Notification to Nasdaq OMX Copenhagen 17/2021

QUARTERLY REPORT

Q1 - Q3 2021

CVR no. 80050410

Q1 - Q3 REPORT 2021 IN HEADLINES

Satisfactory performance in the first nine months of the year

The BANK of Greenland's profit before tax is DKK 114.4 million at the end of September 2021, compared to DKK 94.0 million for the same period of 2020. The profit before value adjustments and write-downs amounts to DKK 108.3 million, compared to DKK 109.1 million for the previous year.

Following sound growth in lending in both 2019 and 2020, lending declined in 2021. The decrease in lending amounts to DKK 191 million, and lending totalled DKK 3,815 million at the end of September. As stated in the Q1 report, the decline in lending was expected in view of the completion of several major construction financing projects, to some extent replaced by mortgage finance guarantees. Guarantees increased by DKK 316 million from DKK 1,622 million at the end of 2020 to DKK 1,938 million at the end of Q3 2021. Lending and guarantees showed an overall increase of DKK 124 million in 2021 and totalled DKK 5,752 million, which is the highest level in the Bank's history.

Net interest and fee income increased by DKK 9.4 million to DKK 249.1 million, compared to the same period of 2020. The increase is due to e.g. higher guarantee commission income, negative deposit interest rates and income from the investment and pension area.

Total expenses including depreciation amount to DKK 144.8 million at the end of Q3 2021, compared to DKK

133.9 million for the same period of 2020. The increase is related to higher staff expenses, reflecting higher payroll expenses due to adjustments under the collective agreement and an increase in the number of employees, and also to other administrative expenses, primarily rising IT costs for BEC.

At the end of September 2021, value adjustments showed a capital gain of DKK 7.7 million, compared to

a capital loss of DKK 4.7 million for the same period of 2020. The Bank's shareholdings developed positively in the first three quarters of 2021, while the interest-rate environment continues to result in automatically generated capital losses on the Bank's bond holdings.

Impairment write-downs on loans and guarantees were reduced by DKK 8.8 million compared to the first three quarters of 2020 and amounted to DKK 1.6 million at the end of September 2021. To a decreasing extent, Covid-19 continues to affect Greenland's society, and the low level of write-downs indicates continued good credit quality among the Bank's customers. For Q3 in isolation, there is a minor reversal of write-downs of DKK

0.8 million. At the end of Q3 2021, the Bank had an unchanged management reserve with regard to Covid-19 amounting to approximately DKK 20 million.

After the end of the quarter, in a stock exchange announcement dated 4 October 2021, the Bank notified the phasing-in from 2022 of the Bank's MREL capital requirement of 15.2% and also notified an expected SNP (Senior Non-Preferred) issue, as well as cover of issue costs. The MREL capital requirement is in addition to the solvency requirement including capital buffers and a total requirement for own funds and eligible liabilities (MREL) of 30,4%. In a stock exchange announcement dated 13 October 2021, the Bank notified the issue of DKK 50 million SNP.

In a stock exchange announcement dated 19 October 2021, the forecast for the year's profit before tax was adjusted upwards from a range of DKK 125-140 million to a range of DKK 135-150 million, which remains unchanged.

  • The profit before tax gives a return of 13.3% p.a. on opening equity after disbursement of dividend.
  • Increase in loans and guarantees of DKK 124 million to DKK 5.752 billion.
  • Deposits decreased to DKK 5.635 billion.
  • Continued stable core operations.
  • Write-downsand provisions of 0.03% for the period.
  • Capital ratio and core capital ratio of 22.7 and an individual capital requirement of 10.7%.

The BANK of Greenland Q1 - Q3 2021 2/24

TABLE OF CONTENTS

Financial Highlights and Key Figures ........................................................................................

4

Management's Review ..............................................................................................................

5

- 10

Income Statement and Statement of Comprehensive Income...................................................

11

Balance Sheet ............................................................................................................................

12

Statement of Changes in Equity .................................................................................................

13

Notes, Accounting Policies, etc. .................................................................................................

14

Notes to the Income Statement ..................................................................................................

15

- 16

Notes to the Balance Sheet ........................................................................................................

17

- 23

Management Statement .............................................................................................................

24

The BANK of Greenland Q1 - Q3 2021 3/24

FINANCIAL HIGHLIGHTS AND KEY FIGURES FOR Q1 - Q3 2021

(DKK 1,000)

Net interest and fee income Value adjustments

Other operating income

Staff and administration expenses Depreciation and impairment of tangible assets Other operating expenses

Write-downs on loans, etc.

Profit before tax

Tax

Profit for the period

Selected accounting items:

Q1 - Q3 Q1 - Q3

2021 2020

249,061 239,671

7,716 -4,691

3,942 3,343

137,545 126,964

5,214 5,213

1,992 1,746

1,570 10,394

114,398 94,006

18,377 24,898

96,021

69,108

Full year

Q1 - Q3

2020 2019

326,513 240,099

136 9,823

5,369 4,280

178,734 124,789

6,948 5,023

2,610 1,852

12,828 6,615

130,898 115,923

34,671 19,666

96,227

96,257

Q1 - Q3 Q1 - Q3

2018 2017

233,129 233,021

503 -4,908

4,134 4,046

115,426 110,883

5,101 4,899

1,216 1,089

9,115 11,510

106,908 103,778

16,800 15,818

90,108

87,960

Lending

Deposits Equity

Balance sheet total Contingent liabilities

Key figures:

3,814,849

3,734,998

4,006,248

3,693,537

5,634,605

5,909,284

5,847,772

5,629,837

1,230,319

1,149,052

1,176,917

1,043,379

7,352,102

7,447,672

7,438,325

6,986,261

1,937,514

1,585,426

1,621,831

1,403,000

3,460,949 3,239,636

4,935,056 4,866,301

984,177 938,169

6,158,154 5,963,026

1,222,946 1,169,902

Capital ratio Core capital ratio

Return on equity before tax for the period Return on equity after tax for the period Income per cost krone

Rate of return Interest rate risk Foreign exchange position Liquidity coverage ratio

Lending plus write-downs as a ratio of deposits Lending as a ratio of equity

Growth in lending during the period Sum of large exposures Write-down ratio for the period Accumulated write-down ratio

Profit per share after tax for the period Net book value per share

Stock exchange quotation/net book value per share

22.7

23.0

23.5

22.3

21.8

21.3

22.7

23.0

23.5

22.3

21.8

21.3

9.5

8.4

11.6

11.4

11.3

11.1

8.0

6.2

8.5

9.5

9.4

9.5

1.78

1.65

1.70

1.84

1.82

1.81

1.3

0.9

1.3

1.4

1.5

1.5

1.4

1.1

1.1

2.4

2.3

1.5

0.9

0.6

0.6

0.4

0.8

1.8

273.4

243.1

241.0

153.8

351.4

160.9

64.4

63.9

68.8

67.2

73.3

69.2

3.1

3.3

3.4

3.5

3.5

3.5

-4.8

-0.7

6.6

6.4

4.3

5.4

161.3

168.4

162.6

173.3

165.8

na

0.03

0.2

0.2

0.1

0.2

0.3

3.2

3.3

3.2

3.4

3.5

3.1

53.3

38.4

53.5

53.5

50.1

48.9

684

638

654

580

547

521

0.9

0.9

0.9

0.9

1.1

1.2

The BANK of Greenland Q1 - Q3 2021 4/24

MANAGEMENT'S REVIEW Q1 - Q3 2021

Income statement

At TDKK 172,289, compared to TDKK 175,129 for the first three quarters of 2020, net interest income decreased by 1.6%. From the end of 2019 and during 2020, there was a shift in the Bank's lending mix in favour of lending at lower interest margins, with a consequential negative impact on interest income from lending, while falling bond yields also have a negative impact on net interest rates.

In recent years the Bank has improved the balance between the return on the Bank's lending and surplus liquidity and interest paid on deposit by continuously introducing negative interest rates for a wider range of customers and more products than before. These factors had a positive impact on net interest income in the first nine months of the year.

At the end of the first half of 2021, the Bank became a primary clearing participant. This new status as a primary clearing participant has already had a positive impact on the Bank's negative interest income. The Bank has also changed its setup in the foreign transactions and funds area, which has also had a positive impact on fee and commission income.

Fee and commission income increased by TDKK 12,127 compared to the same period of 2020. The increased guarantee scope, intensified investment activity and the pension area have a positive impact on this item. The increase in loan transaction fees and payment settlement fees has also affected this item positively. Net interest and fee income therefore increased by TDKK 9,390 to TDKK 249,061 at the end of September 2021.

Other operating income increased by TDKK 599, to TDKK 3,942, compared to the first three quarters of 2020.

Staff and administration expenses increased by TDKK 10,581, to TDKK 137,545, compared to the same period of the previous year. The increase relates to both staff expenses and other administrative expenses. The increase in staff expenses is due to an expected increase in the number of employees and to salary increases under collective agreements, while the increase in other administrative expenses is primarily due to increased IT costs for BEC.

Other operating expenses, which concern operation and maintenance of the Bank's office buildings and contributions to Afviklingsformuen (the Resolution Fund), increased by TDKK 246, to TDKK 1,992, in the first three quarters of 2021, compared to the same period of 2020.

Depreciation of tangible assets is at the level of the same period of the previous year, amounting to TDKK 5,214.

Value adjustments represent a total capital gain of TDKK 7,716, compared to a capital loss of TDKK 4,691 for the same period of the previous year. The financial markets and the Bank's portfolio of sector equities developed favourably in the first three quarters of 2021. Automatic negative bond value adjustments were significantly lower in the first three quarters of 2021 than in the same period of 2020.

Impairment of loans, etc. amounted to TDKK 1,570 for the first three quarters of 2020, compared to TDKK 10,394 for the same period of 2020, which was particularly affected by uncertainty concerning the development of the Covid-19 pandemic.

Since the first outbreak of Covid-19 in Q1 2020, the Bank has reviewed both customer exposures and sectors, in order to identify consequences of Covid-19. The Bank will maintain a significant management reserve until further notice, despite a decreasing negative impact of the pandemic on Greenland's society.

The management reserve includes a Covid-19 sectoral and cyclical addition that gives weight to the sectors assessed to be subject to direct and derived impacts. This amounted to approximately DKK 20 million at the

The BANK of Greenland Q1 - Q3 2021 5/24

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Bank of Greenland A/S published this content on 03 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 November 2021 12:14:18 UTC.