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2009-08-05 08:50:00 CEST 2009-08-05 08:50:03 CEST REGULATED INFORMATION Føroya Banki P/F - Financial Statement ReleaseH1 2009 Interim ReportAnnouncement 19/2009 Føroya Banki increases core income by 35% in the first half of 2009. • Pre-tax profit DKK 88m compared to DKK - 55m in H1 2008 • Profit guidance for 2009 maintained at DKK 165-195m excl. value adjustments, state guarantee and tax • Core income DKK 242m, an increase of 35% compared to H1 2008 • Core earnings DKK 139m, an increase of 88% compared to H1 2008 • Cost/income ratio 50% compared to 60% in H1 2008 • Value adjustments DKK 25m compared to DKK - 41m in H1 2008 • Impairments DKK 56m compared to DKK 86m in H1 2008 • The Group's solvency ratio 22.1% compared to 18.7% in H1 2008 • The Group has a strong liquidity of 197% above statutory requirements • Føroya Banki has applied for DKK 212m in Hybrid Core Capital from the Danish state “Our business model has shown robustness through the business cycle. The first half of 2009 was no exception in this regard, since Føroya Banki posted yet another good profit,” comments Føroya Banki CEO Janus Petersen. “Our focus is on providing core banking services to our customers in a cost efficient manner while upholding a stringent credit risk management policy. Cost efficiency is reflected in alow cost/income ratio compared with peers, and our credit policies are reflected in a low level of impairments in the current circumstances. Having generated a healthy profit for years, Føroya Banki has the financial strength to take advantage of the current options in the Danish banking sector, but we have the patience to wait for the right opportunity focusing on core retail banking as in our home market, combined with a low credit risk”, says Janus Petersen. The Management is satisfied with the pre-tax profit of DKK 88m in H1 compared to a loss of DKK 55m in H1 2008. The good result is explained by improved core income (interest, fee and insurance income), steady costs and improved impairment level as well as better value adjustment on securities. Core income increased 35% compared to H1 2008 to DKK 242m and core earnings (core income less Staff costs and administrative expenses) improved by 88% reaching DKK 139m. With increasing income and a steady cost level the cost/income ratio is improving and is now in line with the Banks strategic goal of 50%, value adjustments and impairments excluded. After last years hardship on equities markets H1 value adjustments on investments are positive by DKK 25m compared to a loss of DKK 41m in H1 2008. The Group's liquidity is still ample and excess liquidity was almost twice the minimum legal requirement. The solvency ratio has increased over the last year from 19% at H1 2008 to 22% in H1 2009. As mentioned in the Q1 report the Group's present level of activities does not require extra infusion of capital. However, in order to strengthen the Group's position in the ongoing consolidation in the Danish banking market the Group decided in June 2009 to take advantage of the Hybrid capital offered in the Credit Package and applied for the maximum amount of Hybrid Core Capital, corresponding to 3% of the Groups risk weighted assets or DKK 212m. On 22 July 2009 Moody's published a rating action for the Danish market. Moody's stated that amongst the 13 rated financial institutions, 11 were placed on review for possible downgrade. Only two had their ratings affirmed and Føroya Banki was one of the two remaining with stable outlook. See attached H1 Interim Report. Føroya Banki For further information: Janus Petersen CEO, Phone +298 330 340 www.foroya.fo |
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