Good Q1 performance for BankNordik as expected
Improved income and slightly lower costs doubled operating profit, compared to previous quarter, to DKK 70m before impairment charges and non-recurring costs.
BankNordik maintains positive guidance for 2012 overall.
BankNordik generated net operating income of DKK 223m in Q1 2012, up from DKK 192m in the previous quarter, which was affected by powerful windstorms in the Faroes in November and December.
As planned, costs were reduced slightly, ending at DKK 153m relative to DKK 157m in the preceding quarter.
Operating profit before impairment charges doubled to DKK 70m in Q1 2012 from DKK 35m in Q4 2011 (adjusted for non-recurring items).
Net loan impairment charges amounted to DKK 22m, a substantial improvement from Q4 2011 and in line with expectations. This brought the operating profit to DKK 48m before non-recurring items, compared to a DKK 2m loss in the preceding quarter.
“We are very pleased to report improvements in both income and profit, especially given the current economic environment as well as the extensive in-house integration of the activities acquired from Amagerbanken. That bodes well for 2012 and especially onwards,” says BankNordik CEO Janus Petersen.
The Q1 financial statements carried non-recurring costs for integration and restructuring of DKK 48m.
Backed by equity of DKK 2.0bn and subordinated debt of DKK 0.8bn, BankNordic had a solvency ratio of 14.9% at 31 March 2012, as compared with the solvency requirement of 9.2%. BankNordik's policy is to retain a high solvency ratio at significantly above the required level. The same applies to the liquidity coverage, which was more than twice the required level.
Consolidation after strong growth
BankNordik acquired considerable operations from Sparbank in 2010 as well as the healthy parts of Amagerbanken in 2011. This meant that in terms of deposits, the Bank's operations more than doubled in the two years.
The last major steps to consolidate the IT systems were taken in February and March after a period of thorough planning in the preceding months. The preparations and conversion have strained the organisation, but the changes are of strategic importance in respect of the continual development of customer service and the ongoing efforts to enhance efficiency. Both are important objectives for BankNordik. In addition, branches in Denmark and in Greenland were merged, while also reducing the headcount.
“We've invested a lot of effort in getting things in order. In particular, it was very important to us that our customers felt the effect as little as possible,” says Janus Petersen, CEO of BankNordik.
“Looking ahead, these big and very important steps have enabled us to offer better customer service and to continue the Bank's healthy development based on our strategy of proximity to our customers, tight risk management and profitability in all operations”, says Janus Petersen.
Forecasting an improved performance
BankNordik continues to expect a profit of DKK 100-170m in 2012 before sector costs and adjustments (2011: DKK 50m).
“Our biggest assignment this year will be to streamline activities, so we can lift our efficiency. At the same time, we must maintain the close contact to our customers that we're known for, and we must grow our business from the new, broader platform we've built over the past couple of years,” said Janus Petersen.
BankNordik's consolidated financial highlights
| DKKm |
Q1 11 |
Q2 11 |
Q3 11 |
Q4 11 |
Q1 2012 |
2011 |
| Operating income* | 157 | 173 | 232 | 192 | 223 | 735 |
| Profit before impairment charges* | 54 | 66 | 80 | 35 | 70 | 235 |
| Impairment charges | -24 | -8 | -17 | -37 | -22 | 101 |
| Operating profit* | 31 | 58 | 63 | -2 | 48 | 134 |
| Non-recurring items | -20 | -35 | -33 | -31 | -37 | -103 |
| Profit before tax | 10 | 23 | 30 | -33 | 11 | 31 |
| Deposits, etc. | 8,943 | 8,740 | 13,955 | 13,032 | 13,088 | 13,032 |
| Loans and advances, etc. | 8,376 | 8,446 | 11,949 | 11,769 | 11,376 | 11,769 |
| Deposit surplus | 567 | 294 | 2,006 | 1,263 | 1,712 | 1,263 |
| Total assets | 13,502 | 13,289 | 18,902 | 17,096 | 17,897 | 17,086 |
| Equity | 1,977 | 1,993 | 2,017 | 1,958 | 1,963 | 1,958 |
| Solvency ratio | 17.1% | 20.3% | 15.0% | 15.6% | 14.9% | 15.6% |
| Excess cover relative to statutory liquidity requirements | 163% | 111% | 149% | 115% | 169% | 115% |
* Adjusted for non-recurring items
Further details are available in the Q1 interim report.
Conference call and webcast today at 11.00 AM (CET)
BankNordik will review the financial results today at 11.00 (CET) at its customary conference call for analysts and investors. The conference call will be webcast on BankNordik's website, www.banknordik.fo.
The dial-in number for the conference call is (+45) 32 71 47 67. Participants are kindly asked to call in a few minutes before the conference begins.
For further information, please contact:
Janus Petersen, CEO, tel. (+298) 330 340
Árni Ellefsen, CFO, tel. (+298) 330 348
Chief Investor Relations Officer
BankNordik was founded more than 100 years ago in the Faroe Islands. The Group has banking activities in Denmark, Greenland and the Faroe Islands and insurance activities in the Faroe Islands and Iceland. The Group has 180,000 customers, total assets of DKK 18bn and 580 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on NASDAQ OMX.
