Announcement no. 9/2020
“Athough BankNordik's results in Q1 2020 were significantly impacted by the COVID-19 health crisis, several of the Bank’s initiatives announced or executed in 2019 started to bear fruit. Interest income was up 4% on the first quarter in 2019, fee and commission income increased by 13%, and staff costs and administrative expenses were 10% lower. As such, the changes made have laid the foundation for a strengthened performance by the Bank in the years ahead. The pre tax loss of DKK 30m was mainly due to a discretionary impairment charge of DKK 25m, large fluctuations in the market value of the Bank’s investment portfolio and high insurance claims” said BankNordik CEO, Árni Ellefsen.
“BankNordik expects the effects of the pandemic to be felt throughout 2020 and likely beyond. There is a large amount of uncertainty around the overall impact of the health crisis on the economies in which the Bank operates, but BankNordik is well positioned to meet these challenges. The bank is well capitalised with a solvency ratio of 23,4% and CET1 capital ratio of 19,8% at the end of Q1 2020. The Bank’s core business has grown stronger, and our through-the-cycle approach to credit risk will benefit the Bank in the current uncertain economic environment,” said Mr. Ellefsen.
Highlights of BankNordik's interim report for the first quarter of 2020:
Q1 2020 vs. Q1 2019
Q1 2020 vs. Q4 2019
Capital ratios
At 31 March 2020 the group’s total CET 1 capital ratio amounted to 19,8%, the core capital ratio amounted to 21,3% and the total capital ratio was 23,4%. The negative net result in Q1 2020 is included in the capital and solvency statement.
In respect of dividend for the financial year 2019, and as stated in announcement of March 24 2020, BankNordik’s Board of Directors does not consider it responsible or appropriate to pay out dividends under the current uncertainty related the COVID-19 situation. The Board of Directors will, however, on a regular basis monitor the development and the consequences of the COVID-19 situation, and should the situation stablise and improve during 2020, the Board of Directors will re-evaluate the appropriation of profit for the 2019 financial year, including the possibilities of paying dividend.
Outlook 2020
The uncertainty regarding the duration and extent of the COVID-19 situation makes it difficult to estimate the long term effects the situation on the Group’s various business segments and financial performance.
Against this backdrop of substantial uncertainty, BankNordik on March 20 2020 decided to suspend the FY2020 guidance of net profit, previously expected in the range of DKK 100-150 million.
As a result of the unprecedented uncertainty surrounding the COVID-19 crisis, BankNordik has reviewed its expectations for the FY2020 period using scenario analysis based on current knowledge. Based on this analysis, the Bank now expects profit after tax for FY2020 to be in the range of DKK 30-80m. The guidance range is lowered by DKK 80 million (DKK 70 million after tax), which may be attributed as follows: DKK 40m due to impairments, DKK 15m due to investment portfolio losses and DKK 25m due to lower net insurance income.
Please note that this guidance is subject to a much higher degree of uncertainty than usual. In large part, it depends on how the COVID-19 crisis evolves going forward, as this in turn has a significant effect on e.g. loan impairment charges, market value adjustments and net insurance income.
For additional information, please contact:
Árni Ellefsen, CEO, tel. (+298) 230 348
BankNordik has banking activities in Denmark, Greenland and the Faroe Islands and insurance activities in the Faroe Islands. Founded in the Faroe Islands more than a century ago, the Group has total assets of DKK 16.9bn and 359 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Financial highlights and comparative figures are provided below.
Financial highlights
|
DKK million
|
Q1 2020 |
Q1. 2019 |
2019 |
Q4. 2019 |
Q3 2019 |
Q2 2019 |
Q1 2019 |
|
|
|
|
|
|
|
|
|
|
Net interest income |
88 |
84 |
337 |
87 |
83 |
83 |
84 |
|
Net fee and commission income |
54 |
48 |
189 |
49 |
47 |
45 |
48 |
|
Income from insurance operations |
4 |
9 |
52 |
14 |
15 |
15 |
9 |
|
Other operating income |
9 |
11 |
49 |
14 |
13 |
11 |
11 |
|
Operating income |
154 |
151 |
628 |
164 |
158 |
155 |
151 |
|
Operating costs |
-109 |
-120 |
-472 |
-117 |
-116 |
-119 |
-120 |
|
Operating profit before impairment charges |
45 |
31 |
155 |
47 |
42 |
35 |
31 |
|
Loan impairment charges, net |
-24 |
19 |
105 |
25 |
9 |
53 |
19 |
|
Operating profit |
22 |
50 |
260 |
71 |
51 |
88 |
50 |
|
Non-recurring items |
0 |
0 |
-14 |
-13 |
0 |
0 |
0 |
|
Profit before value adjustments and tax |
22 |
50 |
247 |
58 |
50 |
88 |
50 |
|
Investment portfolio earnings |
-51 |
15 |
13 |
1 |
0 |
-2 |
15 |
|
Profit before tax |
-30 |
65 |
260 |
59 |
50 |
86 |
65 |
|
|
|
|
|
|
|
|
|
|
Deposits, etc., DKKbn |
12.9 |
14.0 |
14.4 |
14.4 |
13.5 |
14.1 |
14.0 |
|
Loans and advances, etc., DKKbn |
10.0 |
10.0 |
9.9 |
9.9 |
10.0 |
10.1 |
10.0 |
|
Mortgage lending, DKKbn |
13.0 |
12.5 |
13.0 |
13.0 |
12.9 |
12.6 |
12.5 |
|
Equity, DKKbn |
2.1 |
2.0 |
2.1 |
2.1 |
2.1 |
2.0 |
2.0 |
|
Solvency ratio, % |
23.4 |
19.2 |
22.3 |
22.3 |
21.0 |
19.6 |
19.2 |
|
Excess Liquidity relative to statutory requirement, % |
159.4 |
221.5 |
215.7 |
215.7 |
225.1 |
238.3 |
221.5 |
|
Operating cost/income |
70 |
79 |
75 |
71 |
73 |
77 |
79 |
|
Number of FTE, end of period |
359 |
393 |
377 |
377 |
383 |
390 |
393 |
Further details are available in the interim report.
