2015-10-28 08:00:03 CET

2015-10-28 08:00:07 CET


SÄÄNNELTY TIETO

BankNordik P/F - Ársreikningur

Operating profit on track despite continuous pressure on interest margin 


Highlights of BankNordik's interim report for the first nine months of 2015:

(Figures below are adjusted for discontinued activities related to Vørður,
unless otherwise indicated) 



Nine month performance in line with expectations

  -- BankNordik reported operating profit of DKK 157m for the nine months to 30
     September 2015, an increase of DKK 41m compared to the first nine months of
     2014.
     -- Impairment charges were DKK 47m less than in the same period of last
        year.
     -- Interest income was down DKK 17m, primarily due to further pressure on
        interest margins.
     -- Fee and commission income was DKK 29m higher, mainly due to an increase
        in investment management activity and mortgage broking services.
     -- Net insurance income was down DKK 3m.
     -- Operating costs were DKK 14m higher, partially due to one-off IT costs.
        FTE count is 39 lower than at 30 September 2014.
  -- BankNordik generated profit before tax, including discontinued activities
     from Vørður, of DKK 115m for the 9M 2015 period compared to DKK 134m for
     the same period of 2014.
     -- Non-recurring items amounted to DKK 25m compared to DKK 1m for the same
        period last year due to payments in lieu of notice related to recent
        organisational adjustments.
     -- Value adjustments amounted to a DKK 36m loss in comparison to an income
        of DKK 15m in 9M 2014.



“It was an eventful third quarter, which met our profit expectations. The
Bank's strategy has been adjusted, a sales process involving the Danish
corporate banking division has been initiated, and the Bank has entered info a
conditional salesagreement regarding the insurance company Vørður. Furthermore
we also had considerable activity in our core business. Operating income stayed
flat on a year-to-year basis despite the challenging low-interest rate
environment, while operating profit was well ahead of 2014 levels mainly due to
reversed impairment charges for the second straight quarter, mirroring the
strong credit quality of our loan portfolio” said newly appointed BankNordik
CEO, Árni Ellefsen. 



“Upon completion, the recently announced sales processes involving Vørður and
the Danish corporate banking division are expected to increase capital ratios
beyond the bank's capital ratio targets, allowing for an extraordinary dividend
payment to shareholders in due course,” said Mr. Ellefsen. 



Fee and commission income back to normal levels in Q3 2015 after surge in
mortgage refinancing income in Q2 2015 

  -- BankNordik reported operating profit of DKK 60m in Q3 2015, DKK 14m less
     than in Q2 2015.
     -- BankNordik reversed DKK 7m in impairment charges versus DKK 5m for the
        previous quarter.
     -- Interest income was DKK 6m lower than in Q2 2015, mostly due to less
        interest income from the investment portfolio.
     -- Fee and commission income was DKK 15m lower than in Q2 2015, owing to
        mortgage broking services pulling back to normalised levels.
     -- Net insurance income for Q3 was DKK 10m, flat vs. previous quarter.
     -- Operating costs were DKK 6m lower than in Q2 due to one-off items in Q2.
  -- BankNordik generated profit before tax, including discontinued activities
     from Vørður, of DKK 42m in Q3 compared to DKK 12m in Q2.
     -- Non-recurring items were DKK 11m in Q3 compared to DKK 14m in Q2
     -- Value adjustments amounted to a DKK 20m loss in Q3 compared to a DKK 50m
        loss in Q2.



Sale of Vørður

In October, BankNordik entered into a conditional agreement to sell 51% of
insurance company Vørður to Arion Bank. The remaining 49% is covered by a put
and call option agreement enabling BankNordik to sell the stake to Arion Bank
in 2017. The combined agreed price for all shares is EUR 37.7m. The deal is,
however, subject to the approval of the relevant Icelandic authorities. 



Outlook for 2015

Management narrows FY 2015 guidance on profit before impairment charges,
non-recurring items, value adjustments and tax from DKK 200-240m to DKK
200-220m, reflecting the discontinuation of business activities related to
insurance company Vørður. For the first nine months of 2015, this item was DKK
166m. 

At the start of the year, management expected a drop in loan impairment charges
relative to last year's net figure of DKK 85m. For the first nine months of
2015 the bank has recognised net impairment charges of DKK 9m. As a result, FY
2015 impairment charges are now expected to fall substantially relative to last
year's charges. 

This guidance is generally subject to uncertainty and will depend on economic
conditions, including possible central bank monetary policy measures. 



CRD IV implemented

BankNordik had a total capital ratio of 15.6% at 30 September 2015, leaving a
margin of 6.7 percentage points to the Bank's capital requirement of 8.9%. 

As of 30 September 2015, the new capital adequacy rules (CRD IV) have been
implemented and, in comparison to Basel II guidelines, the CET1 capital ratio
dropped by 0.1 percentage point. Applying the new capital adequacy rules, the
Bank had a CET1 ratio of 12.7% at 30 September 2015. 

The Bank's capital adequacy target is a CET1 capital ratio of 13% and a total
capital ratio of 16.5% by 2019. With a CET1 ratio of 12.7% at 30 September
2015, the Bank is well on its way to meeting the CET1 capital ratio target for
2019. 



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 170,000 customers, total assets
of DKK 17bn and 476 employees. The Bank is subject to the supervision of the
Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
www.banknordik.dk. 



Appendix: 9M 2015 financial highlights and comparative figures are provided
below. 



Financial highlights



DKK million                         9M     9M     Q3     Q2     Q1     Q4     Q3
                                  2015   2014   2015   2015   2015   2014   2014
--------------------------------------------------------------------------------
Net interest income                358    375    116    122    120    122    122
Net fee income                     174    145     52     67     55     51     46
Income from insurance               20     23     10     10      0      6     13
 operations                                                                     
Other operating income               7     10      2      3      2      3      3
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating income*                  559    554    180    203    176    183    184
Operating costs*                  -377   -363   -122   -128   -127   -120   -116
Sector costs, etc.                 -16    -18     -5     -6     -5     -5     -6
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit before            166    172     54     69     43     58     62
 impairment charges*                                                            
Loan impairment charges, net        -9    -56      7      5    -20    -29    -17
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit*                  157    116     60     74     23     29     45
Non-recurring items                -25     -1    -11    -14      0   -262      0
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Operating profit before value      132    115     49     60     23   -233     45
 adjustments and tax                                                            
Value adjustments                  -36     15    -20    -50     34    -13     -7
--------------------------------------------------------------------------------
Profit/loss before tax, excl.       96    131     29     10     57   -245     39
 Vørður                                                                         
--------------------------------------------------------------------------------
Profit/loss before tax, incl.      115    134     42     12     61   -226     49
 Vørður                                                                         
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Deposits, etc. DKKbn              12.8   12.3   12.8   12.8   12.3   12.6   12.3
Loans and advances, etc. DKKbn    10.7   10.3   10.7   10.7   10.6   10.5   10.3
Equity, DKKbn                      2.1    2.2    2.1    2.0    2.0    2.0    2.2
Solvency ratio                   15.6%  14.1%  15.6%  15.0%  14.6%  14.8%  14.1%
Excess liquidity relative to      175%   166%   175%   173%   157%   182%   166%
 statutory requirement                                                          
Operating cost/income              67%    66%    67%    63%    72%    66%    63%
Number of FTE, end of period       476    513    476    490    504    506    513
 (incl. Vørður)                                                                 
--------------------------------------------------------------------------------

* Excluding non-recurring items and value adjustments.



Further details are available in the interim report.