2016-02-25 08:00:05 CET
2016-02-25 08:00:05 CET
REGULATED INFORMATION
BankNordik P/F - Financial Statement Release
BankNordik delivers results in line with guidance
Strategic adjustments in 2015 ensure strong customer focus in 2016
Highlights of BankNordik's annual financial results for 2015:
(The figures below have been adjusted for discontinued activities related to
Vørður, unless otherwise indicated)
Operating profit up by 34%
-- BankNordik reported operating profit of DKK 194m for 2015, an increase of
DKK 49m compared to 2014 (+34%).
-- Interest income was down DKK 29m, primarily due to pressure on interest
margins.
-- Fee and commission income was DKK 30m higher, supported by increased
investment management activity and mortgage broking services.
-- Net insurance income was down DKK 1m to DKK 28m.
-- Operating costs were DKK 15m higher, partially due higher IT costs. FTE
amounted to 446, which was 61 fewer than at year-end 2014.
-- Impairment charges on loans and advances were DKK 20m, DKK 65m less than
in 2014.
-- BankNordik generated a loss before tax, including discontinued activities
from Vørður, of DKK 332m for 2015 compared to a loss of DKK 92m for 2014.
-- Goodwill impairments were DKK 468m in 2015 compared to 250m in 2014.
Goodwill related to activites in Denmark and Greenland has now been fully
written off.
-- Non-recurring items amounted to DKK 54m compared to DKK 13m last year due
to payments in lieu of notice related to recent organisational adjustments.
-- Value adjustments amounted to a DKK 41m loss compared to an income of DKK
3m in 2014.
“We’re pleased with our financial results for 2015. Pressure on interest
margins was offset by higher fee and commission income, and we achieved a
moderate 1.8% increase in lending volume. Our long-term core capital ratio
target of 13% has now been reached, allowing us to increase the distribution of
profits to our shareholders on a forward basis,“ commented BankNordik CEO, Árni
Ellefsen.
“2015 was an eventful year both strategically and operationally. BankNordik is
now focused on the remaining market segments with a series of customer-centric
initiatives in the pipeline for 2016, aimed at facilitating growth and
efficiency,” said Mr Ellefsen.
Quarter-on-quarter performance affected by persistently negative short-term
interest rates
-- BankNordik reported operating profit of DKK 36m in Q4 2015, DKK 24m less
than in Q3 2015.
-- Interest income was DKK 5m less than in Q3 2015, owing to added margin
pressure.
-- Fee and commission income remained flat compared to Q3 2015
-- Net insurance income decreased by DKK 2m compared to Q3 2015
-- Operating costs were the same as in the previous quarter
-- Impairment charges on loans amounted to DKK 11m in Q4 2015 versus a DKK
7m reversal of impairment charges for the previous quarter.
-- BankNordik recorded a loss before tax, including discontinued activities
from Vørður, of DKK 447m in Q4 compared to a profit of DKK 42m in Q3.
-- Goodwill impairments were DKK 468m in Q4 2015.
-- Non-recurring items were DKK 29m in Q4 compared to DKK 11m in Q3
-- Value adjustments amounted to a DKK 4m loss in Q4 compared to a DKK 20m
loss in Q3.
Write-down of goodwill
On the basis of the results of the annual impairment test of intangible assets,
BankNordik has decided to write down goodwill of DKK 468m in respect of
activities in Denmark and Greenland. The write-down was related to changes in
the assumptions applied for impairment testing, including low-interest rates,
higher capital requirements imposed on the bank, and the discontinuation of
activities in corporate lending in Denmark.
The impairments are of a technical nature and will not affect capital or
liquidity levels.
Costumer-focused initiatives in 2016
Subsequent to the strategic decisions to divest Vørður and un-wind the
corporate loan portfolio in Denmark, BankNordik is now ready to accelerate its
focus on the remaining personal, private banking and corporate market segments
in 2016. A series of initiatives will be commenced in 2016, including - but not
limited to - an upsizing of the personal costumer business in all three
countries, further costumer segmentation, improved accessibility, and a
scale-up of the use of alternative communication channels in order to lay the
groundwork for attracting new customers.
Outlook for 2016
Management expects profit before impairment charges, non-recurring items, value
adjustments and tax in 2016 to be in the range of DKK 150-190m (2015: DKK
214m).
The lower profit expectations for 2016 are mainly due to the discontinued
corporate banking activities in Denmark, while further pressure on the interest
margin, less income from the investment portfolio, and a normalisation of
remortgaging activities are also expected to reduce income in 2016.
Loan impairments are expected to be at approximately the same level in 2016 as
in 2015.
This guidance is generally subject to uncertainty and will depend on economic
conditions, including possible central bank monetary policy measures.
Capital ratios and dividend policy
In November, BankNordik was designated a SIFI-institution in the Faroe Islands
and became subject to a specific SIFI buffer requirement of 2% in CET1 capital,
to be phased in during the period 2016-2019. However, by year-end 2015,
BankNordik had a CET1 capital ratio of 13.9%, meeting its long-term capital
adequacy target of 13% in 2019. Therefore, the new regulation is not expected
to have an impact on the Bank’s ability to pay dividends in the future.
As such, effective from 2016, the Board of Directors will introduce a new
dividend policy of paying out approximately 40% of net income, while adjusting
the share capital through the use of share buybacks to reflect the Bank’s
long-term capital ratio targets.
At the upcoming Annual General Meeting, to be held on 30 March 2016, the Board
will propose a dividend payment of DKK 20m for 2015 (DKK 2 per share).
The upcoming extraordinary dividends of approximately DKK 300m are contingent
upon the regulatory approval and final completion of the sale of Vørður, as
well as the un-winding of the Danish corporate banking activities. The
extraordinary dividends will be disbursed in step with the increase in the
Bank’s core equity.
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 total assets of DKK 16bn and 446
employees. The Bank is subject to the supervision of the Danish Financial
Supervisory Authority and is dual listed on Nasdaq Iceland and Nasdaq
Copenhagen. www.banknordik.com.
Financial highlights
DKK million 2015 2014 Q4 Q3 Q2 Q1 Q4
2015 2015 2015 2015 2014
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Net interest income 469 498 111 116 122 120 122
Net fee income 226 196 52 52 67 55 51
Income from insurance operations 28 29 8 10 10 0 6
Other operating income 11 14 4 2 3 2 3
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Appendix: 2015 financial highlights and comparative figures are provided below.
Operating income* 734 737 175 180 203 176 183
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Operating costs* -499 -484 -122 -122 -128 -127 -120
Sector costs, etc. -21 -23 -5 -5 -6 -5 -5
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Operating profit before 214 230 47 54 69 43 58
impairment charges*
Loan impairment charges, net -20 -85 -11 7 5 -20 -29
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Operating profit* 194 145 36 60 74 23 29
Non-recurring items -522 -263 -497 -11 -14 0 -262
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Operating profit before value -328 -117 -461 49 60 23 -233
adjustments and tax
Value adjustments -41 3 -4 -20 -50 34 -13
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Profit/loss before tax, excl. -369 -115 -465 29 10 57 -245
Vørður
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Profit/loss before tax, incl. -332 -92 -447 42 12 61 -226
Vørður
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Deposits, etc. DKKbn 12.7 12.6 12.7 12.8 12.8 12.3 12.6
Loans and advances, etc. DKKbn 10.7 10.5 10.7 10.7 10.7 10.6 10.5
Equity, DKKbn 1.8 2.0 1.8 2.1 2.0 2.0 2.0
Solvency ratio 16.8 14.8 16.8% 15.6% 15.0% 14.6% 14.8%
Excess liquidity relative to 167% 182% 167% 175% 173% 157% 182%
statutory requirement
Operating cost/income 68% 66% 70% 67% 63% 72% 66%
Number of FTE, end of period 446 506 446 478 490 504 506
(incl. Vørður)
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* Excluding non-recurring items and value adjustments.
Further details are available in the annual report.
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