- Sale of Danish business finalised according to plan
Announcement no. 17/2021
“We’re delivering a positive performance for the first half-year, driven mainly by improved core earnings and good developments in the insurance business. Our customers have generally emerged from the coronavirus crisis in good shape, although a few industries remain challenged. I’m very pleased to announce that the IT migration of the customer base sold to Spar Nord was executed according to plan in June. As previously announced, we still expect to distribute DKK 700m in extraordinary dividends in relation to the divestment of the Danish business, including DKK 450m this year,” said BankNordik CEO Árni Ellefsen.
“In order to ensure that we will remain an efficient organisation and can keep costs at a reasonable level, we have reorganised our Group and implemented certain initiatives to enhance our earnings. We expect these steps will lift our consolidated profit by DKK 20–25m annually over the coming years. This will provide a good start for our strategic deliberations on how to enhance profitability in all business areas for the longer term,” said Mr Ellefsen.
Highlights of BankNordik’s interim report for the first six months of 2021:
Q2 2021 vs Q1 2021
H1 2021 vs. H1 2020
Capital ratios
At 30 June 2021, the Group had a CET1 capital ratio of 25.7% against 22.6% at 31 December 2020. The total capital ratio including MREL was 31.3% at 30 June 2021 against 26.4% at 31 December 2020.
In order to cover the MREL add-on, which is being phased in over the coming years, BankNordik issued senior non-preferred debt of DKK 150m on 18 June 2021. As part of the ongoing efforts to optimise its capital structure, BankNordik issued a new subordinated (Tier 2) loan of DKK 100m on 24 June 2021 while at the same time redeeming existing loans for a total of DKK 225m.
Extraordinary dividends following the sale of the Danish business
BankNordik continues to expect the divestment of the Danish business and the resulting reduced REA will lead to extraordinary distributions to the shareholders totalling DKK 700m (equal to DKK 73 per share). The Bank intends to distribute DKK 450m of the amount during 2021.
An extraordinary general meeting will be called prior to the expected distribution of DKK 450m this year. On that occasion, the Bank expects to announce whether part of the amount will be distributed by way of a share buyback. The extraordinary general meeting is expected to be called by the end of Q3 2021.
Guidance for 2021
BankNordik expects a moderate increase in its mortgage-broking services and in lending to both personal and commercial customers. In addition, the Bank has launched initiatives expected to lead to an increase in fee and commission income in the second half of 2021 and the following years. Income from insurance operations is expected to continue to grow, always subject to the level of claims. Operating costs are expected to be marginally lower than the 2020 level and impairment charges are expected to remain at a low level. At the beginning of the year, management guided for FY 2021 net profit in the DKK 100–150m range (2020: DKK 166m). On 19 July, the Bank adjusted its guidance for FY 2021 net profit to the DKK 190–220m range.
The guidance is subject to uncertainty and will, amongst other things, depend on economic conditions, developments in the COVID-19 situation in the Group’s markets, loan impairments and market value adjustments.
For further 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 195 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: H1 2021 financial highlights and comparative figures
Highlights and ratios
DKKm |
H1 2021 |
H1 2020 |
Index 21/20 |
Q2 2021 |
Q1 2021 |
Q4 2020 |
Q3 2020 |
Q2 2020 |
Net interest income |
129 |
128 |
101 |
66 |
64 |
65 |
65 |
65 |
Net fee and commission income |
38 |
29 |
130 |
20 |
17 |
16 |
15 |
13 |
Income from insurance operations |
21 |
15 |
139 |
14 |
7 |
12 |
18 |
12 |
Other operating income |
18 |
11 |
169 |
9 |
9 |
8 |
6 |
5 |
Operating income |
206 |
183 |
113 |
109 |
97 |
101 |
104 |
95 |
Operating costs |
-120 |
-118 |
101 |
-61 |
-59 |
-62 |
-57 |
-59 |
Sector costs |
-1 |
0 |
|
0 |
0 |
0 |
0 |
0 |
Operating profit before impairment charges |
85 |
64 |
134 |
47 |
38 |
38 |
47 |
36 |
Impairment charges, net |
23 |
-2 |
27 |
-3 |
10 |
-2 |
16 |
|
Operating profit |
109 |
62 |
177 |
74 |
35 |
48 |
44 |
52 |
Non-recurring items |
81 |
0 |
|
4 |
77 |
0 |
0 |
0 |
Profit before investment portfolio earnings and tax |
190 |
62 |
308 |
78 |
111 |
48 |
44 |
52 |
Investment portfolio earnings |
-7 |
-7 |
112 |
-4 |
-3 |
1 |
3 |
15 |
Profit/loss before tax, continuing activities |
182 |
55 |
331 |
74 |
108 |
49 |
48 |
66 |
Profit before tax, discontinued operations |
9 |
18 |
51 |
0 |
9 |
1 |
35 |
37 |
Profit before tax, total |
192 |
74 |
261 |
74 |
118 |
51 |
82 |
103 |
Tax |
39 |
16 |
250 |
15 |
24 |
7 |
17 |
21 |
Profit/loss after tax |
153 |
58 |
263 |
59 |
94 |
43 |
65 |
82 |
Loans and advances |
7,586 |
7,479 |
101 |
7,586 |
7,450 |
7,608 |
7,501 |
7,479 |
Deposits |
7,660 |
7,581 |
101 |
7,660 |
7,536 |
7,756 |
7,531 |
7,581 |
Mortgage lending |
2,502 |
2,121 |
118 |
2,502 |
2,443 |
2,375 |
2,284 |
2,121 |
Shareholders’ equity |
2,369 |
2,167 |
109 |
2,369 |
2,313 |
2,271 |
2,230 |
2,167 |
Total capital ratio, including MREL capital, % |
31.3 |
24.0 |
|
31.3 |
36.2 |
26.4 |
24.9 |
24.0 |
CET1 capital ratio |
25.7 |
20.3 |
|
25.7 |
31.0 |
22.6 |
21.1 |
20.3 |
Return on equity, % p.a. |
10.1 |
4.7 |
|
9.7 |
7.4 |
7.5 |
8.1 |
11.4 |
Return on equity excluding non-recurring items, % p.a. |
7.0 |
4.1 |
|
9.5 |
4.4 |
7.5 |
6.8 |
10.0 |
Liquidity Coverage Ratio (LCR), % |
202.5 |
232.6 |
|
202.5 |
211.7 |
231.1 |
227.3 |
232.6 |
Cost/income ratio |
58 |
65 |
|
56 |
60 |
62 |
55 |
62 |
Number of FTE, end of period |
195 |
228 |
86 |
195 |
218 |
228 |
232 |
228 |
Further details are available in the interim report.