Core operations improved in Q1

28.4.2022 08:00:01 CEST | BankNordik | Interim report (Q1 and Q3)

Announcement no. 11/2022

“The positive trends continued in the first quarter, and we’re pleased to deliver solid financial results for the period. Our core operations improved by 30% over the year-earlier period. The outlook for the rest of the year is promising, but also subject to potential negative economic implications of the war in Ukraine,” said BankNordik CEO Árni Ellefsen.

“As part of our ongoing efforts to optimise the capital structure of the Group, we requested a rating by Moody’s, and in March we were assigned a good rating with low risk and a positive outlook. The rating enabled us to issue MREL bonds for SEK 300m at a very satisfactory price,” said Ellefsen.

Highlights of BankNordik's interim report for the three months to 31 March 2022:

Q1 2022 vs Q1 2021

Operating profit before impairment charges increased from DKK 38m in Q1 2021 to DKK 49m in Q1 2022.
- Net interest income rose from DKK 63m in Q1 2021 to DKK 66m in Q1 2022.
- Fee and commission income was up by DKK 4m from DKK 17m in Q1 2021 to DKK 22m in Q1 2022.
- Net insurance income amounted to DKK 12m in Q1 2022 for a DKK 4m improvement on Q1 2021.
- Other operating income amounted to DKK 11m in Q1 2022, which was DKK 2m lower than the Q1 2021 figure.
- Operating costs amounted to DKK 61m in Q1 2022, which was a DKK 2m increase relative to Q1 2021.
BankNordik maintains the management estimated provision of DKK 52m originally made due to COVID-19. Although the uncertainty relating to the pandemic has been reduced, the war in Ukraine has caused increased uncertainty.
Net impairment charges were a DKK 10m reversal in Q1 2022, compared to charges of DKK 3m in Q1 2021.
The overall profit before tax was DKK 60m in Q1 2022, compared to the Q1 2021 figure of 117m, which included non-recurring income of DKK 77m.
- The investment portfolio yielded a gain of DKK 2m against a loss of DKK 3m in Q1 2021.

Q1 2022 vs Q4 2021

BankNordik reported an operating profit before impairment of DKK 49m in Q1 2022, a DKK 3m (+6%) improvement on Q4 2021.
- Net interest income amounted to DKK 66m in Q1 2022, which was in line with the Q4 2021 figure.
- Fee and commission income fell by DKK 1m to DKK 22m in Q1 2022 from DKK 23m in Q4 2021.
- Net insurance income amounted to DKK 12m in Q1 2022, a DKK 6m increase on Q4 2021.

Other operating income was up by DKK 3m on Q4 2021 to DKK 11m in Q1 2022.
Operating costs amounted to DKK 61m in Q1 2022, which was a DKK 4m increase relative to Q4 2021.

Loan impairment charges were a DKK 10m net reversal for the Q1 2022 period against a DKK 40m reversal in Q4 2021. Although the uncertainty connected to the COVID-19 pandemic has been reduced, the Bank will maintain its management estimated provision of DKK 52m due to the uncertainty relating to the war in Ukraine.
The overall profit before tax was DKK 60m in Q1 2022 against DKK 95m in Q4 2021.
- The investment portfolio yielded a gain of DKK 2m in Q1 2022, which was in line with the figure for the previous quarter.
Bank lending volumes were up by DKK 60m (1%) from DKK 7,624m at 31 December 2021 to DKK 7,684m at 31 March 2022.
Mortgage-broking services were up by DKK 70m (+3%) from DKK 2,657m at 31 December 2021 to DKK 2,727m at 31 March 2022.
Deposits were up by DKK 132m (2%) from DKK 7,914m at 31 December 2021 to DKK 8,047m at 31 March 2022.

Capital ratios

At 31 March 2022, the Group had a CET 1 capital ratio of 23.8% which is on a level with 31 December 2021. The total capital ratio including MREL was 32.9% at 31 March 2022 against 29.6% at 31 December 2021.

Guidance for 2022

BankNordik's management is guiding for a FY 2022 net profit in the DKK 130-160m range. Solid Q1 results indicate FY results at higher end of guidance range. The guidance is subject to uncertainty and will, amongst other things, depend on economic conditions, developments in the situation relating to the war in Ukraine, loan impairment and market value adjustments.

For further information, please call:

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 199 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.

Appendix: Q1 2022 financial highlights and comparative figures

Highlights and ratios
DKKm	Q1 2022	Q4 2021	Index	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q1 2022	Q1 2021	Index
Net interest income	66	66	99	66	65	66	63	66	63	104
Net fee and commission income	22	23	96	23	19	20	17	22	17	123
Net insurance income	12	6	195	6	7	14	7	12	7	160
Other operating income (less reclassification)	11	8	140	8	8	9	9	11	9	124
Operating income	110	103	107	103	99	109	97	110	97	114
Operating costs	-61	-57	107	-57	-59	-61	-59	-61	-59	104
Sector costs	0	0		0	0	0	0	0	0
Profit before impairment charges	49	46	106	46	40	48	38	49	38	129
Impairment charges, net	10	40	24	40	13	27	-3	10	-3	-289
Operating profit	59	86	68	86	53	75	34	59	34	170
Non-recurring items	0	6	-	6	2	4	77	0	77
Profit before investment portfolio earnings and tax	59	93	63	93	54	79	111	59	111	53
Investment portfolio earnings	2	2	75	2	-1	-4	-3	2	-3	-52
Profit before tax, continuing operations	60	95	63	95	53	75	108	60	108	56
Profit before tax, discontinued operations	0	0		0	0	0	9	0	9	-
Profit before tax, total	60	95	63	95	53	75	117	60	117	51
Tax	12	17	70	17	11	15	24	12	24	50
Net profit	48	78	62	78	41	59	93	48	93	52
Loans and advances	7.684	7.624	101	7.624	7.594	7.586	7.450	7.684	7.450	103
Deposits and other debt	8.047	7.914	102	7.914	7.435	7.660	7.536	8.047	7.536	107
Mortgage credit	2.727	2.657	103	2.657	2.609	2.502	2.443	2.727	2.443	112
Equity	1.697	2.036	83	2.036	2.410	2.369	2.313	1.697	2.313	73
Total capital ratio, incl. MREL capital, %	32,9	29,6		29,6	31,7	31,3	36,2	32,9	36,2
CET 1 capital, %	23,8	23,8		23,8	26,1	25,7	31,0	23,8	31,0
ROE, %	10,3	13,3		13,3	6,8	9,7	7,3	10,3	7,3
ROE, excl. one-offs, %	10,3	13,1		13,1	6,7	9,6	4,4	10,3	4,4
Liquidity Coverage Ratio (LCR), %	198,4	191,4		191,4	185,9	202,5	211,7	198,4	211,7
Operating cost/income, %	55	55		55	59	56	60	55	61
Number of FTE, end of period	199	195	102	195	199	195	218	199	218	91

Further details are available in the interim report.

Attachments

ritzau-5198-en.pdf
Interim Report_Q1 2022.pdf
IR-Presentation_Q1 2022.pdf