The Bank Norwegian Group (the Group) reported profit after tax in the third quarter of NOK 276.1 million compared with NOK 367.8 million in the second quarter and down from NOK 500.6 million in the same quarter last year. The decrease from the previous quarter is mainly caused by higher administrative expenses from provision for legal and financial advisors’ fees related to the offer from Nordax Bank AB (publ) (Nordax), negative change in value of shares and lower interest income due to sale of two portfolios of non-performing loans in the quarter. This was partly offset by gains from the sale of non-performing loan portfolios lowering provisions for loan losses in the quarter. Net interest income amounted to NOK 1 151 million, a decrease of NOK 32.2 million from the second quarter. The reduction is mainly explained by lower interest income due to the sale of non-performing loan portfolios in Norway and Denmark in the quarter and lower income from certificates and bonds mainly in Norway, partly offset by reduced interest expense on deposits in Norway.
Return on equity ended at 10.1%, compared with 13.3% in the previous quarter. The return on assets was 1.9%, compared with 2.5% in the previous quarter.
The total capital ratio was 28.8%, the core capital ratio was 26.8% and the CET1 ratio was 25.7%, including set aside 60% of net result to dividend for 2021 compared to our internal CET1 target of 17.5%. The Board of Directors was authorised by the AGM in April 2021 to resolve a distribution to the shareholders of up to NOK 1 per share after 1 October 2021, in addition to the dividend of NOK 5 approved and paid out in May 2021. As one of the conditions for the completion of the offer from Nordax for the purchase of all the shares in Bank Norwegian is that Bank Norwegian shall not make, or resolve to make, any distributions to its shareholders, the Board of Directors has resolved that no further distributions will be made. This led to improved capital rations with approximately 49bp at the end of the quarter.
In the quarter the Bank sold two portfolios, in July the non-performing instalment loans portfolio in Denmark and in September a non-performing instalment and credit card loans portfolio in Norway. Adjusted for the portfolio sales this quarter, the currency adjusted loan growth was positive with NOK 277.4 million. Broken down by product the currency adjusted loan growth for instalment loans was NOK 21.4 million, adjusted for portfolio sales in Norway and Denmark, compared with NOK -318.9 million in the previous quarter. The positive growth was mainly derived from increased new sales. The currency adjusted loan growth for credit cards was NOK 256.0 million, adjusted for the portfolio sale in Norway, compared with NOK 294.2 million in the previous quarter, adjusted for the portfolio sales in Sweden and Denmark. Instalment loans amounted to NOK 27 498 million and credit card loans amounted to NOK 10 213 million.