(Bloomberg) -- DNB Bank ASA will eliminate about 500 jobs, or about 5% of its headcount, as it cuts costs to brace for tougher times ahead.
The largest Norwegian lender will implement the staff reductions over the next six months, according to a statement on Tuesday. It employed just over 10,600 people at the end of June.
DNB “is preparing for a future with lower interest rates and even tougher competition to win customers,” it said. “DNB will therefore intensify its focus on cost-effectiveness.”
While the Norwegian central bank is still trailing many other central banks in implementing interest-rate cuts, most economists expect it to do so before the end of the year. Falling interest rates tend to hit bank revenue by reducing how much they earn on lending.
The job cuts come after DNB completed the integration of pure-play digital bank Sbanken earlier this year, in an acquisition aimed at strengthening its retail banking position in its home market.
The bank said after the first quarter that competition for mortgage customers was fierce and that its results in its personal customer business were weighed down in that period by the move of clients from Sbanken’s platform.
“We believe this is a natural reaction to recent developments,” analysts led by Shrey Srivastava at Citigroup Inc. said in a note to clients, citing DNB’s high external information technology costs relative to peers and growth in headcount for group functions. “At the same time, it continues to lose market share in personal customers, and is being outcompeted on price by Nordea Bank Abp and Svenska Handelsbanken AB across the entire deposit product suite,” said the analysts, who recommend clients stay ‘neutral’ on the stock.
DNB shares gained slightly after the announcement to 0.6% as of 1:20 p.m. in Oslo. The Oslo-based bank’s net income grew 12% in the three months through June, helped by a 60% jump in investment banking service income.
(Updates with background on competition, acquisition from fifth paragraph.)
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