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Ringkjøbing Landbobank’s interim report for the first half of 2021

Orignally published on 2021-08-04 05:26:15 by finance.yahoo.com

Nasdaq Copenhagen
London Stock Exchange
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Other stakeholders

4 August 2021

Ringkjøbing Landbobank’s interim report for the first half of 2021

The bank delivers core earnings of DKK 727 million and profit before tax of DKK 716 million in the first half of 2021. The profit before tax is equivalent to a return on equity of 17.4% p.a.

Core earnings

(DKK million)

H1
2021

H1
2020

2020

2019

2018

2017

Total core income

1,179

1,061

2,179

2,116

2,001

1,917

Total expenses and depreciation

404

390

788

805

866

845

Core earnings before impairment charges for loans

775

671

1,391

1,311

1,135

1,072

Impairment charges for loans etc.

-48

-141

-223

-100

-43

-70

Core earnings

727

530

1,168

1,211

1,092

1,002

Result for the portfolio etc.

-3

-41

-9

+49

+77

+84

Special costs

8

8

15

15

217

22

Profit before tax

716

481

1,144

1,245

952

1,064

Highlights of the first half of 2021

·The profit before tax is DKK 716 million, equivalent to a return on equity of 17.4% p.a.

·Core income increases by 11% to DKK 1,179 million following a high level of activity in the first half of the year

·Expenses increase by 3% to DKK 404 million

·The rate of costs decreases to 34% in the half-year

·Continued increase in new customers results in growth of 6% in the bank’s loans compared to the end of June 2020

·The expectations for profit before tax were upwardly adjusted to DKK 1,200-1,500 million in June

·An extra share buy-back programme of DKK 242.5 million is planned to start on 1 October 2021

·The purchase of BIL Danmark adds more clients and strengthens the bank’s position in private banking

Yours sincerely

Ringkjøbing Landbobank

John Fisker

Management’s review

Core income

Interest
Net interest income was DKK 652 million in the first half of 2021, compared to DKK 616 million in the same period in 2020, an increase of 6%. The bank is highly satisfied with this development.

The development is partly attributable to a 6% increase in lending compared to the end of June 2020. The increase in lending is broadly based and relates to both niches and retail.

A further reason for the positive development in interest is that the bank lowered the threshold for negative interest on personal customers’ deposits to DKK 100,000 with effect from the beginning of January 2021.

Fee, commission and foreign exchange income
Fee, commission and foreign exchange income amounted to DKK 439 million in the first half of 2021, compared to DKK 374 million in the same period in 2020, an increase of 17%. The bank is also highly satisfied with this development, and the increase reflects a very high level of activity – especially in the first quarter of the year. However, the activity level remained high in the second quarter of 2021.

The bank’s focus on the private banking segment has had a positive effect on the “Securities trading”, “Foreign exchange income” and “Asset management and custody accounts” items in particular.

Due to the high level of activity and the continued increase in new customers, the items “Guarantee commission and mortgage credit commission etc.” and “Loan fees” also developed positively compared to the first half of 2020.

Initiatives aimed at normalising the income from payment handling activities were announced with effect from 1 April 2021. These initiatives are reflected in the income from “Payment handling”, which has improved compared to the first half of 2020.

The income from “Other fees and commission” also developed positively compared to the first half of 2020. This is partly attributable to the bank’s focus on the pension and insurance activities.

Sector shares and other operating income
Earnings of DKK 83 million from banking sector shares in the first half of 2021 were DKK 13 million higher than in the first half of 2020, when earnings were DKK 70 million. The earnings derive primarily from returns on the bank’s ownership interests in DLR Kredit, BankInvest (BI Holding) and PRAS.

Other operating income stood at DKK 5 million in the first half of the year, in contrast to 2020, when the figure was DKK 1 million. The other operating income for the year relates primarily to the sale of a property.

Core income
Total core income increased by 11%, from DKK 1,061 million in the first half of 2020 to DKK 1,179 million in 2021.

Expenses, depreciation and write-downs
Total expenses including depreciation and write-downs on tangible assets amounted to DKK 404 million in the first half of 2021, compared to DKK 390 million in 2020, an increase of 3%.

The increase in the cost level relates to the high level of activity, but an even bigger increase in income compensates for this.

The rate of costs was 34.2% in the first half of the year, compared to 36.8% in 2020.

Impairment charges for loans etc.
The bank’s expenditure for losses and impairment charges was DKK 48 million in the first half of 2021 – which breaks down into DKK 19 million in the second quarter of 2021 and DKK 29 million in the first quarter of 2021, compared to DKK 38 million and DKK 75 million respectively in the second and first quarters of 2020.

The credit quality of the bank’s loans portfolio is generally judged to be good. During the first half of 2021 the bank has seen a decrease in the need for individual impairment charges. At the same time the bank judged that an increase in the management estimates for losses and impairment charges was needed.

The bank thus increased its management estimates for losses and impairment charges considerably during 2020, from DKK 126 million to DKK 566 million. During the first half of 2021, the management estimates increased further to a total of DKK 609 million.

A significant part of the management estimates is attributable to the current economic risks associated with the coronavirus pandemic. Until the first quarter of 2021, the vast majority of the bank’s customers managed the economic situation relating to the coronavirus pandemic and the need for new individual impairment charges was thus limited. This pattern continued in the second quarter of 2021. However, it continues to be the bank’s assessment that considerable risks are associated with how the economy will develop as and when the many state aid schemes are scaled down and discontinued etc. The management estimates relating to the coronavirus pandemic are therefore maintained at a relatively high cumulative level.

In June 2021, the EU reached a political agreement on its common agricultural policy for 2023-2027. A consequence of the agreement is a decrease in the direct support paid to farmers. The actual implementation and detailed consequences are not yet known. The bank has consequently allocated a management estimate to losses and impairment charges with regard to this uncertainty.

In addition, certain parts of the bank’s loans to fisheries are affected by significant quota reductions, primarily as a result of the political agreement with Great Britain in connection with Brexit. The economic framework conditions for large parts of Danish fisheries are thus pending political clarification. The bank allocated management estimates related to this risk as early as 2020. The estimate was further increased in the first half of 2021. The bank’s total exposure to the fisheries sector is 1.6% and the majority of this exposure is judged to be covered by first mortgages on fishing vessels and quotas.

The credit quality of the bank’s personal customers is generally judged to be good. The marked price increases on the housing market in the past few quarters have increased the wealth of many of them. On the other hand, the bank is aware that rising house prices may increase its risk exposure – in particular in respect of first-time buyers.

The bank’s total account for impairment charges was DKK 2,273 million at the end of June 2021 compared to DKK 2,205 million at the end of 2020. At the end of June 2021, 51% of the total account for impairment charges was classified as stage 1 or 2 exposures.

The bank’s total loans to customers with suspended calculation of interest were DKK 179 million at the end of June 2021, compared to DKK 211 million at the end of March 2021. The decline relative to the end of December 2020, when the amount was DKK 265 million, thus continued.

Core earnings
Core earnings for the first half of 2021 were DKK 727 million compared to last year’s DKK 530 million, an increase of 37%.

(DKK million)

H1
2021

H1
2020

2020

2019

2018

2017

Total core income

1,179

1,061

2,179

2,116

2,001

1,917

Total expenses and depreciation

404

390

788

805

866

845

Core earnings before impairment charges for loans

775

671

1,391

1,311

1,135

1,072

Impairment charges for loans etc.

-48

-141

-223

-100

-43

-70

Core earnings

727

530

1,168

1,211

1,092

1,002

Core earnings per share were DKK 25.3 for the first half of 2021 compared to DKK 18.2 in 2020.

*The statement for 2018 was made on a pro forma basis.

Result for the portfolio etc.
The result for the portfolio etc. including funding costs for the portfolio was negative by DKK 3 million net for the first half of the year. In the first half of 2020, the result for the portfolio etc. was negative by DKK 41 million net, as a result of the turmoil on the financial markets due to the coronavirus pandemic.

The bank has thus recovered some of the negative result of DKK 10 million for the portfolio in the first quarter of 2021, which was attributable to the increase in the long-term interest rates.

Amortisation and write-downs on intangible assets
The bank treats amortisation and write-downs on intangible assets as a special item, since expensing them enhances the quality of equity and helps to reduce the deduction when computing total capital. Amortisation and write-downs on intangible assets amounted to DKK 8 million in the first half-year, unchanged relative to 2020.

Profit before and after tax
The profit before tax was DKK 716 million, equivalent to a return on average equity of 17.4% p.a.

The profit after tax was DKK 573 million, equivalent to a return on average equity of 13.9% p.a.

Balance sheet items and contingent liabilities
The bank’s balance sheet total at the end of June 2021 stood at DKK 57,123 million, compared to DKK 53,984 million at the end of June 2020.

Relative to June 2020, the bank’s deposits including pooled schemes increased by 4% from DKK 39,670 million to DKK 41,376 million at the end of June 2021, while its loans in the same period increased by 6% from DKK 35,260 million to DKK 37,268 million. Loans increased by 0.2% in the second quarter of 2021.

The bank’s contingent liabilities including guarantees at the end of June 2021 amounted to DKK 11,811 million, compared to DKK 9,379 million at the end of June 2020.

Credit intermediation
In addition to the traditional bank loans shown on its balance sheet, the bank also arranges mortgage loans on behalf of both Totalkredit and DLR Kredit.

The development in the bank’s total credit intermediation is positive by 8% compared to the end of 2020.

The development is shown in the following summary:

Total credit intermediation

30 June
2021
DKK million

30 June
2020
DKK million

31 Dec.
2020
DKK million

Loans and other receivables at amortised cost

37,268

35,260

36,241

Arranged mortgage loans and funded home loans – Totalkredit

41,708

37,720

39,454

Arranged mortgage loans – DLR Kredit

9,638

9,291

9,511

Total

88,614

82,271

85,206

Securities and market risk
The item “Shares etc.” amounted to DKK 1,373 million at the end of June 2021, with DKK 27 million in listed shares and investment fund certificates and DKK 1,346 million in sector shares etc., mainly in the companies DLR Kredit, BI Holding and PRAS.

The bond portfolio amounted to DKK 6,966 million, of which the vast majority consisted of AAA-rated Danish government and mortgage credit bonds.

The total interest rate risk – impact on profit of a one percentage point change in interest level – was computed as 1.1% of the bank’s tier 1 capital on 30 June 2021.

The bank’s risk of losses based on a Value at Risk model (computed with a 10-day horizon and 99% probability) was as follows in the first half of 2021:

Risk in DKK million

Risk relative to equity
end of period in %

Highest risk of loss

15.0

0.18%

Lowest risk of loss

7.4

0.09%

Average risk of loss

11.5

0.14%

End-of-period risk of loss

13.6

0.16%

The bank’s total market risk within exposures to interest rate risk, listed shares etc. and foreign currency remains at a moderate level, and this policy will continue.

Liquidity
The bank’s liquidity situation is good. The bank’s short-term funding with term to maturity of less than 12 months thus amounts to DKK 1.2 billion, balanced by DKK 10.7 billion in short-term deposits in Danmarks Nationalbank, the central bank of Denmark, and in liquid tradable securities.

The bank’s deposits (excluding pooled schemes) and equity exceeded its loans by DKK 7.3 billion and these two items therefore more than fully finance the loan portfolio. In addition, part of the loan portfolio for renewable energy projects is financed back-to-back with KfW Bankengruppe, which means that DKK 1.1 billion can be disregarded in terms of liquidity.

In terms of liquidity coverage ratio (LCR), the bank must comply with the statutory requirement of at least 100%. On 30 June 2021, the bank’s LCR was 185%, which thus met the statutory requirement by a good margin.
Capital structure
The bank’s equity at the beginning of 2021 was DKK 8,146 million. The profit for the period must be added to this, while the dividend paid and the value of the bank’s own shares bought must be subtracted. After this, equity at the end of June 2021 was DKK 8,333 million.

The bank’s total capital ratio and tier 1 capital ratio were 21.3% and 17.7% respectively at the end of June 2021.

Capital ratios

H1
2021

H1
2020

2020

2019

2018

Common equity tier 1 capital ratio (%)

17.7

18.1

17.5

14.7

14.6

Tier 1 capital ratio (%)

17.7

18.1

17.5

14.7

14.6

Total capital ratio (%)

21.3

22.1

21.1

20.0

18.4

MREL requirement (%) – fixed by the Danish FSA

17.9

20.2

17.9

20.7

19.7

MREL capital ratio (%)

28.2

30.0

26.7

27.3

24.9

A new five-year phasing-in period for the dynamic component of the IFRS 9 transitional arrangements was introduced in 2020. The bank now uses both the static and the dynamic components of the IFRS 9 transitional arrangements, including the simplified approach to recalculation of capital requirements.

Calculated without the IFRS 9 transition programmes, the bank’s total capital ratio was 20.1% and the common equity tier 1 capital ratio 16.4% on 30 June 2021.

In the second quarter of 2021, the bank has started using a new system for calculating the risk-weighted assets. The system was delivered by Moody’s and implemented at the bank’s IT supplier, Bankdata. The system ensures continuous updating of future amendments to acts.

At the end of June 2021, the bank has calculated the individual solvency requirement at 9.3%. To this should be added a capital conservation buffer of 2.5% and a countercyclical buffer of 0%. The total requirement for the bank’s total capital was thus 11.8% at the end of June 2021.

On 22 June 2021, the Systemic Risk Council issued a press release containing a recommendation to re-activate the countercyclical capital buffer at 1.0% with effect from 30 September 2022. The Systemic Risk Council also stated that, unless the build-up of risk in the financial system is curbed considerably, the Council expects to recommend a further increase of the buffer rate to 2.0% by the end of 2022.

On 24 June 2021 the Minister for Industry, Business and Financial Affairs decided to re-activate the countercyclical capital buffer at 1.0% from 30 September 2022.

Compared with the actual total capital of DKK 8.8 billion, the bank had excess capital cover of DKK 4.9 billion relative to the individual solvency requirement, equivalent to 12.0 percentage points at the end of June 2021, and excess capital cover of DKK 3.9 billion compared to the total requirement, equivalent to 9.5 percentage points.

In December 2020, the bank received an MREL requirement of 17.9% applicable from 28 December 2020.

The bank operates with three different capital targets. The capital targets specify that the common equity tier 1 capital ratio must be at least 13.5%, the total capital ratio at least 17% and the MREL capital ratio for covering the MREL requirement at least 23.5%, including the capital buffers.

All capital targets must be met at the end of the year, but the capital ratios may fluctuate over the year. However, the MREL requirement must always be met.

To comply with the MREL requirement, the bank had established funding by the end of 2017 to meet the requirements for grandfathering of contractual senior capital. DKK 0.9 billion of the funding was included to meet the bank’s MREL requirement at the end of June 2021. In addition, the bank issued non-preferred senior capital totalling the equivalent of DKK 1.3 billion from December 2018 to December 2020. In May and June 2021, the bank has issued additional non-preferred senior capital totalling the equivalent of DKK 638 million, meaning that the bank has now issued non-preferred senior capital to the equivalent of DKK 1.9 billion in total. The bank judges that the issues in the second quarter of 2021 have met the need for issues in 2021.

The bank’s capital for covering the MREL requirement totalled DKK 11.6 billion on 30 June 2021, equivalent to an MREL capital ratio of 28.2%. The excess cover relative to the MREL requirement on 30 June 2021 was thus 10.3 percentage points.

Share buy-back programme and capital reduction
The bank’s annual general meeting of 3 March 2021 renewed the previous authorisation of the board of directors to permit the bank, in accordance with applicable law, to acquire its own shares to a total nominal value of 10% of the bank’s share capital. The share buy-back programme for the period 4 February to 29 July 2021 was completed by DKK 225 million. On 30 June 2021, 305,500 shares had been bought back and, when the programme ended on 29 July 2021, a total of 361,605 shares had been bought back, which the overview below shows. The remainder of the DKK 255 million share buy-back programme, equivalent to DKK 30 million, will be executed in the period 5 August to 30 September 2021.

The general meeting further decided to cancel the 160,600 of the bank’s own shares that were bought in 2020. The capital reduction was finalised on 6 May 2021.

On 30 June 2021, the bank’s actual share capital was thus DKK 28,762,221 in nom. DKK 1 shares: see below.

Number of shares

Beginning of 2021

29,228,321

Capital reduction completed by cancellation of own shares

-160,600

After the capital reduction in May 2021

29,067,721

DKK 255 million share buy-back programme

Bought under the share buy-back programme at the end of June 2021

-305,500

Actual number of shares on 30 June 2021

28,762,221

DKK 255 million share buy-back programme

Bought under the share buy-back programme in July 2021

-56,105

Actual number of shares on 31 July 2021

28,706,116

In August 2021, the bank has received the Danish FSA’s approval of a new share buy-back programme totalling DKK 242.5 million for implementation from 1 October 2021. The amount of the share buy-back corresponds to the part of the 2020 share buy-back programme totalling DKK 300 million, which was not completed in 2020.

The board of directors is expected to make the final decision to initiate the share buy-back programme during the second half of 2021.

The Supervisory Diamond
The bank complies with the Danish FSA’s Supervisory Diamond which contains a number of benchmarks and associated limit values which Danish banks must observe.

The Supervisory Diamond benchmarks and limit values and the bank’s key figures are given in the following table.

Benchmark

Limit value

H1
2021

H1
2020

2020

2019

2018

Funding ratio

< 1

0.7

0.7

0.7

0.7

0.7

Liquidity benchmark

> 100%

178.6%

222.5%

177.6%

193.2%

179.5%

Total large exposures

< 175%

108.4%

103.8%

99.8%

121.0%

106.0%

Growth in loans

< 20%

5.6%

2.1%

2.2%

6.3%

*72.3%

Real property exposure

< 25%

17.9%

18.5%

17.9%

17.5%

15.8%

* The increase was mainly caused by the merger with Nordjyske Bank. The pro forma growth in loans for the full year 2018 was 7.0%.

As shown above, Ringkjøbing Landbobank meets all five current limit values by a good margin.

Rating
The bank is rated by the international credit rating agency Moody’s Investors Service.

Moody’s confirmed the bank’s ratings on 30 March 2021, including Aa3 for long-term bank deposits, P-1 for short-term bank deposits and A1 for long-term issuer – all with stable outlook.

BIL Danmark
On 23 June 2021, the bank entered into an agreement with Banque Internationale à Luxembourg S.A., of Luxembourg, regarding takeover of all BIL Danmark’s clients. The Danish FSA’s approval of a Section 204 takeover pursuant to the Danish Financial Business Act was received on 25 June 2021.

BIL Danmark has branches in both Copenhagen and Aarhus. The clients taken over will primarily be attached to the bank’s private banking branches in Holte and Aarhus.

Ringkjøbing Landbobank took over the client portfolio on 1 July 2021. The clients will be transferred to Ringkjøbing Landbobank during the third quarter of 2021 and will continue to be served by BIL Danmark until then.

The takeover comprises

distributed across approximately 500 families and companies.

In connection with the transaction, eight client-oriented employees were transfered from BIL Danmark to Ringkjøbing Landbobank.

Payment for the client portfolio will take the form of an earn-out, based on earnings over a two-year period. In this connection, intangible assets in the form of client relationships equivalent to DKK 45 million will be capitalised on the bank’s balance sheet.

The purchase of the BIL Danmark client portfolio will strengthen the bank’s position in private banking.

New mobile banking service
The bank’s IT supplier, Bankdata, has supplied a new mobile banking app. The new mobile banking app establishes a new future-proofed communication platform with the customers and also offers good possibilities for customer self-compliance, better security and integration with third parties.

Roll-out of the new mobile banking app will take place during the third quarter of 2021.

Bank of the year
In June 2021, the bank was awarded the accolade of Bank of the Year among major banks for the sixth time in a row.

As in previous years, the award was made by the online news portal FinansWatch in collaboration with the audit and consultancy firm EY. We are very humbled by this, since happy customers and skilled staff are fundamental to a good bank.

Enlarging the head office
The bank has entered into agreements with a number of builders in the second quarter of 2021 and thus made the final decision to enlarge the head office in Ringkøbing. The plan is that the builders will start the construction work in the fourth quarter of 2021 for completion in December 2022. The enlargement will add just over 1,200 m2.

The enlargement of the head office will help ensure that the bank can continue to pursue an organic growth strategy.

Job appraisal reviews
The annual job appraisal reviews were completed in June. We are pleased to note that the preceding evaluation process and subsequent interviews showed that both wellbeing and collaboration in the bank are generally really good – which is particularly gratifying after five quarters coping with the coronavirus.
The coronavirus situation
We see support of our customers and business partners during the coronavirus pandemic as an important part of our task. From the start of the pandemic we have, of course, also placed great emphasis on protecting our employees to lessen the risk of transmission of the virus.

The bank has thus prepared for operating in an ever-changing environment due to the coronavirus situation and if varying kinds of restrictions may be reintroduced.

Expected results for 2021
On publication of the 2020 annual report, the bank announced its expectations for core earnings for 2021 in the range DKK 1,100-1,300 million and profit before tax in the range DKK 1,000-1,300 million.

On 8 June 2021, the bank upwardly adjusted its expectations for 2021, primarily as a result of a better income flow than previously expected, primarily as a result of a continued big increase in customers and a high level of activity.

The upwardly adjusted expectations for the full year are now core earnings in the range DKK 1,300-1,500 million and profit before tax in the range DKK 1,200-1,500 million. The upwardly adjusted expectations are maintained.

Accounting policies
The accounting policies are unchanged relative to those in the submitted and audited 2020 annual report.

Key figures

H1
2021

H1
2020

Full year
2020

Key figures for the bank (percent)

Profit before tax as a percentage of average equity, per annum

17.4

12.6

14.5

Net profit as a percentage of average equity, per annum

13.9

10.1

11.7

Rate of costs

34.2

36.8

36.2

Common equity tier 1 capital ratio

17.7

17.9

17.5

Tier 1 capital ratio

17.7

17.9

17.5

Total capital ratio

21.3

21.9

21.1

MREL requirement – fixed by the Danish FSA

17.9

20.2

17.9

MREL capital ratio

28.2

29.8

26.7

Key figures per DKK 1 share (DKK)

Core earnings

25.3

18.2

40.2

Net profit

24.9

13.3

31.6

Book value

289.7

261.9

280.2

Share price, end of period

636.0

468.5

554.0

Basis of calculation, number of shares

28,765,821

29,067,721

29,067,721

Quarterly overviews

Core earnings

Q2
2021

Q1
2021

Q4
2020

Q3
2020

Q2
2020

Q1
2020

Q4
2019

Q3
2019

Q2
2019

Q1
2019

(DKK million)

Net interest income

327

325

321

319

311

305

292

294

296

291

Net fee and commission income excluding
securities trading

166

159

156

147

136

152

154

163

159

150

Income from sector shares etc.

43

40

43

38

35

35

36

36

36

37

Foreign exchange income

13

16

13

9

9

10

8

9

8

6

Other operating income

1

4

1

0

1

0

5

7

0

1

Total core income excluding securities trading

550

544

534

513

492

502

495

509

499

485

Securities trading

29

56

32

39

28

39

35

29

23

41

Total core income

579

600

566

552

520

541

530

538

522

526

Staff and administration expenses

195

198

206

179

190

191

202

180

198

198

Depreciation and write-downs on tangible assets

4

3

4

5

2

3

9

8

4

2

Other operating expenses

2

2

2

2

0

4

1

0

2

1

Total expenses etc.

201

203

212

186

192

198

212

188

204

201

Core earnings before impairment charges for loans

378

397

354

366

328

343

318

350

318

325

Impairment charges for loans and other
receivables etc.

-19

-29

-38

-44

-66

-75

-25

-26

-24

-25

Core earnings

359

368

316

322

262

268

293

324

294

300

Result for the portfolio etc.

+7

-10

+15

+17

+29

-70

-4

+20

+7

+26

Amortisation and write-downs on intangible assets

4

4

4

3

4

4

4

3

4

4

Profit before tax

362

354

327

336

287

194

285

341

297

322

Tax

71

72

64

64

60

36

62

66

76

63

Net profit

291

282

263

272

227

158

223

275

221

259

Quarterly overviews – continued

Balance sheet items and contingent liabilities

End of
Q2
2021

End of
Q1
2021

End of
Q4
2020

End of
Q3
2020

End of
Q2
2020

End of
Q1
2020

End of
Q4
2019

End of
Q3
2019

End of
Q2
2019

End of
Q1
2019

(DKK million)

Loans

37,268

37,210

36,241

35,479

35,260

36,130

35,465

34,757

34,528

34,195

Deposits including pooled schemes

41,376

41,766

39,639

39,204

39,670

37,051

38,128

38,554

39,070

37,439

Equity

8,333

8,132

8,146

7,884

7,612

7,380

7,610

7,426

7,231

7,071

Balance sheet total

57,123

56,845

54,862

53,956

53,984

51,531

52,941

53,601

52,426

50,266

Contingent liabilities

11,811

10,370

9,812

9,590

9,379

9,992

9,665

10,836

10,466

7,976

Statement of capital

End of
Q2
2021

End of
Q1
2021

End of
Q4
2020

End of
Q3
2020

End of
Q2
2020

End of
Q1
2020

End of
Q4
2019

End of
Q3
2019

End of
Q2
2019

End of
Q1
2019

(DKK million)

Common equity tier 1

7,274

7,122

7,277

7,049

6,973

6,109

6,072

5,624

5,441

5,284

Tier 1 capital

7,274

7,122

7,277

7,049

6,973

6,109

6,072

5,624

5,441

5,284

Total capital

8,763

8,614

8,774

8,553

8,507

8,009

8,242

7,786

6,854

6,667

MREL capital

11,596

10,837

11,112

11,587

11,580

10,985

11,248

10,790

9,551

9,033

Total risk exposure

41,063

42,271

41,561

39,682

38,900

41,444

41,223

39,547

40,106

38,308

(Percent)

Common equity tier 1 capital ratio

17.7

16.8

17.5

17.8

17.9

14.7

14.7

14.2

13.6

13.8

Tier 1 capital ratio

17.7

16.8

17.5

17.8

17.9

14.7

14.7

14.2

13.6

13.8

Total capital ratio

21.3

20.4

21.1

21.6

21.9

19.3

20.0

19.7

17.1

17.4

MREL capital ratio

28.2

25.6

26.7

29.2

29.8

26.5

27.3

27.3

23.8

23.6

Statements of income and comprehensive income

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year
2020
DKK 1,000

1

Interest income

704,063

680,406

1,373,215

2

Interest expenses

45,476

62,799

120,910

Net interest income

658,587

617,607

1,252,305

3

Dividends from shares etc.

73,048

71,106

71,241

4

Fee and commission income

454,908

398,037

814,821

4

Fee and commission expenses

44,922

42,604

85,545

Net interest and fee income

1,141,621

1,044,146

2,052,822

5

Value adjustments

+34,528

-19,850

+126,079

Other operating income

4,751

619

2,054

6,7

Staff and administration expenses

392,539

380,689

765,933

Amortisation, depreciation and write-downs on
intangible and tangible assets

14,544

12,866

29,241

Other operating expenses

4,018

4,218

8,110

8,12

Impairment charges for loans and other receivables etc.

-53,564

-145,938

-233,348

Results from investments in associated companies and
group undertakings

0

0

-13

Profit before tax

716,235

481,204

1,144,310

9

Tax

143,050

95,952

224,596

Net profit

573,185

385,252

919,714

Other comprehensive income:

Value changes in pension liabilities

0

0

-561

Total comprehensive income for the period

573,185

385,252

919,153

Core earnings

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year
2020
DKK 1,000

Net interest income

651,865

616,265

1,255,816

4

Net fee and commission income excluding securities
trading

325,164

288,490

591,147

Income from sector shares etc.

82,834

69,626

150,935

4

Foreign exchange income

29,113

18,725

40,759

Other operating income

4,751

619

2,054

Total core income excluding securities trading

1,093,727

993,725

2,040,711

4

Securities trading

84,822

66,943

138,129

Total core income

1,178,549

1,060,668

2,178,840

6,7

Staff and administration expenses

392,539

380,689

765,933

Depreciation and write-downs on tangible assets

7,044

5,366

14,241

Other operating expenses

4,018

4,218

8,110

Total expenses etc.

403,601

390,273

788,284

Core earnings before impairment charges for loans

774,948

670,395

1,390,556

Impairment charges for loans and other receivables etc.

-48,416

-140,790

-223,052

Core earnings

726,532

529,605

1,167,504

Result for the portfolio etc.

-2,797

-40,901

-8,194

Amortisation and write-downs on intangible assets

7,500

7,500

15,000

Profit before tax

716,235

481,204

1,144,310

9

Tax

143,050

95,952

224,596

Net profit

573,185

385,252

919,714

Balance sheet

Note

30 June 2021
DKK 1,000

30 June 2020
DKK 1,000

31 Dec.
2020
DKK 1,000

Assets

Cash in hand and demand deposits with central banks

3,579,716

688,104

659,004

10

Receivables from credit institutions and central banks

223,034

3,950,526

3,376,233

11,12,13

Total loans and other receivables at amortised cost

37,268,165

35,259,875

36,241,166

Loans and other receivables at amortised cost

36,153,561

34,021,803

35,088,380

Wind turbine loans etc. with direct funding

1,114,604

1,238,072

1,152,786

14

Bonds at fair value

6,965,697

6,575,542

6,636,965

15

Shares etc.

1,373,038

1,297,597

1,385,807

Investments in associated companies

482

457

482

Investments in group undertakings

11,997

12,035

11,997

16

Assets linked to pooled schemes

5,159,665

4,240,387

4,700,080

17

Intangible assets

1,027,338

1,042,338

1,034,838

Total land and buildings

212,660

221,320

215,910

Investment properties

7,667

11,567

7,667

Domicile properties

177,803

189,735

186,971

Domicile properties (leasing)

27,190

20,018

21,272

Other tangible assets

15,871

18,466

17,626

Current tax assets

0

0

24,249

Deferred tax assets

18,985

1,828

17,868

Temporary assets

6,368

9,115

6,368

Other assets

1,242,803

648,719

510,327

Prepayments

17,106

17,964

23,209

Total assets

57,122,925

53,984,273

54,862,129

Balance sheet – continued

Note

30 June 2021
DKK 1,000

30 June 2020
DKK 1,000

31 Dec.
2020
DKK 1,000

Liabilities and equity

18

Debt to credit institutions and central banks

2,256,658

2,106,397

2,448,918

Total deposits and other debt

41,375,546

39,670,395

39,638,645

19

Deposits and other debt

36,215,881

35,430,008

34,938,565

Deposits in pooled schemes

5,159,665

4,240,387

4,700,080

20

Issued bonds at amortised cost

2,969,715

2,363,398

2,361,796

Preferred senior capital

1,024,285

1,034,703

1,032,489

Non-preferred senior capital

1,945,430

1,328,695

1,329,307

Current tax liabilities

73,808

17,720

0

Other liabilities

452,366

561,724

591,109

Deferred income

1,976

2,129

1,728

Total debt

47,130,069

44,721,763

45,042,196

Provisions for pensions and similar liabilities

2,278

2,121

2,560

12

Provisions for losses on guarantees

77,194

63,142

85,814

12

Other provisions for liabilities

33,540

34,597

36,534

Total provisions for liabilities

113,012

99,860

124,908

Tier 2 capital

1,546,998

1,551,091

1,549,150

21

Total subordinated debt

1,546,998

1,551,091

1,549,150

22

Share capital

29,068

29,228

29,228

Net revaluation reserve under the equity method

406

419

406

Retained earnings

8,303,372

7,581,912

7,909,643

Proposed dividend etc.

206,598

Total shareholders’ equity

8,332,846

7,611,559

8,145,875

Total liabilities and equity

57,122,925

53,984,273

54,862,129

23

Own shares

24

Contingent liabilities etc.

25

Assets provided as security

Credit risk

26

Loans and guarantees in percent, by sector and industry

27

Loans, guarantees and unutilised credit facilities and loan undertakings by credit quality and IFRS 9 stages

28

Miscellaneous comments

Statement of changes in equity

DKK 1,000

Share
capital

Net revaluation
reserve under the equity method

Retained earnings

Proposed dividend etc.

Total share-holders’ equity

As at 30 June 2021:

Shareholders’ equity at the end of the previous financial year

29,228

406

7,909,643

206,598

8,145,875

Reduction of share capital

-160

160

0

Dividend etc. paid

-206,598

-206,598

Dividend received on own shares

1,645

1,645

Purchase of own shares

-613,400

-613,400

Sale of own shares

424,304

424,304

Other equity transactions (employee shares)

7,835

7,835

Total comprehensive income for the period

573,185

573,185

Shareholders’ equity
on the balance sheet date

29,068

406

8,303,372

0

8,332,846

DKK 1,000

Share
capital

Net revaluation
reserve under the equity method

Retained earnings

Proposed dividend etc.

Total share-holders’ equity

As at 30 June 2020:

Shareholders’ equity at the end of the previous financial year

29,662

419

7,252,515

327,280

7,609,876

Reduction of share capital

-434

434

0

Dividend etc. paid

-327,280

-327,280

Dividend received on own shares

4,966

4,966

Purchase of own shares

-421,125

-421,125

Sale of own shares

351,851

351,851

Other equity transactions (employee shares)

8,019

8,019

Total comprehensive income for the period

385,252

385,252

Shareholders’ equity
on the balance sheet date

29,228

419

7,581,912

0

7,611,559

Statement of changes in equity – continued

DKK 1,000

Share
capital

Net revaluation
reserve under the equity method

Retained earnings

Proposed dividend etc.

Total share-holders’ equity

As at 31 December 2020:

Shareholders’ equity at the end of the previous financial year

29,662

419

7,252,515

327,280

7,609,876

Reduction of share capital

-434

434

0

Dividend etc. paid

-327,280

-327,280

Dividend received on own shares

4,966

4,966

Purchase of own shares

-680,099

-680,099

Sale of own shares

611,241

611,241

Other equity transactions (employee shares)

8,018

8,018

Total comprehensive income for the year

-13

712,568

206,598

919,153

Shareholders’ equity
on the balance sheet date

29,228

406

7,909,643

206,598

8,145,875

Statement of capital

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

Credit risk

34,153,097

33,777,036

35,080,095

Market risk

3,341,854

2,216,053

2,912,209

Operational risk

3,568,376

2,906,665

3,568,376

Total risk exposure

41,063,327

38,899,754

41,560,680

Shareholders’ equity

8,332,846

7,611,559

8,145,875

Proposed dividend etc.

-206,598

Deduction for expected dividend

-196,603

-147,167

Addition for transition programme concerning IFRS 9

571,682

677,179

661,258

Deduction for insufficient coverage for non-performing exposures

-3,715

Deduction for the sum of equity investments etc. above 10%

-281,387

-84,170

-244,297

Deduction for prudent valuation

-18,214

-16,151

-16,284

Deduction for intangible assets

-1,027,338

-1,042,338

-1,034,838

Deferred tax on intangible assets

22,898

26,198

24,548

Deduction of amount of share buy-back programme

-255,000

-57,504

-57,504

Actual utilisation of amount of share buy-back programme

183,855

57,504

57,504

Deduction for trading limit for own shares

-55,000

-55,000

-55,000

Actual utilisation of the trading limit for own shares

388

2,525

2,794

Common equity tier 1

7,274,412

6,972,635

7,277,458

Tier 1 capital

7,274,412

6,972,635

7,277,458

Tier 2 capital

1,543,615

1,545,435

1,543,925

Deduction for the sum of equity investments etc. above 10%

-54,980

-10,998

-46,950

Total capital

8,763,047

8,507,072

8,774,433

Contractual senior funding (grandfathered)

891,424

1,766,956

1,031,852

Non-preferred senior capital

1,941,169

1,305,902

1,305,374

MREL capital

11,595,640

11,579,930

11,111,659

Statement of capital – continued

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

Common equity tier 1 capital ratio (%)

17.7

17.9

17.5

Tier 1 capital ratio (%)

17.7

17.9

17.5

Total capital ratio (%)

21.3

21.9

21.1

MREL capital ratio (%)

28.2

29.8

26.7

Pillar I capital requirements

3,285,066

3,111,980

3,324,854

Individual solvency requirement (%)

9.3

9.3

9.3

Capital conservation buffer (%)

2.5

2.5

2.5

Countercyclical buffer (%)

0.0

0.0

0.0

Total requirement for the bank’s total capital (%)

11.8

11.8

11.8

Excess cover in percentage points relative to individual solvency requirement

12.0

12.6

11.8

Excess cover in percentage points relative to total requirement for total capital

9.5

10.1

9.3

MREL requirement (%) – fixed by the Danish FSA

17.9

20.2

17.9

Excess cover in percentage points relative to MREL requirement

10.3

9.6

8.8

Notes

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year 2020
DKK 1,000

1

Interest income

Receivables from credit institutions and central
banks – net

-6,049

-8,786

-15,917

Loans and other receivables

616,162

629,492

1,251,394

Discounts – amortisation concerning loans taken over etc.

5,148

5,148

10,296

Loans – interest on the impaired part of loans

-25,192

-31,982

-59,678

Bonds – net

13,694

4,820

13,188

Total derivative financial instruments – net

10,946

11,266

20,424

of which currency contracts – net

4,352

8,017

9,740

of which interest-rate contracts – net

6,594

3,249

10,684

Other interest income

1,223

1,762

2,862

Total interest income

615,932

611,720

1,222,569

Negative interest income transferred to interest expenses

Receivables from credit institutions and central banks

2,876

9,842

17,969

Bonds

2,574

4,383

10,883

Total derivative financial instruments

1,527

2,988

4,064

of which currency contracts

320

776

1,102

of which interest-rate contracts

1,207

2,212

2,962

Total negative interest income transferred to interest expenses

6,977

17,213

32,916

Negative interest expenses transferred from interest expenses

Debt to credit institutions and central banks

0

76

161

Deposits and other debt

81,154

51,397

117,569

Total negative interest expenses transferred from interest expenses

81,154

51,473

117,730

Total interest income

704,063

680,406

1,373,215

of which interest income from collateralised repurchase agreements/reverse repo transactions booked under the item “Loans and other receivables”

-60

Notes – continued

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year 2020
DKK 1,000

2

Interest expenses

Debt to credit institutions and central banks – net

4,674

6,051

11,885

Deposits and other debt – net

-71,620

-40,854

-97,803

Issued bonds

10,726

10,285

21,538

Subordinated debt

13,135

18,000

32,003

Other interest expenses

430

631

2,641

Total interest expenses

-42,655

-5,887

-29,736

Negative interest expenses transferred to interest income

Debt to credit institutions and central banks

0

76

161

Deposits and other debt

81,154

51,397

117,569

Total negative interest expenses transferred to interest income

81,154

51,473

117,730

Negative interest income transferred from interest income

Receivables from credit institutions and central banks

2,876

9,842

17,969

Bonds

2,574

4,383

10,883

Total derivative financial instruments

1,527

2,988

4,064

of which currency contracts

320

776

1,102

of which interest-rate contracts

1,207

2,212

2,962

Total negative interest income transferred from
interest income

6,977

17,213

32,916

Total interest expenses

45,476

62,799

120,910

3

Dividends from shares etc.

Shares

73,048

71,106

71,241

Total dividends from shares etc.

73,048

71,106

71,241

4

Gross fee and commission income

Securities trading

93,884

75,915

154,196

Asset management and custody accounts

89,488

81,868

165,388

Payment handling

55,944

49,041

100,790

Loan fees

50,796

41,489

91,361

Guarantee commission and mortgage credit commission etc.

119,421

108,865

224,817

Other fees and commission

45,375

40,859

78,269

Total gross fee and commission income

454,908

398,037

814,821

Net fee and commission income

Securities trading

84,822

66,943

138,129

Asset management and custody accounts

81,033

72,547

150,012

Payment handling

37,967

31,979

63,072

Loan fees

44,648

37,938

82,039

Guarantee commission and mortgage credit commission etc.

119,421

108,865

224,817

Other fees and commission

42,095

37,161

71,207

Total net fee and commission income

409,986

355,433

729,276

Foreign exchange income

29,113

18,725

40,759

Total net fee, commission and foreign exchange income

439,099

374,158

770,035

Notes – continued

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year 2020
DKK 1,000

5

Value adjustments

Other loans and receivables, fair value adjustment

-2,577

1,453

1,292

Bonds

-16,741

-30,958

10,658

Shares etc.

12,145

-5,409

76,441

Foreign exchange

29,113

18,725

40,759

Total derivative financial instruments

-15,339

23,894

24,106

of which currency contracts

-19,887

21,332

22,235

of which interest-rate contracts

4,549

2,556

1,870

of which share contracts

-1

6

1

Assets linked to pooled schemes

271,792

-196,275

124,574

Deposits in pooled schemes

-271,792

196,275

-124,574

Issued bonds etc.

27,927

-27,555

-27,177

Total value adjustments

34,528

-19,850

126,079

6

Staff and administration expenses

Payments and fees to general management, board of
directors and shareholders’ committee

General management

8,933

7,965

17,174

Board of directors

2,050

1,585

3,170

Shareholders’ committee

0

0

857

Total

10,983

9,550

21,201

Staff expenses

Salaries

178,818

178,657

344,570

Pensions

18,938

21,761

41,958

Social security expenses

3,042

3,367

5,244

Costs depending on number of staff

29,690

30,350

60,840

Total

230,488

234,135

452,612

Other administration expenses

151,068

137,004

292,120

Total staff and administration expenses

392,539

380,689

765,933

7

Number of full-time employees

Average number of employees during the period
converted into full-time employees

614

645

632

Number of full-time employees at the end of the period

612

640

612

8

Impairment charges for loans and other receivables etc.

Net changes in impairment charges for loans and other receivables etc. and provisions for losses on guarantees and unutilised credit facilities

68,209

184,363

172,975

Actual realised net losses

10,547

-6,443

120,051

Interest on the impaired part of loans

-25,192

-31,982

-59,678

Total impairment charges for loans and other receivables etc.

53,564

145,938

233,348

Notes – continued

Note

H1
2021
DKK 1,000

H1
2020
DKK 1,000

Full year 2020
DKK 1,000

9

Tax

Tax calculated on income for the year

137,350

91,600

223,794

Adjustment of deferred tax

-2,636

2,004

-3,689

Adjustment of tax calculated for previous years

8,336

2,348

4,491

Total tax

143,050

95,952

224,596

Effective tax rate (%):

Tax rate currently paid by the bank

22.0

22.0

22.0

Non-taxable income and non-deductible costs*

-2.8

-2.6

-2.5

Adjustment of tax calculated for previous years etc.

0.8

0.5

0.1

Total effective tax rate

20.0

19.9

19.6

* Primarily value adjustment of and dividends from sector shares.

Note

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

10

Receivables from credit institutions and central banks

Demand

173,034

267,102

114,751

Up to and including 3 months

0

3,633,424

3,211,482

More than 1 year and up to and including 5 years

5,000

5,000

5,000

More than 5 years

45,000

45,000

45,000

Total receivables from credit institutions and central banks

223,034

3,950,526

3,376,233

11

Loans and other receivables at amortised cost

Demand

4,296,466

3,185,101

3,859,843

Up to and including 3 months

2,699,357

2,768,568

1,252,486

More than 3 months and up to and including 1 year

6,124,764

6,361,359

7,954,602

More than 1 year and up to and including 5 years

10,939,389

10,163,551

10,053,336

More than 5 years

13,208,189

12,781,296

13,120,899

Total loans and other receivables at amortised cost

37,268,165

35,259,875

36,241,166

of which collateralised repurchase agreements/reverse repo transactions

20,552

Notes – continued

Note

Stage 1
DKK 1,000

Stage 2
DKK
1,000

Stage 3
DKK 1,000

Total
DKK
1,000

12

Impairment charges for loans and other receivables and provisions for losses on guarantees, unutilised credit facilities and loan undertakings

Impairment charges and provisions
– by stages

As at 30 June 2021

Loans and other receivables at amortised cost

249,147

840,023

1,072,925

2,162,095

Guarantees

19,528

16,671

40,995

77,194

Unutilised credit facilities and loan undertakings

13,876

19,664

0

33,540

Total impairment charges and provisions by stages

282,551

876,358

1,113,920

2,272,829

of which management estimates

130,081

279,666

199,190

608,937

As at 30 June 2020

Loans and other receivables at amortised cost

206,485

1,026,425

885,359

2,118,269

Guarantees

18,467

23,698

20,977

63,142

Unutilised credit facilities and loan undertakings

16,601

17,996

0

34,597

Total impairment charges and provisions by stages

241,553

1,068,119

906,336

2,216,008

of which management estimates

95,152

328,620

100,000

523,772

As at 31 December 2020

Loans and other receivables at amortised cost

304,520

839,303

938,449

2,082,272

Guarantees

23,665

23,886

38,263

85,814

Unutilised credit facilities and loan undertakings

18,659

17,875

0

36,534

Total impairment charges and provisions by stages

346,844

881,064

976,712

2,204,620

of which management estimates

205,137

255,284

105,765

566,186

Note

30 June
2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

12

Impairment charges for loans and other receivables and provisions for losses on guarantees, unutilised credit facilities and loan undertakings – continued

In addition to the above, a discount on loans and guarantees taken over from Nordjyske Bank amounted to

19,950

30,246

25,099

The above includes the following stage 3 impairment charges and provisions taken over from Nordjyske Bank:

Cumulative stage 3 impairment charges and provisions at the end of the previous financial year

247,609

507,433

507,433

Change during the period

-45,500

-186,248

-259,824

Total stage 3 impairment charges and provisions
taken over

202,109

321,185

247,609

Notes – continued

Note

Stage 1
DKK 1,000

Stage 2
DKK
1,000

Stage 3
DKK 1,000

Total
DKK
1,000

Impair-ment charges etc. taken to income state-ment
DKK 1,000

12

Impairment charges for loans and
other receivables and provisions for losses on guarantees, unutilised credit facilities and loan undertakings
– continued

Impairment charges and provisions

As at 30 June 2021

Impairment charges and provisions
at the end of the previous financial year

346,844

881,064

976,712

2,204,620

Impairment charges and provisions for new exposures during the period, including new accounts for existing customers

61,579

32,439

53,075

147,093

147,093

Reversed impairment charges and
provisions for repaid accounts

-52,601

-81,391

-58,519

-192,511

-192,511

Transfer of impairment charges and provisions at beginning of period to stage 1

100,798

-95,320

-5,478

0

0

Transfer of impairment charges and provisions at beginning of period to stage 2

-9,119

27,340

-18,221

0

0

Transfer of impairment charges and provisions at beginning of period to stage 3

-1,320

-39,310

40,630

0

0

Impairment charges and provisions during the year resulting from credit
risk change

-163,630

151,536

142,270

130,176

130,176

Previously written down, now definitively lost

0

-16,549

-16,549

Lost, not previously written down

9,024

Received on receivables etc. previously written off

-40,218

Total impairment charges and provisions

282,551

876,358

1,113,920

2,272,829

53,564

of which regarding credit institutions etc.

10,871

0

0

10,871

8,866

Notes – continued

Note

Stage 1
DKK 1,000

Stage 2
DKK
1,000

Stage 3
DKK 1,000

Total
DKK
1,000

Impair-ment charges etc. taken to income state-ment
DKK 1,000

12

Impairment charges for loans and
other receivables and provisions for losses on guarantees, unutilised credit facilities and loan undertakings
– continued

Impairment charges and provisions

30 June 2020

Impairment charges and provisions
at the end of the previous financial year

136,729

404,006

1,490,910

2,031,645

Impairment charges and provisions for new exposures during the period, including new accounts for existing customers

53,772

45,382

110,374

209,528

209,528

Reversed impairment charges and
provisions for repaid accounts

-22,567

-40,101

-151,183

-213,851

-213,851

Transfer of impairment charges and provisions at beginning of period to stage 1

77,271

-34,537

-42,734

0

0

Transfer of impairment charges and provisions at beginning of period to stage 2

-6,897

612,243

-605,346

0

0

Transfer of impairment charges and provisions at beginning of period to stage 3

-778

-3,395

4,173

0

0

Impairment charges and provisions during the year resulting from credit
risk change

4,023

84,521

115,536

204,080

204,080

Previously written down, now definitively lost

-15,394

-15,394

Lost, not previously written down

11,989

Received on receivables etc. previously written off

-65,808

Total impairment charges and provisions

241,553

1,068,119

906,336

2,216,008

145,938

of which regarding credit institutions etc.

2,586

0

0

2,586

1,675

Notes – continued

Note

Stage 1
DKK 1,000

Stage 2
DKK
1,000

Stage 3
DKK 1,000

Total
DKK
1,000

Impair-ment charges etc. taken to income state-ment
DKK 1,000

12

Impairment charges for loans and
other receivables and provisions for losses on guarantees, unutilised credit facilities and loan undertakings
– continued

Impairment charges and provisions

As at 31 December 2020

Impairment charges and provisions
at the end of the previous financial year

136,729

404,006

1,490,910

2,031,645

Impairment charges and provisions for new exposures during the period, including new accounts for existing customers

110,102

86,720

122,077

318,899

318,899

Reversed impairment charges and
provisions for repaid accounts

-35,138

-70,486

-180,189

-285,813

-285,813

Transfer of impairment charges and provisions at beginning of period to stage 1

147,307

-58,732

-88,575

0

0

Transfer of impairment charges and provisions at beginning of period to stage 2

-10,189

453,417

-443,228

0

0

Transfer of impairment charges and provisions at beginning of period to stage 3

-1,573

-17,205

18,778

0

0

Impairment charges and provisions during the year resulting from credit
risk change

-394

83,344

153,320

236,270

236,270

Previously written down, now definitively lost

-96,381

-96,381

Lost, not previously written down

66,781

Received on receivables etc. previously written off

-102,789

Total impairment charges and provisions

346,844

881,064

976,712

2,204,620

233,348

of which regarding credit institutions etc.

2,005

0

0

2,005

1,094

Notes – continued

Note

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

13

Suspended calculation of interest

Loans and other receivables with suspended
calculation of interest on the balance sheet date

179,134

210,744

264,721

14

Bonds at fair value

Listed on the stock exchange

6,965,697

6,575,542

6,636,965

Total bonds at fair value

6,965,697

6,575,542

6,636,965

15

Shares etc.

Listed on Nasdaq Copenhagen

8,595

5,328

10,850

Investment fund certificates

18,766

20,407

29,577

Unlisted shares at fair value

11,357

12,204

14,186

Sector shares at fair value

1,334,320

1,259,658

1,331,194

Total shares etc.

1,373,038

1,297,597

1,385,807

16

Assets linked to pooled schemes

Cash deposits

22,193

14,296

101,854

Bonds:

Other bonds

1,405,930

1,649,986

1,513,905

Total bonds

1,405,930

1,649,986

1,513,905

Shares:

Other shares

767,379

583,278

672,557

Investment fund certificates

2,984,403

2,011,417

2,411,764

Total shares

3,751,782

2,594,695

3,084,321

Other items

-20,240

-18,590

0

Total assets linked to pooled schemes

5,159,665

4,240,387

4,700,080

17

Intangible assets

Goodwill

Cost at the end of the previous financial year

923,255

923,255

923,255

Total cost on the balance sheet date

923,255

923,255

923,255

Write-downs at the end of the previous financial year

0

0

0

Total write-downs on the balance sheet date

0

0

0

Total goodwill on the balance sheet date

923,255

923,255

923,255

Customer relationships

Cost at the end of the previous financial year

150,000

150,000

150,000

Total cost on the balance sheet date

150,000

150,000

150,000

Amortisation at the end of the previous financial year

38,417

23,417

23,417

Amortisation for the period

7,500

7,500

15,000

Total amortisation on the balance sheet date

45,917

30,917

38,417

Total customer relationships on the balance sheet date

104,083

119,083

111,583

Total intangible assets on the balance sheet date

1,027,338

1,042,338

1,034,838

Notes – continued

Note

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

18

Debt to credit institutions and central banks

Demand

1,086,282

700,603

711,366

Up to and including 3 months

0

106,291

292,643

More than 3 months and up to and including 1 year

70,778

163,762

385,258

More than 1 year and up to and including 5 years

491,573

590,736

562,413

More than 5 years

608,025

545,005

497,238

Total debt to credit institutions and central banks

2,256,658

2,106,397

2,448,918

19

Deposits and other debt

Demand

31,147,768

29,139,020

29,973,193

Deposits and other debt with notice:

Up to and including 3 months

461,770

936,063

418,740

More than 3 months and up to and including 1 year

1,619,261

1,855,910

1,395,528

More than 1 year and up to and including 5 years

589,293

1,259,521

668,580

More than 5 years

2,397,789

2,239,494

2,482,524

Total deposits and other debt

36,215,881

35,430,008

34,938,565

of which deposits covered by the Guarantee Fund

61.2%

62.8%

64.1%

Distributed as follows:

Demand

31,021,372

29,009,745

29,849,983

With notice

1,353,354

1,924,570

1,328,132

Time deposits

516,455

624,097

277,918

Long-term deposit agreements

966,304

1,338,331

1,050,783

Special types of deposits

2,358,396

2,533,265

2,431,749

36,215,881

35,430,008

34,938,565

20

Issued bonds at amortised cost

More than 1 year and up to and including 5 years

2,356,502

1,676,433

1,675,470

More than 5 years

613,213

686,965

686,326

Total issued bonds at amortised cost

2,969,715

2,363,398

2,361,796

21

Subordinated debt

Tier 2 capital:

Fixed-rate loan, principal of DKK 500 million,

maturity date 13 June 2028

500,000

500,000

500,000

Floating-rate loan, principal of EUR 100 million,

maturity date 22 August 2029

743,615

745,435

743,925

Floating-rate loan, principal of DKK 300 million,

maturity date 13 June 2030

300,000

300,000

300,000

Adjustment to amortised cost and fair value adjustment

3,383

5,656

5,225

Total subordinated debt

1,546,998

1,551,091

1,549,150

22

Share capital

Number of DKK 1 shares

Beginning of period

29,228,321

29,661,796

29,661,796

Cancelled during the period

-160,600

-433,475

-433,475

End of period

29,067,721

29,228,321

29,228,321

of which reserved for subsequent cancellation

300,900

160,600

160,600

Total share capital

29,068

29,228

29,228

Notes – continued

Note

30 June 2021
DKK 1,000

30 June
2020
DKK 1,000

31 Dec.
2020
DKK 1,000

23

Own shares

Own shares included in the balance sheet at

0

0

0

Market value

191,760

77,766

91,767

Number of own shares:

Beginning of period

165,644

433,721

433,721

Purchased during the period

999,016

1,009,724

1,525,629

Sold during the period

-702,550

-843,980

-1,360,231

Cancelled during the period

-160,600

-433,475

-433,475

End of period

301,510

165,990

165,644

of which reserved for subsequent cancellation

300,900

160,600

160,600

Nominal value of holding of own shares, end of period

302

166

166

Own shares’ proportion of share capital, end of period (%)

1.0

0.6

0.6

24

Contingent liabilities etc.

Contingent liabilities

Financial guarantees

4,371,476

2,943,005

3,536,326

Guarantees against losses on mortgage credit loans

2,849,588

2,661,206

2,813,424

Registration and refinancing guarantees

3,762,824

2,925,519

2,684,855

Sector guarantees

104,802

104,802

104,802

Other contingent liabilities

721,942

744,079

672,423

Total contingent liabilities

11,810,632

9,378,611

9,811,830

Other contractual obligations

Irrevocable credit commitments etc.

335,995

0

0

Total other contractual obligations

335,995

0

0

25

Assets provided as security

First-mortgage loans are provided for renewable energy projects. The loans are funded directly by KfW Bankengruppe, to which security in the associated loans has been provided. Each reduction of the first-mortgage loans is deducted directly from the funding at KfW Bankengruppe.

The balance sheet item is

1,114,604

1,238,072

1,152,786

As collateral for clearing and raising of loans, the bank has pledged securities to the central bank of Denmark at a market price of

162,234

309,807

168,512

Amount deposited in a cover-for-liabilities account as security for the Danish Growth Fund up to a specific limit of loss as a consequence of Ringkjøbing Landbobank’s ownership interest in Landbrugets Finansieringsbank

0

378

0

Collateral under CSA agreements etc.

33,256

44,110

35,193

Notes – continued

Note

30 June 2021
percent

30 June
2020
percent

31 Dec.
2020
percent

26

Loans and guarantees in percent, by sector
and industry

Public authorities

0.0

0.0

0.0

Business customers:

Agriculture, hunting and forestry

Cattle farming etc.

1.2

1.4

1.3

Pig farming etc.

1.2

1.3

1.2

Other agriculture, hunting and forestry

4.8

5.7

5.4

Fisheries

1.6

2.0

1.8

Industry and raw materials extraction

2.4

2.7

2.7

Energy supply

Renewable energy

6.6

6.9

7.2

Other energy supply

0.3

0.3

0.3

Building and construction

3.2

3.4

3.3

Trade

3.3

3.7

3.3

Transport, hotels and restaurants

1.9

2.0

2.0

Information and communication

0.5

0.5

0.5

Finance and insurance

8.1

7.7

8.1

Real property

First mortgage without prior creditors

13.0

12.6

12.7

Other real property financing

4.3

4.6

4.2

Other business customers

6.7

6.7

7.1

Total business customers

59.1

61.5

61.1

Private individuals

40.9

38.5

38.9

Total

100.0

100.0

100.0

Notes – continued

Note

Stage 1
DKK 1,000

Stage 2
DKK 1,000

Stage 3
DKK 1,000

Credit-impaired on initial recogni-tion
DKK 1,000

Total
DKK 1,000

Total
%

27

Loans, guarantees and unutilised credit facilities and loan undertakings by credit quality and IFRS 9 stages

As at 30 June 2021

Credit quality

High

52,126,575

141,350

0

0

52,267,925

73%

Medium

10,263,306

1,620,183

0

0

11,883,489

17%

Low

1,515,242

3,842,766

0

0

5,358,008

7%

Credit-impaired

0

0

1,539,220

318,197

1,857,417

3%

Total

63,905,123

5,604,299

1,539,220

318,197

71,366,839

100%

Impairment charges etc.

282,551

876,358

911,811

202,109

2,272,829

As at 30 June 2020

Credit quality

High

45,626,332

148,067

0

0

45,774,399

72%

Medium

8,688,157

1,793,429

0

0

10,481,586

16%

Low

1,745,464

4,493,542

0

0

6,239,006

10%

Credit-impaired

0

0

955,858

463,229

1,419,087

2%

Total

56,059,953

6,435,038

955,858

463,229

63,914,078

100%

Impairment charges etc.

241,553

1,068,119

585,151

321,185

2,216,008

As at 31 December 2020

Credit quality

High

47,043,274

123,728

0

0

47,167,002

72%

Medium

9,525,618

1,630,433

0

0

11,156,051

17%

Low

1,640,245

3,932,329

0

0

5,572,574

8%

Credit-impaired

0

0

1,415,013

366,909

1,781,922

3%

Total

58,209,137

5,686,490

1,415,013

366,909

65,677,549

100%

Impairment charges etc.

346,844

881,064

729,103

247,609

2,204,620

Notes – continued

28

Miscellaneous comments

The statement of core earnings for 2017 and 2018 on pages 1 and 4 was calculated pro forma by adding up figures from Ringkjøbing Landbobank’s statement of the alternative measure of performance “Core earnings” and pro forma figures from Nordjyske Bank, converted and adjusted to Ringkjøbing Landbobank’s statement of the alternative performance measure “Core earnings”.

Core earnings per share on page 4 are stated for the “old” Ringkjøbing Landbobank up to and including 2017, pro forma for 2018 and for the merged bank from 2019.

The various items presenting the bank’s capital and capital ratios as stated on pages 7, 12, 14, 21, 22 and 38 were adjusted retrospectively in 2020 for the period from the end of the second quarter of 2018 to the end of the second quarter of 2020. The adjustment was made because the Danish FSA advised the bank in 2020 that it cannot include the IFRS 9 addition taken over from Nordjyske Bank in the calculation of the transition programme concerning IFRS 9. The change had a small effect on the various items presenting the bank’s capital and capital ratios.

Main figures

Summary of income statement (DKK million)

H1
2021

H1
2020

Full year
2020

Net interest income

659

618

1,252

Dividends from shares etc.

73

71

71

Net fee and commission income

410

355

730

Net interest and fee income

1,142

1,044

2,053

Value adjustments

+35

-20

+126

Other operating income

5

1

2

Staff and administration expenses

393

381

766

Amortisation, depreciation and write-downs on intangible and tangible assets

15

13

29

Other operating expenses

4

4

8

Impairment charges for loans and receivables etc.

-54

-146

-234

Profit before tax

716

481

1,144

Tax

143

96

224

Net profit

573

385

920

Main figures from the balance sheet (DKK million)

30 June
2021

30 June
2020

31 Dec.
2020

Loans and other receivables at amortised cost

37,268

35,260

36,241

Deposits and other debt including pooled schemes

41,376

39,670

39,639

Subordinated debt

1,547

1,551

1,549

Equity

8,333

7,612

8,146

Balance sheet total

57,123

53,984

54,862

The Danish FSA’s official key figures/ratios etc. for Danish banks

H1
2021

H1
2020

2020

Capital ratios:

Total capital ratio

%

21.3

22.1

21.1

Tier 1 capital ratio

%

17.7

18.1

17.5

Individual solvency requirement

%

9.3

9.3

9.3

MREL requirement – fixed by the Danish FSA

%

17.9

20.2

17.9

MREL capital ratio

%

28.2

30.0

26.7

Earnings:

Return on equity before tax

%

8.7

6.3

14.5

Return on equity after tax

%

7.0

5.1

11.7

Income/cost ratio

DKK

2.54

1.89

2.10

Return on assets

%

1.0

0.7

1.7

Market risk:

Interest rate risk

%

1.1

1.2

1.0

Foreign exchange position

%

1.3

2.1

0.1

Foreign exchange risk

%

0.0

0.0

0.0

Liquidity risk:

Liquidity Coverage Ratio (LCR)

%

185

239

206

Loans and impairments thereon relative to deposits

%

95.2

94.2

96.7

Credit risk:

Loans relative to shareholders’ equity

4.5

4.6

4.4

Growth in loans

%

2.8

-0.6

2.2

Total large exposures (< 175%)

%

108.4

103.8

99.8

Cumulative impairment ratio

%

4.4

4.7

4.6

Impairment ratio

%

0.10

0.31

0.48

Proportion of receivables at reduced interest

%

0.3

0.4

0.5

Share return:

Earnings per share*/***

DKK

1,982.3

1,321.8

3,155.6

Book value per share*/**

DKK

28,967

26,190

28,029

Dividend per share*

DKK

0

0

700

Market price relative to earnings per share*/***

32.1

35.4

17.6

Market price relative to book value per share*/**

2.20

1.79

1.98

* Calculated on the basis of a denomination of DKK 100 per share.
** Calculated on the basis of number of shares in circulation at the end of the period.
*** Calculated on the basis of the average number of shares. The average number of shares is calculated as a simple average of the shares at the beginning and the end of the period.

Management statement

The board of directors and the general management have today discussed and approved the interim report of Ringkjøbing Landbobank A/S for the period 1 January to 30 June 2021.

The interim report is drawn up in accordance with the provisions of the Danish Financial Business Act and other Danish disclosure requirements for listed financial companies. We consider the chosen accounting policies to be appropriate and the estimates made responsible, so that the interim report provides a true and fair view of the bank’s assets, liabilities and financial position as at 30 June 2021 and of the result of the bank’s activities for the period 1 January to 30 June 2021. We also believe that the management’s review contains a true and fair account of the development in the bank’s activities and financial circumstances as well as a description of the most important risks and uncertainties which can affect the bank.

The interim report has not been audited or reviewed, but the bank’s external auditors have verified the profit by carrying out procedures corresponding to those required for a review and have thereby checked that the conditions for ongoing recognition of the profit for the period in the common equity tier 1 capital have been met.

Ringkøbing, 4 August 2021

General management:

John Fisker
CEO

Claus Andersen
General Manager

Jørn Nielsen
General Manager

Carl Pedersen
General Manager

Board of directors:

Martin Krogh Pedersen
Chairman

Mads Hvolby
Deputy Chairman

Jens Møller Nielsen
Deputy Chairman

Morten Jensen

Jon Steingrim Johnsen

Jacob Møller

Lone Rejkjær Söllmann

Sten Uggerhøj

Dan Junker Astrup
Employee board member

Gitte E.S.H. Vigsø
Employee board member

Arne Ugilt
Employee board member

Finn Aaen
Employee board member

Attachment

Orignally published on 2021-08-04 05:26:15 by finance.yahoo.com

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