Satisfactory result for the BANK of Greenland in 2016 – Return on equity of 13.4% p.a.
The Bank's profit before value adjustments and write-downs is DKK 140.3 million, with an increase of DKK 3.5 million from 2015. The result is thus at the high end of the estimate of DKK 125-145 million given by the Bank at the beginning of the year.
The profit before tax is a satisfactory TDKK 113,420, compared to TDKK 106,625 in 2015. The profit before tax gives a return of 13.4% p.a. on opening equity before tax and after disbursement of dividend.
The BANK of Greenland recommends to the annual general meeting that the dividend rate for 2016 be the same as in the preceding four years, so that dividend of DKK 55 per share, or a total of DKK 99 million, is paid.
Net interest income of DKK 201.5 million is almost unchanged from 2015. The increase in lending in 2016 was greatest in Q4 and thus has only a limited impact on the interest income for the year. The positive effect of increasing lending was also more than set off by an expected decline in interest income on bond holdings.
Fee and commission income showed a sound increase of TDKK 2,438 to TDKK 85,879.
Total costs, amortisation and depreciation increased by TDKK 980 or 0.6% to TDKK 154,324.The increase is primarily due to staff and other administration costs.
Value adjustment of securities and currencies resulted in a loss of TDKK 12,899, compared to a loss of TDKK 10,775 in 2015.
Impairment of loans, etc. amounted to TDKK 13,971, after a decrease of TDKK 5,461 from 2015. The total impairment has thus declined, as expected, and amounts to a modest 0.3% of the Bank's loans and guarantees.
Loans, guarantees and deposits are all at the highest level in the Bank's history, and with a total business volume of DKK 9.1 billion.
The BANK of Greenland's capital ratio amounts to 21.2%, while the Bank has calculated the individual solvency requirement at 10.1%.
Outlook for 2017
The economic development in Greenland is expected to show further improvement in 2017. The increased economic activity noted by the BANK of Greenland at the end of 2016 is expected to lead to higher average lending in 2017. Continued uncertainty concerning the capital markets, declining bond yields and negative interest rates at Danmarks Nationalbank are nonetheless still expected to affect the Bank.
We also expect a number of costs related to IT development, including the pension concept. In addition, the Bank will celebrate its 50th anniversary in 2017.
The Bank has the conservative expectation of a profit before value adjustments and write-downs at the level of DKK 125-145 million, while a moderate to low level of losses and write-downs is still expected.
