P/F BankNordik : H1 Interim Report 2021

Interim Report

H1 2021

4 August 2021

H1 Interim Report 2021

CONTENTS
MANAGEMENT'S REPORT
• Financial highlights and ratios..................................................................................................	3
• Financial review .....................................................................................................................	4
-	H1 2021 highlights .........................................................................................................	4
-	Income statement .............................................................................................................	4
-	Balance sheet ...................................................................................................................	5

• Capital ratios……..……………………..…........................................................................... 6

-	Supervisory Diamond .......................................................................................................	6
- Events after the balance sheet date .................................................................................	6
-	Guidance for 2021……………………………......................................................................	6

• Adjusted results……………….………………………………………………………………….. 8

•	Segments ...............................................................................................................................	9
	-	Personal Banking...............................................................................................................	10
	-	Corporate Banking.............................................................................................................	11
	-	Insurance ..........................................................................................................................	12
FINANCIAL STATEMENTS
•	Income statement .................................................................................................................	13
•	Balance sheet ........................................................................................................................	15
•	Statement of capital ...............................................................................................................	17
•	Capital and Solvency .............................................................................................................	19
•	Cash flow statement ..............................................................................................................	20
• Notes to the financial statements .........................................................................................	21
Statement by the Executive Board and the Board of Directors	…............................................. 31

CONTACT DETAILS …................................................................................................................. 32

2

H1 Interim Report 2021

Financial highlights and ratios - BankNordik Group

Highlights	H1	H1	Index	Q2	Q1	Q4	Q3	Q2
DKK 1,000	2021	2020	21/20	2021	2021	2020	2020	2020
Net interest income	133,779	139,935	96	67,103	66,677	68,893	69,392	70,614
Dividends from shares and other investments	3,423	3,272	105	2,918	505	0	0	2,479
Net fee and commision income	37,888	29,094	130	19,368	18,520	15,979	14,819	13,423
Net interest and fee income	175,090	172,301	102	89,388	85,702	84,872	84,211	86,516
Net insurance income	21,142	15,244	139	13,940	7,202	11,583	18,325	11,693
Interest and fee income and income from insurance activities, net	196,232	187,545	105	103,329	92,904	96,455	102,536	98,209
Market value adjustments	-3,183	-64,668	5	-4,554	1,371	2,389	45,312	-46,905
Other operating income	4,888	2,528	193	-251,564	256,452	3,103	1,456	2,145
Staff costs and administrative expenses	131,654	121,558	108	-113,253	244,907	64,063	58,715	60,709
Impairment charges on loans and advances etc.	-23,425	2,297		-18,908	-4,518	-9,557	2,298	-15,660
Net profit continuing operations	71,285	-1,530		-15,392	86,677	36,448	68,233	6,714
Net profit discontinued operations	81,876	59,576	137	74,631	7,245	6,839	-3,379	75,604
Net profit	153,161	58,046	264	59,238	93,922	43,287	64,853	82,318
Loans and advances	7,601,355	7,479,595	102	7,601,355	7,449,620	7,607,901	7,470,650	7,479,595
Bonds at fair value	2,357,080	4,461,308	53	2,357,080	2,835,773	4,472,621	4,080,854	4,461,308
Intangible assets	2,491	11,326	22	2,491	2,491	2,432	12,096	11,326
Assets held for sale	3,564	2,404,507	0	3,564	3,564	4,466	2,363	2,405
Assets in disposals groups classified as held for sale	0	0		0	0	3,217,940	0	0
Total assets	12,000,521	16,868,303	71	12,000,521	11,971,157	17,290,303	16,746,992	16,868,303
Amounts due to credit institutions and central banks	1,037,969	51,963	1,998	1,037,969	1,263,398	27,954	47,148	51,963
Deposits and other debt	7,642,397	7,578,031	101	7,642,397	7,512,542	7,733,408	7,476,585	7,578,031
Liabilities directly associated with assets in disposal groups
classified as held for sale	0	0		0	0	6,520,004	0	0
Total shareholders' equity	2,368,780	2,167,057	109	2,368,780	2,312,540	2,271,024	2,229,699	2,167,057

	June 30	June 30	June 30	March 31	Dec. 31	Sept. 30	June 30
Ratios and key figures	2021	2020	2021	2021	2020	2020	2020
Solvency
Total capital ratio, incl. MREL capital, %	31.3	24.0	31.3	36.2	26.4	24.9	24.0
Total capital ratio, %	29.2	24.0	29.2	36.2	26.4	24.9	24.0
Core capital ratio, %	27.8	21.8	27.8	33.1	24.1	22.6	21.8
CET 1 capital	25.7	20.3	25.7	31.0	22.6	21.1	20.3
Risk-weighted Items, DKK mill	7,134	10,286	7,134	7,147	9,774	9,883	10,286
Profitability
Return on shareholders' equity after tax, %	6.6	2.7	2.5	4.1	1.9	3.0	3.9
Cost / income, %	56.3	102.2	85.9	69.1	55.3	42.0	88.3
Cost / income, % (excl. value adjustm. and impairments)	67.0	66.3	75.7	70.6	66.2	58.1	62.7
Return on assets	1.3	0.3	0.5	0.8	0.3	0.4	0.5
Market risk
Interest rate risk, %	0.2	1.6	0.2	0.4	0.5	0.4	1.6
Foreign exchange position, %	0.7	1.5	0.7	0.7	1.0	1.1	1.5
Foreign exchange risk, %	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Liquidity
Liquidity Coverage Ratio (LCR), %	202.5	232.6	202.5	211.7	231.1	227.3	232.6
Credit risk
Change in loans and advances, %	-0.1	-24.5	2.0	-2.1	1.8	-0.1	0.3
Gearing of loans and advances	3.2	3.5	3.2	3.2	3.3	3.4	3.5
Impairment and provisioning ratio, end of period, %	3.0	4.0	3.0	3.6	5.1	3.8	4.0
Write-off and provisioning ratio, %	-0.2	0.0	-0.2	0.0	-0.1	0.0	-0.2
Share of amounts due on which interest rates
have been reduced, end of period, %	0.4	0.7	0.4	0.7	0.7	0.7	0.7
Shares
Earnings per share after tax (nom. DKK 20), DKK	16.0	6.1	6.2	9.8	4.5	6.8	8.6
Market price per share (nom. DKK 20), DKK	168.5	101.0	168.5	156.0	152.0	110.0	101.0
Book value per share (nom. DKK 20), DKK	247.5	227.3	247.5	241.6	237.3	233.5	227.3
Other
Number of full-time employees, end of period	195	363	195	218	352	361	363

3

H1 Interim Report 2021

Financial review

"We're delivering a positive performance for the first half-year, driven mainly by improved core earnings and good developments in the insurance business. Our customers have generally emerged from the coronavirus crisis in good shape, although a few industries remain challenged. I'm very pleased to announce that the IT migration of the customer base sold to Spar Nord was executed according to plan in June. As previously announced, we still expect to distribute DKK 700m in extraordinary dividends in relation to the divestment of the Danish business, including DKK 450m this year," said BankNordik CEO Árni Ellefsen.

"In order to ensure that we will remain an efficient organisation and can keep costs at a reasonable level, we have reorganised our Group and implemented certain initiatives to enhance our earnings. We expect these steps will lift our consolidated profit by DKK 20-25m annually over the coming years. This will provide a good start for our strategic deliberations on how to enhance profitability in all business areas for the longer term," said Mr Ellefsen.

Income statement

Income statement, Group
						Index
DKKm				H1 2021	H1 2020	21/20	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020
Net interest income		129	128	101	66	64	65	65	65
Net fee and commission income	38	29	130	20	17	16	15	13
Net insurance income		21	15	139	14	7	12	18	12
Other operating income (less reclassification)	18	11	169	9	9	8	6	5
Operating income		206	183	113	109	97	101	104	95
Operating costs	1			-120	-118	101	-61	-59	-62	-57	-59
Sector costs				-1	0		0	0	0	0	0
Profit before impairment charges	85	64	134	47	38	38	47	36
Impairment charges, net		23	-2		27	-3	10	-2	16
Operating profit			109	62	177	74	35	48	44	52
Non-recurring items	2		81	0		4	77	0	0	0
Profit before investment portfolio earnings and tax	190	62	308	78	111	48	44	52
Investment portfolio earnings	3	-7	-7		-4	-3	1	3	15
Profit before tax, continuing operations	182	55	331	74	108	49	48	66
Profit before tax, discontinued operations	9	18	51	0	9	1	35	37
Profit before tax, total		192	74	261	74	118	51	82	103
Tax				39	16	250	15	24	7	17	21
Net profit				153	58	263	59	94	43	65	82
Operating cost/income, %		58	65		56	60	62	55	62
Number of FTE, end of period	195	228	86	195	218	228	232	228
1 Comprises staff costs, administrative expenses and amortisation, depreciation and impairment charges (less reclassification to non-recurring items).
2 Reclassified from Other operating income, Staff costs and administrative expenses and from Amortisation, depreciation and impairment charges.
3 Incl. net income from investments accounted for under the equity method (excl. sector shares).

4

H1 Interim Report 2021

The following comments relate to the adjusted figures and are generally stated relative to Q1 2021. Due to seasonal variations, comments on the insurance segment are made relative to Q2 2020. The comments on H1 2021 are stated relative to H1 2020.

Operating income

The BankNordik Group generated operating income of DKK 109m in Q2 2021, an increase of DKK 12m compared to Q1 2021.

Net interest income

Net interest income was DKK 66m in Q2 2021, DKK 2m more than in Q1 2021.

Net fee and commission income

Net fee and commission income amounted to DKK 20m in Q2 2021, an increase of DKK 3m compared to Q1 2021.

Net insurance income

Net insurance income was DKK 14m in Q2 2021, DKK 2m more than in Q2 2020.

Operating and sector costs

Operating costs amounted to DKK 61m in Q2 2021, increasing DKK 3m relative to Q1 2021.

Profit before impairment charges

Profit before impairment charges was DKK 47m in Q2 2021, DKK 9m higher than in Q1 2021.

Impairment charges

Net impairments were a reversal of DKK 27m in Q2 2021 compared to charges of DKK 3m in Q1 2021.

Operating profit

As a result, operating profit came in at DKK 74m in Q2 2021 compared to DKK35m in Q1 2021.

Non-recurring items

Non-recurring items represented an income of DKK 4m in Q2 2021, whereas the figure for Q1 2021 was DKK 77m due to the finalisation of the sale of BankNordik's Danish business.

Profit before tax

Profit before tax in Q2 was DKK 74m, DKK 44m less than in the first quarter of the year, which was obviously strongly impacted by the sale of the Bank's Danish business being finalised.

Profit before tax for the first half of the year totalled DKK 192m, including DKK 9m from discontinued operations. This was significantly higher than the figure for H1 2020 of DKK 74m, which included DKK 18m from discontinued operations. Most of the increase in profit before tax can be ascribed to non-recurring income, although operating profit was DKK 47m higher in H1 2021 than in H1 2020.

Balance sheet

BankNordik's total assets at 30 June 2021 amounted to DKK 12.0bn, up by DKK 29m compared to Q1 2021.

5