2016 was the year when many things became a little bit different. We reduced the number of branch offices, but customer activity increased. DNB's reputation scores declined, but the employees became more positive and engaged in their work. The oil price and the outlook for the Norwegian economy improved, and DNB's share price rose. The Group's common equity Tier 1 capital target was reached one year ahead of plan, and dividend payments were increased in line with our long-term ambition.

In the first half of the year, we implemented the biggest restructuring of our distribution network ever. We reduced the number of branch offices in Norway from 116 to 57. The reason for this is changes in customer behaviour. As a result of new technology and digital services, our customers use us in different ways. While the use of digital services has exploded in recent years, there has been a prolonged decline in the number of visitors to our branch offices. 90 per cent of Norwegian banking customers no longer use branch offices for their daily banking needs. Nine out of ten Norwegians cover their banking needs online, and an increasing number now use their mobile phone or tablet. The number of visits in our mobile bank has increased from 700 000 to 17 million per month during the last three years. Even though we have closed half of our branch offices, we have never talked more with our customers than in 2016. Furthermore, changes in customer behaviour are not unique to the personal customer market – corporate customers also want to use the bank in new ways. Nine out of ten companies now establish their customer relationships digitally. In Finalta’s benchmark analysis of the international banking sector, we were ranked number one in the world based on the efficiency of our branch network, and number two based on the termination of manual services in our branch offices.

For large parts of the Norwegian business community, 2016 was a challenging year. This can largely be attributed to the sharp fall in oil prices in 2014 and 2015. The price of oil dropped from USD 115 per barrel to USD 57 per barrel in 2014, and further to USD 37 per barrel in 2015. We started the year with the lowest oil price since the financial crisis. This made 2016 a challenging year, not only for the oil companies, but also for oil-related industries that supply goods and services.

Analysts in DNB Markets estimate that 40 000 jobs in the Norwegian oil industry disappeared during 2015 and 2016. Even though the oil slump has been painful, it is also important to remember that it is primarily sector-specific. Some industries experienced growth, increased employment levels and very strong earnings in 2016. For example, the hotel and tourist industry reported record profits, as did the seafood industry and several other export industries that are benefiting from a weaker Norwegian krone.

This was also clearly reflected in the regional differences in unemployment. At the end of the year, only four of 19 counties in Norway had significantly higher unemployment levels compared with the same period in 2015. In early 2017, Norway has a good starting point to meet macroeconomic challenges and has considerable scope of action in both fiscal and monetary policy. In addition, many people underestimate the enormous ability and willingness of the Norwegian manufacturing industry to restructure its operations. Over many generations, Norway has adapted to cyclical markets. We have shown that we can cope well with change. DNB is an important market participant, contributing with expertise and capital to promote innovation and restructuring.

Considerable efforts have been made to transform the bank to meet new requirements and competition.

DNB was affected by the challenges in the oil and offshore industry, and our losses and impairment levels increased. Nevertheless, our share price increased from NOK 109.80 to 128.40 in 2016. Including dividend payments of NOK 4.50 per share, DNB created values of more than NOK 37.6 billion for its owners. The positive trend is partly due to our solid capital position. DNB has built up just over NOK 100 billion in common equity Tier 1 capital since 2007. Now we have the opportunity to change our focus and spend more time exploring new and exciting business opportunities. In addition, we have managed to maintain our industry-leading cost-effectiveness despite higher non-recurring costs related to the restructuring of our branch network.

Reputation-wise, 2016 was a demanding year. Several difficult cases dominated the news, particularly Panama Papers and the financing of the construction of an oil pipeline in North Dakota. We have had to endure criticism from both the media and our customers. For me, Panama Papers is a reminder of how much the financial services industry has changed over the last ten years. Practices that were previously quite common are now completely unthinkable. We have learned a lot and implemented a number of measures. We have reviewed all products and services throughout the Group to ensure that we live up to the expectations of our stakeholders.

Although our reputation score fell in 2016, customer activity increased, and customer satisfaction rose in several segments. Both loan volumes and our market share of home mortgages increased. We strengthened our market position within investment banking. Through our NXT initiative, we helped more entrepreneurs than ever. By the end of 2016, we also had more pension funds under management in defined contribution schemes than ever before. In Sweden, there was a significant improvement in both customer satisfaction and earnings, while Large Corporates and International and Markets experienced higher customer satisfaction scores in 2016.

So despite the fact that 2016 was a year characterised by restructuring and workforce reductions in DNB, internal employee surveys show that our employees are more positive and committed to their work. DNB’s employees have shown a strong ability to stick together when we have been in the middle of a storm.

We must continue to work hard to be there for our customers. Every day. When it matters the most. We have developed new services that make life easier for our customers. The savings product “Lev Mer” (Live More) makes it easy to start saving for retirement. “Boligreisen” (Home Journey) gives customers advice and guidance during all phases of a home purchase. Vipps has made it easy to make payments and transfer money. We have proven that our customer value proposition is more than just words. It is something that permeates everything we do.

We received the Norwegian Confederation of Vocational Unions’ (YS) equal opportunity award for 2016 with humility and pride. We were praised for our long-term efforts to reduce internal differential treatment, recruit women to senior executive positions and strive for diversity with respect to gender, ethnicity, age and education. We will continue to work systematically with equal opportunity in the period ahead.

I cannot conclude without saying a little more about Vipps because 2016 was the year when Vipps took the step from being a free person-to-person payment application to becoming a payment platform with un-dreamed of possibilities. We increased the number of active users from 1 to 2.1 million. We launched Vipps for SMEs, clubs and associations. We simplified the payment solutions in the NSB and Ruter apps, and we made advance payments possible in taxis. At the end of the year, we launched a solution that will seriously revolutionise the invoice market, called Vipps Invoice. What is most exciting is that we have just begun.

For quite some time, we have worked on integrated reporting in DNB. We are following the guidelines out-lined in the framework of the International Integrated Reporting Council, IIRC. In 2016, for the first time, we conducted a comprehensive materiality analysis that describes DNB’s main challenges to ensure long-term value creation. The most important challenges are grouped in three main themes related to customers, employees and society.

We have endorsed the United Nations’ sustainable development goals, SDGs, and are continuing our support to the UN Global Compact and the initiative’s ten basic principles in the areas of human rights, labour, the environment and anti-corruption. After reading the report, you will have a more complete picture of our value creation and the role we play in society.

Even with some challenges, 2016 was yet another good year for DNB. Considerable efforts have been made to transform the bank to meet new requirements and competition. The adjustments made mean that we are in a stronger position at the start of 2017. In the light of the improved outlook for both oil prices and the Norwegian economy, we have a much better starting point in 2017 than we had in 2016.

We will continue on our journey to become a bank for the future, and we will continue to deliver on our vision of creating value through the art of serving the customer.

Rune Bjerke

Group chief executive