2014-11-06 07:58:00 CET
2014-11-06 07:58:02 CET
REGULATED INFORMATION
BankNordik P/F - Company Announcement
BankNordik lifts operating profit by 37% in Q1-Q3 2014
Operating profit of DKK 53m in Q3 2014, up from DKK 44m in Q2 2014 and DKK 30m
in Q3 2013. Operating profit for Q1-Q3 period of DKK 128m, up by 37% from DKK
93m last year.
BankNordik's Q3 2014 interim report shows an improved performance, notably in
the Danish banking operations and in the insurance operations. Banking
operations in the Faroes continued to face an extremely competitive market for
lending.
Loans and advances improved in the third quarter, driven especially by 5%
lending growth in the Danish banking operations. Growing demand for new lending
and credit facilities and an inflow of new customers have more than offset the
reduction in the existing loan base. The growing business activity also
supported fee and trading income.
Total operating income for the first nine months of 2014 was down by DKK 44m to
DKK 596m from DKK 640m in the same period of 2013 primarily caused by
decreasing lending rates on the Faroe Islands. The implemented rationalisations
have reduced costs by DKK 27m. With loan impairment charges at less than half
of last year's figure and the cost reductions, BankNordik reported profit
before tax of DKK 134m for Q1-Q3 2014 against DKK 124m last year, even with
value adjustments contributing DKK 15m less than last year. Half of the profit
came from banking operations outside the Faroes.
“We're very pleased to see our operations improving, driven especially by our
Danish activities, and that our earnings performance has been a little better
than we anticipated at the start of the year,” said BankNordik CEO Janus
Petersen.
Narrowing the guidance for 2014
Management now expects profit before impairment charges, non-recurring items,
value adjustments and tax of DKK 220-240m for the full year 2014. This narrows
the guidance to the upper half of the previous guidance range of DKK 200-240m
announced at the start of the year. For the Q1-Q3 2014 period, this item was
DKK 185m.
Management expects full-year loan impairment charges, which amounted to DKK 56m
(net) in the Q1-Q3 period, to be substantially lower than the 2013-figure of
DKK 147m.
Expectations for future financial developments are inherently subject to risk
and uncertainty, and actual results may differ substantially from expectations.
Solvency and liquidity remaining strong
BankNordik's solvency ratio of 14.1% at 30 September 2014 leaves a margin of
5.3 percentage points to the relatively low capital requirement of 8.8%, which
reflects the Bank's controlled risk profile. After recognition of the profit
for the period, the solvency ratio would be 15%.
In step with the gradual implementation of the rules governing systemically
important financial institutions (SIFIs) and the new capital adequacy rules
(CRD IV) in the second half of 2015 or in 2016, the Bank's capital requirements
are expected to increase to close to 14% by the end of 2019. Accordingly,
BankNordik already complies with the upcoming stricter capital requirements.
In terms of liquidity requirements, BankNordik also had a solid buffer at 30
September 2014, at 2.7 times the statutory requirement.
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, 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 170,000 customers, total assets
of DKK 17bn and 513 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 Q1-Q3 Q1-Q3 2013
2014 2014 2014 2013 2013 2014 2013
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Net interest income 125 126 133 133 143 383 441 574
Net fee income 48 54 46 53 43 148 135 188
Income from insurance 26 20 8 14 15 54 55 69
operations
Other operating income 3 4 3 5 2 10 9 14
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Operating income* 201 205 190 206 203 596 640 845
Operating costs* -125 -136 -132 -139 -136 -393 -418 -558
Sector costs, etc. -6 -6 -6 -4 -4 -18 -20 -26
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Operating profit before 70 62 52 62 62 184 201 261
impairment charges*
Loan impairment charges, -17 -19 -21 -42 -32 -56 -107 -147
net
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Operating profit* 53 44 31 20 30 128 93 114
Non-recurring items 0 1 -2 -19 1 -1 8 -11
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Operating profit before 53 45 29 1 31 127 102 103
value adjustments and
tax
Value adjustments -4 9 2 -10 16 7 22 11
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Profit/Loss before tax 49 54 31 -9 47 134 124 114
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Deposits, etc. DKKbn 12.3 12.3 12.0 12.2 12.0
Loans and advances, etc. 10.3 10.2 10.4 10.5 10.6
DKKbn
Equity, DKKbn 2.2 2.2 2.1 2.2 2.2
Solvency ratio 14.1% 14.6% 14.7% 14.7% 14.5%
Liquidity relative to 2.7 x 2.6 x 2.6 x 2.8 x 2.6 x
statutory requirement
Income/cost ratio 62% 66% 70% 68% 67%
Number of employees (FTE) 513 510 512 523 530
at end of period
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* Excluding non-recurring items and value adjustments.
Further details are available in the interim report.
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