Ringkjøbing Landbobank's announcement of the annual accounts for 2016 - The best profit in the bank's history

Udgivet den 31-01-2017  |  kl. 08:02  |  

 

(Million DKK) 2016 2015 2014 2013 2012
Total core income 983 954 907 844 823
Total expenses and depreciation -318 -306 -298 -273 -265
Core earnings before impairments 665 648 609 571 558
Impairment charges for loans etc. -48 -60 -87 -120 -157
Core earnings 617 588 522 451 401
Result for the portfolio etc. +44 0 +65 +21 +47
Profit before tax 661 588 587 472 448

 

2016 in headlines:

  • The best profit in the bank's history
  • 12% improvement in profit before tax to DKK 661 million, equivalent to a 21% return on equity
  • Core earnings increased to DKK 617 million, exceeding expectations
  • High levels of customer satisfaction and willingness to recommend the bank
  • The rate of costs was 32.3 - the lowest in Denmark
  • Increase in loans of 3% and in deposits of 8%
  • Proposed dividend raised from DKK 30 to DKK 36 per share. A new buy-back programme for up to DKK 170 million is also proposed, increasing the total pay-out ratio to 62%
  • Expectations for core earnings of DKK 515 - 615 million in 2017, plus the result for the portfolio

Please do not hesitate to contact the bank's management if you have any questions.

 

Yours sincerely,
Ringkjøbing Landbobank
 
 
John Fisker        Jørn Nielsen

 

Management's review

 

Core income

Total core income increased by 3% from DKK 954 million in 2015 to DKK 983 million in 2016. The bank considers the increase highly satisfactory given the market conditions for the sector.

Net interest income was DKK 665 million in 2016 compared to DKK 638 million in 2015, an increase of 4%. In 2016, the bank earned extraordinary one-off interest in­come of approximately DKK 13 million from early repayment of longer-term loans. After adjusting for this, interest income in 2016 thus increased by 2% compared to 2015. The increase in net interest income should be compared to a 3% increase in lending, exclu­ding reverse repo transactions. Net interest income is thus still influenced by competi­tion in the sector, a changed mix of loans and the continuing low interest rate level.

Fee, commission and foreign exchange income amounted to net DKK 271 million in 2016 compared to net DKK 275 million in 2015, a fall of 1%. This development reflects opposite trends. Income decreased in 2016 due to lower income from the conversion of mortgage loans. The decrease can also be attributed to lower income from trading and the loss of subscription commissions concerning investment fund certificates. The fact that the bank started to receive an outsourcing fee for tasks performed in connection with the investment fund certificates is pulling in the opposite direction. There was also an increase in guarantee commission and other fee income, among others from insu­rance.

Earnings from sector shares increased by DKK 2 million to DKK 39 million in 2016. The earnings for the year derive primarily from return on the bank's ownership in DLR Kredit, BankInvest Holding and PRAS.

 

Costs and depreciation

Total costs including depreciation and write-downs on tangible assets were DKK 318 million in 2016 compared to DKK 306 million last year, an increase of 4%.

Expenses for the Guarantee Fund and the Resolution Fund decreased by DKK 15 million to DKK 2 million in 2016 compared to DKK 17 million in 2015.

On the other hand, the bank had higher costs due to its growth strategy. The bank increased its staff during the year, spent more money on national marketing via adverti­sements and TV commercials, and head office was expanded by a big new lease, which was thoroughly renovated and fitted up as bank premises during the year. As the new lease was taken into use, the bank's own premises at Torvet in Ringkøbing were reno­vated. In 2016, the bank also invested in TV and video-conference equipment with a view to ensuring cohesion between the different branches and increasing efficiency.

Finally, the bank had higher IT expenses in 2016. The bank is a co-owner of the data centre, Bankdata, and uses it as its primary supplier and partner. The bank's proportio­nate share of the data centre's costs increased during the year. In addition, expenses in Bankdata's basic budget are increasing as a result of its ambitious IT strategy. Bankdata has also solved a record number of legislation and sector-related IT tasks in recent years, which will continue in the next few years. In addition the bank paid IT expenses for the digitalisation of processes and the implementation of MobilePay as part of its product range.

The rate of costs was unchanged relative to the 2015 level and was computed at 32.3 for 2016, which continues to be the lowest in Denmark.

 

Impairment charges for loans

Impairment charges for loans amounted to DKK 48 million compared with DKK 60 million in the previous year. The falling trend from previous years thus continues for impairment charges, which are equivalent to 0.2% of the total average of loans and guarantees, compared to 0.3% in 2015.

The average credit quality of the bank's loans portfolio in general improved marginally compared to 2015.

During 2016, individual impairment charges were reversed on a number of customers. The bank also terminated and wrote off a small quantity of agricultural exposures during the financial year. These two circumstances contributed to a reduction of the bank's total balance of individual impairment charges during the financial year, from DKK 665 million at the beginning of the year to DKK 589 million at the end of the year.

The bank expects poor financial results for livestock farmers for 2016, in particular for dairy farmers. Many livestock farmers must thus be expected to have negative earnings in 2016.

On this basis, the bank assessed that there was a need to increase collective impairment charges by DKK 68 million, from DKK 273 million at the beginning of the year to DKK 341 million at the end of the year. The increased collective impairment charges are thus mainly related to the livestock farmers in the bank's agricultural portfolio.

Given the current prices to producers and the outlook for livestock production in Den­mark, the bank expects that the majority of pig and dairy producers again have pro­spects of profitable production in 2017.

The bank's total account for impairment charges and provisions was DKK 937 million at the end of the year, equivalent to 4.5% of total loans and guarantees.

Actual losses on loans for the year, less interest on the impaired part of loans and recei­vables previously written off, were on a par with the impairment charges recognised as expenses. Total impairment charges and provisions for the year thus decreased only marginally, by DKK 6 million.

The portfolio of loans with suspended calculation of interest amounts to DKK 60 million, equivalent to 0.3% of the bank's total loans and guarantees at the end of the year. The portfolio thus decreased compared with the end of 2015, when the amount was DKK 74 million.

On the basis of the quality of the bank's loans portfolio and prospects for economic development in the coming year, the bank expects total impairment charges in 2017 to be lower than in 2016.

From the be­ginning of 2018, new impairment rules based on the IFRS 9 will enter into force. The implementation of these rules is not expected to materially influence the bank's situation.

 

Core earnings

(Million DKK)  
2016
 
2015
 
2014
 
2013
 
2012
Total core income 983 954 907 844 823
Total expenses and depreciation -318 -306 -298 -273 -265
Core earnings before impairment charges 665 648 609 571 558
Impairment charges for loans etc. -48 -60 -87 -120 -157
Core earnings 617 588 522 451 401

Core earnings were DKK 617 million, compared with DKK 588 million last year, an increase of 5% and the best in the bank's history. At the beginning of the year, the bank announced expected core earnings for the year in the DKK 475 - 575 million range. This range was upwardly adjusted to DKK 525 - 600 million in connection with the presen­tation of the bank's interim report, and the core earnings realised are thus above the upwardly adjusted range.

 

Result for the portfolio and market risk

The result for the portfolio for 2016 was DKK 44 million, including funding costs for the portfolio. The falling interest rate level in 2016 positively affected the result for the portfolio.

Shares etc. at the end of the year amounted to DKK 531 million, DKK 22 million of which was in listed shares, DKK 147 million in investment fund certificates and DKK 362 million in sector shares etc. The bond portfolio amounted to DKK 3,443 million, and the majority of the portfolio consists of AAA-rated Danish government and mortgage credit bonds.

The total interest rate risk - calculated as the impact on profit of a 1 percentage point change in the interest level - was 1.8% of the bank's tier 1 capital at the end of the year.

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.

The bank's risk of losses calculated on the basis of a Value at Risk model (computed with a 10-day horizon and 99% probability) was as follows in 2016:

  Risk in million DKK Risk relative to equity
end of year in %
Highest risk of loss: 31.8 0.89%
Lowest risk of loss:   6.2 0.17%
Average risk of loss: 15.7 0.44%
End of year risk of loss: 11.1 0.31%

 

Net profit for the year

The profit before tax was DKK 661 million. Af tax of DKK 122 mil­lion the net profit for the year was DKK 539 million, compared with last year's DKK 459 million.

The profit before tax and the net profit for the year is equivalent to a return on equity at the beginning of the year of 21% and 17% respectively after payment of dividend.

 

Balance sheet

The bank's balance sheet at the end of the year stood at DKK 24,258 million compared with last year's DKK 22,384 million.

The bank's deposits increased by 8% from DKK 16,987 million at the end of 2015 to DKK 18,314 million at the end of 2016. The bank's loans, excluding reverse repo transactions, increased by 3% from DKK 17,017 million at the end of 2015 to DKK 17,482 million at the end of 2016.

The growth in the bank's loans was smaller than in the previous four years. The growth is broadly based and development was positive in all of the bank's segments, except in the bank's renewable energy niche. The bank experienced a major decrease in loans in this niche in 2016, because new loans were limited and there were extraordinary repayments of various major projects during the year. On the other hand, the bank's business department experienced substantial growth, and the bank's first-mortgage loans for private homes as well as residential and commercial rental properties develo­ped positively.

The bank's portfolio of guarantees at the end of the year was DKK 2,460 million compa­red to DKK 2,234 million in 2015.

 

Liquidity

The bank's liquidity situation is good. The bank's short-term funding with term to ma­turity of less than 12 months amounts to DKK 0.4 billion, balanced by DKK 5.8 billion primarily in short-term investments in the Danish central bank and in liquid securities.

During 2016, the bank raised longer-term funding to the equivalent value of a total of DKK 0.5 billion with an average term of approximately 3 years. In 2016 the bank also initiated a joint funding partnership with Totalkredit and, in both the third and fourth quarters of 2016, home loans were sold to Totalkredit for funding.

The bank's deposits at the end of the year exceeded the its loans by DKK 833 million. The loans portfolio is thus more than fully financed by the bank's deposits and equity. In addition, part of the loans portfolio for wind turbines in Germany is refinanced "back-to-back" with KfW Bankengruppe, which means that DKK 1,010 million can be disregar­ded in terms of liquidity.

The bank thus requires no financing for the coming year to meet the internal goal that it must always be able to manage for up to 12 months without access to the financial markets.

In terms of liquidity, the bank must comply with the LCR (Liquidity Coverage Ratio) requirement. This key ratio expresses the ability of banks to honour their payment obli­gations for a 30-day period without access to market funds. The LCR figure is computed as the ratio of the bank's cash and cash equivalents / liquid assets to its payment obliga­tions for the next 30 days as computed in accordance with specific rules.

On 1 January 2016, the requirement for non-SIFI banks was cover of at least 70%. On 1 January 2017, the requirement increased by 10 percentage points to 80%, and on 1 January 2018 it will increase by an additional 20 percentage points, which means that as of this date, the LCR must be at least 100%. The requirement for SIFI banks has been cover of 100% since implementation of the LCR requirement.

Since its introduction on 1 October 2015, Ringkjøbing Landbobank has sought to follow the same rules that apply to SIFI banks, and the bank's internal LCR target is thus 100%.

On 31 December 2016 the bank's LCR was 185% and the bank thus met the target.

On 31 December 2016, the LCR requirement replaced the statutory Section 152 re­quirement, which was phased out on the same date. However, it must still be disclosed, and the figure at the end of the year was 140%.

 

Capital reduction, dividends and share buy-back programme

The annual general meeting in February 2016 authorised the bank's board of directors to buy shares for up to DKK 140 million for cancellation at a future general meeting.

On completion of the share buy-back programme, the following were reserved on 7 December 2016:

  Number of shares    Average purchase price - in DKK Transaction value
- in DKK 1,000
Reserved as of 9 March 2016 20,000 1,403.53 28,071
Reserved as of 1 June 2016 29,000 1,371.46 39,772
Reserved as of 14 September 2016 23,000 1,429.02 32,867
Reserved as of 7 December 2016 28,000 1,415.85 39,644
Total as of 7 December 2016 100,000   140,354

It is thus proposed to the general meeting to cancel the 100,000 shares, which will reduce the number of shares from 4,570,000 to 4,470,000 by a capital reduction.

The bank's board of directors will also propose to the general meeting that a dividend of DKK 36 per share, equivalent to DKK 165 million, be paid for the 2016 financial year. A dividend of DKK 30 per share was paid for the 2015 financial year.

A proposal will also be made to the general meeting that a new share buy-back pro­gramme be established, under which shares for up to DKK 170 million can be bought for cancellation at a future general meeting.

The total pay-out ratio increases from 61% in 2015 to 62% in 2016 on the basis of the above proposals.

 

Capital structure

Equity at the beginning of 2016 was DKK 3,296 million. To this must be added the net profit for the year, while the dividend paid and the value of the bank's own sha­res bought must be subtracted, after which the equity at the end of the year was DKK 3,555 million, an increase of 8%.

The bank's total capital ratio was computed at 18.3% at the end of 2016, and the tier 1 capital ratio at 16.9%.

 
Capital ratios
2016 2015 2014 2013 2012
Common equity tier 1 capital ratio (%) 16.9 17.1 17.5 18.7 19.6
Tier 1 capital ratio (%) 16.9 17.1 17.5 19.2 20.9
Total capital ratio (%) 18.3 18.8 17.5 20.0 22.4
Individual solvency requirement (%) 9.0 9.0 8.9 8.9 8.0

The bank made a strategic investment in 2016 and bought additional shares in DLR Kredit for the equivalent of a total of DKK 85 million net. In January 2017, the bank acquired shares for an additional DKK 53 million. The bank believes that the acquisition is a good investment which will secure a satisfactory return for the bank. The acquisition also ensures that the bank can supply DLR Kredit loans without equity commitments.

The bank calculates the individual solvency requirement using the so-called 8+ model. This means the calculation method is based on 8% plus any supplements calculated for customers with financial problems, and others. The model takes no account of the bank's earnings and cost base or its robust business concept.

Based on the model, the bank has calculated the individual solvency requirement at the end of 2016 at 9.0%. To this should be added a capital conservation buffer of 0.6%, and the total requirement for the bank's total capital is thus 9.6%. Compared with the actual total capital of DKK 3.4 billion, the capital buffer at the end of 2016 was thus DKK 1.6 billion, equivalent to 8.7 percentage points.

During 2017, the authorities will require all banks in Denmark to comply with a Minimum Re­quirement of Eligible Liabilities (MREL). The implementation of these rules is not expected to materially influence the bank's situation.

 

High levels of customer satisfaction and willingness to give referrals

The bank has gained a large number of satisfied and loyal customers over many years. These good customer relationships have greatly contributed to the bank's growth in re­cent years, because existing customers have referred many new customers to the bank. The bank also spends significant resources on enhancing customer experience.

The bank places great weight on its good customer experience and the high levels of customer satisfaction and willingness to refer new customers to the bank. We are very humbled by and proud of the confirmation of these three parameters by two large-scale surveys of Danish banks (Voxmeter's Customer Experience Management 2016-sur­vey with 52,000 interviews published in January 2017 and Wilke / FinansWatch Insight's 2016-survey published in October 2016). Both surveys placed the bank at the top on these parameters.

 

Good increase in customer numbers

In 2016, as in previous years, the bank implemented a large number of outreach initia­tives to both current and new customers. In addition, the bank's new Private Banking branch in Vejle opened in January 2016.

As a result of these initiatives, combined with recommendations and referrals from the bank's existing customer portfolio, the bank saw a highly satisfactory net increase in new customers in both the branch network and within certain niche concepts during the year.

The outreach initiatives are scheduled to continue in 2017 at both regional and national levels.

 

Expected results and plans for 2017

The bank's core earnings in 2016 were DKK 617 million, which is above the upwardly adjusted DKK 525 - 600 million range for the year.

The bank's general goal continues to be a growth-oriented strategy with the wish to at­tract new customers and gain market shares.

Ringkjøbing Landbobank's market share is about 50% in that part of West Jutland where the bank's old branches are located. The bank also has well-established branches in Her­ning, Holstebro and Viborg, which are continuing to operate positively. The bank's goal for 2017 is to retain and develop this portion of the customer portfolio with sound and competitive products, focus on employee expertise, and work in providing skilled advice to customers on the financial products. An additional goal is an inflow of new customers to the bank's branches in Central and West Jutland, deriving from its long-term outreach marketing and market position in general.

The bank will also continue to focus on developing the activities in its niche concepts in the forthcoming year. Focus will thus be placed on serving the bank's existing customers and further developing the portfolio within renewable energy, wholesale lending, and medical practitioners / dentists etc.

The bank's Private Banking branches in Ringkøbing, Herning, Holte and Aarhus and the newly established branch in Vejle have all been successful in 2016. The bank continues to see major opportunities in this segment, and will continue to focus on it with regard to both existing and potential customers. The bank will thus deploy highly competent and dedicated staff to serve the segment, and expects to be able to continue develo­ping this business area in the future.

Based on the prospects for 2017 and the activities and initiatives we want to carry out in 2017, the bank expects to be able to realise lending growth during 2017. Continuing pressure on the bank's interest margin is, however, also expected. The bank also expects a positive development in net fee income. Finally, an increase in the level of cost of ap­proximately 3% relative to the total costs in 2016 is expected, and impairment charges in 2017 are expected to be lower than in 2016.

As a whole, core earnings in 2017 are expected to be in the range DKK 515 - 615 mil­lion. To this must be added the result from the bank's portfolio of securities.

 

Disclaimer:
"This document is a translation of an original document in Danish. The original Danish text shall be the governing text for all purposes and in case of any discrepancy the Danish wording shall be applicable."

 

Main and key figures

  2016 2015 2014 2013 2012
Main figures for the bank (million DKK)          
Total core income 983 954 907 844 823
Total expenses and depreciation -318 -306 -298 -273 -265
Core earnings before impairments 665 648 609 571 558
Impairment charges for loans etc. -48 -60 -87 -120 -157
Core earnings 617 588 522 451 401
Result for the portfolio etc. +44 0 +65 +21 +47
Profit before tax 661 588 587 472 448
Net profit for the year 539 459 446 358 328
           
Equity 3,555 3,296 3,099 2,901 2,676
Deposits 18,314 16,987 15,450 14,114 12,867
Loans 17,482 17,017 14,924 13,849 12,424
Balance sheet total 24,258 22,317 21,238 19,583 17,682
Guarantees 2,460 2,234 2,218 1,902 1,667
           
Key figures for the bank (per cent)          
Return on equity before tax, beginning of year 20.9 19.8 21.1 18.1 18.5
Return on equity after tax, beginning of year 17.1 15.4 16.0 13.7 13.6
Rate of costs 32.3 32.1 32.8 32.4 32.2
Common equity tier 1 capital ratio 16.9 17.1 17.5 18.7 19.6
Tier 1 capital ratio 16.9 17.1 17.5 19.2 20.9
Total capital ratio 18.3 18.8 17.5 20.0 22.4
Individual solvency requirement 9.0 9.0 8.9 8.9 8.0
           
Key figures per DKK 5 share (DKK)          
Core earnings 138 129 112 94 83
Profit before tax 148 129 126 99 93
Net profit for the year 121 100 95 75 68
Book value 795 721 664 607 553
Price, end of year 1,463 1,500 1,152 1,099 770
Dividend 36 30 26 25 14

 

Statements of income and comprehensive income

Note 1.1-31.12
2016
DKK 1,000
1.1-31.12
2015
DKK 1,000
1 Interest income 749,021 736,995
2 Interest expenses 69,743 91,165
  Net interest income 679,278 645,830
3 Dividends from shares etc. 18,995 13,010
4 Fee and commission income 297,328 301,076
4 Fee and commission expenses 42,417 41,687
  Net interest and fee income 953,184 918,229
5 Value adjustments +63,784 +29,583
  Other operating income 7,560 4,964
6,7 Staff and administration costs 306,670 281,634
  Amortisation, depreciation and write-downs on intangible
and tangible assets
8,638 7,351
  Other operating expenses    
      Miscellaneous other operating expenses 26 68
      Costs Guarantee Fund and Resolution Fund 2,292 17,233
8 Impairment charges for loans and other receivables etc. -48,378 -60,367
  Results from investments in associated companies +2,842 +2,137
  Profit before tax 661,366 588,260
9 Tax 121,868 129,595
  Net profit for the year 539,498 458,665
       
  Other comprehensive income 0 0
  Total comprehensive income for the year 539,498 458,665

 

Proposed distribution of profit

  Net profit for the year 539,498 458,665
  Total amount available for distribution 539,498 458,665
  Appropriated for ordinary dividend 164,520 140,100
  Appropriated  for charitable purposes 500 500
  Transfer to net revaluation reserve under the equity method -2,159 +2,137
  Transfer to retained earnings 376,637 315,928
  Total distribution of the amount available 539,498 458,665

 

Core earnings

Note 1.1-31.12
2016
DKK 1,000
1.1-31.12
2015
DKK 1,000
  Net interest income 665,312 637,960
4 Net fee and commission income excl. trading income 214,415 211,541
  Income from sector shares etc. 38,611 36,413
4 Foreign exchange income 16,396 15,812
  Other operating income 7,560 4,964
  Total core income excl. trade income 942,294 906,690
4 Trading income 40,496 47,848
  Total core income 982,790 954,538
6 Staff and administration costs 306,670 281,634
  Amortisation, depreciation and write-downs on intangible
and tangible assets
8,638 7,351
  Other operating expenses 2,318 17,301
  Total expenses etc. 317,626 306,286
  Core earnings before impairment charges for loans 665,164 648,252
8 Impairment charges for loans and other receivables etc. -48,378 -60,367
  Core earnings 616,786 587,885
  Result for the portfolio +44,580 +375
  Profit before tax 661,366 588,260
9 Tax 121,868 129,595
  Net profit for the year 539,498 458,665

 

Balance sheet

Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
  Assets    
  Cash in hand and demand deposits with central banks 284,139 331,563
10 Receivables from credit institutions and central banks 2,077,096 717,602
     Receivables with notice from central banks 1,572,198 130,019
     Money market operations and bilateral loans
   - term to maturity less than 1 year
355,898 262,583
     Bilateral loans - term to maturity more than 1 year 149,000 325,000
11,12,13 Loans and other receivables at amortised cost 17,481,838 17,299,920
     Loans and other receivables at amortised cost 17,481,838 17,016,732
        Loans and other receivables at amortised cost 16,472,015 15,914,993
        Wind turbine loans with direct funding 1,009,823 1,101,739
     Collateralised repurchase agreements /
   reverse repo transactions
0 283,188
14 Bonds at fair value 3,443,359 3,114,721
15 Shares etc. 530,503 467,049
  Investments in associated companies 509 2,667
  Land and buildings, total 56,177 64,287
     Investment properties 3,561 6,056
     Domicile properties 52,616 58,231
  Other tangible assets 18,874 4,206
  Current tax assets 20,444 71,624
  Defered tax assets 8,153 0
  Temporary assets 5,200 5,200
  Other assets 323,848 296,871
  Prepayments 7,997 7,970
  Total assets 24,258,137 22,383,680

 

Balance sheet

Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
  Liabilities and equity    
16 Debt to credit institutions and central banks 1,457,792 1,502,586
     Money market operations and bilateral credits
   - term to maturity less than 1 year
280,698 344,879
     Bilateral credits - term to maturity more than 1 year 167,271 55,968
     Bilateral credits from KfW Bankengruppe 1,009,823 1,101,739
17 Deposits and other debt 18,314,427 16,986,543
18 Issued bonds at amortised cost 297,370 0
  Other liabilities 254,062 208,988
  Deferred income 2,449 1,130
  Total debt 20,326,100 18,699,247
       
  Provisions for deferred tax 0 10,579
12 Provisions for losses on guarantees 6,287 5,478
  Total provisions for liabilities 6,287 16,057
       
  Tier 2 capital 371,095 372,278
19 Total subordinated debt 371,095 372,278
       
20 Share capital 22,850 23,350
  Net revaluation reserve under the equity method 158 2,317
  Retained earnings 3,366,627 3,129,831
  Proposed dividend etc. 165,020 140,600
  Total shareholders' equity 3,554,655 3,296,098
       
  Total liabilities and equity 24,258,137 22,383,680
 
21
 
Own shares
   
22 Contingent liabilities etc.    
23 Assets furnished as security    
24 The supervisory diamond    
25 Miscellaneous comments    

 

Statement of changes in Equity

2015
 
DKK 1,000
Share capital Net revaluation  reserve under the equity method Retained earnings Proposed
dividend

etc.
Total share-holders'
equity
Shareholders' equity at
the end of the previous
financial year
23,900 178 2,949,750 124,780 3,098,608
Reduction of share capital -550   550   0
Dividend etc. paid       -124,780 -124,780
Dividend received on own shares     3,385   3,385
Shareholders' equity after distribution of dividend etc. 23,350 178 2,953,685 0 2,977,213
Purchase of own shares     -640.370   -640.370
Sale of own shares     500.590   500.590
Total comprehensive income for the year   2,139 315,926 140,600 458,665
Shareholders' equity on  the balance sheet date 23,350 2,317 3,129,831 140,600 3,296,098

 

2016
 
DKK 1,000
Share capital Net revaluation  reserve under the equity method Retained earnings Proposed
dividend

etc.
Total share-holders'
equity
Shareholders' equity at
the end of the previous
financial year
23,350 2,317 3,129,831 140,600 3,296,098
Reduction of share capital -500   500   0
Dividend etc. paid       -140,600 -140,600
Dividend received on own shares     3,344   3,344
Shareholders' equity after distribution of dividend etc. 22,850 2,317 3,133,675 0 3,158,842
Purchase of own shares     -481.310   -481.310
Sale of own shares     337.625   337.625
Total comprehensive income for the year   -2,159 376,637 165,020 539,498
Shareholders' equity on  the balance sheet date 22,850 158 3,366,627 165,020 3,554,655

 

Statement of capital

  31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
Credit risk 14,743,046 14,173,867
Market risk 1,749,099 1,539,489
Operational risk 1,827,053 1,750,809
Total risk exposure 18,319,198 17,464,165
     
Shareholders' equity 3,554,655 3,296,098
Proposed dividend etc. -165,020 -140,600
Deduction for prudent valuation -5,834 -3,910
Deduction for the sum of equity investments etc. above 10% -233,381 -118,672
Deduction of trading limit for own shares -55,000 -55,000
Actual utilisation of the trading limit for own shares 4,649 1,221
Common equity tier 1 capital 3,100,069 2,979,137
     
Tier 1 capital 3,100,069 2,979,137
     
Tier 2 capital 371,713 373,125
Deduction for the sum of equity investments etc. above 10% -117,109 -76,769
Total capital 3,354,673 3,275,493
     
Common equity tier 1 capital ratio (%) 16.9 17.1
Tier 1 capital ratio (%) 16.9 17.1
Total capital ratio (%) 18.3 18.8
     
Total capital requirement 1,465,536 1,397,133

 

Notes

Note 1.1-31.12
2016

DKK 1,000
1.1-31.12
2015
DKK 1,000
1 Interest income    
  Receivables from credit institutions and central banks 13,428 15,990
  Loans and other receivables 724,694 700,503
  Loans - interest on the impaired part of loans -32,466 -38,435
  Reverse loans 4 5,094
  Bonds 42,400 54,379
  Total derivative financial instruments -1,605 -4,281
     Of which currency contracts 1,407 1,166
     Of which interest-rate contracts -3,012 -5,447
  Other interest income 2,566 3,745
  Total interest income 749,021 736,995
       
2 Interest expenses    
  Credit institutions and central banks 22,949 24,354
  Deposits and other debt 40,572 54,268
  Repo deposits 0 66
  Issued bonds 31 3,679
  Subordinated debt 6,132 8,790
  Other interest expenses 59 8
  Total interest expenses 69,743 91,165
       
3 Dividends from shares etc.    
  Shares 18,995 13,010
  Total dividends from shares etc. 18,995 13,010
       
4 Gross fee and commission income    
  Securities trading 51,754 58,631
  Asset management and custody accounts 104,141 111,887
  Payment handling 29,816 26,357
  Loan fees 8,951 15,879
  Guarantee commission and mortgage credit commission 64,450 56,362
  Other fees and commission 38,216 31,960
  Total gross fee and commission income 297,328 301,076
       
  Net fee and commission income    
  Securities trading 40,496 47,848
  Asset management and custody accounts 97,170 105,496
  Payment handling 20,317 17,384
  Loan fees 6,306 13,242
  Guarantee commission and mortgage credit commission 64,450 56,362
  Other fees and commission 26,172 19,057
  Total net fee and commission income 254,911 259,389
  Foreign exchange income 16,396 15,812
  Total net fee, commission and foreign exchange income 271,307 275,201

 

Notes

Note 1.1-31.12
2016

DKK 1,000
1.1-31.12
2015
DKK 1,000
5 Value adjustments    
  Loans and other receivables, fair value adjustment -58 9,249
  Bonds 33,900 -29,648
  Shares etc. 22,499 34,659
  Investment properties -2,495 0
  Foreign exchange 16,396 15,812
  Total derivative financial instruments -6,458 -489
     Of which currency contracts -2,930 -1,230
     Of which interest-rate contracts -4,169 -420
     Of which share contracts 641 1,161
  Total value adjustments 63,784 29,583
 
6
Staff and administration costs    
  Payments to general management, board of directors
and shareholders' committee
   
     General management 7,018 5,108
     Board of directors 1,718 1,633
     Shareholders' committee 451 415
     Total 9,187 7,156
  Staff costs    
     Salaries 131,890 130,169
     Pensions 14,072 13,872
     Social security expenses 2,198 2,301
     Costs depending on number of staff 20,538 18,525
     Total 168,698 164,867
  Other administration costs 128,785 109,611
  Total staff and administration costs 306,670 281,634
       
7 Number of full-time employees    
  Average number of employees during the year converted into
full-time employees
271 269
       
8 Impairment charges for loans and other receivables etc.    
  Net changes in impairment charges on loans and other receivables etc. and provisions for losses on guarantees -5,822 11,552
  Actual realised net losses 86,666 87,250
  Interest on the impaired part of loans -32,466 -38,435
  Total impairment charges for loans and other
receivables etc.
48,378 60,367

 

Notes

Note 1.1-31.12
2016

DKK 1,000
1,1-31,12
2015
DKK 1,000
9 Tax    
  Tax calculated on income for the year 140,413 133,489
  Adjustment of deferred tax -18,732 -2,973
  Adjustment of deferred tax due to change in tax rate 0 -924
  Adjustment of tax calculated for previous years 187 3
  Total tax 121,868 129,595
       
  Effective tax rate (%):    
  Tax rate currently paid by the bank 22.0 23.5
  Permanent deviations -3.6 -1.3
  Adjustment of deferred tax due to change in tax rate 0.0 -0.2
  Adjustment of tax calculated for previous years 0.0 0.0
  Total effective tax rate 18.4 22.0
         
Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
10 Receivables from credit institutions and central banks    
  Demand 185,618 98,583
  Up to and including 3 months 1,572,198 230,019
  More than 3 months and up to and including 1 year 170,000 64,000
  More than 1 year and up to and including 5 years 99,280 320,000
  More than 5 years 50,000 5,000
  Total receivables from credit institutions and central banks 2,077,096 717,602
       
11 Loans and other receivables at amortised cost    
  Demand 1,712,434 2,055,385
  Up to and including 3 months 688,316 1,054,786
  More than 3 months and up to and including 1 year 2,317,908 2,273,914
  More than 1 year and up to and including 5 years 6,244,242 5,849,053
  More than 5 years 6,518,938 6,066,782
  Total loans and other receivables at amortised cost 17,481,838 17,299,920
    Of which collateralised repurchase agreements /
  reverse repo transactions
0 283,188
               

 

Notes

Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
12 Impairment charges for loans and other receivables and
provisions for losses on guarantees
   
       
  Individual impairment charges    
  Cumulative individual impairment charges for loans and other
receivables at the end of the previous financial year
664,550 701,131
  Impairment charges / value adjustments during the year 114,618 149,057
  Reversal of impairment charges made in previous financial years -106,360 -121,034
  Recognised as a loss, covered by impairment charges -83,424 -64,604
  Cumulative individual impairment charges for loans and other receivables on the balance sheet date 589,384 664,550
       
  Collective impairment charges    
  Cumulative collective impairment charges for loans and other
receivables at the end of the previous financial year
272,922 226,272
  Impairment charges / value adjustments during the year 68,535 46,650
  Cumulative collective impairment charges for loans and
other receivables on the balance sheet date
341,457 272,922
       
  Total cumulative impairment charges for loans and
other receivables on the balance sheet date
930,841 937,472
       
  Provisions for losses on guarantees    
  Cumulative individual provisions for losses on guarantees
at the end of the previous financial year
5,478 3,995
  Provisions / value adjustments during the year 5,048 5,152
  Reversal of impairment charges made in previous financial years -4,085 -3,586
  Recognised as a loss, covered by provisions -154 -83
  Cumulative individual provisions for losses on guarantees
on the balance sheet date
6,287 5,478
       
  Total cumulative impairment charges for loans and other
receivables and provisions for losses on guarantees on the balance sheet date
937,128 942,950
       
13 Suspended calculation of interest    
  Loans and other receivables with suspended calculation of
interest on the balance sheet date
59,904 74,220
       
14 Bonds at fair value    
  Listed on the stock exchange 3,443,359 3,114,721
  Total bonds at fair value 3,443,359 3,114,721
       
15 Shares etc.    
  Listed on Nasdaq Copenhagen 21,382 11,492
  Investment fund certificates 147,277 196,590
  Unlisted shares at fair value 1,428 1,450
  Sector shares at fair value 360,416 257,517
  Total shares etc. 530,503 467,049

 

Notes

Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
16 Debt to credit institutions and central banks    
  Demand 280,698 268,254
  Up to and including 3 months 60,254 55,023
  More than 3 months and up to and including 1 year 101,966 171,936
  More than 1 year and up to and including 5 years 659,525 593,775
  More than 5 years 355,349 413,598
  Total debt to credit institutions and central banks 1,457,792 1,502,586
       
17 Deposits and other debt    
  Demand 11,952,063 11,182,881
  Deposits and other debts with notice:    
  Up to and including 3 months 2,204,934 1,891,994
  More than 3 months and up to and including 1 year 1,297,037 667,677
  More than 1 year and up to and including 5 years 1,192,377 966,866
  More than 5 years 1,668,016 2,277,125
  Total deposits and other debt 18,314,427 16,986,543
       
  Distributed as follows: 11,750,246 10,912,726
  Demand 357,633 327,306
  With notice 3,136,479 2,352,697
  Time deposits 1,769,783 2,192,532
  Long-term deposit agreements 1,300,286 1,201,282
  Special types of deposits 18,314,427 16,986,543
       
18 Issued bonds at amortised cost    
  More than 1 year and up to and including 5 years 297,370 0
  Total issued bonds at amortised cost 297,370 0
       
  Distributed as follows:    
  Issues in euros    
    Nom. EUR 40 million 297,370 0
    297,370 0
       
19 Subordinated debt    
  Tier 2 capital:    
    Floating rate loan, principal EUR 50 million,
  due date 20 May 2025
371,713 373,125
  Adjustment to amortised cost -618 -847
  Total subordinated debt 371,095 372,278

 

Notes

Note 31 Dec. 2016
DKK 1,000
31 Dec. 2015
DKK 1,000
20 Share capital    
  Number of DKK 5 shares:    
  Beginning of year 4,670,000 4,780,000
  Cancellation during the year -100,000 -110,000
  End of year 4,570,000 4,670,000
    Reserved for subsequent cancellation 100,000 100,000
       
  Total share capital 22,850 23,350
       
21 Own shares    
  Own shares included in the balance sheet at 0 0
  The market value is 150,949 151,226
       
  Number of own shares:    
  Beginning of year 100,817 113,525
  Purchase during the year 342,282 347,731
  Sale during the year -239,921 -250,439
  Cancellation during the year -100,000 -110,000
  End of year 103,178 100,817
    Reserved for subsequent cancellation 100,000 100,000
       
  Nominal value of holding of own shares, end of year 516 504
  Own shares' proportion of share capital, end of year (%) 2.3 2.2
       
22 Contingent liabilities etc.    
       
  Contingent liabilities    
  Finance guarantees 1,219,287 1,112,688
  Guarantees against losses on mortgage credit loans 119,288 80,981
  Guarantee against losses, Totalkredit 109,019 116,104
  Registration and refinancing guarantees 642,705 641,756
  Sector guarantees 39,453 45,321
  Other contingent liabilities 329,757 237,531
  Total contingent liabilities 2,459,509 2,234,381
       
  Other contractual obligations    
  Irrevocable credit commitments 516,724 0
  Total other contractual obligations 516,724 0
       
23 Assets furnished as security    
  First-mortgage loans are provided for German wind turbine
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 1,009,823 1,101,739
       
  As security for clearing etc., the bank has pledged securities
from its holding to the central bank of Denmark to a total market price of
380,459 231,505
       
  Collateral under CSA agreements 38,784 66,251

 

Notes

Note   
31 Dec. 2016
 
31 Dec. 2015
24 The supervisory diamond
(Danish Financial Supervisory Authority limits)
   
  Stable funding (funding ratio) (< 1) 0.7 0.8
  Excess liquidity (> 50%) 139.6% 99.7%
  Total large exposures (< 125%) 29.5% 63.4%
  Growth in loans (< 20%) 2.7% 14.0%
  Real property exposure (< 25%) 14.8% 14.1%
       
25 Miscellaneous comments:
   
Main and key figures
·         Loans on page 9 are stated exclusive of reverse repo transactions etc.
·         Return on equity at the beginning of the year before and after tax are computed after
allocation of dividend etc., net.
·         Key figures per DKK 5 share are calculated on the basis of respectively 2016: 4,470,000 shares, 2015: 4,570,000 shares, 2014: 4,670,000 shares, 2013: 4,780,000 shares and 2012: 4,840,000 shares.
 
Accounting policies
The accounting policies are changed in one minor area relative to those of the submitted and audited financial statements for 2015: the classification of collateral under CSA agreements.
The accounting policies are otherwise unchanged since last year.

 

Quarterly overview

 
(Million DKK)
4th qtr.
2016
3rd qtr.
2016
2nd qtr.
2016
1st qtr.
2016
4th qtr.
2015
3rd qtr.
2015
2nd qtr.
2015
1st qtr.
2015
4th qtr. 2014 3rd qtr. 2014 2nd qtr.
2014
1st qtr.
2014
Net interest income 165 169 165 166 163 160 154 161 160 158 159 158
Net fee and commission income excl. trading
Income
70 44 52 48 55 45 61 51 60 37 51 45
Income from sector shares etc. 9 4 15 11 8 7 11 10 4 4 2 16
Foreign exchange
income
4 4 4 4 5 4 4 3 2 4 4 3
Other operating income 4 2 1 1 2 1 1 1 1 1 1 1
Total core income excl. trading income 252 223 237 230 233 217 231 226 227 204 217 223
Trading income 10 11 11 9 12 11 13 12 10 7 8 11
Total core income 262 234 248 239 245 228 244 238 237 211 225 234
Staff and administration costs 92 72 74 69 78 65 74 65 79 62 68 62
Amortisation, depreciation and write-downs on intangible and tangible assets 2 2 4 1 4 1 1 1 7 1 3 1
Other operating
expenses
0 1 0 1 3 6 4 4 3 4 4 4
Total expenses etc. 94 75 78 71 85 72 79 70 89 67 75 67
Core earnings before
impairments for loans
168 159 170 168 160 156 165 168 148 144 150 167
Impairment charges for loans and other receivables etc. -12 -12 -13 -11 -16 -15 -14 -15 -24 -23 -25 -15
Core earnings 156 147 157 157 144 141 151 153 124 121 125 152
Result for the portfolio +8 +23 +11 +2 -1 -14 -8 +23 +9 +12 +20 +24
Profit before tax 164 170 168 159 143 127 143 176 133 133 145 176
Tax 31 33 30 28 31 29 31 39 33 32 36 40
Net profit for the year 133 137 138 131 112 98 112 137 100 101 109 136

 

Danish Financial Supervisory Authority key figures for Danish banks etc.

  2016 2015 2014 2013 2012
Capital ratios:            
Total capital ratio % 18.3 18.8 17.5 20.0 22.4
Tier 1 capital ratio % 16.9 17.1 17.5 19.2 20.9
Individual solvency requirement % 9.0 9.0 8.9 8.9 8.0
             
Earnings:            
Return on equity before tax % 19.3 18.4 19.6 16.9 17.4
Return on equity after tax % 15.8 14.3 14.9 12.8 12.7
Income / cost ratio DKK 2.81 2.60 2.52 2.19 2.06
Return on assets % 2.2 2.1 2.1 1.8 1.9
             
Market risk:            
Interest rate risk % 1.8 2.2 1.2 0.6 0.6
Foreign exchange position % 0.6 0.8 0.4 1.6 0.6
Foreign exchange risk % 0.0 0.0 0.0 0.0 0.0
             
Liquidity risk:            
Liquidity Coverage Ratio (LCR) % 185 106 - - -
Excess cover relative to statutory liquidity
requirement
% 139.6 99.7 140.7 166.2 185.5
Loans and impairments thereon relative to
deposits
% 100.5 107.4 106.4 104.1 102.4
             
Credit risk:            
Loans relative to shareholders' equity       4.9 5.2 5.0 4.8 4.6
Growth in loans for the year % 2.7 14.0 12.0 11.5 -2.5
Total large exposures % 29.5 63.4 47.8 35.0 27.2
Cumulative impairment ratio % 4.5 4.6 5.0 5.1 5.1
Impairment ratio for the year % 0.23 0.29 0.47 0.72 1.06
Proportion of receivables at reduced interest % 0.3 0.4 0.3 0.5 0.8
             
Share return:            
Earnings per share*/*** DKK 2,335.5 1,941.4 1,853.9 1,462.8 1,314.6
Book value per share*/** DKK 15,916 14,428 13,280 12,145 11,049
Dividend per share* DKK 720 600 520 500 280
Market price relative to earnings per share*/***   12.5 15.5 12.4 15.0 11.7
Market price relative to book value per share*/**   1.84 2.08 1.73 1.81 1.39
*        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 year.
***      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 of the year and at the end of the year.

 

Vedhæftede filer:

Announcement of the annual accounts 2016.pdf

Udgivet af: NPinvestordk

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