Nasdaq Copenhagen
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10 April 2018

Ringkjøbing Landbobank’s report for the first quarter of 2018
- Early publication

As indicated in the report below for the first quarter of 2018, the Danish FSA carried out a “major” inspection of the bank during the quarter.

The inspection process was satisfactory and it was concluded just before Easter. The inspection meant early clarification of several items and the bank already has a total overview. The full first-quarter report is thus finalised and approved by the bank’s management today.

Publication has thus been brought forward compared to the financial calendar for 2018 which was announced earlier.

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

Yours sincerely,
Ringkjøbing Landbobank

 

John Fisker  Jørn Nielsen


Ringkjøbing Landbobank’s report for the first quarter of 2018
- Substantial growth and upward adjustment of expectations

Profit before tax increased by 36% to DKK 269 million, equivalent to a 30% return on equity at the beginning of the period, which is considered highly satisfactory. Core earnings showed an increase of 27% to DKK 217 million and are thus well above budget for the first quarter of the year.

 

 

(DKK million)
Q1
2018
Q1
2017
 

2017
 

2016
 

2015
 

2014
Total core income2742511,019983954907
Total expenses and depreciation-83-75-334-318-306-298
Core earnings before impairment charges for loans191176685665648609
Impairment charges for loans etc.+26-5-10-48-60-87
Core earnings217171675617588522
Result for the portfolio etc.+52+27+60+440+65
Profit before tax269198735661588587

The quarter - highlights

  • Upward adjustment of expectations for core earnings by DKK 100 million to the range DKK 700 - 775 million
  • Upward adjustment of expectations for profit before tax by approximately DKK 150 million to the range DKK 700 - 875 million
  • Profit before tax was DKK 269 million, equivalent to a return of 30% p.a. on equity at the beginning of the period
  • Core earnings were DKK 217 million, which is well above budget for the quarter
  • Reversal of impairment charges by DKK 26 million
  • During the first quarter, the Danish FSA carried out a “major” inspection with a satisfactory result
  • Increase in the bank’s loans of 10% and an increase in deposits of 5%
  • The bank has determined new capital targets in connection with the implementation of the MREL requirement
  • The adopted share buy-back programme of DKK 170 million is expected to be initiated later in the 2nd quarter
  • A good image and high customer satisfaction continue to increase customer numbers


Management’s review

Core income
Net interest income was DKK 167 million in the first quarter of 2018 compared to DKK 161 million in 2017, an increase of 4%. The bank is satisfied with this development, but it should also be compared to a 10% increase in lending volumes, which underlines that interest income is still influenced by a changed mix of loans with more low-margin and low-risk products. This item is also still influenced by the competition in the sector and continuing low interest rates.

Fee,commission and foreign exchange income amounted to DKK 85 million net in the first quarter of 2018 compared to DKK 71 million net in 2017, an increase of 19%.Fee income in the first quarter of 2018 was primarily affected positively by an increase in income from securities trading, asset management and custody accounts and from guarantee commission and mortgage credit commission.

Earnings from sector shares increased by DKK 4 million to DKK 21 million in the first quarter of 2018. The earnings derive primarily from return on the bank’s ownership interests in DLR Kredit and BankInvest Holding (BI Holding).

In March 2018, the board of directors of BI Holding, in which the bank had an ownership interest of 10.3% at the end of March 2018, decided to change the valuation principles for the company’s shares. The change in the valuation principles resulted in a revaluation of the bank’s ownership interest by DKK 52 million. Although the revaluation can be related to a sector share, it has been booked in the bank’s statement of core earnings under the item “Result for the portfolio” because it is a once-only income that does not influence the bank’s regular income from its holding of sector shares.

Total core income in the first quarter increased by 9% from DKK 251 million in 2017 to DKK 274 million in 2018.

Costs and depreciation
Total costs including depreciation and write-downs on tangible assets amounted to DKK 83 million in the first quarter of 2018 compared to DKK 75 million last year, an increase of 11%.

The increase compared to the first quarter of 2018 is related to a DKK 3 million increase in staff costs and a DKK 5 million non-recurrent write-down on property.

The rate of costs was unchanged relative to the 2017 level and was computed at 30.3 for the first quarter of 2018, which continues to be the lowest in Denmark.

The bank expects total costs to increase by 3-5% for the year as a whole including the above write-down on property.

Impairment charges for loans
The bank reversed impairment charges during the first quarter of the year, and a total of DKK 26 million was thus carried to income during the quarter compared to an expense of DKK 5 million in 2017. The reversals were made on the basis of improved credit quality in certain exposures, and as a whole there were no new impairment charges during the quarter.

With effect from 1 January, the bank started using impairment rules that are compatible with the IFRS 9 reporting standard. The IFRS 9 rules are incorporated into the Danish Executive Order on Financial Reports for Credit Institutions and Investment Firms etc. and with the introduction of IFRS 9, the previous impairment model, which was an incurred loss model, has been replaced by an expected loss model.

The new expected loss model means that, on initial recognition, a financial asset must be impaired by the expected credit loss for a twelve-month period (stage 1). If the credit risk for the asset subsequently increases significantly relative to initial recognition, the asset must be impaired by the expected credit loss over the asset’s remaining life (stage 2). Impairment charges for exposures at stages 1 and 2 are calculated on the basis of a statistical model.

If there is objective evidence of impairment (stage 3), the asset must be impaired by the expected credit loss over the asset’s remaining life, but interest income must be recognised in the income statement based on the effective interest method applied to the impaired amount.

The IFRS 9 rules resulted in additional impairment charges of DKK 59 million at the beginning of 2018; the effect on the bank’s equity after tax at the beginning of the period is thus DKK 46 million, equivalent to 1.2% of equity. Further reference is made to the section “Capital structure”.

Individual impairment charges (stage 3) were DKK 558 million at the end of the quarter, while stages 1 and 2 impairment charges totalled DKK 371 million on 31 March 2018.

The bank’s total account for impairment charges and provisions was DKK 971 million at the end of the quarter, equivalent to 4.0% of total loans and guarantees.

The portfolio of loans with suspended calculation of interest amounted to DKK 22 million, equivalent to 0.1% of the bank’s total loans and guarantees at the end of the quarter.

On the basis of the quality of the bank’s loans portfolio and prospects for economic development, the bank still expects total impairment charges in the coming quarters to remain low.

Core earnings

(DKK million)Q1
2018
Q1
2017
 

2017
 

2016
 

2015
 

2014
Total core income2742511,019983954907
Total expenses and depreciation-83-75-334-318-306-298
Core earnings before impairment charges for loans191176685665648609
Impairment charges for loans etc.+26-5-10-48-60-87
Core earnings217171675617588522

Core earnings were DKK 217 million compared to DKK 171 million last year, which is well above budget for the quarter.

Result for the portfolio and market risk
The result for the portfolio for the first quarter of 2018 was positive by DKK 52 million net including funding costs for the portfolio. DKK 52 million is attributable to the revaluation of the bank’s ownership interest in BI Holding. Further details are given in the section “Core income”.

Shares etc. at the end of the quarter amounted to DKK 715 million, DKK 41 million of which was in listed shares etc. and DKK 674 million in sector shares etc. The bond portfolio amounted to DKK 3,293 million, and the majority of the portfolio consists of AAA-rated Danish government and mortgage credit bonds.

The total interest rate risk - computed as the impact on the profit of a one percentage point change in the interest level - was 0.9% of the bank’s tier 1 capital at the end of the quarter.

The bank’s total market risk within exposures to interest rate risk, listed shares etc. and foreign currency remains at a moderate level, and this policy will continue.

The bank’s risk of losses based on a Value at Risk model (computed with a 10-day horizon and 99% probability) was as follows in the first quarter of 2018:

 Risk in DKK millionRisk relative to equity
end of Q1 2018 in %
Highest risk of loss:  9.10.24%
Lowest risk of loss:  3.30.09%
Average risk of loss:   5.50.15%
End of period risk of loss:  4.40.12%

Profit after tax
Profit after tax was DKK 224 million for the first quarter of 2018, compared to DKK 158 million last year.

The profit after tax is equivalent to a return on equity at the beginning of the period of 25% p.a. after payment of dividend.

Balance sheet
The bank’s balance sheet at the end of the quarter stood at DKK 27,004 million compared to last year’s DKK 24,441 million.

The bank’s deposits increased by 5% from DKK 18,565 million at the end of March 2017 to DKK 19,511 million at the end of March 2018. The bank’s loans increased by 10% from DKK 18,186 million at the end of March 2017 to DKK 19,925 million at the end of March 2018.

The bank’s portfolio of guarantees at the end of the quarter was DKK 3,076 million compared to DKK 2,484 million in 2017.

The Danish FSA’s inspection
The Danish FSA has just completed a “major” inspection of the bank which was carried out in February and March.

The inspection process was satisfactory. There was no objective evidence to suggest that additional impairment charges for loans were required, and the calculated individual solvency requirement was approved at an unchanged level. The final report on the inspection is expected to be published in May 2018.

Liquidity
The bank’s liquidity situation is good. The bank’s short-term funding with term to maturity of less than 12 months amounts to DKK 1.2 billion, balanced by DKK 6.0 billion primarily in short-term investments in the Danish central bank and in liquid securities.

The bank's loans at the end of the quarter were at the same level as the bank's deposits. The loan portfolio is thus more than fully financed by the bank’s deposits and equity. In addition, part of the loan portfolio for wind turbines in Germany is refinanced back-to-back with KfW Bankengruppe, which means that DKK 923 million can be disregarded in terms of liquidity.

In terms of liquidity, the bank must comply with the LCR requirement. On 31 March 2018 the bank’s LCR was 256% and the bank thus met the statutory requirement of at least 100%.

On 31 December 2016, the LCR requirement replaced the statutory Section 152 requirement, which was phased out on the same date. However, the latter must still be disclosed, and the figure at the end of March 2018 was 130%.

During the first quarter of the year, the bank strengthened its long-term liquidity by entering into longer-term deposit and money market agreements and issues for the equivalent of a total of DKK 185 million euros with terms from 5 to 10 years and with disbursement in the first quarter of 2018 and later.

This was done with a view to funding growth, remaining independent of the short-term money market and strengthening the bank’s short-term and long-term LCR.

Capital structure
It was announced at the bank’s annual general meeting on 28 February 2018 that the bank’s management had worked with new capital targets. These targets are now finalised and the bank will operate with three targets in the future.

The common equity tier 1 capital ratio must be 13.5%, the total capital ratio must be 17% and the total capital for covering the MREL add-ons must be 22%. The targets are minimum figures that must be met at the end of the year, but there may be major fluctuations in the capital ratios over the year due to the capital rules applying to share buy-back programmes. Finally, no time-limit has been set for when the targets for the common equity tier 1 capital ratio and the total capital ratio must be met.

The total capital target for covering the MREL add-ons must be met already at the beginning of 2019, because the bank has decided to meet the fully phased-in MREL requirement from that date.

The Danish FSA has given the bank a provisional MREL requirement of 17.9% but it will be recalculated later this year. To this must be added a countercyclical capital buffer of 0.50% which will be introduced with effect from 31 March 2019. To comply with the MREL requirement, the bank had established funding to meet the requirements for grandfathering of contractual senior funding already at the end of 2017. DKK 2.0 billion of this can be included in the sum needed to comply with the bank’s MREL requirement at the beginning of 2019. The bank will thus have comfortable excess cover to meet both the MREL requirement and its own target. The bank further expects that it must raise tier 3 capital during 2020 or 2021.

Equity at the beginning of 2018 was DKK 3,817 million. To this must be added the profit for the period, while the dividend paid must be subtracted and adjustments must be made for movements in the bank’s holding of own shares, after which the equity at the end of the quarter was DKK 3,785 million.

The bank’s total capital ratio was computed at 17.6% at the end of the first quarter of 2018, and the tier 1 capital ratio at 16.1%.

Capital ratiosQ1
2018
Q1
2017
2017201620152014
Common equity tier 1 capital ratio (%)16.116.416.516.917.117.5
Tier 1 capital ratio (%)16.116.416.516.917.117.5
Total capital ratio (%)17.617.917.818.818.817.5
 
Individual solvency requirement (%)
9.09.09.09.09.08.9

The statement of capital is influenced by the deduction of the entire DKK 170 million share buy-back programme from the capital, the equivalent of 0.9 percentage points.

The bank has calculated the individual solvency requirement at the end of March 2018 at 9.0%. To this should be added a capital conservation buffer of 1.9%; the total requirement for the bank’s total capital is thus 10.9%.

Compared with the actual total capital of DKK 3.5 billion, the capital buffer at the end of March 2018 was thus DKK 1.3 billion, equivalent to 6.7 percentage points.

Capital reduction and share buy-back programme
It was decided at the annual general meeting held on 28 February 2018 to cancel 538,000 of the bank's own shares. The capital reduction is expected to be finalised during May 2018. The bank’s actual share capital is thus DKK 21.812 million in nom. DKK 1 shares.

The general meeting also adopted a new share buy-back programme, under which the bank may buy back own shares for up to DKK 170 million for cancellation at a future general meeting. The new programme has not yet been initiated and no shares reserved under it. The programme is expected to be initiated later in the 2nd quarter.

The Supervisory Diamond
The bank complies with the Danish FSA’s Supervisory Diamond which contains five different benchmarks and associated limit values which Danish banks must observe.

The benchmark for large exposures was changed with effect from 1 January 2018. In future it will be calculated as the sum of the bank’s 20 largest exposures relative to its common equity tier 1 capital with a limit value of 175%. 

The Danish FSA’s benchmarks and associated limit values and the bank’s key figures at the end of March 2018, etc. are given in the table below.

The Supervisory Diamond
(Danish FSA limit values)

Q1
2018

Q1
2017
 

2017
 2016 2015 2014 
Stable funding (funding ratio) (< 1)0.7 0.8 0.8 0.7 0.8 0.8 
Excess liquidity (> 50%)130.3%130.3%116.8%139.6%99.7%140.7%
Total large exposures (< 175%)137.7%N/A136.1%N/AN/AN/A
Total large exposures (< 125%)
(previous applicable)
 

22.1


%
30.3%22.5%29.5%63.4%47.8%
Growth in loans (< 20%)9.6%6.7%10.7%2.7%14.0%7.8%
Real property exposure (< 25%)19.8%17.2%18.0%14.8%14.1%11.6%

Ringkjøbing Landbobank thus observes all five current limit values by a good margin.

The Danish FSA has also decided to change the liquidity benchmark with effect from 30 June 2018. The current excess liquidity coverage benchmark calculated on the basis of the minimum requirement in Section 152 of the Financial Business Act will be a future LCR liquidity benchmark and show the ability of banks to survive stressed liquidity for a three-month period. The limit value for the new liquidity benchmark will require the key figure to be greater than 100%. The bank expects to be able to comply with the limit value for the new liquidity benchmark without any problems. Further reference is made to the section “Liquidity”.

Encouraging increase in customer numbers
The bank has previously implemented a large number of outreach initiatives to both current and new customers. The outreach initiatives are scheduled to continue in 2018 at both regional and national levels.

The management has changed the strategy for the bank and no more new branches will be established for the time being. Instead, it was decided to invest in the existing branches and utilise the good potential in the market for attracting additional customers on the basis of the bank’s good image and its customers’ willingness to recommend the bank to others. In the first quarter of 2018 the bank thus added a business customer department to its Private Banking branch in Aarhus.

The good image and high customer satisfaction continue to increase customer numbers, and the bank also saw a highly satisfactory net increase in new customers in both the branch network and within the niche concepts during the first quarter of the year.

Changes in the board of directors
Due to the provision on age in the articles of association, chairman of the board of directors for 16 years, timber merchant Jens Lykke Kjeldsen retired from the bank’s board of directors and from the shareholders' committee with effect from the annual general meeting held on 28 February 2018.

As a consequence, the board of directors has elected the former deputy chairman of the board, CEO Martin Krogh Pedersen, to be the new chairman of the board and manager Jens Møller Nielsen as the new deputy chairman of the board.

The shareholders’ committee will elect one additional member to the bank’s board of directors on 25 April 2018, to bring the total number of board members back up to nine.

Accounting policies and key figures
As indicated in the section “Impairment charges for loans”, the bank’s accounting policy for calculating impairment charges for loans changed with effect from 1 January 2018. It is not practically possible to change the comparative figures for 2017 and earlier years concerning the changed accounting policy and these figures have therefore not been changed.

The accounting policies are otherwise unchanged relative to those in the submitted and audited 2017 annual report.

Expected results for 2018
The bank’s core earnings for the first quarter of 2018 were DKK 217 million, which is well above the budget for the quarter.

On the basis of the realised increase in loans, increasing net interest income, encouraging increase in customer numbers and the reversed impairment charges, expectations for core earnings for 2018 are adjusted upward from DKK 600 - 675 million to DKK 700 - 775 million.

Profit before tax for the quarter was DKK 269 million. On this basis expectations for profit before tax are adjusted upward from DKK 540 - 735 million to DKK 700 - 875 million.

Disclaimer:
This document is a translation of an original document in Danish. The original Danish text shall be the governing text for all purposes and in case of any discrepancy the Danish wording shall be applicable.

Main and key figures

 Q1
2018
Q1
2017
Full year
2017
Main figures for the bank (DKK million)   
Total core income2742511,019
Total expenses and depreciation-83-75-334
Core earnings before impairment charges for loans191176685
Impairment charges for loans etc.+26-5-10
Core earnings217171675
Result for the portfolio+52+27+60
Profit before tax269198735
Profit after tax224158589
    
Equity3,7853,5003,817
Deposits19,51118,56519,110
Loans19,92518,18619,351
Balance sheet total27,00424,44125,796
Guarantees3,0762,4843,184
    
Key figures for the bank (per cent)   
Return on equity before tax, beginning of period30.123.321.7
Return on equity after tax, beginning of period25.118.617.3
Rate of costs30.329.932.8
Common equity tier 1 capital ratio16.116.416.5
Tier 1 capital ratio16.116.416.5
Total capital ratio17.617.917.8
Individual solvency requirement9.09.09.0
    
Key figures per DKK 1 share (DKK)   
Core earnings9.97.630.9
Profit before tax12.38.833.7
Profit after tax10.37.027.0
Book value173.5156.6175.0
Price, end of period332.0309.0321.5
Dividend--9.0



Statements of income and comprehensive income

 NoteQ1
2018
DKK 1,000
Q1
2017
DKK 1,000
Full year
2017
DKK 1,000
1Interest income174,072177,157694,136
2Interest expenses10,31815,94853,094
 Net interest income163,754161,209641,042
3Dividend from shares etc.85256710,258
4Fee and commission income90,29176,431322,717
4Fee and commission expenses9,61210,32642,486
 Net interest and fee income245,285227,881931,531
5Value adjustments+79,899+48,729+143,225
 Other operating income1,0508234,979
6, 7Staff and administration costs76,30773,112327,024
 Amortisation, depreciation and write-downs on intangible and tangible assets5,9261,0694,249
 Other operating expenses   
   Miscellaneous other operating expenses054326
   Costs Guarantee Fund and Resolution Fund7506002,848
8Impairment charges for loans and other receivables etc.+25,551-4,972-10,320
 Results from investments in associated companies00-20
 Profit before tax268,802197,626734,948
9Tax44,37539,750146,308
 Profit after tax224,427157,876588,640
     
 Other comprehensive income000
 Total comprehensive income for the period224,427157,876588,640


Core earnings

NoteQ1
2018
DKK 1,000
Q1
2017
DKK 1,000
Full year
2017
DKK 1,000
 Net interest income167,157161,196642,707
4Net fee and commission income excluding
trading income
58,48448,134215,374
 Income from sector shares etc.20,60817,09570,674
4Foreign exchange income4,5165,23020,902
 Other operating income1,0508234,979
 Total core income excluding trading income251,815232,478954,636
4Trading income22,19517,97164,857
 Total core income274,010250,4491,019,493
6, 7Staff and administration costs76,30773,112327,024
 Amortisation, depreciation and write-downs on intangible and tangible assets5,9261,0694,249
 Other operating expenses7506543,174
 Total expenses etc.82,98374,835334,447
 Core earnings before impairment charges for loans191,027175,614685,046
8Impairment charges for loans and other receivables etc.+25,551-4,972-10,320
 Core earnings216,578170,642674,726
 Result for the portfolio+52,224+26,984+60,222
 Profit before tax268,802197,626734,948
9Tax44,37539,750146,308
 Profit after tax224,427157,876588,640


Balance sheet

 Note31 March 2018
DKK 1,000
31 March 2017
DKK 1,000
31 Dec. 2017
DKK 1,000
 Assets   
 Cash in hand and demand deposits with
central banks
291,347279,825308,211
10Receivables from credit institutions and central banks2,405,8932,163,3621,211,577
   Receivables with notice from central banks2,094,3411,703,184957,086
   Money market operations and bilateral loans
  - term to maturity less than 1 year
256,552310,898199,491
   Bilateral loans - term to maturity more than 1 year55,000149,28055,000
11, 12Loans and other receivables at amortised cost19,925,20818,185,92419,350,866
   Loans and other receivables at amortised cost 19,002,70317,233,44718,374,249
   Wind turbine loans with direct funding922,505952,477976,617
14Bonds at fair value3,292,7372,801,0943,952,614
15Shares etc.714,513595,890621,285
 Investments in associated companies489509489
 Land and buildings, total50,51556,04555,647
   Investment properties3,5613,5613,561
   Domicile properties46,95452,48452,086
 Other tangible assets18,83319,49518,811
 Current tax assets22,96112,41120,483
 Deferred tax assets8,7198,1538,719
 Temporary assets5,5875,2004,000
 Other assets260,243306,214235,351
 Prepayments6,6786,4148,430
 Total assets 27,003,72324,440,53625,796,483



Balance sheet

  Note31 March 2018
DKK 1,000
31 March 2017
DKK 1,000
31 Dec. 2017
DKK 1,000
 Liabilities and equity   
16Debt to credit institutions and central banks1,882,2581,445,4931,599,416
   Money market operations and bilateral credits
  - term to maturity less than 1 year
736,218325,664455,285
   Bilateral credits - term to maturity more than 1 year223,535167,352167,514
   Bilateral credits from KfW Bankengruppe922,505952,477976,617
17Deposits and other debt19,510,74618,564,51519,110,127
18Issued bonds at amortised cost1,197,939297,514673,436
 Other liabilities211,258250,520210,691
 Deferred income3,5452,9673,879
 Total debt22,805,74620,561,00921,597,549
     
12Provisions for losses on guarantees27,3187,80610,263
12Other provisions for liabilities13,84000
 Total provisions for liabilities41,1587,80610,263
     
 Tier 2 capital372,058371,275371,753
19Total subordinated debt372,058371,275371,753
     
20Share capital22,35022,85022,350
 Net revaluation reserve under the equity method138158138
 Retained earnings3,762,2733,477,4383,592,780
 Proposed dividend etc.--201,650
 Total shareholders’ equity3,784,7613,500,4463,816,918
     
 Total liabilities and equity27,003,72324,440,53625,796,483
     
21Own shares   
22Contingent liabilities etc.   
23Assets furnished as security   
24Loans and guarantees in per cent, by sector and industry   
25Miscellaneous comments   



Statement of changes in equity

DKK 1,000Share
capital
Net revaluation
reserve under
the equity
method
Retained
earnings
Proposed
dividend etc.
Total
share-holders’
equity
On 31 March 2018:

Shareholders’ equity at the end of the previous financial year 
22,3501383,592,780201,6503,816,918
Changed accounting policy for impairment charges under
IFRS 9
  -45,836 -45,836
Adjusted shareholders’ equity
at the end of the previous
financial year
22,3501383,546,944201,6503,771,082
Dividend etc. paid   -201,650-201,650
Dividend received on own shares  5,112 5,112
Shareholders’ equity after distribution of dividend etc.22,3501383,552,05603,574,544
Purchase of own shares  -74,190 -74,190
Sale of own shares  58,482 58,482
Other equity transactions  1,498 1,498
Total comprehensive income for the period  224,427 224,427
Shareholders’ equity on
the balance sheet date
22,3501383,762,27303,784,761


Statement of changes in equity

DKK 1,000Share
capital
Net revaluation
reserve under
the equity
method
Retained
earnings
Proposed
dividend etc.
Total
share-holders’
equity
On 31 March 2017:

Shareholders’ equity at the end of the previous financial year 
22,8501583,366,627165,0203,554,655
Dividend etc. paid   -165,020-165,020
Dividend received on own shares  4,151 4,151
Shareholders’ equity after distribution of dividend etc.22,8501583,370,77803,393,786
Purchase of own shares  -217,974 -217,974
Sale of own shares  166,758 166,758
Total comprehensive income for the period  157,876 157,876
Shareholders’ equity on
the balance sheet date
22,8501583,477,43803,500,446


On 31 December 2017:

Shareholders’ equity at the end of the previous financial year
22,8501583,366,627165,0203,554,655
Reduction of share capital-500 500 0
Dividend etc. paid   -165,020-165,020
Dividend received on own shares  4,151 4,151
Shareholders’ equity after distribution of dividend etc.22,3501583,371,27803,393,786
Purchase of own shares  -662,983 -662,983
Sale of own shares  494,433 494,433
Other equity transactions  3,042 3,042
Total comprehensive income for the year -20387,010201,650588,640
Shareholders’ equity on
the balance sheet date
22,3501383,592,780201,6503,816,918

Statement of capital                

 31 March
2018
DKK 1,000
31 March
2017

DKK 1,000
31 Dec.
2017
DKK 1,000

Credit risk
17,166,61015,133,93016,648,306
Market risk1,035,9771,183,8631,169,580
Operational risk1,890,4561,827,0531,890,456
Total risk exposure20,093,04318,144,84619,708,342
    
Equity3,784,7613,500,4463,816,918
Proposed dividend etc.00-201,650
Deduction for expected dividend-77,254-44,3900
Addition for transition programme concerning IFRS 943,54400
Deduction for prudent valuation-6,317-5,365-5,724
Deduction for the sum of equity investments etc. above 10%-300,825-297,375-308,194
Deduction of the amount of the share buy-back programme-170,000-170,0000
Actual utilisation of the amount of the share buy-back programme047,7170
Deduction for trading limit for own shares-55,000-55,000-55,000
Actual utilisation of the trading limit for own shares14,4378,147220
Common equity tier 1 capital3,233,3462,984,1803,246,570
    
Tier 1 capital3,233,3462,984,1803,246,570
    
Tier 2 capital372,558371,893372,253
Deduction for the sum of equity investments etc. above 10%-72,942-107,466-104,494
Total capital3,532,9623,248,6073,514,329
    
Common equity tier 1 capital ratio (%)16.116.416.5
Tier 1 capital ratio (%)16.116.416.5
Total capital ratio (%)17.617.917.8
    
Total capital requirement1,607,4431,451,5881,576,667
    
Individual solvency requirement (%)9.09.09.0
Capital conservation buffer (%)1.91.31.3
Countercyclical buffer (%)0.00.00.0
Total requirement for the bank’s total capital (%)10.910.310.3
Excess cover in percentage points relative to individual solvency requirement8.68.98.8
Excess cover in percentage points relative to total requirement for total capital6.77.67.5

Notes

NoteQ1
2018

DKK 1,000
Q1
2017

DKK 1,000
Full year
2017

DKK 1,000
1Interest income   
 Receivables from credit institutions and central banks-2,0752,450710
 Loans and other receivables175,608172,297687,492
 Loans - interest on the impaired part of loans-6,864-7,626-29,355
 Bonds4,1208,52028,291
 Total derivative financial instruments1,8661,3832,446
   Of which currency contracts1,2709582,654
   Of which interest-rate contracts596425-208
 Other interest income1,4171334,552
 Total interest income174,072177,157694,136
     
2Interest expenses   
 Credit institutions and central banks2,6785,29714,213
 Deposits and other debt5,3459,14032,436
 Issued bonds887117766
 Subordinated debt1,3701,3675,651
 Other interest expenses382728
 Total interest expenses10,31815,94853,094
     
3Dividends from shares etc.   
 Shares85256710,258
 Total dividends from shares etc.85256710,258
     
4Gross fee and commission income   
 Securities trading24,24321,20275,038
 Asset management and custody accounts19,85816,52793,203
 Payment handling7,9677,02832,277
 Loan fees3,2061,76010,660
 Guarantee commission and mortgage credit commission etc.20,10216,42177,574
 Other fees and commission14,91513,49333,965
 Total gross fee and commission income90,29176,431322,717
     
 Net fee and commission income   
 Securities trading22,19517,97164,857
 Asset management and custody accounts17,46414,34284,652
 Payment handling5,3595,17421,989
 Loan fees2,5711,0707,207
 Guarantee commission and mortgage credit commission etc.20,10216,42177,574
 Other fees and commission12,98811,12723,952
 Total net fee and commission income80,67966,105280,231
 Foreign exchange income4,5165,23020,902
 Total net fee, commission and foreign exchange income85,19571,335301,133


Notes

NoteQ1
2018

DKK 1,000
Q1
2017

DKK 1,000
Full year
2017

DKK 1,000
5Value adjustments   
 Other loans and receivables, fair value adjustment6043873,879
 Bonds-6,23712,36930,502
 Shares etc.75,86420,82568,613
 Foreign exchange4,5165,23020,902
 Total derivative financial instruments8,6809,91819,329
   Of which currency contracts7,425-3,625467
   Of which interest-rate contracts1,03013,27018,011
   Of which share contracts225273851
 Issued bonds-3,52800
 Total value adjustments79,89948,729143,225
 

6
Staff and administration costs   
 Salaries and fees to general management,
board of directors and shareholders’ committee
   
   General management1,8011,7307,356
   Board of directors001,734
   Shareholders’ committee00469
   Total1,8011,7309,559
 Staff costs   
   Salaries33,95531,698142,368
   Pensions3,8263,56114,852
   Social security expenses7834601,812
   Costs depending on number of staff5,3755,31322,431
   Total43,93941,032181,463
 Other administration costs30,56730,350136,002
 Total staff and administration costs76,30773,112327,024
     
7Number of full-time employees   
 Average number of full-time-equivalent staff during the period277271274
     
8Impairment charges for loans and other receivables etc.   
 Net changes in impairment charges for loans and other receivables etc
and provisions for losses on guarantees and unutilised credit facilities
-19,24612,646-6,094
 Actual realised net losses559-4845,769
 Interest on the impaired part of loans-6,864-7,626-29,355
 Total impairment charges for loans and other receivables etc.-25,5514,97210,320


Notes

NoteQ1
2018
DKK 1,000
Q1
2017
DKK 1,000
Full year
2017
DKK 1,000
9Tax   
 Tax calculated on income for the period44,37539,750147,863
 Adjustment of deferred tax00-566
 Adjustment of tax calculated for previous years00-989
 Total tax44,37539,750146,308
     
 Effective tax rate (%):   
 Tax rate currently paid by the bank22.022.022.0
 Permanent deviations-5.5-1.9-2.0
 Adjustment of tax calculated for previous years0.00.0-0.1
 Total effective tax rate16.520.119.9
   
Note31 March
2018
DKK 1,000
31 March
2017

DKK 1,000
31 Dec.
2017
DKK 1,000
10Receivables from credit institutions and central banks   
 Demand156,552140,898100,211
 Up to and including 3 months2,094,3411,873,184957,086
 More than 3 months and up to and including 1 year100,000099,280
 More than 1 year and up to and including 5 years5,00099,2805,000
 More than 5 years50,00050,00050,000
 Total receivables from credit institutions and central banks2,405,8932,163,3621,211,577
     
11Loans and other receivables at amortised cost   
 Demand1,825,3531,803,1071,975,218
 Up to and including 3 months1,079,384920,889651,025
 More than 3 months and up to and including 1 year2,172,3902,098,7642,568,864
 More than 1 year and up to and including 5 years7,135,3116,415,9336,527,126
 More than 5 years7,712,7706,947,2317,628,633
 Total loans and other receivables at amortised cost19,925,20818,185,92419,350,866


Notes

Note31 March
2018
DKK 1,000
31 March 2017
DKK 1,000
31 Dec.
2017
DKK 1,000
12Impairment charges for loans and other receivables and
provisions for losses on guarantees and unutilised credit facilities
   
     
 Individual impairment charges   
 Cumulative individual impairment charges at the end of the previous financial year577,490589,384589,384
 Changed accounting policy for impairment charges-577,490  
 Impairment charges / value adjustments during the period049,552179,150
 Reversal of impairment charges made in previous financial years0-38,212-136,853
 Recognised as a loss, covered by impairment charges0-1,258-54,191
 Cumulative individual impairment charges on the balance sheet date0599,466577,490
     
 Collective impairment charges   
 Cumulative collective impairment charges at the end of the previous financial year 343,282341,457341,457
 Changed accounting policy for impairment charges-343,282  
 Impairment charges / value adjustments during the period01,0451,825
 Cumulative collective impairment charges on the balance sheet date0342,502343,282
     
 Stage 1 impairment charges   
 Cumulative stage 1 impairment charges at the end of the previous financial year 0--
 Changed accounting policy for impairment charges61,228--
 Stage 1 impairment charges / value adjustment during the period2,434--
 Cumulative stage 1 impairment charges on the balance sheet date63,662--
     
 Stage 2 impairment charges   
 Cumulative stage 2 impairment charges at the end of the previous financial year 0--
 Changed accounting policy for impairment charges308,912--
 Stage 2 impairment charges / value adjustment during the period-1,305--
 Cumulative stage 2 impairment charges on the balance sheet date307,607--
     
 Stage 3 impairment charges   
 Cumulative stage 3 impairment charges at the end of the previous financial year 0--
 Changed accounting policy for impairment charges575,516--
 Stage 3 impairment charges / value adjustment during the period38,638--
 Reversal of stage 3 impairment charges during the period-54,657--
 Recognised as a loss, covered by stage 3 impairment charges-1,372--
 Cumulative stage 3 impairment charges on the balance sheet date558,125--
     
 Total cumulative impairment charges for loans and
other receivables on the balance sheet date
929,394941,968920,772

Notes

Note31 March
2018
DKK 1,000
31 March
2017

DKK 1,000
31 Dec.
2017
DKK 1,000
12Provisions for losses on guarantees   
 Cumulative provisions for losses on guarantees at the end of the previous financial year10,2636,2876,287
 Changed accounting policy for provisions for losses on guarantees20,881  
 Provisions / value adjustments during the period6,1012,5347,385
 Reversal of provisions made in previous financial years-8,476-1,013-2,095
 Recognised as a loss, covered by provisions-1,451-2-1,314
 Cumulative provisions for losses on guarantees on the balance sheet date27,3187,80610,263
     
 Provisions for losses on unutilised credit facilities   
 Cumulative provisions for losses on unutilised credit facilities at the end of the previous financial year0--
 Changed accounting policy for provisions for losses on unutilised credit facilities12,996--
 Provisions / value adjustments during the period844--
 Cumulative provisions for losses on unutilised credit facilities on the balance sheet date13,840--
     
 Total cumulative impairment charges for loans and other receivables and provisions for
losses on guarantees and unutilised credit facilities on the balance sheet date
970,552949,774931,035
     
13Suspended calculation of interest   
 Loans and other receivables with suspended calculation of interest on the balance sheet date22,42555,96324,995
     
14Bonds at fair value   
 Listed on the stock exchange3,292,7372,801,0943,952,614
 Total bonds at fair value3,292,7372,801,0943,952,614
     
15Shares etc.   
 Listed on Nasdaq Copenhagen24,37316,46312,233
 Investment fund certificates16,793148,0967,994
 Unlisted shares at fair value1,4021,4371,402
 Sector shares at fair value671,945429,894599,656
 Total shares etc.714,513595,890621,285


Notes  

Note31 March
2018
DKK 1,000
31 March
2017

DKK 1,000
31 Dec.
2017
DKK 1,000
16Debt to credit institutions and central banks   
 Demand229,540251,286269,160
 Up to and including 3 months527,92695,476240,993
 More than 3 months and up to and including 1 year127,347133,17197,329
 More than 1 year and up to and including 5 years629,363630,929604,614
 More than 5 years368,082334,631387,320
 Total debt to credit institutions and central banks1,882,2581,445,4931,599,416
     
17Deposits and other debt   
 Demand12,593,49612,139,39812,267,337
 Deposits and other debt with notice:   
 Up to and including 3 months1,726,4081,886,9282,646,787
 More than 3 months and up to and including 1 year1,899,7381,461,255908,429
 More than 1 year and up to and including 5 years1,433,6661,547,6681,468,246
 More than 5 years1,857,4381,529,2661,819,328
 Total deposits and other debt19,510,74618,564,51519,110,127
     
 Distributed as follows:   
 Demand12,533,64511,965,01012,129,959
 With notice1,806,678301,7251,785,363
 Time deposits1,592,9083,083,3191,725,906
 Long-term deposit agreements2,151,4431,874,4372,008,385
 Special types of deposits1,426,0721,340,0241,460,514
  19,510,74618,564,51519,110,127
     
18Issued bonds at amortised cost   
 More than 3 months and up to and including 1 year298,0460297,802
 More than 1 year and up to and including 5 years748,102297,514375,634
 More than 5 years151,79100
 Total issued bonds at amortised cost1,197,939297,514673,436
     
19Subordinated debt   
 Tier 2 capital:   
   Floating-rate loan, principal of EUR 50 million,372,558371,893372,253
   maturity date 20 May 2025   
 Adjustment to amortised cost-500-618-500
 Total subordinated debt372,058371,275371,753


Notes

Note31 March
2018
DKK 1,000
31 March
2017

DKK 1,000
31 Dec.
2017
DKK 1,000
20Share capital   
 Number of DKK 1 shares   
 Beginning of period22,350,00022,850,00022,850,000
 Cancelled during the period00-500,000
 End of period22,350,00022,850,00022,350,000
   Reserved for the adopted capital reduction538,000500,0000
   Reserved for subsequent cancellation0160,000538,000
     
 Total share capital22,35022,85022,350
     
21Own shares   
 Own shares included in the balance sheet at000
 The market value is193,053212,357173,187
     
 Number of own shares:   
 Beginning of period538,685515,890515,890
 Purchased during the period223,672568,4501,444,027
 Sold during the period-180,873-397,100-921,232
 Cancelled during the period00-500,000
 End of period581,484687,240538,685
   Reserved for the adopted capital reduction538,000500,0000
   Reserved for subsequent cancellation0160,000538,000
     
 Nominal value of holding of own shares, end of period581687539
 Own shares’ proportion of share capital, end of period (%)2.63.02.4
     
22Contingent liabilities etc.   
     
 Contingent liabilities   
 Financial guarantees1,113,2371,038,1661,101,189
 Guarantees against losses on mortgage credit loans669,332527,582633,796
 Registration and refinancing guarantees857,774557,609969,390
 Sector guarantees65,91360,45175,892
 Other contingent liabilities369,623300,316403,607
 Total contingent liabilities3,075,8792,484,1243,183,874
     
 Other contractual obligations   
 Irrevocable credit commitments etc.110,000123,900392,000
 Total other contractual obligations110,000123,900392,000
     
23Assets 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 associated loans has been provided. Each reduction of the first-mortgage
loans is deducted directly from the funding at KfW Bankengruppe.
   
 The balance sheet item is922,505952,477976,617
     
 As security for clearing etc., the bank has pledged securities from its holding
to the central bank of Denmark to a total market price of
173,620 

 

114,471
235,418
     
 Collateral under CSA agreements etc.25,55232,30431,609

Notes

Note 31 March
2018
31 March
2017
31 Dec.
2017
24Loans and guarantees in per cent, by sector and industry   
     
 Public authorities0.10.20.1
     
 Business customers:   
 Agriculture, hunting and forestry   
   Cattle farming etc.1.81.11.7
   Pig farming etc.1.51.71.7
   Other agriculture, hunting and forestry3.64.03.9
 Fishing2.52.82.4
 Mink production0.80.91.0
 Industry and raw materials extraction1.82.51.6
 Energy supply2.62.01.7
 Wind turbines - Denmark3.13.22.9
 Wind turbines - abroad7.69.38.1
 Building and construction3.22.24.3
 Trade3.33.33.3
 Transport, hotels and restaurants1.31.51.4
 Information and communication0.30.20.3
 Finance and insurance12.813.513.6
 Real property   
   First mortgage without prior creditors16.214.013.5
   Other real estate financing2.33.62.7
 Other business customers7.06.57.1
 Total business customers71.772.371.2
     
 Private individuals28.227.528.7
     
 Total100.0100.0100.0
     
25























Miscellaneous comments
 

Main and key figures
  • The return on equity before and after tax, beginning of period
    was calculated per annum after deduction of dividend etc., net.
  • Key figures per DKK 1 share were calculated on the basis of
    the first quarter of 2018: 21,812,000 shares, the first quarter of 2017:
    22,350,000 shares and 2017: 21,812,000 shares.
 
Number of shares / share split
  • The comparative figures as at 31 March 2017 on page 10 and in notes 20 and 21
    have been adjusted to the denomination of nom. DKK 1 per share.


Main figures

Summary of the income statement (DKK million)Q1
2018
Q1
2017
Full year
2017
Net interest income164161641
Dividend from shares etc.1110
Net fee and commission income8066280
Net interest and fee income245228931
Value adjustments+80+49+143
Other operating income115
Staff and administration costs7673327
Amortisation, depreciation and write-downs on intangible and tangible assets614
Other operating expenses113
Impairment charges for loans and receivables etc.+26-5-10
Results from investments in associated companies000
Profit before tax269198735
Tax4540146
Profit after tax224158589
 
Main figures from the balance sheet (DKK million)31 March
2018
31 March
2017
31 Dec.
2017
Loans and other receivables19,92518,18619,351
Deposits and other debt19,51118,56519,110
Subordinated debt372371372
Equity3,7853,5003,817
Balance sheet total27,00424,44125,796


Quarterly overview

 

(DKK million)
Q1
2018
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Net interest income167165158159161165169165166
Net fee and commission income excluding
trading income
585248674870445248
Income from sector shares etc.2119181717941511
Foreign exchange income555564444
Other operating income111214211
Total core income excluding trading income252242230250233252223237230
Trading income22131815181011119
Total core income274255248265251262234248239
Staff and administration costs769875817392727469
Amortisation, depreciation and write-downs on intangible and tangible assets611112241
Other operating expenses110110101
Total expenses etc.8310076837594757871
Core earnings before impairment charges
for loans
191155172182176168159170168
Impairment charges for loans and other
receivables etc.
+2600-5-5-12-12-13-11
Core earnings217155172177171156147157157
Result for the portfolio+520+17+16+27+8+23+11+2
Profit before tax269155189193198164170168159
Tax452938394031333028
Profit after tax224126151154158133137138131



The Danish FSA’s official key figures / ratios etc. for Danish banks

 Q1
2018
Q1
2017
Full year
2017
Capital ratios:    
Total capital ratio%17.616.417.8
Tier 1 capital ratio%16.116.416.5
Individual solvency requirement%9.09.09.0
     
Earnings:    
Return on equity before tax%7.15.619.9
Return on equity after tax%5.94.516.0
Income / cost ratioDKK5.683.483.13
Return on assets%0.80.62.3
     
Market risk:    
Interest rate risk%0.90.81.1
Foreign exchange position%1.80.81.1
Foreign exchange risk%0.00.00.0
     
Liquidity risk:    
Liquidity Coverage Ratio (LCR)%256160193
Excess cover relative to statutory liquidity requirement%130.3130.3113.5
Loans and impairments thereon relative to deposits%105.0103.0106.1
     
Credit risk:    
Loans relative to shareholders’ equity 5.35.25.1
Growth in loans%3.04.010.7
Total large exposures%22.130.322.5
Cumulative impairment ratio%4.04.44.0
Impairment ratio%-0.110.020.04
Proportion of receivables at reduced interest%0.10.30.1
     
Share return:    
Earnings per share*/***DKK1,004.1690.92,604.6
Book value per share*/**DKK17,38615,79417,500
Dividend per share*DKK00900
Market price relative to earnings per share*/*** 33.144.712.3
Market price relative to book value per share*/** 1.911.961.84
*  Calculated on the basis of a denomination of DKK 100 per share. 
**  Calculated on the basis of the number of shares in circulation 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 and the end of the period.



Management statement

The board of directors and the general management have today discussed and approved the quarterly report of Ringkjøbing Landbobank A/S for the period 1 January to 31 March 2018.

The report is drawn up in accordance with the provisions of the Danish Financial Business Act and other Danish disclosure requirements for listed financial companies. We consider the chosen accounting policies to be appropriate and the estimates made responsible, so that the quarterly report provides a true and fair view of the bank’s assets, liabilities and financial position as of 31 March 2018 and of the result of the bank’s activities for the period 1 January to 31 March 2018. We also believe that the management’s review contains a true and fair account of the development in the bank’s activities and financial circumstances as well as a description of the most important risks and uncertainties which can affect the bank.

The quarterly report has not been audited or reviewed, but the external auditors have verified the profit by carrying out procedures corresponding to those required for a review and have thereby checked that the conditions for ongoing recognition of the profit for the period in the common equity tier 1 capital have been met.

Ringkøbing, 10 April 2018

 

 

General management:


 
John Fisker
CEO
 Jørn Nielsen
General Manager
 

 

Board of directors:
 

 
Martin Krogh Pedersen
Chairman
 Jens Møller Nielsen
Deputy Chairman
 

Jon Steingrim Johnsen
  

Jacob Møller
 
 

Lone Rejkjær Söllmann
 
 

Dan Junker Astrup
Employee board member
  
 

Bo Fuglsang Bennedsgaard
Employee board member
 
 

Gitte E. S. H. Vigsø
Employee board member

Attachment