BankNordik P/F - Company Announcement

Q3 Interim Report: BankNordik lifts operating profit

Despite a more competitive market, a lower interest margin and impairment
losses, BankNordik achieved operating profit before value adjustments and tax
of DKK 102m for the first nine months of 2013, compared to DKK 66m in the 9M
2012 period. Profit before tax amounted to DKK 124m. Operating costs were
reduced considerably, boosting both profitability and competitive strength. 

 More and more of BankNordik's commercial customers are experiencing increasing
revenues and brighter prospects, and they are again ready to invest in new
plant and business activities. This is a trend feeding through to the Bank by
way of increased lending to corporate customers. On the other hand, personal
customers continued to pay off debts more than they took out new loans, causing
the Bank's loans and advances to fall slightly. 

Recent years' organisational trimmings and efficiency improvements have been
converted to added competitive power. BankNordik is getting good and improving
satisfaction ratings and is playing an active role in the more competitive
market, offering attractive prices on loans as well as deposits. Combined with
the lower net lending, however, this has put the Bank's earnings under
pressure, as expected. 

“BankNordik is a part of the local community, just like a small, local bank,
but we can also offer our customers the services of a large bank and at some of
the best prices in the market,” said BankNordik CEO Janus Petersen. 

“Our loyalty concept has been very well received. It allows us to individualise
our service, and our customers get significant financial benefits from pooling
their business with us. We are investing in building long-term customer
relations and in strengthening our market position,” said Janus Petersen. 



Operating profit before impairment charges of DKK 221m

BankNordik generated operating income of DKK 640m in the first nine months of
2013 and of DKK 204m in the third quarter, in which the Group's insurance arm
reported relatively high claims expenses. Operating costs were reduced by DKK
31m to DKK 418m for the 9M period. 

This brought operating profit before impairment charges to DKK 221m in 9M 2013,
compared with DKK 210m in 9M 2012. The Q3 2013 operating profit was DKK 68m. 

Net loan impairment charges for Q3 amounted to DKK 32m.  For the full year,
impairment charges are now expected to be slightly higher than the 2012 figure
of DKK 115m. 

Operating profit before value adjustments and tax and after impairment charges,
special items and the contribution to the banking sector's deposit guarantee
scheme was DKK 102m for the first nine months of 2013, as against DKK 66m in
the same period of 2012. The profit before tax amounted to DKK 124m. 



Guidance for full-year results maintained

The BankNordik Group continues to deliver on the announced strategy and its
emphasis on providing quality customer service, profitability and risk
management. 

Despite the promising indications for both the Danish and the international
economy, demand for loans is expected to remain weak in the foreseeable future.
In addition, the interest margin is under considerable competitive pressure.
Furthermore, the Bank's financial results for 2013 and each of the next few
years will be charged with a contribution of about DKK 25m for building up the
banking sector's deposit guarantee scheme. 

Against that background, BankNordik maintains its full-year guidance of profit
before value adjustments and tax in the DKK 130m-160m range, which is a strong
improvement from DKK 102m in 2012. 



Solvency and liquidity at healthy levels

The Bank has a well-diversified lending portfolio with personal customers and
the public sector accounting for almost 60%, a good industry diversification
and only few large exposures. This risk profile is reflected in the Bank's
solvency need of 8.9%, which is among the very lowest in the Danish banking
sector and very close to the statutory minimum solvency requirement of 8%. The
Bank's solvency of 14.5% leaves a margin of 5.6 percentage points relative to
the minimum requirement. 

Due to its large deposit surplus BankNordik has a healthy liquidity with a
surplus coverage of 163% above the required level at 30 September 2013. 



For further information, please contact:

Janus Petersen, CEO, tel. (+298) 330 340

Árni Ellefsen, CFO, tel. (+298) 330 348

Johnny í Grótinum, Investor Relations, tel. (+298) 230 380, ir@banknordik.fo



BankNordik has banking activities in Denmark, Greenland and the Faroe Islands
and insurance activities in the Faroe Islands and Iceland. Founded in the Faroe
Islands more than a century ago, the Group has 180,000 customers, total assets
of DKK 17bn and 517 employees. The Bank is subject to the supervision of the
Danish Financial Supervisory Authority and is listed on NASDAQ OMX.
www.banknordik.dk. 




Financial highlights



DKKm                            Q3     Q2     Q1     Q4     Q3    9M    9M  2012
                              2013   2013   2013   2012   2012  2013  2012      
--------------------------------------------------------------------------------
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Operating income*              204    230    206    236    224   640   660   895
Operating costs*              -136   -142   -141   -143   -145  -418  -449  -592
--------------------------------------------------------------------------------
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Operating profit before         68     88     65     93     79   221   211   303
 impairment charges                                                             
Loan impairment charges,       -32    -20    -55    -35    -14  -107   -79  -115
 net                                                                            
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Operating profit*               35     68     10     58     65   114   131   188
Non-recurring items              0     18    -10    -15     -1     8   -61   -77
Sector costs, etc.              -4     -8     -8     -7      0   -20    -4    -9
--------------------------------------------------------------------------------
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Operating profit/(loss)         31     79     -8     36     64   102    66   102
 before value adjustments                                                       
 and tax                                               
Value adjustments               16    -16     22      6      4    22    14    19
--------------------------------------------------------------------------------
Profit before tax               47     63     14     42     68   124    80   121
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Deposits, etc. DKKbn          12.0   12.3   12.8   12.7   13.1                  
Loans and advances etc.       10.6   10.7   10.8   11.3   11.3                  
 DKKbn                                                                          
Total assets, DKKbn           16.9   17.4   17.8   17.6   17.8                  
Equity, DKKbn                  2.2    2.1    2.1    2.1    2.0                  
Solvency ratio               14.5%  15.4%  14.9%  14.8%  13.8%                  
Liquidity relative to        2.6 x  2.8 x  3.0 x  2.5 x  2.7 x                  
 statutory requirement                                                          
Cost/income ratio              66%    62%    68%    61%    65%                  
Number of employees (FTE)      517    529    533    550    577                  
 at year-end                                                                    
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* Adjusted for non-recurring items and other special items (value adjustments,
sector costs, etc.). 

Further details are available in the interim report.

Attachments:

Interim Report Q3 2013.pdf