- Sale of Danish business finalised as planned
Announcement no. 10/2021
“We sold our Danish business effective 1 February, finalising the satisfactory agreement we entered into with Spar Nord in December of last year. The sales process proceeded as planned, and we expect the handover of the divested customer base to be completed by 19 June. Considering the reduced REA resulting from the sale, we expect to distribute DKK 700m in extraordinary dividends to our shareholders during 2021-2023, provided such payout would be in compliance with the regulatory guidelines in place at the time of distribution,” said BankNordik CEO Árni Ellefsen.
“Following the divestment, we’ve made changes to our group organisation in order to ensure that our operations remain cost efficient. Our focus going forward is to retain our strong market positions in the Faroese banking market and also to build profitable growth in Greenland and in our insurance business. We aim to do that by offering good customer experiences and competitive products. We saw high customer activity and rising income flows in both markets in the first quarter of the year, and we further developed our portfolio of green products intended to encourage and support our customers in making sustainable choices,” said Ellefsen.
Highlights of BankNordik's interim report for the three months to 31 March 2021:
Q1 2021 vs Q1 2020
Q1 2021 vs Q4 2020
Capital ratios
At 31 March 2021, the Group had a CET1 capital ratio of 31.0% against 22.6% at 31 December 2020. The core capital ratio was 33.1% at 31 March 2021 against 24.1% at 31 December 2020. The total capital ratio was 36.2% at 31 March 2021 against 26.4% at 31 December 2020.
As previously announced, the divestment of the Danish business and the reduced REA derived from the transaction is expected to result in extraordinary distributions to the shareholders totalling DKK 700m (equal to DKK 73 per share). The first DKK 450m of this amount is expected to be distributed in 2021, while the remaining DKK 250m is expected to be distributed in 2022 and 2023, provided such payout would be in compliance with the regulatory guidelines at the time of distribution.
Guidance for 2021
BankNordik expects a moderate increase in its mortgage-broking services and in lending to both personal and commercial customers. A moderate increase in fee and commission income is also expected as well as a continuing increase in income from insurance operations, although the claims experience may vary significantly from one year to the next. Operating costs are expected to remain at the 2020 level and impairment charges are expected to remain at a low level.
Management expects a net profit in the DKK 150-200m range (2020: DKK 166m).
This guidance is generally subject to uncertainty and will, amongst other things, depend on economic conditions, loan impairment charges and market value adjustments.
For additional information, please contact:
Árni Ellefsen, CEO, tel. (+298) 230 348
BankNordik has banking activities in 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 12bn and 218 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Q1 2021 financial highlights and comparative figures
Highlights and ratios
DKKm |
Q1 2021 |
Q1 2020 |
Index 21/20 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Q1 2020 |
Net interest income |
64 |
63 |
101 |
64 |
65 |
65 |
65 |
63 |
Net fee and commission income |
17 |
16 |
111 |
17 |
16 |
15 |
13 |
16 |
Net insurance income |
7 |
4 |
203 |
7 |
12 |
18 |
12 |
4 |
Other operating income (less reclassification) |
9 |
5 |
169 |
9 |
8 |
6 |
5 |
5 |
Operating income |
97 |
87 |
111 |
97 |
101 |
104 |
95 |
87 |
Operating costs |
-59 |
-59 |
99 |
-59 |
-62 |
-57 |
-59 |
-59 |
Sector costs |
0 |
0 |
|
0 |
0 |
0 |
0 |
0 |
Profit before impairment charges |
38 |
28 |
136 |
38 |
38 |
47 |
36 |
28 |
Impairment charges, net |
-3 |
-18 |
19 |
-3 |
10 |
-2 |
16 |
-18 |
Operating profit |
35 |
10 |
347 |
35 |
48 |
44 |
52 |
10 |
Non-recurring items |
77 |
0 |
|
77 |
0 |
0 |
0 |
0 |
Profit before investment portfolio earnings and tax |
111 |
10 |
1.109 |
111 |
48 |
44 |
52 |
10 |
Investment portfolio earnings |
-3 |
-21 |
14 |
-3 |
1 |
3 |
15 |
-21 |
Profit before tax, continuing operations |
108 |
-11 |
-957 |
108 |
49 |
48 |
66 |
-11 |
Profit before tax, discontinued operations |
9 |
-18 |
-51 |
9 |
1 |
35 |
37 |
-18 |
Profit before tax, total |
118 |
-30 |
-397 |
118 |
51 |
82 |
103 |
-30 |
Tax |
24 |
-5 |
-442 |
24 |
7 |
17 |
21 |
-5 |
Net profit |
94 |
-24 |
-387 |
94 |
43 |
65 |
82 |
-24 |
Loans and advances |
7.450 |
7.416 |
100 |
7.450 |
7.608 |
7.501 |
7.479 |
7.416 |
Deposits and other debt |
7.536 |
7.468 |
101 |
7.536 |
7.756 |
7.531 |
7.581 |
7.468 |
Mortgage credit |
2.443 |
2.057 |
119 |
2.443 |
2.375 |
2.284 |
2.121 |
2.057 |
Equity |
2.313 |
2.087 |
111 |
2.313 |
2.271 |
2.230 |
2.167 |
2.087 |
Total capital ratio, % |
36,2 |
23,4 |
|
36,2 |
26,4 |
24,9 |
24,0 |
23,4 |
Core capital ratio, % |
33,1 |
21,3 |
|
33,1 |
24,1 |
22,6 |
21,8 |
21,3 |
CET 1 capital, % |
31,0 |
19,8 |
|
31,0 |
22,6 |
21,1 |
20,3 |
19,8 |
Liquidity Coverage Ratio (LCR), % |
211,7 |
177,7 |
|
211,7 |
231,1 |
227,3 |
232,6 |
177,7 |
Operating cost/income, % |
60 |
68 |
|
60 |
62 |
55 |
62 |
68 |
Number of FTE, end of period |
218 |
228 |
96 |
218 |
228 |
232 |
228 |
228 |
Further details are available in the interim report.