Norwegian regulatory body Finanstilsynet recently reported that Norwegian financial institutions enjoyed good results in the first half of 2011, but that uncertainties in the financial markets have resulted in a more challenging liquidity situation for Norwegian banks.

The banks' low credit losses contributed to the good results in the first half of 2011, in spite of a continued reduction in their net interest income. The combined results before tax for the banks in the first half of 2011 totalled close to Nkr16 billion – which is approximately equal to the same figure for the first half of 2010. Interest margins are still under pressure, especially because of increased competition in of the residential mortgage sector. However, recorded losses were low and continued to fall in the first half of the year.

The uncertainties in the financial markets have led to more expensive financing for banks and access to long-term financing has become more challenging. However, in the course of the last two years banks have increased their liquidity reserves and long-term financing, and improved their solidity, which Finanstilsynet believes has made them better prepared for market turmoil than they were during the financial crisis in 2008.

For further information on this topic please contact Paul Sveinsson at Arntzen de Besche Advokatfirma AS by telephone (+47 23 89 40 00), fax (+47 23 89 40 01) or email ([email protected]).