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					        Charts
Financial Stability 2/07
Summary
Chart 1 Banks’ capital ratio and pre-tax profit as a
percentage of average total assets.1)
Annual figures. 1998 – 2006 and at 2007 Q3
1,5                                                               14
                             Capital ratio (right-hand scale)
                                                                  12
1,2
                                                                  10
0,9                                                               8
          Profit before loan           Profit after loan losses
0,6       losses and write-downs       and write-downs            6
          (left-hand scale)            (left-hand scale)
                                                                  4
0,3
                                                                  2

     0                                                 0
      1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1)   Excluding branches of foreign banks in Norway
Source: Norges Bank
Chart 2 Banks’1) gross stock of non-performing
loans. Percentage of gross lending to sector.
Quarterly figures. 97 Q1 – 07 Q3
5                                                              5

                                         Enterprises
4                                                              4

                      All sectors
3                                                              3


2                                                              2


1                                                              1
                                    Households


0                                                              0
 1997          1999        2001      2003        2005   2007
1) All   banks in Norway
Source: Norges Bank
Chart 3 Banks’ interest margin. Percentage
points. Quarterly figures. 87 Q1 – 07 Q3
6                                                 6

5                                                 5

4                                                 4

3                                                 3

2                                                 2

1                                                 1

0                                                 0
 1987   1990   1993   1996   1999   2002   2005
Source: Norges Bank
Chart 4 Credit to mainland Norway as a percentage
of mainland GDP. Quarterly figures. 87 Q1 –07 Q3
190                                           190
180                                           180
170                                           170
160                                           160
150                                           150
140                                           140
130                                           130
120                                           120
110                                           110
   1987 1990 1993 1996 1999 2002 2005
Sources: Statistics Norway and Norges Bank
Chart 5 Real house prices. Indices. 1985 = 100.
Annual figures. 1985 – 20071)

240                                 Deflated by CPI
                                                            240
            Deflated by
            house rent    Deflated by
180                       building costs                    180


120                                                         120

                                   Deflated by disposable
 60                                income2)                 60


     0                                                      0
         1985 1988 1991 1994 1997 2000 2003 2006
1)First half of 2007
2)Disposable income less estimated reinvested dividends
for the period 2000-2005
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms, Statistics Norway and Norges Bank
Chart 6 Market value for offices in Oslo1)
and output gap. Price per square meter at constant
NOK-2007. Annual figures.
1982 – 2010
 35 000                                         6

 30 000                                                     4
                         Output gap (right-hand scale)

 25 000                                                     2

 20 000                                                     0

 15 000                                                     -2
                                         Market value
                                         (left-hand scale
 10 000                                                     -4
          1982 1986 1990 1994 1998 2002 2006 2010
1) Average value for high-standard offices in central
parts of Oslo. At 30 June 2007
Sources: OPAK and Norges Bank
1 The financial institutions
Chart 1.1 Banks’1) assets and liabilities. Per cent .
30 September 2007
100
                        Foreign
                        assets
                                                     Customer
 80                     Other                        deposits
                        Norwegian
                        assets
 60
                        Lending to                   Deposits from
                        Norwegian                    financial institutions
 40
                        households
                                                     Securities debt
 20
                        Lending to                   Other liabilities
                        Norwegian
                        enterprises                  Equity
   0
               Assets                  Liabilities
     banks in Norway. Norwegian banks’ foreign subsidiaries and
1) All

 branches abroad are not included in the statistical basis
Sources: Statistics Norway and Norges Bank
Chart 1.2 Banks’1) profit/loss in per cent of average
total assets. Annual figures 2002-2006. Q1- Q3 06
and 072)
4                                                                   4

3                                                                   3

2                                                                   2

1                                                                   1

0                                                                   0

-1                                                                  -1

-2                                                 Q1- Q3           -2

-3                                                                  -3
          2002   2003    2004    2005   2006    2006     2007

           Net interest income             Other operating income
           Operating expenses              Loan losses
           Write-downs etc.                Pre-tax profit/loss
 1) All  banks excluding branches of foreign banks in Norway
 2)   Figures for 2007 are affected by transition to IFRS


 Source: Norges Bank
Chart 1.3 OSEBX and sub-indices for banks on
the Oslo Stock Exchange1). 1 Jan 02 = 100. Daily.
figures. 1 Jan 02 - 29 Nov 07
350                                                          350
                                 Bank index
300                                                          300
                    Primary capital
250                 certificate index                        250
200                                                          200
150                                                          150
100                           OSEBX                          100
 50                                                          50
     0                                                       0
      2002   2003   2004      2005      2006    2007
1)Gjensidige NOR was moved from the primary capital certificate
index to the bank index and was included in OSEBX from
13 September 2002
Source: Reuters (EcoWin)
Chart 1.4 Banks’1) capital ratio (Tier 1 + Tier 2)
and core capital ratio (Tier 1). Per cent.
Quarterly figures. 02 Q1 – 07 Q3
16                                                             16
14         Capital ratio2)
                                                               14
12                                                             12
10                                                             10
 8       Core capital ratio2)                                  8
 6                                                             6
 4                              If all banks were still        4
                                reporting according
 2                              to Basel I in 2007             2
 0                                                             0
 mar.02 mar.03 mar.04 mar.05 mar.06 mar.07
1) Allbanks excluding branches of foreign banks in Norway
2) In 2007Q1 eight banks reported according to Basel II. In Q2 and

Q3 the figure had increased to ten. Other banks reported according
 to Basel I

Sources: Norges Bank and Kredittilsynet
 Chart 1.5 Banks’1) total interest margin divided
 into deposit and lending margin2). Percentage points.
 End of quarter. 97 Q2 – 07 Q3
   4                                                               4
3,5                                   Total interest margin        3,5
   3                                                               3
2,5                                                                2,5
   2                                                               2
                                           Lending margin
1,5                                                                1,5
   1                                                               1
0,5          Deposit margin3)                                      0,5
   0                                                               0
-0,5                                                               -0,5
    1997      1999       2001       2003       2005         2007
1) Allbanks in Norway
2) Deposit and lending margins are measured against 3-month
money market rates
3) As interest rates on deposits can not be negative, the deposit

margin is low when money market rates are low
Source: Statistics Norway
Chart 1.6 Banks’1) lending margins.
06 Q4 – 07 Q3. Percentage points
   1                                                                        1
                                                    2006 Q4
0,8                                                 2007 Q1                 0,8
                                                    2007 Q2
0,6                                                                         0,6
                                                    2007 Q3
0,4                                                                         0,4
0,2                                                                         0,2
   0                                                                        0
-0,2                                                                        -0,2
-0,4                                                                        -0,4
-0,6                                                                        -0,6
            Non-financial    Households Home equity       Repayment loans
         private enterprises              lines of credit   secured on
                                                             dwellings

1) All   banks in Norway

Sources: Statistics Norway and Norges Bank
Chart 1.7 Growth in banks’ and mortgage
companies’1) lending. 12-month growth.
Per cent. Monthly figures. Jan 00 – Oct 07
24                                                24

20                                                20
                               Retail sector
16                                                16

12                                                12

  8                                               8
                                 All sectors
  4                                               4
          Corporate sector

  0                                               0

 -4                                               -4
   2000 2001 2002 2003 2004 2005 2006 2007
1) All   banks and mortgage companies in Norway
Source: Norges Bank
Chart 1.8 Growth in banks’ and mortgage
companies’1) lending to selected industries. Per
cent. Four-quarter growth. 02 Q1 – 07 Q3
 30                                                             30
             Property                 Construction and
             management and           utilities
             commercial services
 20                                                             20
                       Retail trade, hotel
                       and restaurant

 10                                                             10



   0                                                            0

                                                Manufacturing

-10                                                             -10
   2002         2003        2004       2005     2006     2007
1) All   banks and mortgage companies in Norway
Source: Norges Bank
 Chart 1.9 Norwegian banks’1) share of deposits.
 Deposits from customers in per cent of lending to
 customers. Quarterly figures. 00 Q1 – 07 Q3
  80                                                             80

  75                                                             75

  70                                                             70

  65                                                             65

  60                                                             60

  55                                                             55

  50                                                             50
    2000 2001 2002 2003 2004 2005 2006 2007

    banks except branches and subsidiaries of foreign banks in
1) All

Norway
Source: Norges Bank
Chart 1.10 Norwegian banks’1) funding sources.
Percentage of gross lending. Quarterly figures.
00 Q1 – 07 Q3
40                                                               40
                                 Deposits from retail sector


30       Deposits from
                                                                 30
                                    Bonds
         corporate sector

20                                                               20
                                    Deposits / loans from
                                    financial institutions

10                                                               10

                            Notes and short-term paper
 0                                                               0
  2000 2001 2002 2003 2004 2005 2006 2007

    banks except branches and subsidiaries of foreign banks in
1) All

Norway

Source: Norges Bank
Figur 1.11 5- year yields on Norwegian government
and bank bonds. 3-month money market
(NIBOR) and treasury bill rates. Weekly figures.
 3 Jan - 28 Nov 07. Per cent
7                                                       7
                                 Money market
6            Bank bonds                                 6
5                                                       5
4                                                       4
                Treasury bills       Government bonds
3                                                       3
2                                                       2
1                                                       1
0                                                       0
jan.07      apr.07          jul.07        okt.07
Sources: Reuters (EcoWin) and DnB NOR Markets
Chart 1.12 Banks’1) liabilities by maturity.
Customer deposits are excluded. Per cent. Year-
end 2004-2006, and Jun an Sep 2007
100
90
80
70
60
50
40
30
20
10
 0
         2004          2005         2006          jun.07          sep.07
         Less than 1 month    1 - 3 months        3 - 12 months
         1 - 5 years          More than 5 years

    banks except branches and subsidiaries of foreign banks in
1) All

Norway
Source: Norges Bank
Figur 1.13 Norwegian banks’1) short-term
domestic debt2). Per cent of gross lending.
Quarterly figures 00 Q1– 07 Q3
25                                                          25

         Small banks 4)
20                                                          20


15                                                          15
                            Medium sized banks4)

10                                                          10


 5                                                          5
           DnB NOR 3)

 0                                                          0
  2000 2001 2002 2003 2004 2005 2006 2007
1) Allbanks except branches and subsidiaries of foreign banks in
Norway
2) Short-term paper debt, 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
Figur 1.14 Norwegian banks’1) short-term
foreign debt2). Per cent of gross lending.
Quarterly figures. 00 Q1 – 07 Q3
25                                                           25
                                DnB NOR 3)

20                                                           20


15                                                           15


10                                                           10
                             Medium-sized banks   4)



  5                                                          5

         Small banks 4)
  0                                                          0
   2000 2001 2002 2003 2004 2005 2006 2007
1) Allbanks except branches and subsidiaries of foreign banks in
Norway
2) Short-term paper debt, 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
Chart 1.15 Selected funding sources for
Norwegian banks’1). 30 Sep 2007. In billions NOK
2000                                                       2000

                           Bonds
1500                                                       1500
                           Short-term paper

                           Deposits from financial inst.
1000                                                       1000
                           Deposits from customers

500                                                        500



  0                                                        0

              NOK                  Foreign currency

    banks except branches and subsidiaries of foreign banks in
1) All

Norway

Source: Norges Bank
Chart 1.16 Norwegian banks’1) liquidity indicator
(ratio of stable funding sources to illiquid asets). Per
cent. Quarterly figures.
00 Q1 – 07 Q3
120                                                          120
         DnB NOR including foreign        DnB NOR2)
         branches, borrowers
110      and depositors                                      110



100                                                          100


          Small banks3)
 90                                                          90
                                Medium-sized banks3)


 80                                                          80
   2000 2001 2002 2003 2004 2005 2006 2007
     banks except branches and subsidiaries of foreign banks in
1) All

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
Chart 1.17 Life insurance companies’ buffer
capital1) and asset mix. Per cent of total assets.
Quarterly figures. 01 Q1 – 07 Q3
40                                                                   40
                                   Bonds ”hold to maturity“ 2)


30                                                                   30
                                Bonds and short-
                                term paper
20                                                                   20
                           Equities and shares

                                                     Real estate
10                                                                   10
        Buffer capital

     0                                                               0
      2001   2002        2003    2004     2005     2006     2007
1) Buffer capital is defined as the sum of the security 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
2 The macro-financial
    environment
Chart 2.1 GDP growth abroad. Increase on
previous year in per cent. Forecasts for
2007 – 20091)
 12                                                          12
              2006        2007
              2008        2009
     9                                                       9


     6                                                       6


     3                                                       3


     0                                                       0
            US       Euro area Japan      China   Trading
                                                  partners
1)   Forecasts in Monetary Policy Report 3/07
Sources: IMF and Norges Bank
Chart 2.2 12-month rise in house prices1) and
housing starts in the US. Monthly figures.
Jan 03 – Oct 07
2300                                                     20
            Housing starts in 1000s
            (left-hand scale)
2100
                                                         15

1900
                                                         10
1700
                                                         5
1500
               House prices (right-hand scale)
                                                         0
1300

1100                                                     -5
    2003          2004       2005          2006   2007
1)   Median price in USD. Existing homes
Source: Reuters (EcoWin)
Chart 2.3 House prices in Europe. 4-quarter rise.
Per cent. Quarterly figures. 98 Q1 – 07 Q3
35                                                  35
30       Ireland                Spain               30
                   UK                   Denmark
25                                                  25
20                                                  20
15                                                  15
10                                                  10
5                                                   5
        France
0                                                   0
-5                                                  -5
  1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: Reuters (EcoWin)
Chart 2.4 Spread between money market rate
and expected key rate.1) 3-month maturity.
Percentage points. 1 Mai 07 – 29 Nov 07
1,25                                                      1,25
                                    UK

      1                                                   1

0,75                                                      0,75

     0,5                                                  0,5
                       US

0,25                                         Norway 2)    0,25
                                    Euro area
      0                                                   0
      mai 07      jul 07       sep 07       nov 07
1) Expected key rates are measured by Overnight Indexed
Swaps (OIS)
2) Norges Bank’s projection


Sources: Bloomberg and Norges Bank
Chart 2.5 Credit spread against government bonds
in the US and Europe. Percentage points. Daily
figures.1 Jan 02 – 29 Nov 07
12                                                       12
             High yield companies in
             the US
 9                                                       9

                   Emerging economies, EMBI+
 6                                                       6



 3                 US, BBB                               3


     Europe, BBB
 0                                                        0
  2002    2003      2004     2005      2006    2007   2008

Source: Reuters (EcoWin)
 Chart 2.6 Global change in credit ratings of private
 enterprises’ debt.1) Monthly figures.
 Per cent. Jan 07 – Nov 07
100                                                          100
     90                                                      90
     80       Upgrades                                       80
     70                                                      70
     60                                                      60
     50                                                      50
     40                                                      40
     30                                                      30
     20        Downgrades                                    20
     10                                                      10
     0                                                       0
     jan 07        apr 07          jul 07         okt 07
1)Long-term and short-term credit ratings from S&P. Enterprises
and debt securities

Source: Bloomberg
Chart 2.7 10-year government bond yield. Per cent.
Daily figures. 2 Jan 97 – 29 Nov 07
10                                                    10


 8                                        UK          8
                          Norway

 6                                                    6


 4                                                    4
         Germany
                                   US
 2                                                    2


 0                                                    0
  1997    1999     2001      2003       2005   2007
Source: Reuters (EcoWin)
Chart 2.8 Equity indices. 2 Jan. 97 = 100.
Daily figures. 2 Jan 97 – 29 Nov 07
400                                                 400

                               Norway OSEBX
300                                                 300
             Europe Stoxx


200                                                 200



100                                                 100
                                    US S&P 500


  0                                                 0
   1997    1999   2001      2003   2005      2007
Source: Reuters (EcoWin)
Chart 2.9 P/E for the US and Europe. Estimated
earnings over the last 12 months. Monthly
figures. Jan 96 – Sep 07
40                                               40

35      US S&P 500                Europe Stoxx   35

30                                               30

25                                               25

20                                               20

15                                               15

10                                               10

5                                                5

0                                                0
 1996    1998   2000    2002    2004    2006
Sources: Reuters (EcoWin) and Norges Bank
Chart 2.10 Return on equity (x-axis) and the
valuation indicator P/B (y-axis). Oslo Stock
Exchange. Quarterly figures. 97 Q3 –07 Q3
2,9                                                2,9
                                    07 Q3
2,6                                                2,6

2,3                                                2,3

 2            Regression line                      2

1,7                                                1,7
      02 Q3 and Q4
1,4                                                1,4

1,1                                                1,1
                                 03 Q1
0,8                                                0,8
   -3 % 0 %   3%     6%     9 % 12 % 15 % 18 % 21 %
Sources: Reuters (EcoWin) and Norges Bank
Chart 2.11 Price indices of selected raw materials.
Daily figures. USD. 31.12.04 = 100. 1 Jan 03 –
29 Nov 07
250                                                    250

225                             Metal                  225

200                                                    200
                  Oil (Brent
175               Blend)                               175

150                                                    150

125                                                    125
                                        Raw material
100                                                    100
                                           index
 75                                                    75

 50                                                    50
   2003    2004        2005    2006      2007      2008

Source: Reuters (EcoWin)
Chart 2.12 Household disposable real income1) and
consumption. Annual rise. Per cent.
Annual figures. 1997 – 2006
8                                                               8
              Income
              Consumption
6                                                               6


4                                                               4


2                                                               2


0                                                               0
    1997               2000           2003             2006
1) Adjustedfor estimated reinvested share dividends/redemption of
share capital for 2000 - 2006
Sources: Statistics Norway and Norges Bank
Chart 2.13 Projected key policy rate in the
baseline scenario with fan chart. Per cent.
Quarterly figures. 05 Q1 – 10 Q4
9                                             9
8    30% 50% 70% 90%                          8
7                                             7
6                                             6
5                                             5
4                                             4
3                                             3
2                                             2
1                                             1
0                                             0
 2005 2006 2007 2008 2009 2010

Source: Norges Bank
Chart 2.14 Household liabilities and assets. In
billions of NOK. 2007 Q2
7000                                                       7000
                                 Other claims
6000                               Securities              6000
                      Insurance reserves
5000                    Notes, coins and
                                                           5000
4000                    bank deposits                      4000
3000                                            Housing-
                                                           3000
2000                                            wealth1)   2000
                                  Other loans
1000                                                       1000
                                  Mortgages
       0                                                   0
                   Liabilities                  Assets
1)   Projections
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate
Agency Firms, Statistics Norway and Norges Bank
Chart 2.15 Household liabilities by type of loan. In
billions of NOK. Monthly figures
Jan 97 – Oct 07
1800                                                    1800
1600              Home equity lines of credit           1600
1400                                                    1400
1200                                                    1200
       Student loans Other loans
1000                                                    1000
 800                                                    800
 600                                                    600
 400                                                    400
                 Repayment loans secured on dwellings
 200                                                    200
   0                                                    0
   jan.98 jan.00 jan.02 jan.04 jan.06
Source: Statistics Norway
Chart 2.16 Indebted households by debt burden1).
Debt distributed after household debt burden.
Per cent. 2005
 80                                           80
                     Households
                     Debt
 60                                                         60

 40                                                         40

 20                                                         20

   0                                                        0
          Below 300 300-400 400-500 Over 500
                         Debt burden
      burden is debt as a percentage of disposable income
1) Debt

Dispoable income is income less interest rates and taxes

Total debt was NOK 1 470 bn. Total number of households was
1.7 million
Sources: Statistics Norway and Norges Bank
Chart 2.17 Share of households with a debt burden
higher than 500%. By age and income1). Per cent.
2005
 50                                                          50
                                               Age
                                                  68+
 40                                                          40
                                                  55-67
 30                                               45-54      30
                                                  35-44
 20                                               25-34      20
                                                  17-24
 10                                                          10

     0                                                       0
            1-3         4-7          8-9          10
                        Income deciles
1)Huseholds are divided into 10 groups of the same size by
income after tax

Sources: Statistics Norway and Norges Bank
Chart 2.18 Household saving and net lending as a
percentage of disposable income1,2). 1980 – 2006
10                                                               10
                                           Saving
 5                                                               5

 0                                                               0

 -5                                                              -5

-10                                                              -10
                     Net lending

-15                                                              -15
   1980       1985     1990        1995     2000       2005
1)There is a break in the series between 1995 and 1996
2) Adjustedfor estimated reinvested share dividends for 2000 –
2005
Sources: Statistics Norway and Norges Bank
Chart 2.19 House prices. 12-month rise and
annualised rise in 3-month centered moving average
in per cent. Monthly figures. Jan 98 – Oct 07

40                                                   40

30                                                   30
                   12-month rise
20                                                   20

10                                                   10

 0                                                   0

-10       Annualised rise in 3-month                 -10
          centered moving average

-20                                                  -20
   1998     2000        2002       2004   2006
Sources: Association of Real Estate Agents, ECON Pöyry,
Finn.no and Association of Real Estate Agency Firms
Chart 2.20 Seasonally adjusted monthly housing
turnover in thousands. Houses for sale as a share
of housing turnover.1) Housing turnover rate, new
houses in eastern Norway. Jan 03 – Oct 07

20             Housing turnover
                                                                    6
               (right-hand scale)
                                                                    5
15                                  Turnover rate, new houses
                                    (left-hand scale)               4

10                                                                  3

                                                                    2
5                                   Houses for sale as a share of
                                    turnover(right-hand scale)      1

0                                                                   0
 2003           2004        2005         2006         2007
1) Houses   for sale and housing turnover rate are seasonally
adjusted
Sources: Association of Norwegian Real Estate
Agents,Association of Real Estate Agency Firms, ECON
Pöyry, Finn.no and Norges Bank
Chart 2.21 Long-term real interest rate1) and
normal real interest rate2. Per cent. House prices
deflated by house rent index in CPI. Indexed, 96
Q1 = 1. Quarterly figures. 96 Q1 – 07 Q3
6                                                  6
              Long-term real interest rate
5                                                                         5

4                                                                         4

3                                                                         3

2                    Interval for normal real interest                    2
                     rate
1               House prices deflated by house rent                       1

0                                                                         0
 1996         1998      2000       2002      2004        2006
          yield on 5-year government bonds in 5 years less long-
1) Implicit

term inflation expectations
2) The normal real interest rate is the level of the real interest rate

that is consistent with normal capacity utilisation
Sources: Statistics Norway, FINN.no, ECON Pöyry,
Association of Norwegian Real Estate Agents, Association
of Real Estate Agency Firms and Norges Bank
Chart 2.22 Real house prices, building costs and
land costs1). Indexed. 1985 = 100. Annual figures.
1985 – 2006
 250                                              250

                             Average price per
200                          square metre land                  200
                             < 20 decares
150                                           House prices      150

100                                                             100
                                     Building costs

 50                                                             50

     0                                                          0
         1985 1988 1991 1994 1997 2000 2003 2006
1)The series is based on Statistics Norway’s transfer of properties
index and includes unbuilt property for free market sale. The
series is not adjusted for location or site development
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms and Statistics Norway
Chart 2.23 Actual and calculated1) house price
1000 NOK/sqm. Quarterly figures. 02 Q2 – 07 Q2
27                                                                  27
25                                     Actual house price           25
23                                                                  23
21                                                                  21
19                                                                  19
17                                     Calculated house price       17
15                                                                  15
13                                                                  13
  2002      2003        2004       2005       2006       2007
1)Calculated house price is calculated by estimating the house
price model with data to 2002 Q2 and simulate forward using
actual values for the explanatory variables and calculated values
for house prices in the forecast period

Sources: Association of Norwegian Real Estate Agents,
Association of Real Estate Agency Firms, FINN.no, ECON
Pöyry and Norges Bank
Chart 2.24 Four quarter rise in house prices.
Interest burden1). Per cent. Quarterly figures.
91 Q1 – 10 Q42)
25                                                              12
                                  House prices
20                                (left-hand scale)

15                                                              9
10
     5                                                          6
     0
                                           Interest burden
 -5                                        (right-hand scale)   3
-10
-15                                                             0
   1991 1994 1997 2000 2003 2006 2009
1) Interest expenses after tax in percentage of liquid disposable
Income less estimated reinvested share dividend payments plus
Interest payments
2) Projections for 2007 Q1 – 2010 Q4 for interest burden and 2007

Q4 – 2010 Q4 for rise in house prices
Sources: Association of Norwegian Real Estate Agents,
ECON Pöyry, Finn.no, Association of Real Estate Agency
Firms, Statistics Norway and Norges Bank
Chart 2.25 Debt burden1) and debt burden adjusted
for household general living expenses2). Annual
figures. 1987 – 20103)
250                                                           800
                                                              700
200                          Debt burden
                             (left-hand scale)                600
150                                                           500
                                                              400
100                                                           300
                                  Adjusted debt burden
                                  (right-hand scale)          200
 50
                                                              100
  0                                                           0
   1987    1991     1995      1999     2003      2007
1)Loan  debt as a percentage of liquid disposable income less
estimated reinvested share dividend payments
2) Disosable income less general living expenses as

calculated by the National Institute for Consumer Research (SIFO)
3) Projections for 2007 - 2010


Sources: Statistics Norway, SIFO and Norges Bank
Chart 2.26 Pre-tax return on total assets.1)
Norwegian limited companies.2) Per-cent.
Annual figures. 1988-2006
     10                                                         10
                                Median companies
     0                                                          0
                              Companies with weak results
 -10                          (75 percentile)
                                                                -10

 -20      Companies with very weak results                      -20
          (90 percentile)

 -30                                                            -30

 -40                                                 -40
    1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
1)Pre-tax result as a percentage of total assets
2)Exclusive production of oil and gas, bank and insurance and
public services
Source: Norges Bank
Chart 2.27 Share of enterprises with negative results
before and after a 10 per cent strengthening of
NOK.1) Selected industries. Per cent. 2006

Export industries


         Fishing


        Shipping


        Offshore

                                                Before stronger NOK
 Other industries
                                                After stronger NOK

                    0    10      20       30      40      50       60
1)The projections assume that the share of turnover in each industry
that is related to exports is reduced by 10 per cent and the part of costs
of goods sold that is related to imports is reduced by 10 per cent
Source: Norges Bank
Chart 2.28 Debt-servicing capacity1) in selected
industries.2) Per cent. Annual figures. 1999-2006
                  Total
        Construction
           Transport
              Energy
 Manufacturing and
        mining
          Retail trade
            Shipping
  Financial services
   Commercial serv.
              Fishing                                    2006
   Hotel, rest., travel                                  2005
             Offshore                                    '99-'04
             Property
Telecommunications

                          0   10   20     30     40      50        60
  1) Pre-taxresult before depreciation and write-downs as a
  percentage of interest-bearing debt
  2) Includes only enterprises with interest-bearing debt


  Source: Norges Bank
Chart 2.29 Equity ratio in Norway and Euro
area. Annual figures. 1988-2006
50       Equity ratio
                                                                 50
         Euro area
                               Equity ratio
40                                                               40

30                                                               30

20                                   Equity ratio adjusted for   20
                                     cross-ownership1)
         Equity ratio adjusted for
10       cross-ownership and                                     10
         intangible assets
 0                                                               0
  1988     1991      1994      1997       2000      2003     2006
1)Total book equity minus total investments in Norwegian
enterprises in which the ownership interest is at least 20 per cent.
The ownership interest in Norwegian enterprises is based on
estimates
Source: Norges Bank and ECB
Chart 2.30 Risk-weighted debt in various industries.1)
In billions of NOK. 2007
                 Property
    Commercial services
             Retail trade
Manufacturing and mining
     Telecommunication
   Hotel, rest. and travel
         Other industries
                 Offshore
                 Shipping
                  Fishing
                  Energy
            Construction
                Transport
                      2)
      Financial services

                             0,0   0,5   1,0   1,5   2,0    2,5    3,0
    1) Probability of default multiplied by interest-bearing debt in each
    enterprise, totalled for all enterprises in the industry
    2) Includes property funds and private equity funds. Does not

    include banks, mortgage companies, finance companies and
    insurance companies
   Source: Norges Bank
Chart 2.31 Income and liquid assets. Norwegian
limited companies. In billions of NOK. Annual
figures. 1988-2007
3500                                                        600
3000                                                        500
2500               Income                                   400
2000               (left-hand scale)
                                                            300
1500
1000                                                        200
                              Liquid   assets1)
 500                          (right-hand scale)            100
      0                                                     0
          1988 1991 1994 1997 2000 2003 2006
 1) The dotted line shows how large liquid assets would have been
 if they had stayed at their historic level compared to income

 Source: Norges Bank
Chart 2.32 Liquid assets in excess of level
implied by higher turnover. In billions of NOK.
2007

 140

 120            31      Other industries

 100            9       Shipping
                9       Manufacturing and mining
  80           10       Retail trade
               12       Financial services
  60

  40            26      Commercial services

  20
                34      Commercial property
   0


  Source: Norges Bank
Chart 2.33 Net yield for offices in Oslo.1)
December 88 – June 07. Semi-annual figures.
Per cent
12                                                               12
10                                  Net yield                    10
 8                                                               8
 6                                                               6
 4                   10-years Government bonds                   4
 2                                                               2
 0                                                               0
 des.88 des.91 des.94 des.97 des.00 des.03 des.06
1)Net rental income / Market value. Offices of good standard
in central Oslo. It is assumed that the property owner’s costs
constituted 10 per cent of the rental income p.a.

Source: Norges Bank (estimates) and OPAK
Chart 2.34 Average duration of rental contracts
at the time of agreement. Offices in Oslo. Annual
figures. 2000-2007
9                                                           9
8                                                           8
7                                                           7
6                                                           6
5                                                           5
4                                                           4
3                  Average remaining duration of            3
                   all rental contract in the sample
2                                                           2
1                                                           1
0                                                           0
                                                       1)
    2000 2001 2002 2003 2004 2005 2006 2007
1) At   30 Sept. 2007

Source: Eiendomsverdi
 Chart 2.35 Property companies’ debt to financial
 institutions. Counties. In billions of NOK. 2007

            Oslo
       Rogaland
       Hordaland
Møre og Romsdal              New enterprises
        Akershus             Established before 2005
  Sør-Trøndelag
      Vest-Agder
  Other counties

                   0    50     100       150       200
 Source: Norges Bank
Chart 2.36 The relationship between expected
earnings and net interest-bearing debt. Enterprises
listed on Oslo Stock Exchange.1) Per cent. Quarterly
figures. 3Q 1997 – 3Q 2007
 30                                                              30

 25                                                              25

 20                                                              20

 15                                                              15

 10                                                              10

     5                                                           5

     0                                                           0
     jan.97    jan.99    jan.01     jan.03    jan.05    jan.07
1)   OBX-enterprises, including oil/gas and banking/insurance

 Sources: Reuters (EcoWin) and Norges Bank
Chart 2.37 Number of bankruptcies opened
as a percentage of total number of
enterprises. 1990 – 20101)
3,5                                                3,5
3,0                                                3,0
2,5                                                2,5
2,0                                                2,0
1,5                                                1,5
1,0                                                1,0
0,5                                                0,5
0,0                                                0,0
   1990        1994       1998   2002   2006   2010
1)   Projections for 2007-2010

Source: Statistics Norway and Norges Bank
3 Outlook and challenges
 Chart 3.1 The price of hedging credit risk1).
 5-year CDS prices. Percentage points.
 Daily figures. 1 Jan 04 – 29 Nov 07
2,0                                                              2,0
                                 Bear Sterns
1,8                                                              1,8
1,6                                                              1,6
1,4                                                              1,4
                         Merrill Lynch
1,2                                                              1,2
                  Northern Rock
1,0                                                              1,0
           European bank index
0,8                                                              0,8
0,6                                                              0,6
                       DnB NOR
0,4                                                              0,4
0,2                                                              0,2
0,0                                                              0,0
  jan.07     mar.07     mai.07     jul.07      sep.07   nov.07
1) Bonds   rated BBB
Source: Bloomberg, Reuters (EcoWin) and
Thomson Datastream
Chart 3.2 Credit risk premium on normal corporate
bonds1). 5-year maturity. Percentage points.
Daily figures. 1 Jan 04 – 29 Nov 07
2,50                                                         2,50
2,25                                                         2,25
2,00                                                         2,00
1,75                                                         1,75
                                                 US
1,50                                                         1,50
1,25                                                         1,25
1,00                                                         1,00
0,75                                                         0,75
0,50                                         Europe          0,50
0,25                                                         0,25
0,00                                                         0,00
   jan.04 jul.04 jan.05 jul.05 jan.06 jul.06 jan.07 jul.07
 1) Bonds   rated BBB
Source: Reuters (EcoWin)
Chart 3.3 Real house price index1), 1819=100,
trend2), and real house price gap in per cent.
Annual figures. 1946 – 2007
                                                               150
1600
                                                               120
                                 Trend (left-hand scale)
1200                                                           90

800                                                            60
             Real house price
             (left-hand scale)
                                                               30
400
                                                               0
                    Gap (right-hand scale)
      0                                   -30
       1945 1955 1965 1975 1985 1995 2005
 1) House prices index deflated by consumer price index. Projections
 for 2007
 2) The trend is calculated using a Hodrick-Prescott filter and a

 recursive method on data for the period 1819-2007
 Sources: Statistics Norway and Norges Bank
 Chart 3.4 Rental prices and market value for
 offices in Oslo. Constant 2007-NOK.
 June 86 – June 07
 2500                                                         35000

                          Rental prices1)                     30000
 2000                     (left-hand scale)
                                                              25000
 1500                                                         20000

 1000                                                         15000
                                   Transactions price2)
                                   (right-hand scale)         10000
     500
                                                              5000

       0                                       0
        1986 1989 1992 1995 1998 2001 2004 2007

1)   Offices of good standard in central parts of Oslo
2)   Centrally situated offices of normal good standard in the Oslo area

Source: OPAK
Chart 3.5 Households net lending and increase in
the banking sector’s net foreign debt. Billions of
2007-NOK. 1981 – 2007
 200                                                              200
 150                            Annual change in the banks’       150
                                net foreign debt2)
 100                                                              100

     50                                                           50
      0                                                           0

     -50                            Households net lending1)      -50
-100                                                              -100
-150                                                              -150
           1981   1985   1989     1993    1997   2001    2005
1) Net lending from the credit market statistics adjusted for
estimated reinvested share dividends for 2000 – 2005. Figures
cover the period 1981 – 2006.
2) Changes in net debt and equity during the calendar year. The

change during the first three quarters of 2007 is annualised.
Sources: Statistics Norway and Norges Bank
  Box: Problems in some
foreign financial institutions
Chart 1 Share prices for financial institutions and
global finance equity index. 1 Jan 01 = 100. Daily
figures. 1 Jan 01 – 29 Nov 07
400                                                        400

350                              Countrywide               350

300                                                        300

250                                                        250
                                                 IKB
200       Northern Rock                                    200

150                                                        150

100                                                        100
                                 Finance equity index
 50                                                        50

  0                                                         0
   2001   2002   2003     2004    2005   2006   2007    2008

Source: Reuters (EcoWin)
Boxes
 Problems in the US
residential mortgage
       market
Chart 1 US mortgage-backed securities (MBS).
Outstanding volumes. In billions of USD.
2001-2006
6000                                                   6000

5000                                                   5000

4000                                                   4000

3000                                                   3000

2000                                                   2000

1000                                                   1000

  0                                                    0
       2001   2002   2003   2004   2005     2006

       Agencies             Other (investment banks)


Source: UBS, US Economic Perspectives (9 March 2007)
Chart 2 Default rates on US mortgages. Per cent of
lending. Quarterly figures. 98 Q1 – 07 Q2
16                                              16
14                                              14

12                                              12
                    Subprime
10                                              10
8                                               8
                    Total
6                                               6

4                                               4
2                                               2
                    Prime
0                                               0
      des des des    des des des des des des
      98 99 00       01 02 03 04 05 06

Source: Bloomberg
Chart 3 US mortgages. Billion USD. 31 Dec 2006

6000                   Seconds                          6000
                    Prime Jumbo1     Subprime
5000                                                    5000
4000                                    Alt-A           4000
3000                                 Agencies           3000
2000                                                    2000
1000                                                    1000
     0                                                  0
                Bank                 Securities
1)Loan amount exceeds standard terms accepted by agencies.
Higher risk than standard terms.

Source: UBS, US Economic Perspectives (9 March 2007)
Chart 4 US subprime mortgage-backed securities.
Credit spreads. First half 2006 vintage. Per cent.
Daily figures. 19 Jan 06 – 28 Nov 07
30                                                                               30
27                                                                               27
24                                                                               24
21                                                         BBB-                  21
18                                                                               18
15                                                                               15
12                                                                  A            12
9                                                                                9
6                                                                                6
3                                                                                3
                                                                    AAA
0                                                                                0
     jan 06   apr 06   jul 06   okt 06   jan 07   apr 07   jul 07       okt 07

Source: Lehman Brothers
Problems in the interbank
 markets – central bank
        liquidity
Chart 1 Banks’ total access to borrowing in
Norges Bank. Available liquidity for and turnover
in Norges Bank’s settlement system. Billions of
NOK. Quarterly figures. 03 Q2 – 07 Q3
250                                                     250
                                    Turnover
200                                                     200

150                                                     150
                                         Liquidity
100                                                     100
                Banks’ access to borrowing
  50                                                    50

   0                                                    0
   jun.03    jun.04     jun.05      jun.06     jun.07
Source: Norges Bank
Covered bonds
Chart 1 5-year bond yields on three euro
bonds. Daily figures. 29 June - 29 Nov 07
5,0                                                        5,0
                             Bank bond
4,8                                                        4,8

4,6                                                        4,6

4,4                  Covered bond                          4,4

4,2                                                        4,2

4,0                                                        4,0
                             Government bond
3,8                                                        3,8

3,6                                                        3,6
  26 jun   26 jul   26 aug    26 sep     26 okt   26 nov

Source: Bloomberg, Reuters (EcoWin) and Norges Bank
Stress testing of banks’
    problem loans
 Chart 1 House prices. 12-month rise in per cent.
 Annual figures. 2002 – 20101)
20                                                             20
15                                                             15
10                                                             10
                                         Baseline
  5                                                            5
  0                                                            0
 -5                                                            -5
-10                                                            -10
                                         Stress scenario
-15                                                            -15
-20                                                            -20
   2002            2004           2006    2008             2010
 1)   Projections for 2007-2010
 Sources: Statistics Norway and Norges Bank
Chart 2 Credit to households (C2). 12-month
growth in per cent. Annual figures. 2002 – 20101)
16                                                            16


12                                      Baseline              12


8                                                             8


4                                                             4
                                      Stress scenario


0                                                              0
 2002         2004           2006          2008            2010
1) Annual change in per cent measured by end-year stock.
Projections for 2007-2010
Sources: Statistics Norway and Norges Bank
      Chart 3 Banks’ losses on lending to households
      and non-financial enterprises. Percentage of
      lending to households and non-financial
      enterprises. Annual figures. 2002 – 20101)
      2                                                        2

1,5                                                            1,5

      1                                  Stress scenario
                                                               1

0,5                                                            0,5

      0                                                        0
                                   Baseline

-0,5                                                           -0,5
    2002           2004           2006        2008         2010
 1)   Projections for 2007-2010
 Source: Norges Bank
 Chart 4 Banks’ losses on loans to non-financial
 enterprises in different industries. Share of total
 losses. Stress test alternative. Annual figures.
 2007 – 2010
100                                    Public sector
 90                                    Business services
 80
 70                                    Commercial property
 60
 50                                    Transport
 40                                    Hotels and restaurants
                                       Retail trade
 30                                    Construction
 20                                    Power supply
                                       Manufacturing
 10                                    Agriculture and
                                       fisheries
  0
      2007     2008     2009     2010
 Source: Norges Bank
 Chart 5 Projections of post-tax profit as a
 percentage of average total assets in Norway’s five
 largest banks1). Annual figures
1,5                                                      1,5

  1                 Baseline                             1

0,5                Stress scenario                       0,5

  0                                                      0

-0,5                                                     -0,5
                       3 per cent loan loss
 -1                                                      -1

-1,5                                                   -1,5
    2007           2008              2009          2010
  DnB NOR Bank (excl. branches abroad), SpareBank 1
 1)

 SR Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
 SpareBank 1 Midt-Norge
 Source: Norges Bank
Chart 6 Projections of capital adequacy in per
cent in Norway’s five largest banks1). Annual
figures. 2007 – 2010
25                                                       25
           Baseline
           Stress scenario
20         3 per cent loan loss
                                                         20


15                                                       15


10                                                       10


 5                                                       5


 0                                                       0
       2007          2008         2009      2010
  DnB NOR Bank (excl. branches abroad), SpareBank 1
 1)

 SR-Bank, Sparebanken Vest, SpareBank 1 Nord-Norge and
 SpareBank 1 Midt-Norge
 Source: Norges Bank

				
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