Interim Report -
Q1 2010
Contents
Financial Review
Group Financial Highlights 3
Summary 4
Financial Review 6
Management Statement 10
Financial Statements - Sydbank Group
Income Statement 11
Statement of Comprehensive Income 11
Balance Sheet 12
Group Financial Highlights - Quarterly 13
Capital 14
Cash Flow Statement 16
Segment Statements 17
Notes 18
Supplementary Information 27
Group Financial Highlights
Q1 Q1 Index Full year
2010 2009 10/09 2009
Income statement (DKKm)
Core income excl trading income 829 822 101 3,320
Trading income 399 272 147 1,266
Total core income 1,228 1,094 112 4,586
Costs, core earnings 656 659 100 2,466
Core earnings before impairment 572 435 131 2,120
Impairment of loans and advances etc 323 270 120 1,195
Core earnings 249 165 151 925
Profit on investment portfolios 116 72 161 430
Profit before non-recurring items 365 237 154 1,355
Non-recurring items, net - - - 86
Profit before contribution to
the Private Contingency Association etc 365 237 154 1,441
Contribution to the Private Contingency Association etc 139 72 193 443
Profit before tax 226 165 137 998
Tax 57 41 139 217
Profit for the period 169 124 136 781
Balance sheet highlights (DKKbn)
Loans and advances at amortised cost 73.3 78.2 94 74.5
Loans and advances at fair value 7.4 15.8 47 12.9
Deposits and other debt 62.2 73.5 85 68.8
Bonds issued at amortised cost 8.6 10.1 85 8.6
Subordinated capital 3.1 4.2 74 3.1
Shareholders' equity 9.3 7.2 129 9.1
Total assets 149.0 161.4 92 157.8
Financial ratios per share (DKK per share of DKK 10)
EPS Basic 2.3 2.0 11.7
EPS Diluted 2.3 2.0 11.7
Share price at end of period 147.8 71.5 133.8
Book value 126.5 114.0 124.1
Share price/book value 1.17 0.63 1.08
Average number of shares outstanding (millions) 73.7 63.0 66.9
Other financial ratios and key figures
Solvency ratio 15.3 15.0 15.2
Core capital ratio 13.1 11.3 13.1
Pre-tax profit as % of average shareholders' equity 2.4 2.3 12.3
Post-tax profit as % of average shareholders' equity 1.8 1.7 9.6
Income/cost ratio (DKK) 1.20 1.16 1.24
Interest rate risk 1.0 2.3 1.0
Foreign exchange position 2.8 1.5 1.1
Foreign exchange risk 0.0 0.0 0.0
Loans and advances relative to deposits * 1.1 1.0 1.0
Loans and advances relative to shareholders' equity * 7.9 10.8 8.2
Growth in loans and advances for the period * (1.7) (5.2) (9.6)
Excess cover relative to statutory liquidity requirements 121.1 66.6 94.4
Total large exposures 13.6 21.4 17.2
Accumulated impairment ratio 2.1 1.3 1.8
Impairment ratio for the period 0.39 0.27 1.40
Number of full-time staff at end of period 2,344 2,429 97 2,369
Financial ratios are prepared according to “Recommendations & Financial Ratios
2005” published by the Danish Society of Financial Analysts.
* Calculated on the basis of loans and advances at amortised cost.
Summary
Considering the ongoing difficult economic situation, profit before tax of DKK
226m for the first three months of 2010 is considered satisfactory. The result
equals a return of 9.8% p.a. on average shareholders' equity.
The Interim Report is characterised by:
• 1% increase in core income excl trading income
• 47% rise in trading income
• Total core income of DKK 1,228m - an all-time high so far
• Unchanged level of costs (core earnings)
• Impairment of loans and advances of DKK 323m
• Profit on investment portfolios of DKK 116m
• Contribution of DKK 139m to the Private Contingency Association etc
• 6% reduction in bank loans and advances to DKK 73.3bn
• 15% decline in deposits to DKK 62.2bn
• Core capital ratio of 13.1%
• Solvency ratio of 15.3%.
Income statement - Q1 (DKKm) 2010 2009
Core income excl trading income 829 822
Trading income 399 272
Total core income 1,228 1,094
Costs, core earnings 656 659
Core earnings before impairment 572 435
Impairment of loans and advances etc 323 270
Core earnings 249 165
Profit on investment portfolios 116 72
Profit before contribution to the Private Contingency Association etc 365 237
Contribution to the Private Contingency Association etc 139 72
Profit before tax 226 165
Tax 57 41
Profit for the period 169 124
Core earnings before impairment represent DKK 572m against DKK 435m for the
first three months of 2009. The increase of DKK 137m consists of a rise in core
income excl trading income of DKK 7m, an increase in trading income of DKK 127m
and a decline of DKK 3m in costs (core earnings).
Core earnings before impairment are in the upper end of the range as announced
in the 2009 Annual Report.
Impairment of loans and advances etc represents DKK 323m (Q1 2009: DKK 270m).
Profit on investment portfolios amounts to DKK 116m and the expense to the
Private Contingency Association etc totals DKK 139m. Less a calculated tax
charge of DKK 57m, profit for the period stands at DKK 169m.
Profit for the period equals a return of 7.3% p.a. on average shareholders'
equity compared with 6.9% p.a. in 2009. Earnings per share rose from DKK 2.0 to
DKK 2.3.
The Group's solvency ratio stands at 15.3%, including a core capital ratio of
13.1 percentage points compared with 15.2% and 13.1 percentage points,
respectively, at end-2009. Since the beginning of the year the core capital
ratio excluding hybrid core capital has risen from 11.5% to 11.6%.
The Group's liquidity measured under the 15% and 10% statutory requirements
constitutes 37.2% and 22.1%, respectively, at 31 March 2010.
The Group continues to project core earnings before impairment of loans and
advances in the region of DKK 1.9-2.1bn in 2010 - unchanged compared with the
range announced in the 2009 Annual Report.
Financial Review
Core income excl trading income
Total core income excl trading income grew by 1% to DKK 829m.
Core income excl trading income - Q1 (DKKm) 2010 2009
Interest margins etc 692 699
Mortgage credit 49 48
Payment services 40 32
Remortgaging and loan fees 23 19
Other commission 20 17
Other operating income 5 7
Total 829 822
Bank loans and deposits have decreased by 6% and 15%, respectively, compared
with one year ago; however, income from interest margins etc continues to show
significant robustness despite a slight decline of DKK 7m to DKK 692m.
The remaining income components of core income excl trading income have gone up
by a total of 11% compared with Q1 2009.
Trading income
Total trading income rose by 47% - from DKK 272m in 2009 to DKK 399m in 2010.
In Q1 2010 trading income was favourably affected by a rise in the trading
activity of retail investors. The volume of securities trading grew by 20%
compared with Q1 2009.
Within the fixed income department the strong developments of the institutional
segments continue and the low short-term rates have made a positive
contribution. Finally, income from asset management has been favourably
impacted by growing volume generated by the market.
Trading income - Q1 (DKKm) 2010 2009
Bonds 107 61
Shares 81 47
Currency 56 77
Money market 50 26
Asset management 105 61
Total 399 272
Costs and depreciation
The Group's total costs and depreciation recorded DKK 745m (2009: DKK 722m).
DKK 3m can be ascribed to investment portfolio earnings and DKK 86m (2009: DKK
60m) to the Private Contingency Association etc.
Costs and depreciation - Q1 (DKKm)
2010 2009
Staff costs 377 380
Other administrative expenses 275 251
Depreciation and impairment of property, plant and equipment 23 31
Other operating expenses 70 59
Total costs and depreciation 745 721
Distributed as follows:
Costs, core earnings 656 659
Costs, investment portfolio earnings 3 3
Costs, guarantee commission to the Private Contingency Association etc 86 59
Costs (core earnings) of DKK 656m decreased by DKK 3m compared with one year
ago. At end-Q1 2010 the Group's staff numbered 2,344 (full-time equivalent)
compared with 2,429 at 31 March 2009.
Core earnings before impairment of loans and advances
Core earnings before impairment of loans and advances represent DKK 572m - an
increase of DKK 137m or 31% compared with one year ago.
Impairment of loans and advances etc
Impairment of loans and advances constitutes DKK 323m (2009: DKK 270m). At 31
March 2010 the impairment ratio (excl the provision for the Private Contingency
Association) relative to loans and advances and guarantees represents 0.34%. At
end-March accumulated impairment and provisions (excl the provision of DKK 272m
for the Private Contingency Association) amount to DKK 1,767m, a rise of DKK
209m compared with the beginning of the year.
Core earnings
Core earnings represent DKK 249m compared with DKK 165m in 2009.
Investment portfolio earnings
Less funding charges and less related costs of DKK 3m, investment portfolio
earnings amount to DKK 116m (2009: DKK 72m).
The Group's interest rate risk comprises DKK 104m at 31 March 2010. The Group's
exchange rate risk continues to be very low and its equity position is modest.
Contribution to the Private Contingency Association etc
In Q1 2010 guarantee commission and the provision for the guarantee to the
Private Contingency Association amount to DKK 70m and DKK 52m, respectively,
totalling DKK 122m. In addition DKK 16m has been charged to income to cover the
expected additional minimum payment to the credit institution department
(“Pengeinstitutafdelingen”) under the Guarantee Fund for Depositors and
Investors for the purpose of restoring the liquid resources of the Fund's
capital following the bankruptcy of Capinordic Bank.
Subsidiaries
The subsidiary bank, Sydbank (Schweiz) AG, which conducts private banking
activities in St. Gallen, Switzerland, recorded a profit after tax of DKK 3m
(2009: loss of DKK 1m). Ejendomsselskabet recorded a profit after tax of DKK 1m
(2009: loss of DKK 1m).
Profit for the period
Profit before tax amounts to DKK 226m. Less a calculated tax charge of DKK 57m,
profit for the period stands at DKK 169m compared with DKK 124m in 2009.
Return
Return on shareholders' equity represents 7.3% p.a. against 6.9% p.a. in 2009.
Earnings per share rose from DKK 2.0 to DKK 2.3.
Developments in Q1 2010 compared with Q4 2009
Total core income grew by DKK 83m in Q1 compared with Q4. The change is made up
by a reduction of DKK 20m in core income excl trading income and an increase of
DKK 103m in trading income. Costs (core earnings) recorded DKK 64m more than in
Q4, owing to a seasonal adjustment.
Profit for the period (DKKm) Q1 Q4 Q3 Q2 Q1
2010 2009
Core income excl trading income 829 849 830 819 822
Trading income 399 296 329 369 272
Core income 1,228 1,145 1,159 1,188 1,094
Costs, core earnings 656 592 586 629 659
Core earnings before impairment 572 553 573 559 435
Impairment of loans and advances etc 323 346 284 295 270
Core earnings 249 207 289 264 165
Profit on investment portfolios 116 69 150 139 72
Profit before non-recurring items 365 276 439 403 237
Non-recurring items - 86 - - -
Profit before contribution to the PCA etc 365 362 439 403 237
Contribution to the Private Contingency Association etc 139 116 113 142 72
Profit before tax 226 246 326 261 165
Tax 57 29 81 66 41
Profit for the period 169 217 245 195 124
During the same period impairment of loans and advances decreased by DKK 23m
and investment portfolio earnings improved by DKK 47m. No non-recurring items
were recognised in Q1; non-recurring items of DKK 86m were recognised as income
in Q4.
The contribution to the Private Contingency Association etc grew by DKK 23m in
Q1 compared with Q4. After tax, profit amounts to DKK 169m for Q1 compared with
DKK 217m for Q4.
Balance sheet
The Group's total assets made up DKK 149.0bn at 31 March 2010 against DKK
157.8bn at year-end 2009.
Assets (DKKbn) 31 Mar 2010 31 Dec 2009
Amounts owed by credit institutions etc 10.9 14.5
Loans and advances at fair value (reverse repo transactions) 7.4 12.9
Loans and advances at amortised cost (bank loans and advances) 73.3 74.5
Securities and holdings etc 38.0 38.5
Assets related to pooled plans 7.2 6.7
Other assets etc 12.2 10.7
Total 149.0 157.8
The Group's bank loans and advances total DKK 73.3bn - a decline of 1% compared
with year-end 2009 and 6% compared with 31 March 2009.
Shareholders' equity and liabilities (DKKbn) 31 Mar 2010 31 Dec 2009
Amounts owed to credit institutions etc 43.2 45.4
Deposits and other debt 62.2 68.8
Deposits in pooled plans 7.2 6.7
Bonds issued 8.6 8.6
Other liabilities etc 14.9 15.6
Provisions 0.5 0.5
Subordinated capital 3.1 3.1
Shareholders' equity 9.3 9.1
Total 149.0 157.8
The Group's deposits make up DKK 62.2bn against DKK 68.8bn at year-end 2009 and
DKK 73.5bn at end-March 2009. The decline in deposits is largely ascribable to
time deposits.
Capital
At end-Q1 2010, shareholders' equity constitutes DKK 9,325m - an increase of
DKK 207m since year-end 2009. The change comprises additions from net sale of
own shares of DKK 38m and profit for the period of DKK 169m.
Risk-weighted items rose from DKK 77.9bn at year-end 2009 to DKK 79.5bn at
end-Q1 2010 ascribable to a continued decline in the average rating of the
lending portfolio.
The Group's solvency ratio stands at 15.3%, including a core capital ratio of
13.1 percentage points compared with 15.2% and 13.1 percentage points,
respectively, at end-2009. During the same period the core capital ratio
excluding hybrid core capital has risen from 11.5% to 11.6%.
The solvency need is determined on the basis of the regulatory requirement of
8.0%. For precautionary reasons, an estimated buffer of one percentage point
has been added to the regulatory requirement and the Group's solvency need at
31 March 2010 has been set at 9.0%.
Outlook for 2010
The Group continues to project core earnings before impairment of loans and
advances in the region of DKK 1.9-2.1bn in 2010 - unchanged compared with range
announced in the 2009 Annual Report.
Management Statement
Today we have reviewed and approved the Interim Report - Q1 2010 of Sydbank A/S.
The consolidated interim financial statements for Q1 2010 have been prepared in
accordance with International Financial Reporting Standards as approved by the
EU. Furthermore, the interim report has been prepared in compliance with
additional Danish disclosure requirements for interim reports of listed
financial companies. The interim report has not been audited or reviewed.
In our opinion the accounting policies applied are appropriate and the interim
report gives a true and fair view of the Group's assets, shareholders' equity
and liabilities and financial position at 31 March 2010 and of the results of
the Group's operations and consolidated cash flows for the financial reporting
period 1 January-31 March 2010 as well as a description of the most significant
risks and elements of uncertainty which may affect the Group.
Aabenraa, 27 April 2010
Group Executive Management
Carsten Andersen Karen Frøsig
(Group Chief Executive)
Preben L. Hansen Allan Nørholm
Board of Directors
Kresten Philipsen Anders Thoustrup Svend Erik Busk
(Chairman) (Vice-Chairman)
Otto Christensen Peder Damgaard Harry Max Friedrichsen
Peter Gæmelke Hanni Toosbuy Kasprzak Sven Rosenmeyer Paulsen
Steen Tophøj Jan Uldahl-Jensen Margrethe Weber
Income Statement - Sydbank Group
Q1 Q1 Full year
DKKm Note 2010 2009 2009
Interest income 2 1,098 1,789 5,695
Interest expense 3 261 967 2,290
Net interest income 837 822 3,405
Dividends on shares 9 8 31
Fee and commission income 4 331 254 1,114
Fee and commission expense 40 35 151
Net interest and fee income 1,137 1,049 4,399
Market value adjustments 5 204 94 667
Other operating income 5 7 23
Staff costs and administrative expenses 6 652 631 2,341
Depreciation and impairment of property, plant and equipment 23 31 135
Other operating expenses 70 59 270
Impairment of loans and advances etc 8 376 282 1,368
Profit on holdings in associates and subsidiaries 1 18 23
Profit before tax 226 165 998
Tax 9 57 41 217
Profit for the period 169 124 781
EPS Basic (DKK) * 2.3 2.0 11.7
EPS Diluted (DKK) * 2.3 2.0 11.7
Dividend per share (DKK) - - -
* Based on average number of shares outstanding, see page 14.
Statement of Comprehensive Income - Sydbank Group
Profit for the period 169 124 781
Other comprehensive income
Translation of foreign entities 8 (3) 1
Hedge of net investment in foreign entities (8) 3 (1)
Property revaluation - - 23
Other comprehensive income after tax 0 0 23
Comprehensive income after tax 169 124 804
Balance Sheet - Sydbank Group
31 Mar Full year 31 Mar
DKKm Note 2010 2009 2009
Assets
Cash and balances on demand at central banks 813 862 1,309
Amounts owed by credit institutions and central banks 10 10,133 13,637 12,056
Loans and advances at fair value 7,388 12,930 15,845
Loans and advances at amortised cost 73,277 74,544 78,203
Bonds at fair value 35,745 36,642 33,842
Shares etc 1,961 1,552 1,330
Holdings in associates etc 310 310 249
Assets related to pooled plans 7,154 6,735 5,543
Intangible assets 13 14 14
Total land and buildings 1,045 1,046 1,021
investment property 2 2 9
owner-occupied property 1,043 1,044 1,012
Other property, plant and equipment 128 139 144
Current tax assets 62 32 247
Deferred tax assets 11 11 10
Assets held for sale 0 - 5
Other assets 11 10,911 9,316 11,543
Prepayments 61 51 58
Total assets 149,012 157,821 161,419
Shareholders' equity and liabilities
Amounts owed to credit institutions and central banks 12 43,149 45,406 45,336
Deposits and other debt 13 62,178 68,780 73,513
Deposits in pooled plans 7,154 6,735 5,543
Bonds issued at amortised cost 8,627 8,622 10,094
Current tax liabilities 8 8 10
Other liabilities 14 14,905 15,524 15,321
Deferred income 9 27 12
Total liabilities 136,030 145,102 149,829
Provisions 15 531 477 133
Subordinated capital 16 3,126 3,124 4,218
Shareholders' equity:
Share capital 742 742 675
Revaluation reserves 112 112 91
Other reserves:
Reserves according to articles of association 418 418 411
Other reserves 33 33 20
Retained earnings 8,020 7,813 6,042
Total shareholders' equity 9,325 9,118 7,239
Total shareholders' equity and liabilities 149,012 157,821 161,419
Group Financial Highlights - Quarterly
Q1 Q4 Q3 Q2 Q1 Full year
2010 2009 2009 2009 2009 2009
Income statement (DKKm)
Core income excl trading income 829 849 830 819 822 3.320
Trading income 399 296 329 369 272 1,266
Total core income 1,228 1,145 1,159 1,188 1,094 4,586
Costs, core earnings 656 592 586 629 659 2,466
Core earnings before impairment 572 553 573 559 435 2,120
Impairment of loans and advances etc 323 346 284 295 270 1,195
Core earnings 249 207 289 264 165 925
Profit on investment portfolios 116 69 150 139 72 430
Profit before non-recurring items 365 276 439 403 237 1,355
Non-recurring item - 86 - - - 86
Profit before contribution to the Private Contingency Association
etc 365 362 439 403 237 1,441
Contribution to the Private Contingency Association etc 139 116 113 142 72 443
Profit before tax 226 246 326 261 165 998
Tax 57 29 81 66 41 217
Profit for the period 169 217 245 195 124 781
Balance sheet highlights (DKKbn)
Loans and advances at amortised cost 73.3 74.5 73.9 75.6 78.2 74.5
Loans and advances at fair value 7.4 12.9 9.1 12.9 15.8 12.9
Deposits and other debt 62.2 68.8 65.3 71.6 73.5 68.8
Bonds issued at amortised cost 8.6 8.6 10.1 10.1 10.1 8.6
Subordinated capital 3.1 3.1 3.2 3.5 4.2 3.1
Shareholders' equity 9.3 9.1 8.9 7.5 7.2 9.1
Total assets 149.0 157.8 153.4 160.1 161.4 157.8
Financial ratios per share (DKK per share of DKK 10)
EPS Basic 2.3 3.0 3.7 3.0 2.0 11.7
EPS Diluted 2.3 3.0 3.7 3.0 2.0 11.7
Share price at end of period 147.8 133.8 133.3 122.5 71.5 133.8
Book value 126.5 124.1 120.8 116.2 114.0 124.1
Share price/book value 1.17 1.08 1.10 1.05 0.63 1.08
Average number of shares outstanding (millions) 73.7 73.3 67.0 64.3 63.0 66.9
Other financial ratios and key figures
Solvency ratio 15.3 15.2 14.8 13.8 15.0 15.2
Core capital ratio 13.1 13.1 12.9 11.4 11.3 13.1
Pre-tax profit as % of average shareholders' equity 2.4 2.7 4.0 3.5 2.3 12.3
Post-tax profit as % of average shareholders' equity 1.8 2.4 3.0 2.7 1.7 9.6
Income/cost ratio (DKK) 1.20 1.23 1.33 1.24 1.16 1.24
Interest rate risk 1.0 1.0 0.4 2.2 2.3 1.0
Foreign exchange position 2.8 1.1 1.4 3.4 1.5 1.1
Foreign exchange risk 0.0 0.0 0.0 0.1 0.0 0.0
Loans and advances relative to deposits * 1.1 1.0 1.0 1.0 1.0 1.0
Loans and advances relative to equity * 7.9 8.2 8.4 10.1 10.8 8.2
Growth in loans and advances for the period * (1.7) 0.8 (2.2) (3.3) (5.2) (9.6)
Excess cover relative to statutory liquidity requirements
121.1 94.4 93.8 106.8 66.6 94.4
Total large exposures 13.6 17.2 20.1 34.6 21.4 17.2
Accumulated impairment ratio 2.1 1.8 1.5 1.3 1.3 1.8
Impairment ratio for the period 0.39 0.39 0.35 0.37 0.27 1.40
Number of full-time staff at end of period 2,344 2,369 2,385 2,414 2,429 2,369
Financial ratios are prepared according to “Recommendations & Financial Ratios
2005” published by the Danish Society of
Financial Analysts. * Calculated on the basis of loans and advances at
amortised cost.
Capital - Sydbank Group
Reserve for
Reserves net
according to revaluation
Share Revaluation articles of acc. to equity Retained
DKKm capital reserves association method earnings Total
Shareholders' equity at 1 Jan 2010 742 112 418 33 7,813 9,118
Changes in equity in 2010
Purchase of own shares - - - - (466) (466)
Sale of own shares - - - - 504 504
Comprehensive income for the period - - - - 169 169
Total changes in equity - - - - 207 207
Shareholders' equity at 31 March 2010 742 112 418 33 8,020 9,325
Shareholders' equity at 1 Jan 2009 675 91 411 20 5,891 7,088
Changes in equity in 2009
Purchase of own shares - - - - (273) (273)
Sale of own shares - - - - 310 310
Tax on equity items - - - - (10) (10)
Comprehensive income for the period - - - - 124 124
Total changes in equity - - - - 151 151
Shareholders' equity at 31 March 2009 675 91 411 20 6,042 7,239
Q1 Full year Q1
2010 2009 2009
The Sydbank share
Share capital (DKK) 742,499,990 742,499,990 675,000,000
Shares issued (number) 74,249,999 74,249,999 67,500,000
Shares outstanding at end of period (number) 73,737,003 73,471,636 63,455,402
Average number of shares outstanding 73,661,441 66,926,690 63,015,301
The Bank has only one class of shares as all shares carry the same rights.
Capital - Sydbank Group
31 Mar 31 Dec 31 Mar
DKKm 2010 2009 2009
Solvency
Solvency ratio 15.3 15.2 15.0
Core capital ratio 13.1 13.1 11.3
Capital base after deductions
Shareholders' equity 9,325 9,118 7,239
Revaluation reserves (112) (112) (91)
Proposed dividend - -
-
Intangible assets and capitalised tax assets (25) (25) (25)
Core capital (excl hybrid core capital) 9,188 8,981 7,123
Hybrid core capital 1,382 1,386 1,388
50% of holdings > 10% (119) (105) (99)
50% of total holdings etc > 10% (5) - (33)
50% of difference between expected losses and
accounting value adjustments and accounting provision
- (33) (42)
50% of the value of transferred payments etc with delivery risk
- (5 ) -
Core capital (incl hybrid core capital) after deductions 10,446 10,224 8,337
Subordinated loan capital 1,744 1,744 2,839
Revaluation reserves 112 112 91
Difference between expected losses and impairment charges 114
- -
Capital base before deductions 12,416 12,080 11,267
50% of holdings > 10% (119) (105) (99)
50% of total holdings etc > 10% (5)
- (33)
50% of difference between expected losses and
accounting value adjustments and accounting provision
- (33) (42)
50% of the value of transferred payments etc with delivery risk
- (5) -
Holdings in associates (131) (128) (65)
Capital base after deductions 12,161 11,809 11,028
Credit risk 63,609 62,608 59,839
Market risk 8,514 8,764 7,212
Operational risk 7,378 6,537 6,537
Risk-weighted items 79,501 77,909 73,588
Regulatory solvency requirement 6,360 6,233 5,887
Adequate capital base 7,155 7,012 5,887
Cash Flow Statement - Sydbank Group
Q1 Full year Q1
DKKm 2010 2009 2009
Operating activities
Pre-tax profit for the period 226 998 165
Taxes paid (81) 86 (109)
Adjustment of non-cash operating items 451 1,867 326
Cash flows from working capital (3,481) (193) 93
Cash flows from operating activities (2,885) 2,758 475
Investing activities
Purchase and sale of holdings in associates 0 (67) 0
Purchase and sale of property, plant and equipment (11) (128) (27)
Cash flows from investing activities (11) (195) (27)
Financing activities
Purchase and sale of own holdings 38 371 28
Share issue 0 855 -
Raising of subordinated capital 2 (1,095) (1)
Issue of bonds 5 (1,473) (2)
Cash flows from financing activities 45 (1,342) 25
Cash flows for the period (2,851) 1,221 473
Cash equivalent positions at 1 Jan 7,421 6,200 6,200
Cash flows for the period (2,851) 1,221 473
Cash equivalent positions at end of period 4,570 7,421 6,673
Segment Statements - Sydbank Group
DKKm Banking Sydbank Markets Treasury Other Total
Business segments Q1 2010
Core income excl trading income 835 (6) - - 829
Trading income 197 202 - - 399
Core income 1,032 196 - - 1,228
Costs and depreciation 555 89 3 12 659
Impairment of loans and advances etc 323 0 - - 323
Core earnings 154 107 (3) (12) 246
Investment portfolio income - - 113 6 119
Profit before non-recurring items 154 107 110 (6) 365
Non-recurring items, net - - - - -
Profit before contribution to the Private Contingency Association
etc 154 107 110 (6) 365
Contribution to the Private Contingency Association etc - - - 139 139
Profit before tax 154 107 110 (145) 226
Business segments Q1 2009
Core income excl trading income 849 (27) - - 822
Trading income 143 129 - - 272
Core income 992 102 - - 1,094
Costs and depreciation 560 85 3 14 662
Impairment of loans and advances etc 270 (1) - - 269
Core earnings 162 18 (3) (14) 163
Investment portfolio income - - 76 (2) 74
Profit before non-recurring items 162 18 73 (16) 237
Non-recurring items, net - - - - -
Profit before contribution to the Private Contingency Association
etc 162 18 73 (16) 237
Contribution to the Private Contingency Association etc - - - 72 72
Profit before tax 162 18 73 (88) 165
Notes - Sydbank Group
Note 1
Accounting policies
The interim report has been prepared in accordance with IAS 34 “Interim
Financial Reporting” as adopted by the EU and in compliance with additional
Danish disclosure requirements for interim reports. As a result of the use of
IAS 34, the presentation is less complete compared with the presentation of an
annual report and the measurement principles are in compliance with IFRS.
The accounting policies are consistent with those adopted in the 2009 Annual
Report, to which reference is made.
The 2009 Annual Report provides a comprehensive description of the accounting
policies applied.
The measurement of certain assets and liabilities requires managerial estimates
as to how future events will affect the value of such assets and liabilities.
The significant estimates made by the management in the use of the Group's
accounting policies and the inherent considerable uncertainty of such estimates
used in the preparation of the condensed interim report are identical to those
used in the preparation of the annual report as at 31 December 2009.
The Group's significant risks and the external elements which may affect the
Group are described in detail in the 2009 Annual Report.
Notes - Sydbank Group
Q1 Q1 Full year
DKKm 2010 2009 2009
Note 2
Interest income
Reverse transactions with credit institutions and central banks 8 13 55
Amounts owed by credit institutions and central banks 20 73 171
Reverse loans and advances 26 132 304
Loans and advances and other amounts owed 803 1,126 3,786
Bonds 214 330 1,216
Derivatives 26 111 148
Other interest income 1 4 15
Total 1,098 1,789 5,695
Note 3
Interest expense
Repo transactions with credit institutions and central banks 35 10 24
Credit institutions and central banks 48 268 637
Repo deposits 1 4 7
Deposits and other debt 142 559 1,327
Bonds issued 19 84 184
Subordinated capital 16 42 110
Other interest expense 0 0 1
Total 261 967 2,290
Note 4
Fee and commission income
Securities trading and custody accounts 183 132 605
Payment services 47 40 161
Loan fees 24 18 84
Guarantee commission 29 21 93
Other fees and commission 48 43 171
Total 331 254 1,114
Notes - Sydbank Group
Q1 Q1 Full year
DKKm 2010 2009 2009
Note 5
Market value adjustments
Other loans and advances and amounts owed at fair value 0 11 (6)
Bonds 215 161 294
Shares etc 100 (37) 226
Investment property - - 0
Currency 68 76 247
Total derivatives (179) (117) (94)
Assets related to pooled plans 260 (79) 753
Deposits in pooled plans (260) 79 (753)
Other assets/liabilities 0 0 0
Total 204 94 667
Note 6
Staff costs and administrative expenses
Salaries and emoluments to:
Group Executive Management:
Salaries 3 3 10
Pensions 0 0 2
Board of Directors 1 1 3
Shareholders' Committee 1 1 2
Total 5 5 17
Staff costs:
Wages and salaries 308 317 1,201
Pensions 34 36 138
Social security contributions 2 2 8
Payroll tax etc 28 20 90
Total 372 375 1,437
Other administrative expenses:
IT 125 116 500
Rent etc 31 31 161
Marketing and entertainment expenses 18 20 76
Other expenses 101 84 150
Total 275 251 887
Total 652 631 2,341
Note 7
Staff
Average number of staff (full-time equivalent) 2,396 2,501 2,459
Notes - Sydbank Group
Q1 Q1 Full year
DKKm 2010 2009 2009
Note 8
Impairment of loans and advances recognised in the income statement
Impairment and provisions 330 264 972
Write-offs 53 25 465
Recovered from debt previously written off 7 7 69
Impairment of loans and advances etc 376 282 1,368
Impairment and provisions at end of period
Individual impairment and provisions 1,903 1,143 1,637
Collective impairment and provisions 136 173 141
Impairment and provisions at end of period 2,039 1,316 1,778
Individual impairment of loans and advances and provisions for guarantees
Impairment and provisions at 1 Jan 1,637 954 954
Exchange rate adjustment 1 (1) 0
Impairment and provisions during the period 339 256 1,052
Other movements 94 - -
Write-offs covered by impairment and provisions 168 66 369
Impairment and provisions at end of period 1,903 1,143 1,637
Individual impairment of loans and advances 1,608 1,063 1,397
Individual provisions for guarantees 295 80 240
Impairment and provisions at end of period 1,903 1,143 1,637
Collective impairment of loans and advances and provisions for guarantees
Impairment and provisions at 1 Jan 141 152 152
Impairment and provisions during the period (5) 21 (11)
Impairment and provisions at end of period 136 173 141
Sum of loans and advances and amounts owed
subject to collective impairment and provisions 20,993 16,104 21,855
Collective impairment and provisions 136 173 141
Loans and advances and amounts owed after collective impairment and
provisions 20,857 15,931 21,714
Individual impairment of loans and advances subject to objective evidence of
impairment
Balance before impairment of individually assessed loans and
advances 3,555 2,254 3,126
Impairment of individually assessed loans and advances 1,608 1,063 1,397
Balance after impairment of individually assessed loans and
advances 1,947 1,191 1,729
Note 9
Effective tax rate
Current tax rate of Sydbank 25.0 25.0 25.0
Permanent differences - - (3.1)
Adjustment of tax of previous years - - (0.1)
Effective tax rate 25.0 25.0 21.8
Notes - Sydbank Group
31 Mar 31 Dec 31 Mar
DKKm 2010 2009 2009
Note 10
Amounts owed by credit institutions and central banks
Amounts owed at notice by central banks 0 3,554 1,136
Amounts owed by credit institutions 6,899 5,091 8,271
Reverse transactions 3,234 4,992 2,649
Total 10,133 13,637 12,056
Note 11
Other assets
Positive market value of derivatives etc 10,108 8,330 10,551
Sundry debtors 351 336 272
Interest and commission receivable 450 649 702
Other assets 2 1 18
Total 10,911 9,316 11,543
Note 12
Amounts owed to credit institutions and central banks
Amounts owed to central banks 2,626 12,522 27,622
Amounts owed to credit institutions 25,951 18,928 16,745
Repo transactions 14,572 13,956 969
Total 43,149 45,406 45,336
Note 13
Deposits and other debt
On demand 39,722 40,645 37,070
At notice 678 697 739
Time deposits 15,727 21,526 29,600
Special categories of deposits 5,531 5,912 5,763
Repo transactions 520 - 341
Total 62,178 68,780 73,513
Notes - Sydbank Group
31 Mar 31 Dec 31 Mar
DKKm 2010 2009 2009
Note 14
Other liabilities
Negative market value of derivatives etc 9,373 7,488 9,078
Sundry creditors 5,395 7,886 5,639
Interest and commission etc 134 146 538
Other liabilities 3 4 66
Total 14,905 15,524 15,321
Note 15
Provisions
Provisions for pensions and similar obligations 3 3 4
Provisions for deferred tax 209 208 25
Provisions for guarantees * 295 240 80
Other provisions 24 26 24
Total 531 477 133
* Of which the Private Contingency Association 272 220 60
Note 16
Subordinated capital (Tier 2)
Interest rate Nominal (m) Maturity
Floating Bond loan EUR 100 29.06.12 - - 745
Floating Bond loan EUR 40 17.09.12 - - 298
Floating Bond loan DKK 50 29.10.12 - - 50
Floating Bond loan EUR 100 21.10.13 744 744 745
Floating Bond loan DKK 200 14.11.14 200 200 200
Floating Bond loan EUR 100 04.04.15 744 743 743
Floating Bond loan EUR 8 31.10.15 56 56 56
Total supplementary capital 1,744 1,743 2,837
Floating Bond loan EUR 100 Perpetual 739 738 738
Floating Bond loan EUR 75 Perpetual 558 558 558
Floating Bond loan DKK 85 Perpetual 85 85 85
Total hybrid core capital 1,382 1,381 1,381
Total 3,126 3,124 4,218
Notes - Sydbank Group
31 Mar 31 Dec 31 Mar
DKKm 2010 2009 2009
Note 17
Contingent liabilities and other obligating agreements
Contingent liabilities
Financial guarantees 2,900 2,702 2,611
Mortgage finance guarantees 2,646 2,343 1,015
Registration and remortgaging guarantees 5,236 5,057 3,248
Loss guarantee/guarantee 479 531 691
Other contingent liabilities 1,488 1,420 1,426
Total 12,749 12,053 8,991
Other obligating agreements
Irrevocable credit commitments 7 14 -
Other liabilities 58 61 56
Total 65 75 56
A group of minority shareholders (“Foreningen af Minoritetsaktionærer i
bankTrelleborg”) has filed a class action regarding the legality of the
compulsory redemption against Fonden for bankTrelleborg, Sydbank and the Danish
Financial Supervisory Authority. In continuation of the compulsory redemption
of the shares in bankTrelleborg, the shares were priced by appraisers in
accordance with section 144 (4) of the Danish Financial Business Act. A few
shareholders have brought the findings of the appraisers before the courts as
regards Fonden for bankTrelleborg and Sydbank.
Moreover, in 2009 the group of minority shareholders filed an action against
Sydbank regarding an inadequate prospectus in connection with the conversion of
sparTrelleborg to bankTrelleborg.
In addition, the Group is party to a number of legal actions. These actions are
under continuous review and the necessary provisions made are based on an
assessment of the risk of loss. Pending legal actions are not expected to have
any significant impact on the financial position of the Group.
Sydbank and the majority of Danish banks are participating in the government
guarantee scheme which was adopted by the Danish parliament on 10 October 2008.
The scheme extends from 5 October 2008 to 30 September 2010 and involves an
unconditional government guarantee for the obligations of Danish banks, except
for subordinated capital and covered bonds.
Note 18
Repo and reverse transactions
In connection with repo transactions, which involve selling securities to be
repurchased at a later date, the securities remain on the balance sheet, and
consideration received is recognised as a deposit. Repo transaction securities
are treated as assets provided as collateral for liabilities. At 31 March 2010,
the fair value of repo transaction securities stood at DKK 14,947m.
In connection with reverse transactions, which involve buying securities to be
resold at a later date, the Group is entitled to sell the securities or deposit
them as collateral for other loans. The securities are not recognised on the
balance sheet and consideration paid is carried as a loan. At 31 March 2010,
the fair value of reverse transaction securities stood at DKK 10,527m.
Note 19
Collateral
As of 31 March 2010 the Group had deposited as collateral securities at a
market value of DKK 2,931m with Danish and foreign exchanges and clearing
centres etc in connection with margin calls and securities settlements etc.
Notes - Sydbank Group
Note 20
Related parties
Sydbank is the bank of a number of related parties. Transactions with related
parties are settled on an arm's length basis.
No unusual transactions took place with related parties in Q1 2010. Reference
is made to the 2009 Annual Report for a detailed description of transactions
with related parties.
Note 21
Reporting events occurring after the balance sheet date
After the expiry of the quarter, no matters of significant impact on the
financial position of the Sydbank Group have occurred.
Note 22
Large shareholders
Two shareholders have each reported a holding of more than 5% of Sydbank's
share capital:
ATP, Copenhagen
Nykredit A/S, Copenhagen
Notes - Sydbank Group
Q1 Q1 Full year
DKKm 2010 2009 2009
Note 23
Core income
Core income excl trading income
Interest margins etc 692 699 2,776
Mortgage credit 49 48 221
Payment services 40 32 159
Remortgaging and loan fees 23 19 83
Other commission 20 17 59
Other operating income 5 7 22
Total 829 822 3,320
Mortgage credit
Totalkredit cooperation 43 30 168
Totalkredit, set-off of loss 1 0 8
Totalkredit cooperation, net 42 30 160
DLR Kredit 4 16 52
Other mortgage credit income 3 2 9
Total 49 48 221
Trading income
Bonds 107 61 292
Shares 81 47 258
Currency 56 77 234
Money market 50 26 178
Asset management 105 61 304
Total 399 272 1,266
Supplementary Information
Financial calendar
In 2010 the Group's company statements will be released as follows:
- Interim Report - 1H 2010
17 August 2010
- Interim Report Q1-Q3 2010
26 October 2010
Sydbank contacts
Carsten Andersen, Group Chief Executive
Tel +45 74 37 20 00
Niels Møllegaard, Group Executive Vice President
Tel +45 74 37 20 50
Mogens Sandbæk, CFO
Tel +45 74 37 24 00
Address
Sydbank A/S
Peberlyk 4
DK-6200 Aabenraa
Tel +45 74 37 37 37
CVR No DK 12626509
Relevant links
www.sydbank.dk
www.sydbank.com
For further information reference is made to Sydbank's audited 2009 Annual
Report at sydbank.com.
