Føroya Banki P/F - Ársreikningur

H1 2009 Interim Report

Announcement 19/2009

Føroya Banki increases core income by 35% in the first half of 2009.

• Pre-tax profit DKK 88m compared to DKK - 55m in H1 2008
• Profit guidance for 2009 maintained at DKK 165-195m excl. value adjustments,
state guarantee and 
tax
• Core income DKK 242m, an increase of 35% compared to H1 2008
• Core earnings DKK 139m, an increase of 88% compared to H1 2008
• Cost/income ratio 50% compared to 60% in H1 2008
• Value adjustments DKK 25m compared to DKK - 41m in H1 2008
• Impairments DKK 56m compared to DKK 86m in H1 2008
• The Group's solvency ratio 22.1% compared to 18.7% in H1 2008
• The Group has a strong liquidity of 197% above statutory requirements
• Føroya Banki has applied for DKK 212m in Hybrid Core Capital from the Danish
state

“Our business model has shown robustness through the business cycle. The first
half of 2009 was no exception in this regard, since Føroya Banki posted yet
another good profit,” comments Føroya Banki CEO Janus Petersen. 

“Our focus is on providing core banking services to our customers in a cost
efficient manner while upholding a stringent credit risk management policy.
Cost efficiency is reflected in alow cost/income ratio compared with peers, and
our credit policies are reflected in a low level of impairments in the current
circumstances. Having generated a healthy profit for years, Føroya Banki has
the financial strength to take advantage of the current options in the Danish
banking sector, but we have the patience to wait for the right opportunity
focusing on core retail banking as in our home market, combined with a low
credit risk”, says Janus Petersen. 

The Management is satisfied with the pre-tax profit of DKK 88m in H1 compared
to a loss of DKK 55m in H1 2008. 

The good result is explained by improved core income (interest, fee and
insurance income), steady costs and improved impairment level as well as better
value adjustment on securities. 

Core income increased 35% compared to H1 2008 to DKK 242m and core earnings
(core 
income less Staff costs and administrative expenses) improved by 88% reaching
DKK 139m. 
With increasing income and a steady cost level the cost/income ratio is
improving and is now in line with the Banks strategic goal of 50%, value
adjustments and impairments excluded. 

After last years hardship on equities markets H1 value adjustments on
investments are positive by DKK 25m compared to a loss of DKK 41m in H1 2008. 

The Group's liquidity is still ample and excess liquidity was almost twice the
minimum legal requirement. 

The solvency ratio has increased over the last year from 19% at H1 2008 to 22%
in H1 2009. 

As mentioned in the Q1 report the Group's present level of activities does not
require extra infusion of capital. However, in order to strengthen the Group's
position in the ongoing consolidation in the Danish banking market the Group
decided in June 2009 to take advantage of the Hybrid capital offered in the
Credit Package and applied 
for the maximum amount of Hybrid Core Capital, corresponding to 3% of the
Groups risk weighted assets or DKK 212m. 

On 22 July 2009 Moody's published a rating action for the Danish market.
Moody's stated that amongst the 13 rated financial institutions, 11 were placed
on review for possible downgrade. Only two had their ratings affirmed and
Føroya Banki was one of the two remaining with stable outlook. 

See attached H1 Interim Report.


Føroya Banki
For further information: 
Janus Petersen CEO, Phone +298 330 340 
www.foroya.fo

Attachments:

microsoft word - interim report h1 2009.pdf

webcast 05 august 2009.ppt