 06 Q1 25 20 15 Property management and commercial services Construction, electricity and water supply 10 5 Retail trade, hotel and restaurant 0 -5 -10 2002 2003 2004 Manufacturing 2005 2006 25 20 15 10 0 5 -5 -10 1) All banks and mortgage companies in Norway Source: Norges Bank

Chart 3.8 Distribution of banks’ 1) lending to retail and corporate markets 2) . Percentage of gross lending. Annual figures. 2003 - 2005 Others Construction Manufacturing Retail trade Primary industries Transport Services Property management 2005 2004 2003 0 5 10 15 20 25 30 35 40 1) 2) All banks i Norway Includes loans to households involved in one man companies Source: Norges Bank

Chart 3.9 Norwegian banks’ Percentage of gross lending. Quarterly figures. 00 Q1 – 06 Q1 1) financing. 40 40 30 Deposits from corporate sector Deposits from retail sector Bonds 30 20 20 10 0 2000 Deposits/loans from financial institutions 2001 2002 Notes and short-term paper 2003 2004 2005 2006 0 1) All banks except branches and subsidiaries of foreign banks in Norway 10 Source: Norges Bank

Chart 3.10 Developments in Norwegian banks’ 1) liquidity indicator. Quarterly figures. 00 Q1 – 06 Q1

110 110

DnB NOR

100 100 90

Small banks 2)

90

Medium-sized banks 2)

80 2000 2001 2002 2003 2004 2005 2006 80

1) banks in Norway 2) All banks except branches and subsidiaries of foreign The dividing-line between small and medium-sized banks stand at NOK 10bn at end-2005 Source: Norges Bank

Chart 3.11 Norwegian banks’ 1) short term foreign debt 2) . Percentage of gross lending. Quarterly figures. 00 Q1 – 06 Q1

25 25

DnB NOR

20 20 15 15 10

Medium-sized banks 3)

10 5 5

Small banks 3)

0 2000 2001 2002 2003 2004 2005 2006 0

1) in Norway 2) 3) All banks except branches and subsidiaries of foreign banks Short-term paper debt, deposits and loans from other financial institutions The dividing-line between small and medium-sized banks stand at NOK 10bn at end-2005 Source: Norges Bank

Chart 3.12 Life insurance companies’ buffer capital 1) and asset mix. Percentage of total assets. Quarterly figures. 01 Q1 – 06 Q1 40 Bonds "held to maturity" 40 30 20 Bonds and short term paper Equities and shares 30 20 10 Real estate Buffer capital 0 2001 2002 2003 2004 2005 2006 1) Buffer capital is defined as the sum of the Adjustment Fund, supplementary provisions with an upward limit of one year and surplus of Tier 1 capital.

Source: Kredittilsynet (The Financial Supervisory Authority of Norway) 0 10

Boxes

Long-term real interest rates and house prices

Chart 1 Long-term real interest rate figures. 96 Q1 – 06 Q1 1) and neutral real interest rate. Per cent. House prices deflated by house rent index in the CPI. Indexed, 96 Q1 = 1. Quarterly 6 6 Long-term real interest rate 5 5 4 4 3 3 2 Interval for neutral real interest rate 2 1 House prices deflated by house rent 1 0 1996 1998 2000 2002 2004 2006 1) Implicit yield on 5-year government bonds in 5 years less long term inflation expectations 0 Sources: NEF, EFF, FINN.no, ECON and Norges Bank

Household housing wealth and financial assets

Chart 1 Housing wealth and financial assets in billions of NOK. Indexed house prices, 2001 = 100. Annual figures. 2001 - 2005

3500 150 140 3000 2500 2000 1500

Housing wealth (left hand scale) Indexed house prices (right-hand scale) Financial assets (left-hand scale)

130 120 110 1000 2001 2002 2003 2004 2005 100

Sources: Statistics Norway, ECON, FINN.no, Association of Norwegian Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF) and Norges Bank

Chart 2 Household debt and wealth by categories. Billions of NOK. 2005

6000 6000 5000 4000

Other claims Securities Insurance reserves Notes, coins and bank deposits

5000 4000 3000 3000 2000

Housing wealth

2000 1000

Other loans Mortgages

1000 0 0

Debt Wealth Sources: Statistics Norway, ECON, FINN.no, Association of Norwegian Real Estate Agents (NEF), Association of Real Estate Agency Firms (EFF) and Norges Bank

Household margins

Chart 1 Household income after tax by use. Billions of 2003-NOK. Annual figures.1987-2003

600 600 500 400 300

Living costs

200

Loan installments

100

Interest Margin

0 1987 1991 1995

*) Revision of SIFO’s standard budget in 2001

500 400 300 200 100 0

Sources: Statistics Norway, SIFO (National Institute for Consumer Research) and Norges Bank

Chart 2 Share of households by margins 1) .

In per cent and in thousands of NOK. 2003

20 20 15 15 10

17% of debt 13% of households

5 10 5 0

0 50 100 150 200 250 300 350 400 450 500 1) Margins = Income after tax – standard living costs – debt servicing Sources: Statistics Norway, SIFO (National Institute for Consumer Research) and Norges Bank

0

Chart 3 Total household margins in billions of NOK.

1) Share of households with negative margins and corresponding share of total debt in per cent.

2) Annual figures and projections 1986-2009

50 300 40

Margins (right-hand scale)

30 200 20

Debt (left-hand scale)

100 10

Households (left-hand scale)

0 1986 1990 1994 1998 2002 2006

1) Margins = Income after tax – standard living costs – debt servicing 2) Demography and financial situation of households as of 2003 Sources: Statistics Norway, SIFO (National Institute for Consumer Research) and Norges Bank

0

Chart 4 Effects of borrowing rates on margins 1) . Share of households with negative margins and corresponding share of total debt 2 ) . In per cent and billions of NOK

60 50

Margins (right hand scale) 2003 borrowing rate

300 250 40 200 30 20 10

Debt (left hand scale) Households (left-hand scale)

150 100 50 0 0 2 4 6 8 10 12 14

1) Margins = Income after tax – standard living costs – debt servicing 2) Demography and financial situation of households as of 2003

0

Sources: Statistics Norway, SIFO (National Institute for Consumer Research) and Norges Bank

How do banks price corporate credit risk?

2 0 8 6 4 14 12 10 Chart 1 Estimated lending rate for non-financial enterprises. Weighted average in per cent. Yearly figures 1989-2005 18 16 SEBRA median Bank statistics SEBRA weighted average 1989 1991 1993 1995 1997 1999 2001 2003 2005 2 0 8 6 4 18 16 14 12 10 Source: Norges Bank

Chart 2 Estimated premium on loans categories of risk. By probability of bankruptcy (=p). Per cent. Yearly figures. 1989-2005 1) in various Very low (p < 0,5%) Low (0,5% < p < 1%) Average (1% < p < 2%) High (2% < p < 5%) Very high (p > 5%) -1 5 4 3 2 1 0 -2 -3 -4 -5 1989 1991 1993 1995 1997 1999 2001 2003 2005 5 4 3 2 1 0 -1 -2 -3 -4 -5 1) Premium on loans = r – t – a – (1-e)*f r = estimated borrowing rate t = estimated loss (likelihood of bankruptcy * bank debt * 0,45) a = estimated administrative costs of loans e = equity ratio f = cost of loan capital (weighted average of deposit rate, money market rate and bond yields) Source: Norges Bank

Chart 3 Estimated premium on loans to enterprises. Weighted average in per cent. Yearly figures.

1989-2005 2 2 1.5

1 0.5

0 0 1 1.5

0.5

-0.5

-0.5

-1 1989 1991 1993 1995 1997 1999 2001 2003 2005 -1 Source: Norges Bank

40 30 20 10 0 Chart 4 Share of enterprises in various categories of risk. By probability of bankruptcy (=p). Per cent. Yearly figures 1990, 1995, 2000 and 2004 70 60 Very low (p < 0,5% ) Average (1% < p < 2% ) Very high (p > 5% ) Low (0,5% < p < 1% ) High (2% < p < 5% ) 50 1990 1995 2000 2004 Source: Norges Bank 70 60 20 10 0 50 40 30

The significance of Norges Bank’s key rate and competitive conditions for banks’ interest rates

Chart 1 Banks’ lending rates, the sight deposit rate and 3-month interbank rate (NIBOR). Per cent.

91 Q1– 06 Q1 16 16 14 12 10 4 6 8 Lending rate (all loans) Sight deposit rate 1) 0 2 Deposit rate (all deposits) NIBOR 3-month rate (effective) 1) 1991 1993 1995 1997 1999 2001 2003 2005 8 6 4 0 2 14 12 10 1) Quarterly average Source: Norges Bank

Chart 2 Changes in the sight deposit rate and banks’ lending rates. Percentage points. Quarterly figures. 02 Q2 – 05 Q4 Sight deposit rate Mortgage loans Enterprises Deposits 03.11.05

01.07.05

1) 12.03.04

18.12.03

2) 18.09.03

3) 26.06.03

4) 06.03.03

04.07.02

-2 -1.5

-1 -0.5

0 0.5

1 1) Incl. changes in the sight deposit rate 29.1.04 and 12.3.04

2) Incl. changes in the sight deposit rate 14.8.03 and 18.9.03

3) Incl. changes in the sight deposit rate 1.5.03 and 26.6.03

4) Incl. changes in the sight dep. rate 12.12.02, 23.01.03 and 6.3.03

Source: Norges Bank

Chart 3 Average mortgage and deposit rates. Norwegian and foreign banks in Norway. Per cent p.a. Quarterly figures. 04 Q1 - 06 Q1

5 4

Mortgage rates

Norwegian banks

3

Mortgage rates

Foreign banks

2

Deposit rates

Foreign banks

1 0 04 Q1 04 Q3

Source: Norges Bank

05 Q1

Deposit rates

Norwegian banks

05 Q3 06 Q1 0 1 2 3 4 5

Equity market valuation

Chart 1 Forward-looking P/E. Expected earnings next 12 months. Monthly figures. Jan 96 – May 06

30 30 25 25

US

20 15 10

Europe Norway

5 0 96 97 98 99 00 01 02 03 04 05 06 5 0 20 15 10

Sources: Reuters EcoWin and Norges Bank

Chart 2 Historical P/E. Four-quarter earnings. Quarterly figures. 81 Q1 – 06 Q1

35 30 25

Europe US

20 15 10

Norway

5 0 81 83 85 87 89 91 93 95 97 99 01 03 05

Sources: Thomson Datastream and Norges Bank

35 30 25 0 5 20 15 10

Chart 3 Price-to-book ratio. Quarterly figures. 96 Q1 – 06 Q1

6 7 5 3 4

US

1 2

Europe Norway

0 96 97 98 99 00 01 02 03 04 05 06 0 1 2 5 3 4 6 7

Sources: Reuters EcoWin and Norges Bank

Chart 4 Yield gap 1) . Per cent. Monthly figures. Jan 99 – May 06

10 8

Norway

6

Europe

2 4

US

0 0 -2 99 00 01 02 03 04 05 06

1) Yield gap defined as E/P less inflation-adjusted interest rate on 5-year government bonds

-2

Sources: Reuters EcoWin, Consensus Forecasts and Norges Bank

6 2 4 8 10