2016-08-04 08:00:01 CEST
2016-08-04 08:00:01 CEST
REGULATED INFORMATION
BankNordik P/F - Financial Statement Release
Satisfactory H1 2016 results
FY2016 guidance revised towards upper bound
Highlights of BankNordik's interim report for the first six months of 2016:
(The figures below have been adjusted for discontinued activities related to
Vörður, unless otherwise indicated)
First half of 2016 vs. first half of 2015
-- BankNordik reported operating profit of DKK 101m for the first half of
2016, an increase of DKK 4m compared to the first half of 2015 (+4%).
-- Net interest income was down by DKK 32m year-on-year primarily due to
the controlled run-off of corporate lending in Denmark, but also due to
pressure on interest margins and the lower investment portfolio income.
-- Fee and commission income was DKK 26m lower, owing to a pull-back in
mortgage-broking activity to normal levels, less income from corporate
activities in Denmark, and less income from asset management activity.
-- Net insurance income was up by DKK 10m in H1 2016, primarily due to
lower claims.
-- Operating costs were down by DKK 23m from DKK 255m, partially due to the
winding-up of the Danish corporate activities. FTE count is 26 less than
at 30 June 2015.
-- BankNordik reversed DKK 4m in net impairment charges compared to net
impairment charges of DKK 15m for the same period last year.
-- BankNordik generated profit before tax, including discontinued activities
from Vörður, of DKK 86m in the first six months of 2016 compared to DKK 73m
for the same period last year.
-- Non-recurring items in H1 2016 were DKK 12m versus DKK 14m in H1 2015.
-- Value adjustments amounted to a gain of DKK 7m against a loss of DKK 16m in
H1 2015.
-- Discontinued activities before tax related to Vörður amounted to a loss of
DKK 9m compared to a profit of DKK 6m in H1 2015.
“The first half of 2016 progressed well and we now expect full-year results at
the upper end of the Group’s guidance on operating profit before impairment
charges,” commented BankNordik CEO Árni Ellefsen.
“A large part of the Danish corporate portfolio was settled by June 2016 and
the Vørður deal is expected to close in the second half of 2016. Impairment
charges remained extraordinary low during second quarter, which confirms
BankNordik’s dedication to firm and systematic credit policy guidelines,” said
Mr Ellefsen.
Q2 2016 vs. Q1 2016
-- Operating profit in Q2 2016 was DKK 50m, flat compared to Q1 2016.
-- Net interest income was down by DKK 15m in Q2 2016 compared to Q1 2016,
primarily due to the winding-up of corporate activities in Denmark, but
also because of increased pressure on interest margins.
-- Fee and commission income was up by DKK 6m compared to Q1 2016 due to
dividend income from the investment portfolio.
-- Net insurance income was up by DKK 3m compared to Q1 2016.
-- Operating costs were down by DKK 2m from DKK 117m.
-- Loan impairment charges were reversed DKK 3m compared to reversed
charges of DKK 1m in Q1 2016.
-- BankNordik recorded a profit before tax, including discontinued activities
from Vørður, of DKK 61m in Q2 2016 compared to a profit of DKK 25m in Q1
2016.
-- There were no non-recurring items in Q2 2016 compared to non-recurring
items of DKK 12m in Q1 2016.
-- Value adjustments amounted to a gain of DKK 9m in Q2 2016 compared to a
loss of DKK 3m in Q1 2016.
-- Discontinued activities before tax relating to Vörður amounted to a profit
of DKK 1 compared to a loss of DKK 10m in Q1 2016.
Update on the sale of Vörður and the winding-up of corporate activities in
Denmark
As announced in June, BankNordik has received approval from the Icelandic
central bank and the Icelandic FSA to sell all shares in Vörður. The final
regulatory approval needed is from the competition authorities, which
BankNordik expects to receive in the second half of 2016.
The winding up of corporate banking activities in Denmark has seen steady
progress and approximately DKK 1 billion in book value had been settled by the
end of June 2016.
The sale of Vörður and the controlled run-off of corporate activities in
Denmark are expected to generate a total capital relief of approximately DKK
300m, which amount is intended for distribution to the shareholders in excess
of ordinary dividends as per the Group’s dividend policy. The Board of
Directors expects to propose the distribution of extraordinary dividends at
BankNordik’s 2017 Annual General Meeting. The proposal will be made with due
consideration for the announced target of a CET1 capital ratio of not less than
13%.
Share buy-back programme initiated
On 30 May 2016, the Group initiated a share buy-back programme, enabling the
acquisition of own shares up to a market value of DKK 33m. The program runs
until year-end and as of 28 July 2016, the Group had accumulated 56,194 shares
under the programme, amounting to a total transaction value of DKK 6.4m.
Hybrid and subordinated debt
On 24 June 2016, BankNordik redeemed its hybrid and subordinated bonds for a
total value of DKK 450m, while simultaneously issuing new CRD IV compliant Tier
2 capital in the amount of DKK 225m. The coupon rate of the newly issued
subordinated debt was 5.0785% p.a., based on the 5-year fixed Danish swap rate
plus a margin of 4.75% p.a. The net annual interest expense savings resulting
from the transactions will amount to approximately DKK 20m.
Capital ratios
As of 30 June 2016, BankNordik had a total capital ratio of 17.1%, leaving a
margin of 8.1 percentage points to the Bank’s capital requirement of 8.9%.
The CET1 capital ratio was 15.1% at 30 June 2016 as compared to the Bank’s
target of 13%.
Outlook for 2016
Management narrows the FY2016 guidance on profit before impairment charges,
non-recurring items, value adjustments and tax from the range of DKK 150-190m
to the range of DKK 160-190m (H1 2016: DKK 97m).
Net impairment charges on loans for 2016 are expected to be in line with the
level of 2015 (DKK 20m). For the first six months of 2016, net impairment
charges were a reversal of DKK 4m.
This guidance is generally subject to uncertainty and will depend on economic
conditions, including possible central bank monetary policy measures.
For additional information, please contact:
Árni Ellefsen, CEO, tel. (+298) 230 348
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 total assets of DKK 16.4bn and
464 employees. The Bank is subject to the supervision of the Danish Financial
Supervisory Authority and has a dual listing on Nasdaq Iceland and Nasdaq
Copenhagen.
Appendix: Financial highlights and comparative figures are provided below.
Financial highlights
DKK million H1 H1 Q2 Q1 Q4 Q3 Q2
2016 2015 2016 2016 2015 2015 2015
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Net interest income 210 242 98 113 111 116 122
Net fee income 96 122 51 45 52 52 67
Income from insurance 20 10 11 8 8 10 10
operations
Other operating income 5 5 3 2 4 2 3
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Operating income* 331 379 163 168 175 180 203
Operating costs* -232 -255 -115 -117 -122 -122 -128
Sector costs, etc. -2 -11 -1 -1 -5 -5 -6
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Operating profit before 97 112 47 49 47 54 69
impairment charges*
Loan impairment charges, 4 -15 3 1 -11 7 5
net
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Operating profit* 101 97 50 50 36 60 74
Non-recurring items -12 -14 0 -12 -497 -11 -14
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Operating profit before 88 83 50 38 -461 49 60
value adjustments and tax
Value adjustments 7 -16 9 -3 -4 -20 -50
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Profit/loss before tax, 95 67 60 35 -465 29 10
excl. Vørður
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Profit/loss before tax, 86 73 61 25 -447 42 12
incl. Vørður
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Deposits, etc. DKKbn 12.9 12.8 12.9 12.5 12.7 12.8 12.8
Loans and advances, etc. 9.4 10.7 9.4 10.0 10.7 10.7 10.7
DKKbn
Equity, DKKbn 1.8 2.0 1.8 1.8 1.8 2.1 2.0
Solvency ratio 17.1% 15.0% 17.1% 17.2% 16.8% 15.6% 15.0%
Excess liquidity relative 254% 173% 254% 207% 167% 175% 173%
to statutory requirement
Operating cost/income 70% 67% 70% 70% 70% 67% 63%
Number of FTE, end of 464 490 464 477 459 478 490
period (incl. Vørður)
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* Excluding non-recurring items and value adjustments.
Further details are available in the interim report.
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