The Danish Financial Supervisory Authority
Nasdaq Copenhagen A/S
20 February 2020
Vestjysk Bank realised a profit after tax of DKK 478 million in 2019. The profit was favourably affected by the sale of the Bank’s shares in Sparinvest Holdings SE, as detailed in a company announcement dated 30 August 2019, and recognition of additional deferred tax asset at 31 December 2019. A negative value adjustment of owner-occupied properties due to a fall in rental value and increased costs for investment in IT related to stricter statutory requirements in the banking sector detracted from the performance. Impairment allowances were generally at a lower level than in 2018, and the Bank’s overall profit after tax for 2019 was very satisfactory.
- Profit after tax of DKK 478 million (2018:DKK 296 million), equalling a return on equity after tax of 17.2%. Excluding the profit from the sale of shares in Sparinvest Holdings SE and the increased deferred tax asset, the profit was DKK 313 million and return on equity after tax was 11.3%.
- Core income of DKK 1,055 million (2018:DKK 909 million), including value adjustments of DKK 185 million (2018:DKK 35 million).
- The proceeds from the sale of shares in Sparinvest Holding SE in Q3 2019 amounted to DKK 142 million.
- Cost ratio of 48.2% (2018: 52.9%). Excluding the income from the sale of shares in Sparinvest Holdings SE, the cost ratio was 55.6%.
- DKK 38 million value adjustment of the Bank’s owner-occupied properties, DKK 21 million of which was recognised in the profit for the year.
- Core earnings before impairment of DKK 547 million (2018:DKK 428 million).
- Additional recognition of deferred tax asset of DKK 23 million. The recognised tax asset thus amounted to DKK 98 million, while the deferred tax asset not recognised amounted to DKK 480 million.
- Impairment of loans and receivables, etc. of DKK 64 million (2018:DKK 186 million). Impairment losses on agriculture still accounted for the majority of the Bank’s impairment losses.
- The Bank’s capital requirement was 13.6%, consisting of an individual solvency need of 10.1%, a general capital conservation buffer of 2.5% and a countercyclical buffer of 1.0%.
- The Bank’s total capital ratio was 21.1%, implying an excess cover of 7.5 percentage points or DKK 1,070 million.
- The Bank’s MREL ratio was 21.1%. The MREL requirement was phased in at 0.625%, added to the capital requirement. The MREL requirement was 14.2%. This taken into account, the excess cover was 6.9 percentage points, or DKK 980 million.
Outlook for 2020
Vestjysk Bank expects a profit after tax of around DKK 250-300 million. Currently, however, there is some uncertainty as to the global economic outlook and, in particular, the settlement price trend for agricultural products. A significant decline in these could impact the Bank’s impairment losses.
Like other banks, Vestjysk Bank is introducing negative deposit rates for retail customers for pension savings in excess of DKK 10,000 effective from 15 February 2020 and for deposits in excess of DKK 500,000 effective from 15 March 2020. The effects of this have been factored into the outlook for 2020, and the bank is closely monitoring sector developments in this respect.
Please address any enquiries regarding the present announcement to Jan Ulsø Madsen, CEO, at tel. (+45) 96 63 21 04.
Vestjysk Bank A/S
Kim Duus Jan Ulsø Madsen
Vestjysk Bank A/S
Tel. (+45) 96 63 20 00
CVR no. 34 63 13 28