Summary
• Net interest income amounted to DKK 339 million against DKK 381 million in 2021.
• Profit before value adjustments and tax totalled DKK 129 million. This was DKK 109 million lower than in 2021. The decline was due to a combination of slightly lower net interest income and an increase in administrative expenses.
• Comprehensive income for the year amounted to DKK 991 million compared with DKK 378 million in 2021. The increase was driven primarily by the higher value adjustment in 2022.
• Net lending, which is new loans including leases less repayment instalments and redemptions, amounted to DKK 4.8 billion.
• Common Equity Tier 1 (CET1) capital, which equals equity, increased to DKK 9,766 million from DKK 8,775 million at the end of 2021.
Today, 9 March 2023, KommuneKredit announced its Annual Report 2022.
Market developments did not as such have any impact on KommuneKredit’s net interest income. The reason is that we pass on the market rates to our customers at a small margin. Our profit before tax and value adjustments in 2022 was not in line with what we expected at the beginning of the year due to our higher costs.
On the other hand, market developments affected our value adjustments because we measure both assets and liabilities at market value. In 2022, we recorded positive value adjustments of DKK 1.1 billion, and our pre-tax profit was therefore a record-high DKK 1.3 billion. The positive value adjustment will be partly offset by negative value adjustments over the coming years and we expect this to reduce profit going forward.
Net interest income fell from DKK 496 million in 2019 to DKK 339 million in 2022. The reduction results in a deliberate downward trend in profit before value adjustments. At the same time, it increases the likelihood of negative fair value adjustments resulting in an overall negative result in individual years going forward.
In accordance with KommuneKredit’s articles of association, the association may not pay dividends, which is why net profit is transferred to equity. KommuneKredit had an equity ratio of 4.1 pct. at the end of 2022, against 3.5 pct. at 31 December 2021.
Outlook for 2023
At KommuneKredit, we expect our possibilities of raising funding will remain unaffected by any turbulence in the financial markets in 2023. We expect to maintain our equity ratio at not less than 3 pct. Net lending is expected to amount to DKK 4.5 billion, while net interest income is expected in the amount of DKK 400 million. We expect administrative expenses of approximately DKK 190 million.
Contact
CEO Jens Lundager
Phone +45 3369 7622
Email: jlu@kommunekredit.dk
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