BankNordik P/F - Ársreikningur

H1 2012 Interim Report

Interim Financial Report for first half of 2012.

BankNordik improving H1 operating profit

Operating profit before impairment charges of DKK 131m, up from DKK 120m in the
same period of last year. 

BankNordik maintains full-year 2012 profit guidance in the DKK 150-200m range
after impairment charges and before special items. 

BankNordik's earnings performance is developing as expected. Q2 operating
income amounted to DKK 221m, which was in line with the first quarter figure of
DKK 219m, despite the general interest rate developments. As a result, both
interest income, which is linked to the money market rates (CIBOR), and the
return on the securities portfolio fell. The H1 operating income was DKK 439m. 

Operating expenses for the second quarter amounted to DKK 155m, which was in
line with the previous three quarters, that is, since BankNordik acquired the
healthy parts of Amagerbanken effective 1 July 2011. The H1 operating expenses
amounted to DKK 308m. 

This brought the H1 operating profit (before impairment charges and special
items) to DKK 131m, compared to DKK 120m in H1 2011. 

“We are pleased to be reporting a slight improvement in our core business, not
least in light of the difficult earning conditions caused by developments in
interest rates,” said BankNordik CEO Janus Petersen. 

Loan impairment charges (net) amounted to DKK 29m in the second quarter when
calculated according to the previous rules, compared with DKK 19m in the first
quarter. The Danish FSA has introduced new rules requiring, among other things,
that property is recognised at the estimated value obtainable in a sale within
six months. Property funding is a relatively small business area for
BankNordik, but the Bank has nevertheless made value adjustments of two
properties under the new rules, resulting in an extra impairment charge of DKK
25m. DKK 8m of this amount related to investment property and has been booked
under value adjustments. Accordingly, total impairment charges amounted to DKK
65m (net). 

This brought the H1 2012 operating profit before special items from the
acquisition of Amagerbanken, value adjustments and sector costs to DKK 66m. The
H1 2012 profit before tax amounted to DKK 12m. 

Consolidation after strong growth

BankNordik acquired considerable operations from Sparbank in 2010 as well as
the healthy parts of Amagerbanken in 2011. This meant that, in terms of
deposits, the Bank's operations more than doubled in the two years. As a
result, it was necessary to implement changes to in-house procedures, involving
both customer service and the ongoing efforts to enhance efficiency. These are
two important goals for BankNordik. In addition, branches have been merged in
Denmark and in Greenland, and the overall headcount has been reduced. 

“During the first half of the year, everyone at the Bank made a very committed
effort to get the new structure in place. In particular, it was very important
to us that our customers felt the effect as little as possible. This has paid
off as customer defections have been very limited, and we now have a strong,
fully integrated organisation,” said Janus Petersen. 

“Looking ahead, these big and very important steps have enabled us to offer
better customer service and to continue the Bank's healthy development based on
our strategy of proximity to our customers, tight risk management and
profitability in all operations”, said Janus Petersen. 

Backed by equity of DKK 2.0bn and subordinated debt of DKK 0.8bn, BankNordic
had a solvency ratio of 15.1% at 30 June 2012, as compared with the solvency
requirement of 9.3%. BankNordik's policy is to retain the high solvency ratio
at significantly above the required level. For cost considerations, on the
other hand, the solvency ratio should not be unnecesarily high, and for that
reason the Bank repaid subordinated loan capital of DKK 150m in July. This
brought the solvency ratio to 13.9%. 

Unchanged forecast for profit before special items

Interest income has remained under pressure in the third quarter. This is
partly offset by implemented and announced lending rate increases and interest
expenses avoided because the subordinated loan capital was repaid. 

In addition, the drop in lending seen in the first half year appears to have
stabilised, and the Bank now expects end-of-year loans and advances in line
with the level of 30 June. 

Costs are expected to be lower in the second half than in the first half of the
year as the implemented rationalisation measures will gradually begin to take
effect. 

Accordingly, the Bank maintains the full-year guidance as regards operating
profit (DKK 150-200m) including impairment charges of DKK 80-120m in spite of
the extraordinary impairment charges taken in the second quarter. 

Due to redundancy costs of DKK 11m and other restructuring costs, the full-year
2012 special items from integration and restructuring are now expected to
amount to DKK 60-70m (previous forecast: DKK 30-50m). 

Accordingly, BankNordik expects profit before sector costs, value adjustments
and tax of DKK 80-140m (previous forecast: DKK 100-170m). 

“Our agenda for the second half of 2012 will be to continue streamlining our
activities, so we can enhance our efficiency. At the same time, we will
maintain the close contact to our customers that we've come to be known for,
and focus on growing our business from the new, broader platform we've built
over the past couple of years,” said Janus Petersen. 

BankNordik's consolidated financial highlights

DKKm                    H1    H1      Q2      Q1      Q4      Q3      Q2    2011
                      2012  2011    2012    2012    2011    2011    2011        
--------------------------------------------------------------------------------
Operating income*      439   330     221     219     192     232     173     735
Profit before          131   120      66      66      35      80      66     235
 impairment charges                                                             
Impairment charges     -65   -32     -46     -19     -37     -17      -8     101
Operating profit*       66    89      20      46      -2      63      58     134
Special items          -54   -56     -18     -36     -31     -33     -35    -103
Profit before tax       12    33       2      10     -33      30      23      31
Deposits                          13,262  13,088  13,032  13,955   8,740  13,032
Loans                             11,430  11,376  11,769  11,949   8,446  11,769
Deposit surplus                    1,833   1,712   1,263   2,006     294   1,263
Total assets                      17,876  17,878  17,086  18,902  13,289  17,086
Equity                             1,957   1,969   1,958   2,017   1,993   1,958
Solvency ratio                     15.1%   14.9%   15.6%   15.0%   20.3%   15.6%
Surplus liquidity                   2.8x    2.7x    2.2x    2.5x    3.1x    2.2x
 relative to                                                                    
 statutory                                                                      
 requirement                                                                    
--------------------------------------------------------------------------------

 * Adjusted for special items, i.e. integration and restructuring costs, value
adjustments and sector costs. 

Further details are available in the H1 2012 interim report.

Conference call and webcast today at 11.00 AM (CET)

BankNordik will review the financial results today at 11.00 (CET) at its
customary conference call for analysts and investors. The conference call will
be webcast on BankNordik's website, www.banknordik.fo. 

The dial-in number for the conference call is (+45) 32 71 47 67. Participants
are kindly asked to call in a few minutes before the conference begins. 

For further information, please contact:

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

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

Investor Relations: ir@banknordik.fo



BankNordik was founded more than 100 years ago in the Faroe Islands. The Group
has banking activities in Denmark, Greenland and the Faroe Islands and
insurance activities in the Faroe Islands and Iceland. The Group has 180,000
customers, total assets of DKK 18bn and 580 employees. The Bank is subject to
the supervision of the Danish Financial Supervisory Authority and is listed on
NASDAQ OMX. www.banknordik.dk.

Attachments:

BN Q2 2012 - UK.pdf

Interim Report H1 2012.pdf

Q2 Audiocast Presentation.pdf