2015-02-26 08:00:02 CET
2015-02-26 08:00:07 CET
REGULATED INFORMATION
BankNordik P/F - Financial Statement Release
BankNordik delivers DKK 157m operating profit for 2014
-- Operating profit up by 47%
-- Operational improvements, mainly in Denmark, lifted profit past guid-ance
-- Operations outside the Faroes delivered more than half of the profit
-- Plunging interest rates trigger DKK 250m write-down of carrying amount of
goodwill - operations, liquidity and solvency unaffected
-- Board recommends dividend pay-out of DKK 20m
BankNordik generated operating income of DKK 789m in 2014, a 6% drop from last
year's figure of DKK 840m which was due to the very low level of interest
rates. However, the Bank also managed to reduce costs by 6% (DKK 36m). The
employee headcount was 506 at the end of 2014, down from 523 a year earlier and
612 just three years ago.
Recent years' efficiency improvements have enabled BankNordik to offer
attractive terms to both existing and new customers. The Bank had an
exceptionally good customer inflow and lending growth in the second half of
2014, especially in Denmark where lending grew by 12%. The customer inflow has
lifted income from fees and insurance operations.
Profit for the year before impairment charges, non-recurring items, value
adjustments and tax was DKK 242m, or slightly better than the guidance of DKK
200-240m provided at the beginning of the year.
Loan impairment charges were much lower, at DKK 85m in 2014 compared with DKK
148m in 2013. This brought the 2014 operating profit (before non-recurring
items and value adjustments) to DKK 157m, a DKK 50m or 47% improvement from DKK
107m in 2013. A main driver of the improvement was the much higher operating
profit from the Danish operations.
New business activities driving more than half of the profit
In recent years, the Bank has expanded its business operations outside the
original market area of the Faroes and now generates more than half of its
consolidated earnings from these activities. The Bank has built a much broader
platform for development, and business growth in the new activities will drive
its future earnings capacity. Retail customers, a relatively low risk segment,
constitute some 60% of the Danish operations. Growth in this business area
contributes to a desirable diversification of risk.
“We're quite pleased with our full-year results, not least considering the
current market conditions and very competitive climate. We're particularly
delighted to see our new activities deliver more than half of our operating
profit plus a fair rate of lending growth in the second half of the year,”
commented BankNordik CEO Janus Petersen. "Like other banks, we have seen our earnings have come under severe pressure in
recent years. However, BankNordik has a presence in attractive market areas,
and we have a good potential for growing our business with both existing and
new customers. Our performance in the second half shows that it is possible to
grow in a stagnant market,” said Mr Petersen.
Solvency and liquidity remaining strong
BankNordik's solvency ratio of 14.8% at 31 December 2014 leaves a margin of 5.8
percentage points to the individual capital requirement of 9.0%, which reflects
the Bank's controlled risk profile. In terms of liquidity, BankNordik also had
a solid buffer at 31 December 2014, at 2.8 times the statutory requirement.
Dividend pay-out of DKK 20m
In light of the Bank's financial position and the reported operating profit,
the Board of Directors recommends that the dividend pay-out should amount to
DKK 20m in respect of 2014.
Reassessment of goodwill
The Bank has performed the annual impairment test of goodwill as required under
the accounting regulation. As a result of the test, goodwill was written down
by DKK 250m. The main reason for the impairment is the very low level of
interest rates applied in the calculation of the carrying amount of goodwill
from the Bank's acquisitions of activities outside the Faroes. The present
currency situation and the extremely low level of interest rates further
impaired goodwill. The impairment should be seen relative to the carrying
amount of goodwill of DKK 730m and the equity before the write-down of DKK
2,249m.
The write-down is based on a long-term assessment of the parameters used when
calculating goodwill and has no effect on the Bank's strategy, business
operations, solvency or liquidity.
Outlook for 2015
BankNordik's management believes the level of interest rates will remain low
and lead to a further contraction of interest margins and limited general
demand for loans.
On the other hand, based on the current positive trend in customer inflow, the
Bank expects a slight increase in loans and advances in 2015, as the volume of
new loans and advances is expected to more than offset repayments on existing
loans. Net interest income is expected to fall in 2015, while fee income is
expected to rise, driven especially by the Bank's growing activities in
pension, investment and mortgage-credit services.
Total operating income is expected to be slightly lower than in 2014. At the
same time, costs are expected to be unchanged or slightly lower, for an
operating profit before impairment charges, non-recurring items, value
adjustments and tax of DKK 200-240m (2014: 242m).
Loan impairment charges, at DKK 85 million (net) in 2014 and 0.8% of loans and
advances, are expected to be largely unchanged in 2015.
Expectations for future financial developments are inherently subject to risk
and uncertainty, and actual results may differ substantially from the
expectations expressed.
Appendix:
FY 2014 financial highlights and comparative figures
Risk Management Report 2014
Annual Report 2014
Investor Presentation of Annual Report 2014
For additional information, please contact:
Janus Petersen, CEO, tel. (+298) 330 340
Árni Ellefsen, CFO, tel. (+298) 230 348
Johnny í Grótinum, Investor Relations, tel. (+298) 230 380, jig@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 170,000 customers, total assets
of DKK 17bn and 500 employees. The Bank is subject to the supervision of the
Danish Financial Supervisory Authority and is listed on NASDAQ.
www.banknordik.dk.
Financial highlights
DKKm 2014 2013 Q4 Q3 Q2 Q1 Q4
2014 2014 2014 2014 2013
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Net interest income 508 574 125 125 126 133 133
Net fee income 190 182 52 45 50 44 52
Income from insurance 76 69 22 26 20 8 14
operations
Other operating income 14 15 3 3 4 3 5
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Operating income 789 840 202 198 201 187 204
Operating costs -523 -559 -130 -125 -136 -132 -139
Sector costs, etc. -23 -26 -5 -6 -6 -6 -4
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Operating profit before 242 255 68 67 58 49 61
impairment charges
Loan impairment charges, net -85 -148 -29 -17 -19 -21 -42
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Operating profit 157 107 39 50 40 28 19
Impairment of goodwill -250 - -250 - - - -
Other non-recurring items -13 -11 -12 0 1 -2 -19
Value adjustments 13 17 -4 -1 13 4 -9
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Profit/Loss before tax -92 114 -226 49 54 31 -9
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Deposits, etc. DKKbn 12.6 12.2 12.6 12.3 12.3 12.0 12.2
Loans and advances, etc. DKKbn 10.5 10.5 10.5 10.3 10.2 10.4 10.5
Equity, DKKbn 2.0 2.2 2.0 2.2 2.2 2.1 2.2
Solvency ratio 14.8% 14.7% 14.8% 14.1% 14.6% 14.7% 14.7%
Liquidity relative to statutory 2.8 x 2.8 x 2.8 x 2.7 x 2.6 x 2.6 x 2.8 x
requirement
Cost/income ratio 66% 67% 64% 62% 66% 70% 68%
Number of employees (FTE) at 506 523 506 513 510 512 523
end of period
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Further details are available in the 2014 Annual Report.
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