Ringkjøbing Landbobank - interim report 2014 - Great increase in customer numbers, growth and upward adjustment of expectations

The core earnings for the first half of the year were DKK 277 million against DKK 231 million in 2013, an increase of 20%. The profit before tax was DKK 321 million, representing a return on equity of 23% p.a., which is considered highly satisfactory.

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| Source: Ringkjøbing Landbobank A/S
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(Million DKK) 1st half 2014 1st half 2013
2013

2012

2011

2010
Total core income 459 424 844 823 767 758
Total costs and depreciations -142 -132 -273 -265 -248 -240
Core earnings before impairments 317 292 571 558 519 518
Impairment charges for loans etc. -40 -61 -120 -157 -129 -138
Core earnings 277 231 451 401 390 380
Result for portfolio +44 +15 +23 +49 +1 +38
Expenses for bank packages 0 -1 -2 -2 -11 -80
Profit before tax 321 245 472 448 380 338

 

The half-year – highlights:

  • 31% improvement in profit before tax to DKK 321 million, equivalent to a 23% return p.a. on equity after payment of dividend
  • Increase in core earnings from DKK 231 million in 2013 to DKK 277 million in 2014 - a 20% increase
  • 14% increase in the bank’s loans and 11% increase in deposits
  • Satisfactory final report on the Danish Financial Supervisory Authority’s ordinary inspection
  • Highly satisfactory number of new customers in both the branch network and niche concepts resulting in the best ever net increase in customers
  • Expectations of core earnings for the entire year adjusted upward to DKK 460-510 million.

Please do not hesitate to contact the bank’s management if you have any questions.                        

 

Yours sincerely,
Ringkjøbing Landbobank 
 
John Fisker


 

Management report

Core income

Net interest income was DKK 317 million in the first half of 2014 against DKK 304 million in 2013, an increase of 4%. Compared with the first half of 2013, the bank noted increasing average loans and deposits in the half-year, but also noted a fall in the interest margin from the first half of 2013 to the first half of 2014.

Fees, commissions and foreign exchange earnings amount to net DKK 122 million in the first half of 2014 against net DKK 113 million in 2013, an increase of 8%. The increase is attributable primarily to greater activity and volumes within asset management and pensions and to greater trading activity, which has strengthened earnings.

The total core income was 8% higher in the first half of the year, with an increase from DKK 424 million in 2013 to DKK 459 million in 2014. The DKK 35 million increase in total core income was affected positively by an extraordinary once-only income of the order of DKK 10 million in connection with the sale of the bank’s shares in Nets Holding A/S. Corrected for the once-only income, the bank considers the increase in core income satisfactory.

 

Costs and depreciations

Total costs including depreciations on tangible assets were DKK 142 million in the first half of 2014 against DKK 132 million last year, an increase of 7%.

The rate of costs was computed at 30.8, still the lowest in the country. A low rate of costs is especially important in periods of difficult economic conditions as this provides a high level of robustness in the bank’s results.

 

Impairment charges for loans

Impairment charges for loans amounted to DKK 40 million in the first half of 2014. The level of impairment charges fell by 34% relative to the same period of last year and is equivalent in the first half of 2014 to 0.5% p.a. of total average loans, impairment charges, guarantees and provisions.

The bank’s total account for impairment charges and provisions amounted to DKK 908 million at the end of the half-year, equivalent to 5.5% of total loans and guarantees. Actual losses and write-offs on loans etc. continue to be very low, and they were exceeded during the half-year by the items "Interest on the impaired part of loans" and "Receivables previously written off", such that the total account for impairment charges and provisions increased by net DKK 54 million during the first half of the year.

The portfolio of loans with suspended calculation of interest amounts to DKK 98 million, equivalent to 0.6% of the bank’s total loans and guarantees at the end of the half-hear.

Given the low growth in the Danish economy for a number of years, which, however, is expected to improve this year, the bank is satisfied with the credit policy on the basis of which the bank is operated. Based on the business cycle, the bank expects that impairment charges in all of 2014 will show a falling trend relative to 2013.

 

Core earnings

(Million DKK) 1st half 2014 1st half 2013
2013

2012

2011

2010
Total core income 459 424 844 823 767 758
Total costs and depreciations -142 -132 -273 -265 -248 -240
Core earnings before impairments 317 292 571 558 519 518
Impairment charges for loans etc. -40 -61 -120 -157 -129 -138
Core earnings 277 231 451 401 390 380

This half-year’s core earnings of DKK 277 million are the best ever in the bank’s history and constitute a 20% increase relative to last year’s DKK 231 million.

 

Result for portfolio and market risk

The portfolio income for the first half of 2014 was DKK 44 million including funding costs for the portfolio.

The bank’s holding of shares etc. at the end of the half-year amounted to DKK 213 million, DKK 28 million of which was in listed shares, while DKK 185 million was in sector shares etc. The bond portfolio amounted to DKK 4,351 million, and the majority of the portfolio consists of AAA-rated Danish mortgage credit bonds and short-term bank bonds issued by rated counterparties.

The total interest rate risk, computed as the impact on the profit of a one percentage point change in the interest level, was 0.8% of the bank’s core capital after deduction at the end of the half-year.

The bank’s total market risk within exposures to interest rate risk, listed shares etc. and foreign currency remains at a low level. The bank’s risk of losses calculated on the basis of a Value-at-risk model (computed with a 10-day horizon and 99% probability) in the first half of 2014 was as follows:

 
 
Risk in
million DKK
Risk relative to equity
end of 1st half 2014 in %
Highest risk of loss: 10.6 0.36%
Lowest risk of loss:   4.7 0.16%
Average risk of loss   7.6 0.26%

The bank’s policy remains to keep the market risk at a low level.

 

Profit after tax

The profit after tax was DKK 245 million for the first half of 2014 against DKK 184 million last year.
The profit after tax is equivalent to a return on equity at the beginning of the period of 18% p.a. after payment of dividend.

 

Balance sheet

The bank’s balance sheet at the end of the half-year stood at DKK 19,675 million against last year’s DKK 17,800 million.

The bank’s deposits increased by 11% from DKK 12,654 million to DKK 14,054 million. The bank’s loans increased by 14% from DKK 12,570 million to DKK 14,283 million. The growth in the bank’s loans is broadly based on sectors with growth from both the branch network and the bank’s niche concepts, and primarily comes from new customers.

The bank’s portfolio of guarantees at the end of the half-year was DKK 1,438 million against DKK 2,615 million at the end of the first half of 2013. The fall in the portfolio of guarantees is due, among other things, to the fact that a number of guarantees were provided at the end of the first half of 2013 which resulted in actual loans later in 2013.  

 

Liquidity

The bank’s liquidity is good, with loans and deposits at the same level. The excess solvency relative to the statutory liquidity requirement is 169%. The bank’s short-term funding with term to maturity of less than 12 months amounts to DKK 0.7 billion, balanced by DKK 4.8 billion in short-term money market placings, primarily in Danish banks and liquid securities. The bank is thus not dependent on the short-term money market.

The bank’s loans portfolio is more than fully financed by the bank’s deposits and equity. In addition, part of the loans portfolio for wind turbines in Germany is refinanced back-to-back with KfW Bankengruppe, and the DKK 1,136 million concerned can thus be disregarded in terms of liquidity. The bank requires no financing for the coming year to meet the minimum requirement that it must always be able to manage for up to 12 months without access to the financial markets.

 

Capital reduction and share buy-back programme

It was decided at the annual general meeting in February 2014 to cancel 60,000 own shares, and the capital reduction was finally implemented in April.

The bank was further authorised at the general meeting to buy up to 110,000 own shares and set them aside for later cancellation. As of 5 August 2014, 45,000 own shares have been set aside for later cancellation under the new share buy-back programme.

 

Capital

The equity at the beginning of 2014 was DKK 2,901 million. To this must be added the profit for the period, while the dividend paid and the value of the own shares bought must be subtracted, after which the equity at the end of the half-year was DKK 2,971 million.

The bank’s solvency ratio (Tier 2) was computed at 18.2% at the end of the second quarter of 2014, and the Tier 1 capital ratio was also computed at 18.2%.

 
Solvency cover
1st half 2014        1st half 2013 2013 2012 2011 2010
Core tier 1 capital ratio
(excl. hybrid core capital) (%)
18.1 18.8 18.7 19.6 18.3 17.1
Tier 1 capital ratio (%) 18.2 19.6 19.2 20.9 19.8 18.6
Solvency ratio - Tier 2 (%) 18.2 20.7 20.0 22.4 21.4 22.4
Individual solvency requirement (%) 8.8 8.7 8.9 8.0 8.0 8.0
Solvency cover 207% 238% 225% 280% 268% 280%

With effect from 2014, capital ratios are calculated according to the new CRD IV directive. As described in the bank’s 2013 annual report, the bank’s calculation of capital adequacy was affected by the new rules, including the introduction of a phasing out arrangement for inclusion of hybrid core capital and subordinated loan capital. Certain changes have also been implemented for the calculation of risk-weighted items, including the weighting and calculation of exposures in default, and a temporary discount on the risk weighting of exposures to certain SME-commitments has also been introduced.

In addition, new rules on the calculation of capital have been introduced. These rules indicate both that in future, the share buy-back programme must be deducted from the capital on publication of the officially approved programme in contrast to the previous practice, where the deduction from the capital was made in step with the actual purchase of shares, and that the calculated dividend must be deducted from ongoing earnings in contrast to previously, where the expected dividend was not deducted from the capital until the end of the year.

The bank calculates the individual solvency requirement on the basis of the so-called 8+ model. The method of calculation in this model starts with 8%, to which are added any supplements calculated inter alia for customers with financial problems. The 8+ model takes no account of the bank’s earnings and cost base or its robust business model. Despite this, the bank’s individual solvency requirement at the end of the half-year was calculated at 8.8% - equivalent to a fall of 0.1 percentage point relative to the end of 2013.

 

The Danish Financial Supervisory Authority’s ordinary inspection

The bank has received the Danish Financial Supervisory Authority’s final report on the ordinary inspection conducted in the period February - April 2014. The inspection was completed satisfactorily in the bank’s opinion, and the bank is very pleased with the FSA’s general conclusions on risk assessment, which state the following:

  • The credit quality of the bank’s loans portfolio is higher than in comparable banks.
  • The total impairment charges are sufficient.
  • The risks of losses attached to weak exposures are relatively low.
  • Compared to the beginning of the year, the solvency requirement fell by 0.1 percentage point to 8.8% on 31 March 2014, which is judged by the FSA to be sufficient, given the bank’s risks and business model.

In connection with the inspection, the bank received a number of orders of an administrative nature, which the bank will adopt and adapt to.

 

Good increase in customer numbers

In 2013 the bank carried out various outreach initiatives towards existing and new customers, including by investing in further disseminating the bank’s Private Banking platform at national level and by carrying out outreach activities in the branch network in Central and West Jutland. The activities were carried out to create healthy organic growth in the bank, as the biggest challenge in times of low growth in society is to create growth in the bank’s top line.

The outreach initiatives are all continuing in 2014, and the bank also opened a new Private Banking branch in Aarhus in the first half of 2014. In the first half-year, the bank experienced an overwhelming net growth in new customers, the best ever in the bank’s history.

 

Accounting policies and key figures

The accounting policies are unchanged relative to those in the submitted and audited 2013 annual report.

 

Upward adjustment of expectations for 2014

The core earnings for the half-year were DKK 277 million against DKK 231 million last year, an increase of 20%. On the basis of the 2014 development, expectations for core earnings for the entire 2014 are adjusted upward from the previously announced range of DKK 410-460 million to the range DKK 460-510 million.


 

Main and key figures

  1st half
2014
1st half
2013
Full year
2013
Main figures for the bank (million DKK)      
Total core income 459 424 844
Total costs and depreciations -142 -132 -273
Core earnings before impairments 317 292 571
Impairment charges for loans etc. -40 -61 -120
Core earnings 277 231 451
Result for portfolio +44 +15 +23
Expenses for bank packages 0 -1 -2
Profit before tax 321 245 472
Profit after tax 245 184 358
       
Shareholders’ equity 2,971 2,754 2,901
Deposits 14,054 12,654 14,114
Loans 14,283 12,570 13,849
Balance sheet total 19,675 17,800 19,583
Guarantees 1,438 2,615 1,902
       
Key figures for the bank (per cent)      
Return on equity before tax, beginning of year, p.a. 23.1 18.8 18.1
Return on equity after tax, beginning of year, p.a. 17.6 14.1 13.7
Rate of costs 30.8 31.2 32.4
Core tier 1 capital ratio 18.1 18.8 18.7
Tier 1 capital ratio 18.2 19.6 19.2
Solvency ratio - Tier 2 18.2 20.7 20.0
Individual solvency requirement 8.8 8.7 8.9
       
Key figures per 5 DKK share (DKK)      
Core earnings 58 48 94
Profit before tax 67 51 99
Profit after tax 51 38 75
Net asset value 622 569 607
Price, end of period 1,170 951 1,099
Dividend - - 25


 

Profit and loss account

Note 1.1-30.6 2014
DKK 1,000
1.1-30.6 2013
DKK 1,000
1.1-31.12 2013
DKK 1,000
1 Interest receivable 394,712 389,837 776,268
2 Interest payable 71,936 75,927 146,037
  Net income from interest 322,776 313,910 630,231
3 Dividend on capital shares etc. 7,686 1,769 12,610
4 Income from fees and commissions 129,858 121,340 229,813
4 Fees and commissions paid 15,325 15,590 31,123
  Net income from interest and fees 444,995 421,429 841,531
5 Value adjustments +55,799 +16,963 +23,074
  Other operating income 2,249 1,103 2,730
6,7 Staff and administration costs 129,839 123,758 254,909
  Amortisations, depreciations and write-downs on
intangible and tangible assets
3,961 1,473 4,270
  Other operating costs      
      Miscellaneous other operating costs 154 22 28
      Costs Deposit Guarantee Fund 7,587 8,472 16,091
8 Impairment charges for loans and other debtors etc. -40,393 -61,139 -120,175
  Result of capital shares in associated companies 0 0 -3
  Profit before tax 321,109 244,631 471,859
9 Tax 76,500 60,500 114,199
  Profit after tax 244,609 184,131 357,660
         
  Other comprehensive income 0 0 0
  Total comprehensive income 244,609 184,131 357,660

 

 

Core earnings

  1.1-30.6 2014
DKK 1,000
1.1-30.6 2013
DKK 1,000
1.1-31.12 2013
DKK 1,000
  Net income from interest 316,530 303,520 614,719
  Net income from fees and provisions excl. commission 95,886 90,919 171,765
  Income from sector shares 18,335 6,481 14,403
  Foreign exchange income 7,547 7,296 13,293
  Other operating income 2,249 1,103 2,730
  Total core income excl. trade income 440,547 409,319 816,910
  Trade income 18,647 14,831 26,925
  Total core income 459,194 424,150 843,835
  Staff and administration costs 129,839 123,758 254,909
  Amortisations, depreciations and write-downs on
intangible and tangible assets
3,961 1,473 4,270
  Other operating costs 7,608 6,921 13,827
  Total costs etc. 141,408 132,152 273,006
  Core earnings before impairments 317,786 291,998 570,829
  Impairment charges for loans and other debtors etc. -40,393 -61,139 -120,175
  Core earnings 277,393 230,859 450,654
  Result for portfolio +43,849 +15,344 +23,497
  Expenses for bank packages -133 -1,572 -2,292
  Profit before tax 321,109 244,631 471,859
  Tax 76,500 60,500 114,199
  Profit after tax 244,609 184,131 357,660


 

Balance sheet

Note End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
  Assets      
  Cash in hand and claims at call on central banks 277,529 78,348 63,064
10 Claims on credit institutions and central banks 227,903 825,183 416,913
     Claims at notice on central banks 0 0 0
     Money market operations and bilateral loans
   - term to maturity under 1 year
105,022 620,464 214,032
     Bilateral loans - term to maturity over 1 year 122,881 204,719 202,881
11,12,13 Loans and other debtors at amortised cost price 14,283,008 12,569,569 13,849,285
     Loans and other debtors at amortised cost price 13,147,142 11,772,322 12,880,717
     Wind turbine loans with direct funding 1,135,866 797,247 968,568
14 Bonds at current value 4,350,832 3,670,755 4,669,732
15 Shares etc. 212,851 235,705 208,697
  Capital shares in associated companies 540 543 540
  Land and buildings total 72,541 75,554 73,871
    Investment properties 8,015 8,165 8,015
    Domicile properties 64,526 67,389 65,856
  Other tangible assets 4,337 4,464 4,385
  Actual tax assets 0 0 24,501
  Temporary assets 1,000 5,047 1,000
  Other assets 238,873 327,969 263,856
  Periodic-defined items 5,997 7,072 6,977
  Total assets 19,675,411 17,800,209 19,582,821


 

Balance sheet

Note End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
  Liabilities and equity      
16 Debt to credit institutions and central banks 1,795,623 1,404,166 1,754,884
    Money market operations and bilateral credits
  - term to maturity under 1 year
527,282 602,919 656,258
    Bilateral credits - term to maturity over 1 year 132,475 4,000 130,058
   Bilateral credits from KfW Bankengruppe 1,135,866 797,247 968,568
17 Deposits and other debts 14,054,243 12,653,915 14,113,816
18 Issued bonds at amortised cost price 244,132 318,099 249,814
  Actual tax liabilities 27,810 184 0
  Other liabilities 195,820 270,740 173,806
  Periodic-defined items 150 151 917
  Total debt 16,317,778 14,647,255 16,293,237
         
  Provisions for deferred tax 13,188 15,151 13,188
12 Provisions for losses on guarantees 4,884 11,448 4,256
  Total provisions for liabilities 18,072 26,599 17,444
         
  Subordinated loan capital 200,081 199,588 200,193
  Hybrid core capital 168,286 172,845 170,847
19 Total subordinated debt 368,367 372,433 371,040
         
20 Share capital 23,900 24,200 24,200
  Reserve for net revaluation under the intrinsic value method 189 192 189
  Profit carried forward 2,947,105 2,729,530 2,755,211
  Proposed dividend etc. - - 121,500
  Total shareholders’ equity 2,971,194 2,753,922 2,901,100
         
  Total liabilities and equity 19,675,411 17,800,209 19,582,821
 
21
Own capital shares      
22 Contingent liabilities etc.      
23 Assets furnished as security      
24 Capital adequacy computation      
25 The supervisory diamond      
26 Miscellaneous comments      


 

Statement of shareholders’ equity

DKK 1,000 Share
capital
Reserve for net revaluation under the intrinsic value method Profit     carried   forward Proposed
dividend etc.
Total share-holders’
equity
On 30 June 2014:
 
Shareholders’ equity at the end of the previous financial year
24,200 189 2,755,211 121,500 2,901,100
Reduction of share capital -300   300   0
Dividend etc. paid       -121,500 -121,500
Dividend received on own shares     2,022   2,022
Shareholders’ equity after allocation of dividend etc. 23,900 189 2,757,533 0 2,781,622
Purchase and sale of own shares     -55,037   -55,037
Total comprehensive income     244,609   244,609
Shareholders’ equity on  the balance sheet date 23,900 189 2,947,105 0 2,971,194

 

 

On 30 June 2013:
 
Shareholders’ equity at the end of the previous financial year
24,700 192 2,581,588 69,660 2,676,140
Reduction of share capital -500   500   0
Dividend etc. paid       -69,660 -69,660
Dividend received on own shares     1,427   1,427
Shareholders’ equity after allocation of dividend etc. 24,200 192 2,583,515 0 2,607,907
Purchase and sale of own shares     -38,116   -38,116
Total comprehensive income     184,131   184,131
Shareholders’ equity on  the balance sheet date 24,200 192 2,729,530 0 2,753,922

 

 

On 31 December 2013:
 
Shareholders’ equity at the end of the previous financial year
24,700 192 2,581,588 69,660 2,676,140
Reduction of share capital -500   500   0
Dividend etc. paid       -69,660 -69,660
Dividend received on own shares     1,427   1,427
Shareholders’ equity after allocation of dividend etc. 24,200 192 2,583,515 0 2,607,907
Purchase and sale of own shares     -64,467   -64,467
Total comprehensive income   -3 236,163 121,500 357,660
Shareholders’ equity on  the balance sheet date 24,200 189 2,755,211 121,500 2,901,100

 

Notes

Note 1.1-30.6
2014

DKK 1,000
1.1-30.6
2013

DKK 1,000
1.1-31.12 2013
DKK 1,000
1 Interest receivable      
  Claims on credit institutions and central banks 10,002 11,272 23,425
  Loans and other debtors 367,607 361,697 719,154
  Loans - interest concerning the impaired part of loans -22,166 -21,481 -43,913
  Bonds 45,583 42,206 86,007
  Total derivatives financial instruments, -6,694 -3,857 -8,617
  of which      
     Currency contracts 512 -2,726 -4,104
     Interest-rate contracts -7,206 -1,131 -4,513
  Other interest receivable 380 0 212
  Total interest receivable 394,712 389,837 776,268
         
2 Interest payable      
  Credit institutions and central banks 13,229 11,835 23,385
  Deposits and other debts 48,672 53,238 101,280
  Issued bonds 3,785 4,593 8,015
  Subordinated debt 6,241 6,246 13,221
  Other interest payable 9 15 136
  Total interest payable 71,936 75,927 146,037
         
3 Dividend from shares etc.      
  Shares 7,686 1,769 12,610
  Total dividend from shares etc. 7,686 1,769 12,610
         
4 Gross income from fees and commissions      
  Securities trading 23,346 17,645 33,646
  Asset management 51,485 46,556 84,785
  Payment handling 11,187 10,134 21,524
  Loan fees 2,307 3,492 6,273
  Guarantee commissions 27,297 28,717 61,527
  Other fees and commissions 14,236 14,796 22,058
  Total gross income from fees and commissions 129,858 121,340 229,813
                             
  Net income from fees and commissions      
  Securities trading 18,647 14,831 26,925
  Asset management 48,466 43,778 79,755
  Payment handling 10,351 9,117 19,347
  Loan fees 1,490 2,471 4,204
  Guarantee commissions 27,297 28,717 61,527
  Other fees and commissions 8,282 6,836 6,932
  Total net income from fees and commissions 114,533 105,750 198,690
  Foreign exchange income 7,547 7,296 13,293
  Total net income from fees, commissions and foreign exchange income 122,080 113,046 211,983


 

Notes

Note   1.1-30.6
2014

DKK 1,000
1.1-30.6
2013

DKK 1,000
1.1-31.12 2013
DKK 1,000
5 Value adjustments      
  Loans and other debtors, current value adjustment 4,325 -2,334 -974
  Bonds 30,020 5,280 1,653
  Shares etc. 16,911 8,567 9,479
  Investment properties 0 0 150
  Foreign exchange income 7,547 7,296 13,293
  Total derivatives financial instruments, -7,596 -5,564 -7,846
  of which      
     Interest-rate contracts -8,078 -5,588 -8,289
     Share contracts 482 24 443
  Issued bonds 2,043 1,061 2,491
  Other liabilities 2,549 2,657 4,828
  Total value adjustments 55,799 16,963 23,074
 
6
Staff and administration costs      
  Payments to general management, board of directors
and shareholders’ committee
     
     General management 2,048 2,020 3,973
     Board of directors 696 647 1,294
     Shareholders’ committee 0 0 366
     Total 2,744 2,667 5,633
  Staff costs      
     Salaries 60,675 56,723 117,365
     Pensions 6,337 5,921 12,066
     Social security expenses 459 431 900
     Costs depending on number of staff 7,753 6,838 16,195
     Total 75,224 69,913 146,526
  Other administration costs 51,871 51,178 102,750
  Total staff and administration costs 129,839 123,758 254,909
         
7 Number of full-time employees      
  Average number of employees during the period
converted into full-time employees
259 247 251
         
8 Impairment charges on loans and other debtors etc.      
  Net changes in impairment charges on loans and other debtors and provisions for losses on guarantees 54,328 69,714 95,058
  Actual realised net losses 8,231 12,906 69,030
  Interest concerning the impaired part of loans -22,166 -21,481 -43,913
  Total impairment charges on loans and other debtors etc. 40,393 61,139 120,175

 

 

Notes

Note   1.1-30.6
2014

DKK 1,000
1.1-30.6
2013

DKK 1,000
1.1-31.12 2013
DKK 1,000
9 Tax      
  Tax calculated on the period’s profit 76,500 60,500 114,967
  Adjustment of deferred tax 0 0 -1,660
  Adjustment of deferred tax due to change in tax rate 0 0 -303
  Adjustment of tax calculated for previous years 0 0 1,195
  Total tax 76,500 60,500 114,199
         
  Effective tax rate (%):      
  The current tax rate of the bank 24.5 25.0 25.0
  Permanent deviations -0.7 -0.3 -1.0
  Adjustment of deferred tax due to change in tax rate 0.0 0.0 -0.1
  Adjustment of tax calculated for previous years 0.0 0.0 0.3
  Total effective tax rate 23.8 24.7 24.2
         
Note   End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
10 Claims on credit institutions and central banks      
  Claims at call 105,022 519,030 114,032
  Up to and including 3 months 0 0 100,000
  More than 3 months and up to and including 1 year 0 101,434 0
  More than 1 year and up to and including 5 years 122,881 204,219 202,881
  More than 5 years 0 500 0
  Total claims on credit institutions and central banks 227,903 825,183 416,913
         
11 Loans and other debtors at amortised cost price      
  At call 1,265,632 1,116,484 1,311,786
  Up to and including 3 months 546,204 566,336 674,795
  More than 3 months and up to and including 1 year 1,932,896 1,459,594 1,542,624
  More than 1 year and up to and including 5 years 4,939,311 4,666,358 4,601,579
  More than 5 years 5,598,965 4,760,797 5,718,501
  Total loans and other debtors at amortised cost price 14,283,008 12,569,569 13,849,285


 

Notes

Note   End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
12 Impairment charges for loans and other debtors and provisions for losses on guarantees      
         
  Individual impairment charges      
  Cumulative individual impairment charges for loans and other debtors at the end of the previous financial year 736,513 632,529 632,529
  Impairment charges/value adjustments during the period 109,905 185,598 255,157
  Reverse entry - impairment charges made in previous
financial years
-96,082 -98,710 -90,895
  Booked losses covered by impairment charges -8,376 -13,995 -60,278
  Cumulative individual impairment charges for loans and other debtors on the balance sheet date 741,960 705,422 736,513
         
  Collective impairment charges      
  Cumulative collective impairment charges for loans and other debtors at the end of the previous financial year 112,652 114,876 114,876
  Impairment charges/value adjustments during the period 48,253 -3,671 -2,224
  Cumulative collective impairment charges for loans and other debtors on the balance sheet date 160,905 111,205 112,652
         
  Total cumulative impairment charges for loans and other debtors on the balance sheet date 902,865 816,627 849,165
         
  Provisions for losses on guarantees      
  Cumulative individual provisions for losses on guarantees at the end of the previous financial year 4,256 10,958 10,958
  Provisions/value adjustments during the period 1,158 1,439 3,282
  Reverse entry - provisions made in previous financial years -494 -670 -9,245
  Booked losses covered by provisions -36 -279 -739
  Cumulative individual provisions for losses on guarantees on the balance sheet date 4,884 11,448 4,256
         
  Total cumulative impairment charges for loans and other debtors and provisions for losses on guarantees on the balance sheet date 907,749 828,075 853,421
         
13 Suspended calculation of interest      
  Loans and other debtors with suspended calculation of
interest on the balance sheet date
97,950 97,060 85,258

 

Notes

Note   End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
14 Bonds at current value      
  Listed on the stock exchange 4,350,832 3,670,755 4,669,732
  Total bonds at current value 4,350,832 3,670,755 4,669,732
         
15 Shares etc.      
  Listed on NASDAQ OMX Copenhagen 28,142 36,302 15,700
  Unlisted shares at current value 1,372 3,005 1,372
  Sector shares at current value 183,337 196,398 191,625
  Total shares etc. 212,851 235,705 208,697
         
16 Debt to credit institutions and central banks      
  Debt payable on demand 276,109 262,273 298,236
  Up to and including 3 months 283,775 298,723 315,311
  More than 3 months and up to and including 1 year 76,191 154,010 137,287
  More than 1 year and up to and including 5 years 618,492 425,958 560,112
  More than 5 years 541,056 263,202 443,938
  Total debt to credit institutions and central banks 1,795,623 1,404,166 1,754,884
         
17 Deposits and other debts      
  On demand 8,541,033 7,700,289 8,325,047
  Deposits and other debts at notice:      
  Up to and including 3 months 1,557,161 940,436 1,205,176
  More than 3 months and up to and including 1 year 785,388 1,353,166 1,426,171
  More than 1 year and up to and including 5 years 1,498,396 1,382,561 1,501,668
  More than 5 years 1,672,265 1,277,463 1,655,754
  Total deposits and other debts 14,054,243 12,653,915 14,113,816
         
  Distributed as follows:      
  On demand 8,139,917 7,206,282 7,933,649
  At notice 346,999 270,346 337,480
  Time deposits 2,234,978 2,588,889 2,549,938
  Long term deposit agreements 1,882,823 1,334,523 1,883,569
  Special types of deposits 1,449,526 1,253,875 1,409,180
    14,054,243 12,653,915 14,113,816


 

Notes

Note   End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
18 Issued bonds at amortised cost price      
  Up to and including 3 months 0 209,970 3,727
  More than 3 months and up to and including 1 year 95,018 3,727 0
  More than 1 year and up to and including 5 years 149,114 104,402 246,087
  Total issued bonds at amortised cost price 244,132 318,099 249,814
         
  Distributed as follows:
Issues in Danish kroner:
  Nom. 220 million DKK
0 220,000 0
    Own holding 0 -10,030 0
  Issues in Norwegian kroner:      
    Nom. 100 million NOK 88,720 94,600 88,540
    Regulation at amortised cost price and adjustment to
  current value of issues
3,725 7,229 5,768
  Issues in euro:      
    Nom. 20 million EUR 149,114 0 149,206
  Other issues 2,573 6,300 6,300
    244,132 318,099 249,814
         
19 Subordinated debt      
  Subordinated loan capital:      
    Floating rate loan, principal EUR 27 million, expiry
  30 June 2021
200,081 201,388 201,428
  Hybrid core capital:      
    4.795% bond loan, nom, DKK 200 million,
  perpetual
200,000 200,000 200,000
    Own holding -35,500 -35,500 -35,500
  Regulation at amortised cost price and adjustment to current value of subordinated loan capital and hybrid core capital 3,786 6,545 5,112
  Total subordinated debt 368,367 372,433 371,040
         
20 Share capital      
  Number of shares at DKK 5 each:      
  Beginning of period 4,840,000 4,940,000 4,940,000
  Changes during the period -60,000 -100,000 -100,000
  End of period 4,780,000 4,840,000 4,840,000
    Of which reserved for subsequent cancellation 45,000 35,000 60,000
         
  Total share capital 23,900 24,200 24,200


 

Notes

Note  End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
21 Own capital shares      
  Own capital shares included in the balance sheet at 0 0 0
  The market value is 57,614 34,993 68,747
         
  Number of own shares:      
  Beginning of year 62,554 96,075 96,075
  Purchases during the period 141,713 177,781 318,806
  Sales during the period -95,024 -137,060 -252,327
  Cancellation during the period -60,000 -100,000 -100,000
  End of period 49,243 36,796 62,554
   Of which reserved for subsequent cancellation 45,000 35,000 60,000
         
  Nominal value of holding of own shares,
end of period
246 184 313
  Own shares’ proportion of share capital,
end of period (%)
1.0 0.8 1.3
         
22 Contingent liabilities etc.      
  Contingent liabilities      
  Finance guarantees 966,522 1,630,347 949,047
  Guarantees against losses on mortgage credit loans 54,275 49,197 55,841
  Guarantee against losses Totalkredit 121,876 108,469 112,284
  Registration and conversion guarantees 48,625 98,826 55,605
  Sector guarantees 48,175 46,816 48,175
  Other contingent liabilities 198,941 681,661 680,982
  Total contingent liabilities 1,438,414 2,615,316 1,901,934
         
23 Assets furnished as security      
  First mortgage loans are provided for German wind turbine projects. The loans are funded directly by KfW Bankengruppe, to which security in the as-sociated loans has been provided. Each repayment of the first mortgage loans is deducted directly from the funding from the KfW Bankengruppe. 1,135,866 797,247 968,568
         
  As security for clearing, the bank has pledged securities from its holding to the Central Bank of Denmark to a total market price of 80,821 310,783 321,192
         
  Collateral under CSA agreements 64,165 66,424 75,372

 

 

Notes

Note  End
June 2014
DKK 1,000
End
June 2013
DKK 1,000
End
Dec. 2013
DKK 1,000
24 Capital adequacy computation      
  Computed pursuant to the Executive order on Capital
Adequacy issued by the Danish FSA.
     
         
  Weighted items with credit and counterpart risk 12,239,250 11,857,848 12,235,761
  Market risk 1,310,061 1,304,381 1,110,690
  Operational risk 1,567,369 1,522,813 1,522,813
  Total risk weighted items 15,116,680 14,685,042 14,869,264
         
  Shareholders’ equity 2,971,194 2,753,922 2,901,100
  Proposed dividend etc. 0 0 -121,500
  Deduction for the sum of equity investments etc. > 10% -94.888 0 0
  Deductions for accruals related to calculated dividend and the residual frame of the share buy-back programme -140,130 0 0
  Reserve for net revaluation 0 -192 -189
  Core tier 1 capital (excl. hybrid core capital) 2,736,176 2,753,730 2,779,411
  Hybrid core capital 131,600 164,500 164,500
  Deduction for equity investments etc. > 10% 0 -23,092 -19,963
  Deduction for the sum of equity investments etc. > 10% -115.909 -20,098 -63,503
  Tier 1 capital 2,751.867 2,875,040 2,860,445
  Subordinated loan capital 161,100 201,388 201,428
  Reserve for net revaluation 0 192 189
  Deduction for equity investments etc. > 10% 0 -23,092 -19,963
  Deduction for the sum of equity investments etc. > 10% -155.618 -20,098 -63,503
  Capital base after deductions 2,757.349 3,033,430 2,978,596
         
  Core tier 1 capital ratio (excl. hybrid core capital) (%) 18.1 18.8 18.7
  Tier 1 capital ratio (%) 18.2 19.6 19.2
  Solvency ratio - Tier 2 (%) 18.2 20.7 20.0
         
  Capital base requirements under Section 124 (2,1) of the Danish FSA 1,209.334 1,174,803 1,189,541
         
25 The supervisory diamond
(Danish Financial Supervisory Authority limits)
     
         
  Stable funding (funding ratio) (< 1) 0.7 0.7 0.7
  Excess liquidity (> 50%) 168.6% 144.8% 166.2%
  Total large exposures (< 125%) 29.8% 35.1% 35.0%
  Growth in loans (< 20%) 3.1% 1.2% 11.5%
  Real estate exposure (< 25%) 12.3% 11.0% 11.4%
         
26 Miscellaneous comments on:
   
 
Main and key figures for the bank
  • Return on equity at the beginning of the year before and after tax are computed per annum after allocation of dividend etc., net.
  • Key figures per DKK 5 share are calculated on the basis of respectively 1st half 2014: 4,780,000 shares,1st half 2013: 4,840,000 shares and 2013: 4,780,000 shares.


 

Main figures summary

  1st half
2014
1st half
2013
Full year
2013
Profit and loss account summary (million DKK)
Net income from interest 323 314 630
Dividend on capital shares etc. 8 2 12
Net income from fees and commissions 114 106 199
Net income from interest and fees 445 422 841
Value adjustments +56 +17 +23
Other operating income 2 1 3
Staff and administration costs 130 124 255
Amortisations, depreciations and write-downs on intangible and tangible assets 4 2 4
Other operating costs 8 8 16
Impairment charges for loans and other debtors etc. -40 -61 -120
Profit before tax 321 245 472
Tax 76 61 114
Profit after tax 245 184 358
 
Main figures from the balance sheet (million DKK)
Loans and other debtors 14,283 12,570 13,849
Deposits and other debts 14,054 12,654 14,114
Subordinated debt 368 372 371
Shareholders’ equity 2,971 2,754 2,901
Balance sheet total 19,675 17,800 19,583

 

Quarterly overview

 
(Million DKK)
2nd qtr.
2014
1st qtr.
2014
4rd qtr.
2013
3rd qtr.
2013
2nd qtr.
2013
1st qtr.
2013
4th qtr. 2012 3rd qtr. 2012 2nd qtr.
2012
1st qtr.
2012
Net income from interest 159 158 156 155 151 153 146 153 156 160
Net income from fees and
provisions excl. commission
51 45 48 33 55 36 51 30 48 33
Income from sector shares 2 16 5 3 4 2 5 -1 2 0
Foreign exchange income 4 3 3 3 2 5 4 3 2 4
Other operating income 1 1 1 1 1 0 0 1 1 1
Total core income excl. trade
income
217 223 213 195 213 196 206 186 209 198
Trade income 8 11 7 5 9 6 8 5 5 6
Total core income 225 234 220 200 222 202 214 191 214 204
Staff and administration costs 68 62 70 61 66 58 69 59 64 61
Amortisations, depreciations and write-downs on intangible and
tangible assets
3 1 2 1 0 1 0 1 1 1
Other operating costs 4 4 4 3 3 4 3 0 4 2
Total costs etc. 75 67 76 65 69 63 72 60 69 64
Core earnings before impairments 150 167 144 135 153 139 142 131 145 140
Impairment charges for loans and other debtors etc. -25 -15 -25 -34 -40 -21 -33 -45 -55 -24
Core earnings 125 152 119 101 113 118 109 86 90 116
Result for portfolio +20 +24 +12 -4 +9 +6 -9 +25 +6 +27
Expenses for bank packages 0 0 0 -1 0 -1 0 0 0 -2
Profit before tax 145 176 131 96 122 123 100 111 96 141
Tax 36 40 30 23 30 31 33 28 24 35
Profit after tax 109 136 101 73 92 92 67 83 72 106

 

Danish Financial Supervisory Authority
key figures for Danish banks

   1st half
2014
1st half
2013
Full year
2013
Solvency:        
Solvency ratio - Tier 2 % 18.2 20.7 20.0
Tier 1 capital ratio % 18.2 19.6 19.2
Individual solvency requirement % 8.8 8.7 8.9
         
Earnings:        
Return on equity before tax % 10.9 9.0 16.9
Return on equity after tax % 8.3 6.8 12.8
Income/cost ratio DKK 2.77 2.26 2.19
         
Market risk:        
Interest rate risk % 0.8 1.3 0.6
Foreign exchange position % 0.8 1.2 1.6
Foreign exchange risk % 0.0 0.0 0.0
         
Liquidity risk:        
Excess cover relative to statutory liquidity
requirement
% 168.6 144.8 166.2
Loans and impairments thereon relative to deposits % 108.1 105.8 104.1
         
Credit risk:        
Loans relative to shareholders’ equity   4.8 4.6 4.8
Growth in loans for the period % 3.1 1.2 11.5
Total large exposures % 29.8 35.1 35.0
Cumulative impairment percentage % 5.5 5.2 5.1
Impairment percentage for the period % 0.24 0.38 0.72
Proportion of debtors at reduced interest % 0.6 0.6 0.5
         
Share return:        
Profit for the period after tax per share * / *** DKK 1,017.1 753.1 1,462.8
Book value per share * / ** DKK 12,561 11,467 12,145
Share price relative to profit for the period per share * / *** DKK 23.0 25.3 15.0
Share price relative to book value per share * / **   1.86 1.66 1.81
 
*        Calculated on the basis of a denomination of DKK 100 per share.
**       Calculated on the basis of number of shares outstanding at the end of the period.
***      Calculated on the basis of the average number of shares. The average number of shares is calculated                as a simple average of the shares at the beginning of the period and at the end of the period.

 

 

Management’s statement

The board of directors and the general management have today considered and approved the interim report for Ringkjøbing Landbobank A/S for the period 1 January - 30 June 2014.

The interim report was prepared in accordance with the provisions of the Danish Act on Financial Activities and further Danish requirements on listed financial companies concerning disclosure. We consider the accounting policies to be appropriate and the accounting estimates made to be responsible, such that the interim report provides a true and fair view of the bank’s assets, liabilities and financial position as of 30 June 2014 and of the bank’s activities for the period 1 January - 30 June 2014. We also believe that the management report contains a true and fair account of the bank’s activities and financial position as well as a description of the most important risks and uncertainties which can affect the bank.

The interim report is not audited or reviewed, but the external auditors have checked that the conditions for ongoing inclusion of the earnings for the period in the core capital have been met.

 

Ringkøbing, 6 August 2014

General Management:
 
 John Fisker
CEO
 
  
Board of Directors: 

 
Jens Lykke Kjeldsen
Chairman
  Martin Krogh Pedersen
Deputy chairman
 
Gert Asmussen
   
Inge Sandgrav Bak
 
Gravers Kjærgaard
   
Jørgen Lund Pedersen
 
Bo Bennedsgaard
Employee board member
   
Gitte E. S. Vigsø
Employee board member