2014-05-07 08:03:00 CEST
2014-05-07 08:03:02 CEST
REGULATED INFORMATION
BankNordik P/F - Financial Statement Release
2014 Q1 results as expected
BankNordik reporting profit before impairment charges of DKK 52 million after
positive performance by the Danish activities and new efficiency improvements.
Management maintains full-year guidance of profit before impairment charges,
non-recurring items, value adjustments and tax of DKK 200-240 million.
The BankNordik Group had net operating income of DKK 190 million in the first
quarter of 2014. Even when adjusted for seasonal fluctuations, the income was
slightly down, in part due to continued weak demand for loans and credit and
because interest margins have contracted in the extremely competitive market
for new lending, not least in the Faroe Islands.
On the other hand, the Danish banking activities continued their positive trend
in the first quarter. The Danish banking activities have now been profitable
for four consecutive quarters, contributing DKK 20 million to profit in Q1
2014.
The Bank continues to implement efficiency improvements, reducing operating
costs to DKK 138 million in the past quarter. As a result, the Bank generated
profit before impairment charges of DKK 52 million.
Loan and credit impairment charges, net, amounted to DKK 21 million, supporting
the expectations for lower impairments expressed at the beginning of the year.
Profit before tax and after impairment charges, non-recurring items and value
adjustments was DKK 31 million, as against DKK 13 million in the first quarter
of 2013.
Solvency and liquidity requirement buffers
BankNordik maintains a controlled risk profile as reflected in its solvency
need of 8.8%, which is among the lowest rates in Denmark and close to the
statutory minimum of 8%. The Bank's solvency ratio of 14.7% at 31 March 2014
leaves a buffer of 5.8 percentage points relative to the solvency need.
In terms of liquidity, BankNordik also has solid buffer at 2.6 times the
statutory requirement.
In April, the Bank resolved to redeem subordinate loan capital of DKK 63
million provided by the Danish State. See announcement of 23 April 2014. While
the Bank had an adequate equity ratio at the time, its decision to raise the
loan in 2009 was considered an appropriate part of the Group's capital
planning, also considering the unpredictable situation then prevailing in the
financial markets. Management believes that now is an appropriate time to
redeem the loan considering the Group's expected income, solvency and capital
planning for the next few years. The redemption has been approved by the Danish
Financial Supervisory Authority.
Accordingly, BankNordik has now reduced its subordinate loan capital to DKK 460
million. At the end of 2011, it amounted to DKK 831 million. Following
redemption of the loan, the solvency ratio is about 14.1%, leaving a buffer
relative to the solvency need of about 5.3 percentage points (before
recognition of profit for the current financial year).
Outlook for 2014
Management maintains the full-year guidance provided at the beginning of the
year. BankNordik is expected to generate profit before impairment charges,
non-recurring items, value adjustments and tax of DKK 200-240 million for 2014.
Impairment writedowns on loans are expected to be lower in 2014 than in 2013.
Appendix: Financial highlights - First quarter of 2014
For further information, please contact:
Janus Petersen, CEO, tel. (+298) 330 340
Árni Ellefsen, CFO, tel. (+298) 330 348
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 500 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 Q1 Q4 Q3 Q2 Q1 2013
2014 2013 2013 2013 2013
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Net interest income 133 133 143 151 147 574
Net fee income 46 53 43 48 44 188
Income from insurance operations 8 14 15 29 12 69
Other operating income 3 5 3 3 3 14
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Operating income* 190 206 204 230 206 845
Operating costs* -132 -139 -136 -142 -141 -558
Sector costs, etc. -6 -4 -4 -8 -8 -26
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Profit before impairment 52 60 64 81 57 261
charges*
Loan impairment charges, net -21 -42 -32 -20 -55 -147
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Operating profit* 31 20 31 61 1 114
Non-recurring items -2 -19 0 18 -10 -11
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Operating profit/(loss) before 29 1 31 79 -9 103
value adjustments and tax
Value adjustments 2 -10 16 -16 22 11
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Profit/loss before tax 31 -9 47 63 13 114
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Deposits, etc. 12,047 12,193 12,019 12,331 12,800 12,193
Loans and advances etc. 10,392 10,460 10,587 10,750 10,820 10,460
Total assets 16,584 17,085 16,876 17,369 17,817 17,085
Equity 2,135 2,156 2,155 2,125 2,063 2,156
Solvency ratio 14.7% 14.7% 14.5% 15.4% 14.9% 14.7%
Liquidity relative to statutory 2.6 x 2.8 x 2.6 x 2.8 x 3.0 x 2.8 x
requirement
Costs / Operating profit 70% 68% 67% 61% 68% 66%
Number of employees (FTE) at 512 523 530 545 538 523
year-end
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* Excluding non-recurring items and value adjustments.
Further details are available in the Interim Report Q1 2014 available on
www.banknordik.com.
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