Spar Nord Annual Report: DKK 989 million net profit and 12.0% return on equity
Spar Nord has released its financial statements for 2017. Highlights of the financial statements include:
- DKK 989 million net profit, corresponding to 12.0% return on equity.
- Core earnings before impairment of DKK 1,213 million - in line with the guidance provided.
- Low interest rates and fierce competition resulted in a 5% drop in net interest income to DKK 1,546 million. The lending margin was 42 basis point lower at end-2017 than at end-2016.
- Bank and leasing loans rose DKK 2.2 billion, or 6%, on decent growth in all busi- ness areas, both for retail and business customers.
- Net fee income rose 6% to DKK 1,116 million driven by growth in mortgage loans arranged and higher income from insurance mediation, daily banking and payment services.
- Market value adjustments and dividends amounted to DKK 404 million, which was 7% lower than in 2016, but a highly satisfactory level given the market con- ditions.
- Costs and expenses totalled DKK 1,936 million, an increase of 2%, or DKK 40 million, on 2016. The increase was partly the result of a 2% increase in payroll costs and an 8% increase in operating expenses due to strategic IT projects, refurbishment of branches and higher marketing costs.
- Loan impairment charges were a net income of DKK 38 million, reflecting a very strong credit quality among Spar Nord's retail and business customers. By com- parison, loan impairment charges were an expense of DKK 242 million in 2016.
- Solid capital position with a common equity tier 1 ratio of 14.4% and an own funds ratio of 18.2%. For 2017, Spar Nord proposes a dividend of DKK 3.50 per share, equal to a dividend payout ratio of 43%.
Lasse Nyby, Chief Executive Officer of Spar Nord, considers the financial state- ments satisfactory and provides the following comments:
"The net profit of close to 1 billion Danish kroner is the best in the Bank's history. The performance allowed us in 2017 to achieve a return on equity of 12.0%, and we are of course very pleased with that.
We are particularly pleased with the fact that in 2017 we managed to create busi- ness volume growth in an otherwise stagnant market. Posting a 6% increase in lending, we thus gained market share in both the retail and the business customer segments. Extraordinarily, we were able to recognise income of DKK 38 million from the reversal of impairment, reflecting the fact that our customers are generally in good financial condition. However, we also have to say that the exception- ally low interest rates and fierce price competition left a mark on 2017, squeezing the interest margin and earnings in our traditional banking operations. This pres- sure appears to continue into 2018 and is part of the explanation why we do not expect 2018 to be as good a financial year as 2017.
In 2017, we have focused on implementing our new strategy, and we have realised quite a few of the initiatives that will propel Spar Nord to becoming the "Personal Bank in a Digital World". Among other things, we have refurbished 22 of our local banks, launched a new concept for customer meetings and carried out a number of steps to pave the way for better customer experiences and stronger growth. We will continue these efforts with undiminished strength in 2018 to be able to maintain a high level of satisfaction and loyalty among our customers in future."
Should you have any questions in connection with this announcement or the Annual Report as a whole, please contact Lasse Nyby, Chief Executive Officer, at tel. +45 9634 4011, or Ole Madsen, Senior Vice President, Communication & Business Development, at tel. + 45 2527 0580 or at e-mail oma@sparnord.dk.
Spar Nord
Vedhæftede filer:
Nr. 1 - Aarsrapport_2017 GB.pdf