Interim financial statements
Announcement no. 21/2019
Strong customer activity in Q1 2019
“While net interest income was down due to persistent margin pressure, net fee and commission income was elevated by strong customer activity in the first quarter of 2019. In particular, an inflow of new customers in Denmark had a positive impact on mortgage sales. Operating costs, on the other hand, were higher during the quarter, but we remain steadfast in targeting almost flat expenditure level of around DKK 460m for FY2019,” said BankNordik CEO, Árni Ellefsen.
“In addition to our commitment to improving the customer experience and strengthening the Group’s customer relationships, we continued to advance the optimisation of processes and apply technology to increase productivity and our cost structure for the long term,” said Mr. Ellefsen.
Highlights of BankNordik's interim report for the first quarter of 2019:
Q1 2019 vs. Q1 2018
- BankNordik reported operating profit of DKK 57m in Q1 2019, DKK 20m less than in Q1 2018 (-26%).
- Net interest income was down by DKK 3m year-on-year, due to tighter interest margins.
- Fee and commission income was up by DKK 4m in Q1 2019 due to higher customer activity.
- Net insurance income was down by DKK 3m in Q1 2019 due to higher claims.
- Operating costs were up by DKK 5m to DKK 120m, mainly due to higher marketing and IT costs.
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- BankNordik reversed DKK 19m in net impairment charges in Q1 2019.
- Profit before tax was DKK 65m in Q1 2019 compared to DKK 148m in Q1 2018.
- Zero non-recurring items were recognised in Q1 2019 compared to DKK 76m in the same period of last year.
- Value adjustments amounted to a gain of DKK 8m in Q1 2019 compared to a loss of DKK 6m in Q1 2018.
- Bank lending volumes were up by DKK 399m (4%) from DKK 9,607m at 31 March 2018 to DKK 10,006m at 31 March 2019.
- Mortgage lending volumes were up by DKK 625m (+5%) from DKK 11,852m at 31 March 2018 to DKK 12,477m at 31 March 2019
- Deposits increased by DKK 921m (+7%) from DKK 13,083m at 31 March 2018 to DKK 14,004m at 31 March 2019.
Q1 2019 vs. Q4 2018
- Operating profit was down by DKK 3m to 57m in Q1 2019 from DKK 60m in Q4 2018.
- Net interest income was down by DKK 1m in Q1 2019 compared to Q4 2018, due to margin pressure.
- Fee and commission income was DKK 48m in Q1 2019, up DKK 5m from Q4 2018 due to increased customer activity.
- Net insurance income was DKK 9m in Q1 2019, down DKK 4m compared to the previous quarter as claims were higher.
- Other operating income was up by DKK 2m in Q1 2019.
- Operating costs increased by DKK 6m QoQ, in particular due to higher IT costs.
- Net impairment charges were a DKK 19m reversal in Q1 2019 compared to a reversal of DKK 18m in Q4 2018.
- BankNordik recorded profit before tax of DKK 65m in Q1 2019 compared to a profit of DKK 38m in Q4 2018.
- There were zero non-recurring items in Q1 2019 compared to a loss of DKK 10m in Q4 2018.
- Value adjustments amounted to a gain of DKK 8m in Q1 2019 compared to a loss of DKK 12m in Q4 2018.
Capital ratios
The Group’s CET1 capital ratio was down by 0.5 of a percentage point quarter-on-quarter to stand at 17.2% at 31 March 2019. The total capital ratio decreased to 19.2% at 31 March 2019 from 19.8% at 31 December 2018.
Net income in 2019 will not be recognised in the capital and solvency statement until the annual report is released in audited form.
Outlook
Management reconfirms the FY2019 guidance of operating profit before impairment charges in the range of DKK 160–200m in 2019 (Q1 2019: DKK 38m), while net profit is expected to be at the upper end of the previously announced range of DKK 100–150m (Q1 2019: DKK 52m).
This guidance is generally subject to uncertainty and will, amongst other things, depend on economic conditions, loan impairments and market value adjustments.
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. Founded in the Faroe Islands more than a century ago, the Group has total assets of DKK 17.4bn and 393 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Financial highlights and comparative figures are provided below.
Financial highlights
| DKK million | Q1 2019 | Q4 2018 | Q3 2018 | Q2 2018 | Q1 2018 |
| Net interest income | 91 | 92 | 94 | 93 | 94 |
| Net fee and commission income | 48 | 42 | 43 | 43 | 44 |
| Income from insurance operations | 9 | 13 | 13 | 6 | 12 |
| Other operating income | 11 | 9 | 10 | 15 | 12 |
| Operating income* | 158 | 156 | 160 | 157 | 162 |
| Operating costs* | -120 | -115 | -111 | -116 | -115 |
| Sector costs, etc. | 0 | 0 | 0 | 0 | 0 |
| Operating profit before impairment charges* | 38 | 42 | 49 | 42 | 47 |
| Loan impairment charges, net | 19 | 18 | 39 | 23 | 31 |
| Operating profit* | 57 | 60 | 88 | 65 | 77 |
| Non-recurring items | 0 | -10 | -6 | 12 | 76 |
| Profit before value adjustments and tax | 57 | 50 | 81 | 76 | 154 |
| Value adjustments | 8 | -12 | -3 | -17 | -6 |
| Profit/loss before tax | 65 | 38 | 78 | 59 | 148 |
| Deposits, etc. DKKbn | 14.0 | 13.4 | 13.2 | 13.1 | 13.1 |
| Loans and advances, etc. DKKbn | 10.0 | 10.0 | 10.0 | 9.7 | 9.6 |
| Mortgage lending DKKn | 12.5 | 12.2 | 12.1 | 11.9 | 11.9 |
| Equity, DKKbn | 2.0 | 2.0 | 1.9 | 1.9 | 1.9 |
| Solvency ratio | 19.2% | 19.8% | 17.6% | 18.5% | 18.9% |
| Excess liquidity relative to statutory requirement | 222% | 213% | 219% | 225% | 218% |
| Operating cost/income | 76% | 73% | 69% | 73% | 71% |
| Number of FTE, end of period | 393 | 393 | 385 | 390 | 387 |
* Excluding non-recurring items and value adjustments.
Further details are available from the interim report.
Attachments
