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2010-02-25 09:01:42 CET 2010-02-25 09:03:03 CET REGULATED INFORMATION Føroya Banki P/F - ÁrsreikningurAnnual report 2009Anouncement no. 11 / 2010 Profit increased 34% to DKK 135 million in 2009 Føroya Banki's cautious strategy continues to pay off, and going forward the Bank will focus on harvesting the benefits from the solid platform acquired in Denmark, Greenland and Iceland Highlights: • Pre-tax profit increased by 34% to DKK 135m • Interest, fee and insurance income up by 24% to DKK 497m from DKK 401m in 2008 • Impairments, excluding payments under the guarantee to the Sector Fund, amount to DKK 110m, corresponding to 110bp of exposures • The Group's solvency ratio is 26.2% compared to 20.6% in 2008 The Group's cautious strategy continues to pay off. Føroya Banki reports a profit before value adjustments, and payment to the Danish state, of DKK 156 million, which was DKK 8 million short of the range projected in the annual report for 2008. The difference is primarily explained by higher than expected impairments in the fourth quarter of 2009. Income from banking and insurance activities increased 24% to DKK 497m. This result sees Føroya Banki continuing the progress of the last years. The solvency ratio was 26% at the end of the year, and liquidity was almost to and a half times above statutory requirements. “At Føroya Banki we develop our core business continuously while sticking to our cautious strategy of operational excellence and strict credit management”, says Janus Petersen, CEO. “We deliver on our promises of a profitable business and of pursuing the published intention of acquiring an international platform for further growth. 2010 will be a year of transition with extra costs to integration and IT, but we nevertheless project a profit in the range of DKK 150-190 million including payment to the state. And we are laying the platform for considerable growth in the profits in the coming years.” International growth strategy launched 2009 was marked in particular by the Bank implementing its international growth strategy. The Bank conducted a number of due diligence processes in Denmark and Iceland, and the latter resulted in the acquisition of the insurance company Vørður in the fourth quarter. The clear message during the course of 2009 that the Bank was ready to participate in the consolidation of the Danish banking sector, has now been followed by action. The Bank has acquired a part of Sparbank's branch network in Denmark and all their activities in Greenland. Føroya Banki will take over assets and liabilities in the 12 branches and in addition will pay for goodwill in the amount of DKK 335m. Payment will occur simultaneously with the transition, which is dependant upon approval from the Danish Financial Supervisory Authority. We have realized that expansion possibilities on the home market are limited and that an improvement of the Group's rate of return presupposed expansion beyond the islands. This acquisition provides our capital strength and the purchased distribution network a satisfactory solid foundation to create profitable growth outside of the Faroe Islands,” says Janus Petersen, CEO of Føroya Banki. The outlook is positive, but 2010 will be a year of transition The outlook for 2010 is marked by the fact that it will be a year of transition for the Bank in many ways. The profit guidance states that the Groups pre-tax profit before value adjustments will be in the range of DKK 150-190 million projecting an increase of 35-70% compared to 2009. Possible capital gain from the planned sale of the aquaculture company Bakkafrost in Q1 2010 is not included in this expectation. This year of transition will be characterized by firstly, investments in the integration of the banking platforms in the three countries, secondly by costs related to converting the Faroese banking business from a domestic IT platform to the Danish SDC, thirdly by more provisions stemming from a clean up in the loan portfolio and finally by the payment to the state for the bank Packages. The Group projects costs to increase by 50-55% in 2010. Impairments on loans and advances are expected to stay at the same nominal level as in 2009 indicating relatively lower impairment levels given the 50% enlargement of the loan portfolio following the acquisition. Impairments on the Faroe Islands are expected to be lower, while the loan book in the Danish activities has been assessed by the Bank to be of moderate risk, as 70% of the portfolio has been reviewed individually. Given the latest media coverage of the challenges in the Danish agriculture industry, it is necessary to em-phasise that the Bank has no exposures in Danish agriculture. See detailed information in the annual report (“Annual Report 2009”) Conference Call Føroya Banki will host a conference call for analysts and investors with a live web-cast of the presentation on the website in connection with the publication of Annual Report 2009. The conference call with analysts and investors will take place on Thursday February 25th, at 13:00 (GMT+1), 14:00 (CEST). If you would like to participate in the conference call, please dial the relevant number below a few minutes before the conference starts: UK participants dial: + 44 208 817 9301 Danish participants dial: + 45 327 147 67 US participants dial: + 1 718 354 1226 International Participants dial: + 44 (0) 208 817 9301 The live presentation will be accessible on the website at www.foroya.fo. Føroya Banki was founded in 1906 and is a limited liability company incorporated and domiciled in the Faroe Island. Today, Føroya Banki Group provides financial services to the private, institutional and corporate cus-tomer segments. Føroya Banki operates in the Faroe Islands, where it holds in excess of 40% of the banking market and 25% of the insurance market, but the Group also conducts business in the Danish, Greenlandic and Icelandic markets. Føroya Banki is listed under the ticker FO-BANK on the Nasdaq OMX Nordic Market. The Group employs approximately 450 members of staff. For further information: Janus Petersen, CEO, phone +298 330 340 Johnny i Grótinum, IR, cell phone +298 230 380 www.foroya.fo/ir |
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