• Decision to resume leasing activities – resulting in re-segmentation of accounting data regarding leasing from discontinuing activities to core earnings.
• Core income for the period amounted to DKK 2,420 million, up 11% on Q1-Q3 2013 – growth was driven by income from fees, charges and commissions and market-value adjustments (incl. regarding Nets), while net interest income was 5% down on 2013.
• Despite the decline compared with the same period of 2013, net interest income developed positively, ending at DKK 479 million in Q3 after DKK 414 million in Q1 and DKK 430 million in Q2.
• As expected, costs and expenses grew by 2%, driven primarily by increasing payroll taxes and non-recurring costs connected with acquisitions. The cost-to-income ratio improved to 0.54 (if adjusted for the Nets gain, the cost-to-income ratio ended at 0.59).
• Thus, core earnings before impairment ended at DKK 1,107 million, which is DKK 220 million, or 25%, up on the same period of 2013 (if adjusted for market-value adjustments of Nets shares, the increase amounted to DKK 42 million, or 5%).
• Loan losses came to DKK 288 million, which is DKK 23 million, or 7%, down on the same period last year. The increase from DKK 71 million in Q2 to DKK 128 million in Q3 is attributable exclusively to a portfolio writedown of DKK 60 million on agricultural exposures, triggered by declining settlement prices for agricultural products.
• The Group’s total business volume at end-Q3 amounted to DKK 192.5 billion, which is DKK 10.1 million, or 6%, up on end-2013. Bank lending was DKK 2.2 billion, or 6%, up, and bank deposits were DKK 1.1 billion, or 3%, up on the beginning-of-year balance.
• After the loan portfolio from FIH Erhvervsbank was consolidated and governmental hybrid core capital redeemed, the Common Equity (Tier 1) ratio stood at 13.2%, and the total capital ratio at 15.5%. The excess coverage relative to the solvency need ratio of 9.7% amounted to 5.8 percentage points, or DKK 2.8 billion.
SUBSEQUENT EVENTS
• The decision to switch from the SDC data processing centre to BEC will result in an estimated writedown of the shareholding in SDC of DKK 195 million in Q4 2014 and estimated future cost savings of around DKK 55 million a year from 2017 (DKK 35 million in 2016).
OUTLOOK
• In light of developments in Q1-Q3 and events following the end of the period, the Group’s full-year core earnings before impairment are now expected to hover around DKK 1,200 million – corresponding to an upward adjustment of the forecast earnings from operations of DKK 100 million compared with the forecast at the beginning of the year.
• Despite the extraordinary portfolio writedown on agricultural customers in Q3, full-year loan losses, etc. are still expected to end at a slightly lower level than in 2013.
