Announcement no. 3/2024
“Tailwinds and positive developments are the key words to describe virtually all aspects of the BankNordik Group’s business in 2023. We are pleased to report a satisfactory profit after tax for 2023 of DKK 308m backed by an 18% year-on-year improvement in our core operating income.
The sound results were driven mainly by the favourable interest rate environment, an improved balance of income and costs, the return on our own portfolio and the continued solid performance of the customer portfolio. On the other hand, 2023 was also a year of high, albeit subsiding, inflation, soaring interest rates and geopolitical tensions, resulting in sustained general economic uncertainty, which caused us to raise the management estimate.
Our outlook for 2024 is positive, however. Despite the higher management estimate, we reversed impairment charges overall for 2023, which shows that we have a strong credit portfolio and are well positioned for 2024. However, we expect to see rising impairment charges in 2024 compared with the reversals we have witnessed in recent years,” said BankNordik CEO Turið F. Arge.
At the upcoming annual general meeting, the Board of Directors will propose a total dividend distribution of DKK 80m for 2023 (or DKK 8.33 per share) to the shareholders. The dividend distribution corresponds to 26% of the net profit for the year and thus deviates from the dividend policy of distributing 70% of the net profit. The reason for the deviation is an ongoing consultation in connection with the FSA's preliminary assessment that it cannot be established that there is a well-developed and established residential and commercial property market in the Faroe Islands and in Greenland. The consultation may result in an increased risk weighting of exposures of Faroese and Greenlandic banks secured against residential and commercial properties, which may adversely affect total capital. The Bank expects the issue to be resolved during the first half.
The Bank maintains the announced financial targets for 2024: ROE >12%, cost/income <53% and CET1 capital of 20%.
Highlights of BankNordik's annual report for 2023:
Q4 2023 relative to Q3 2023
Q1-Q4 2023 vs Q1-Q4 2022
Capital ratios
At 31 December 2023, the Group had a CET 1 capital ratio of 25.8%, against 21.4% at 31 December 2022. The total capital ratio including MREL was 41.2% at 31 December 2023 against 29.7% at 31 December 2022.
Guidance for 2024
BankNordik's management is guiding for FY 2024 net profit in the DKK 225-255m range (FY 2023: DKK 308m). The guidance is subject to uncertainty and will, amongst other things, depend on economic conditions, developments in the Group’s markets, loan impairments and market value adjustments.
For further information, please call:
Turið F. Arge, CEO, tel. (+298) 230 678
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 12.9bn and 207 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Q1-Q4 2023 financial highlights and comparative figures
| DKKm | Q4 2023 | Q3 2023 | Index | Q2 2023 | Q1 2023 | Q4 2022 | 2023 | 2022 | Index |
| Net interest income | 100 | 96 | 104 | 86 | 78 | 72 | 360 | 270 | 133 |
| Net fee and commission income | 17 | 19 | 90 | 19 | 21 | 23 | 77 | 88 | 87 |
| Net insurance income | 12 | 24 | 51 | 19 | 5 | 14 | 60 | 52 | 115 |
| Other operating income (less reclassification) | 4 | 9 | 42 | 11 | 8 | 8 | 32 | 37 | 87 |
| Operating income | 133 | 148 | 90 | 135 | 112 | 117 | 528 | 447 | 118 |
| Operating costs | -65 | -65 | 100 | -64 | -63 | -58 | -257 | -243 | 106 |
| Sector costs | 0 | 0 | 0 | 0 | 0 | -2 | -1 | ||
| Profit before impairment charges | 68 | 83 | 82 | 71 | 49 | 59 | 269 | 202 | 133 |
| Impairment charges, net | -5 | 0 | 7 | 8 | 3 | 10 | 47 | 22 | |
| Operating profit | 62 | 82 | 76 | 78 | 57 | 62 | 279 | 249 | 112 |
| Non-recurring items | 0 | 0 | -6 | -3 | 0 | -9 | 0 | ||
| Profit before investment portfolio earnings and tax | 62 | 82 | 76 | 72 | 54 | 62 | 270 | 249 | 109 |
| Investment portfolio earnings | 46 | 26 | 179 | 15 | 22 | 8 | 109 | -43 | -256 |
| Profit before tax | 109 | 108 | 101 | 87 | 75 | 70 | 379 | 207 | 184 |
| Tax | 20 | 20 | 100 | 17 | 14 | 16 | 72 | 42 | 170 |
| Net profit | 89 | 88 | 101 | 70 | 61 | 54 | 308 | 164 | 187 |
| Loans and advances | 8.883 | 8.790 | 101 | 8.655 | 8.354 | 8.083 | 8.883 | 8.083 | 110 |
| Deposits and other debt | 8.710 | 8.602 | 101 | 8.426 | 8.524 | 8.351 | 8.710 | 8.351 | 104 |
| Mortgage credit | 2.599 | 2.615 | 99 | 2.567 | 2.634 | 2.648 | 2.599 | 2.648 | 98 |
| Equity | 1.851 | 1.762 | 105 | 1.676 | 1.608 | 1.799 | 1.851 | 1.799 | 103 |
| Total capital ratio, incl. MREL capital, % | 41,1 | 29,9 | 30,2 | 28,9 | 29,7 | 41,1 | 29,7 | ||
| CET 1 capital, % | 25,8 | 21,5 | 21,8 | 20,8 | 21,4 | 25,8 | 21,4 | ||
| ROE, % | 19,6 | 20,5 | 21,2 | 17,7 | 12,1 | 16,9 | 8,6 | ||
| ROE, excl. one-offs, % | 19,6 | 20,5 | 22,6 | 18,5 | 12,1 | 17,3 | 8,6 | ||
| Liquidity Coverage Ratio (LCR), % | 228,2 | 196,6 | 183,7 | 220,0 | 225,2 | 228,2 | 225,2 | ||
| Operating cost/income, % | 49 | 44 | 47 | 56 | 49 | 49 | 54 | ||
| Number of FTE, end of period | 207 | 207 | 100 | 203 | 203 | 200 | 207 | 200 | 104 |
Further details are available in the annual report.
