Company announcement no. 11/2024
“The positive trends continued in the second quarter, and we’re pleased to report strong core operations and a profit for the first half of DKK 175m before tax. Our continued strong topline performance is driven by growth in both lending and deposit volumes, a solid investment portfolio return and a reasonable level of impairment reflecting our customers’ generally sound credit quality,” says Føroya Banki CEO Turið F. Arge.
“In conclusion to its assessment of the Faroese and Greenlandic residential and commercial property markets, the Danish Financial Supervisory Authority found that it cannot be documented that the markets are well-developed and established. This decision means that the risk weighting of residential and commercial property loans can only be reduced if certain conditions are met. Loans for owner-occupied residential properties often meet these exemption provisions, as do staff housing loans, whereas the weighting of loans for residential rental properties may be reduced if the property can be divided into single units and sold on as individual owner-occupied residential properties. For us, the decision means an increased risk weighting of exposures secured against residential and commercial properties and a roughly DKK 200m increase in RVA, which has been factored into the H1 figures,” says Turið F. Arge.
Føroya Banki’s current strategic period expires this year, and we are close to completing the process of defining our strategic direction and objectives for the new strategic period beginning in 2025. In this context, the Board of Directors is also considering updating the Bank’s financial objectives, which will be announced as soon as they have been determined.
Highlights of Føroya Banki’s interim report for the first six months of 2024:
H1 2024 vs. H1 2023
Q2 2024 vs Q1 2024
Capital ratios
At 30 June 2024, the Group had a CET 1 capital ratio of 25.6%, against 25.8% at 31 December 2023. The total capital ratio including MREL was 40.8% at 30 June 2024, against 41.1% at 31 December 2023. The net profit of DKK 142.0m for H1 2024 is not included in the calculation of capital ratios.
Guidance for 2024
The Bank confirms the 2024 net profit guidance of DKK 225–255m communicated in the annual report for 2023. The guidance is generally subject to uncertainty and will, amongst other things, depend on economic developments, loan impairment charges and market value adjustments.
For further information, please call:
Turið F. Arge, CEO, tel. (+298) 230 678
Føroya Banki 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 13.5bn and 209 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Føroya Banki’s H1 2024 financial highlights and comparative figures:
|
Highlights and ratios |
|
|
|
|
|
|
|
|
|
|
DKKm |
Q2 2024 |
Q1 2024 |
Index |
Q4 2023 |
Q3 2023 |
Q2 2023 |
H1 2024 |
H1 2023 |
Index |
|
Net interest income |
90 |
92 |
97 |
100 |
96 |
86 |
182 |
164 |
111 |
|
Net fee and commission income |
17 |
19 |
88 |
17 |
19 |
19 |
36 |
40 |
91 |
|
Net insurance income |
15 |
12 |
125 |
12 |
24 |
19 |
27 |
24 |
111 |
|
Other operating income (less reclassification) |
10 |
11 |
93 |
4 |
9 |
11 |
21 |
19 |
112 |
|
Operating income |
132 |
135 |
98 |
133 |
148 |
135 |
266 |
247 |
108 |
|
Operating costs |
-68 |
-64 |
106 |
-65 |
-65 |
-64 |
-132 |
-127 |
104 |
|
Sector costs |
0 |
0 |
|
0 |
0 |
0 |
-1 |
-1 |
|
|
Profit before impairment charges |
63 |
70 |
90 |
68 |
83 |
71 |
133 |
119 |
112 |
|
Impairment charges, net |
7 |
-23 |
-30 |
-5 |
0 |
7 |
-16 |
16 |
-102 |
|
Operating profit |
70 |
47 |
148 |
62 |
82 |
78 |
118 |
135 |
87 |
|
Non-recurring items |
0 |
0 |
|
0 |
0 |
-6 |
0 |
-9 |
|
|
Profit before investment portfolio earnings and tax |
70 |
47 |
148 |
62 |
82 |
72 |
118 |
126 |
93 |
|
Investment portfolio earnings |
35 |
23 |
155 |
46 |
26 |
15 |
58 |
37 |
158 |
|
Profit before tax |
105 |
70 |
150 |
109 |
108 |
87 |
175 |
162 |
108 |
|
Tax |
18 |
15 |
122 |
20 |
20 |
17 |
33 |
31 |
107 |
|
Net profit |
87 |
55 |
158 |
89 |
88 |
70 |
142 |
131 |
108 |
|
Loans and advances |
9.023 |
8.915 |
101 |
8.883 |
8.790 |
8.655 |
9.023 |
8.655 |
104 |
|
Deposits and other debt |
9.180 |
8.930 |
103 |
8.710 |
8.602 |
8.426 |
9.180 |
8.426 |
109 |
|
Mortgage credit |
2.585 |
2.621 |
99 |
2.599 |
2.615 |
2.567 |
2.585 |
2.567 |
101 |
|
Equity |
1.909 |
1.824 |
105 |
1.851 |
1.762 |
1.676 |
1.909 |
1.676 |
114 |
|
Total capital ratio, incl. MREL capital, % |
40,8 |
39,9 |
|
41,1 |
29,9 |
30,2 |
40,8 |
30,2 |
|
|
CET 1 capital, % |
25,6 |
25,0 |
|
25,8 |
21,5 |
21,8 |
25,6 |
21,8 |
|
|
ROE, % |
18,6 |
12,0 |
|
19,6 |
20,5 |
17,0 |
15,1 |
15,1 |
|
|
ROE, excl. one-offs, % |
18,6 |
12,0 |
|
19,6 |
20,5 |
18,1 |
15,1 |
15,9 |
|
|
Liquidity Coverage Ratio (LCR), % |
285,6 |
283,6 |
|
228,2 |
196,6 |
183,7 |
285,6 |
183,7 |
|
|
Operating cost/income, % |
52 |
48 |
|
49 |
44 |
47 |
50 |
51 |
|
|
Number of FTE, end of period |
209 |
209 |
100 |
207 |
207 |
203 |
209 |
203 |
103 |
Further details are available in the H1 2024 interim report.
