BankNordik improves operating performance

Highlights of BankNordik's interim report for the six months to 30 June 2015:

Stronger year-on-year performance in H1 2015

• BankNordik reported operating profit before value adjustments and non-recurring items of DKK 88 million in the first six months of 2015, a DKK 20 million improvement on H1 2014.
  • Impairment charges were DKK 25 million less than in the first half of 2014.
  • Interest income was up by DKK 3 million due to customer inflows and an increase in loans and advances of close to DKK 500m.
  • Fee income was up by DKK 24 million, driven by an increase in investment management activity and mortgage broking services.
  • Costs were DKK 10 million higher than in H1 2014, due to an increase in IT costs, much of which was of a non-recurring nature. The Bank's FTE headcount is 21 lower than at 30 June 2014.
  • Net insurance income was down by DKK 11 million relative to H1 2014, due to an unusually long and severe winter in Iceland.
• BankNordik generated profit before tax of DKK 79 million for H1 2015 against DKK 85 million in H1 2014.
  • Non-recurring items amounted to DKK 14 million, compared with DKK 1 million in H1 2014, due to payment in lieu of notice relating to the organisational adjustment announced in May 2015.
  • Value adjustments amounted to DKK 5 million, against DKK 17 million in H1 2014.

“We're very pleased to report improvements in income generation and customer inflows, an increase in loans and advances and low impairment charges, and that our earnings are fully in line with our guidance,” said BankNordik CEO Janus Petersen.

“Having reviewed the Bank's capital requirement, the Board has lowered our common equity tier 1 target for 2019 by half a percentage point to 13.0%, equal to DKK 61 million. Currently, the our common equity tier 1 ratio is 12.2%,” said Mr Petersen.

Very strong year-on-year improvement in Q2 2015

• BankNordik reported operating profit before value adjustments and non-recurring items of DKK 70 million in the second quarter of 2014, a DKK 26 million improvement on Q2 2014.
  • The Bank reversed impairment charges of DKK 5 million in the second quarter, for a DKK 25 million improvement in this item relative to Q2 2014.
  • Interest income was DKK 1 million higher than in Q2 2014.
  • Fee income was DKK 10 million higher than in Q2 2014.
  • Costs were DKK 4 million higher than in Q2 2014.
  • Net insurance income was DKK 4 million lower than in Q2 2014.
• BankNordik generated profit before tax of DKK 15 million against DKK 54 million in Q2 2014.
  • Non-recurring items amounted to DKK 14 million, against DKK 1 million in Q2 2014.
  • Capital loss of DKK 40 million, against a capital gain of DKK 9 million in Q4 2014

Initiating sales process for Vørður insurance company

Due to its decision to focus more on banking operations, the Bank initiated a sales process in the second quarter involving its Icelandic insurance business, which is expected to be completed in 2015.

Outlook for 2015

Management continues to expect FY 2015 profit of DKK 200-240 million before impairment charges, non-recurring items, value adjustments and tax. For the first half-year of 2015, this item was DKK 103m, and we expect an even better performance in H2 2015, provided costs perform as planned and assuming normalised insurance income.

At the start of the year, the Bank expected a drop in loan impairment charges relative to last year's net figure of DKK 85 million. In the H1 2015 period, the Bank recognised net impairment charges of DKK 15 million. As a result, FY 2015 impairment charges are now expected to fall substantially relative to last year's charges.

This guidance is generally subject to uncertainty and will depend on economic conditions, including possible central bank monetary policy measures.

Solvency strong –  common equity tier 1 target reduced

BankNordik's total capital ratio of 15% at 30 June 2015 leaves a margin of 6.1 percentage points to the relatively low capital requirement of 8.9%, which reflects the Bank's controlled risk profile.

The Bank expects to become subject to the new capital adequacy rules (CRD IV) this year and to be given SIFI status. The common equity tier 1 target has been reduced by half a percentage point to 13.0%. The Bank's capital adequacy target is to have a common equity tier 1 capital ratio of 13% and a total capital ratio of 16.5% by 2019. With its common equity tier 1 capital ratio at 12.2% at 30 June 2015, the Bank has almost met its common equity tier 1 target for 2019.

For additional information, please contact:

Janus Petersen, CEO, tel. (+298) 330 340

Árni Ellefsen, CFO, 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 170,000 customers, total assets of DKK 17bn and 490 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on NASDAQ OMX. www.banknordik.dk.

Appendix: H1 2015 financial highlights and comparative figures are provided on the next page.

Financial highlights

* Excluding non-recurring items and value adjustments.

Further details are available in the interim report.