Strong H1 performance

Company Announcement no. 13/2023

“Reporting a pre-tax profit of DKK 162m against DKK 113m in the year-earlier period, we are pleased to announce solid results for the first six months of the year. The positive performance was driven especially by the improved interest rate setting and by the persistently sound credit quality and resilience to inflationary pressures of our customer portfolio, which resulted in reversals of impairment charges in both Q1 and Q2 this year. Despite the sound performance in our core operations and positive outlook for the rest of the year, we have decided to raise the management estimated provision from DKK 65m to DKK 75m. The decision was based on the persistently uncertain economic environment,” said BankNordik CEO Turið F. Arge.

Highlights of BankNordik’s interim report for the first six months of 2023:

H1 2023 vs H1 2022

• Operating profit before impairment charges increased from DKK 96m in H1 2022 to DKK 119m in H1 2023.
  • Net interest income rose from DKK 130m in H1 2022 to DKK 164m in H1 2023.
  • Fee and commission income amounted to DKK 40m in H1 2023, which was DKK 3m lower than in H1 2022. Net insurance income amounted to DKK 24m in H1 2023, a DKK 3m decline relative to the year-earlier period.
  • Other operating income amounted to DKK 19m in H1 2023, which was DKK 1m more than in the same period of 2022.
  • Operating costs amounted to DKK 127m in H1 2023, which was a DKK 4m increase relative to H1 2022.

• Non-recurring items amounted to DKK 9m in H1 2023 against DKK 0m in H1 2022.
• Impairment was a net reversal of DKK 16m in H1 2023, compared with a DKK 31m net reversal in H1 2022.

• The overall profit before tax for H1 2023 was DKK 162m against DKK 113m for H1 2022.
  • The investment portfolio yielded a return of DKK 37m in H1 2023 against a loss of DKK 14m in H1 2022.

Q2 2023 vs Q1 2023

• BankNordik reported operating profit before impairment charges of DKK 71m in Q2 2023, an increase of DKK 22m from Q1 2023.
  • Net interest income amounted to DKK 86m in Q2 2023, which was a DKK 9m improvement on Q1 2023.
  • Fee and commission income fell by DKK 2m to DKK 19m in Q2 2023 from DKK 21m in Q1 2023.
  • Net insurance income amounted to DKK 19m in Q2 2023, a DKK 14m increase on Q1 2023.

• • Other operating income amounted to DKK 11m in Q2 2023, which was a DKK 2m increase relative to Q1 2023.
  • Operating costs for Q2 2023 amounted to DKK 64m, which was a DKK 1m increase on Q1 2023.

• Non-recurring items amounted to DKK 6m in Q2 2023 against DKK 3m in Q1 2023.
• Impairment charges were a DKK 7m net reversal for the Q2 2023 period against a DKK 8m reversal in Q1 2023.
• The overall profit before tax was DKK 87m in Q2 2023 against DKK 75m in Q1 2023.
  • The investment portfolio yielded a return of DKK 15m in Q2 2023, against DKK 22m in the preceding quarter.
• Bank lending volumes were up by 4% from DKK 8,354m at 31 March 2023 to DKK 8,655m at 30 June 2023.
• Brokered mortgage-credit fell by 3% from DKK 2,634m at 31 March 2023 to DKK 2,567m at 30 June 2023.
• Deposits fell by 1% from DKK 8,524m at 31 March 2023 to DKK 8,426m at 30 June 2023.

Capital ratios

At 30 June 2023, the Group had a CET 1 capital ratio of 22.1%, against 21.6% at 31 December 2022. The total capital ratio including MREL was 30.4% at 30 June 2023 against 29.9% at 31 December 2022. The profit for the period is not included in the capital ratios.

Guidance for 2023
On 18 April 2023, the Bank raised its FY 2023 net profit guidance from DKK 190–220m as originally guided to DKK 210–240m. Subsequently, on 16 June 2023, the Bank further raised its net profit guidance to a range of DKK 235-265m.The guidance is generally subject to uncertainty and will, amongst other things, depend on economic developments, loan impairment charges and market value adjustments.

For further information, please call:
Turið F. Arge, CEO, tel. (+298) 230 678

BankNordik has banking activities in Greenland and the Faroe Islands and insurance activities in the Faroe Islands. Founded in the Faroe Islands more than a century ago, the Group has total assets of DKK 12.5bn and 203 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.

Appendix: H1 2023 financial highlights and comparative figures

Highlights and ratios

DKKm	Q2 2023	Q1 2023	Index	Q4 2022	Q3 2022	Q2 2022	H1 2023	H1 2022	Index
Net interest income	86	78	111	72	67	65	164	130	126
Net fee and commission income	19	21	88	23	22	22	40	43	93
Net insurance income	19	5	399	14	11	15	24	27	89
Other operating income (less reclassification)	11	8	129	8	11	9	19	19	103
Operating income	135	112	120	117	110	111	247	219	113
Operating costs	-64	-63	101	-58	-62	-62	-127	-123	104
Sector costs	0	0		0	0	0	-1	-1
Profit before impairment charges	71	49	145	59	48	48	119	96	125
Impairment charges, net	7	8	86	3	12	22	16	31	50
Operating profit	78	57	137	62	60	70	135	127	106
Non-recurring items	-6	-3		0	0	0	-9	0
Profit before investment portfolio earnings and tax	72	54	135	62	60	70	126	127	99
Investment portfolio earnings	15	22	68	8	-36	-16	37	-14	-253
Profit before tax	87	75	115	70	24	54	162	113	144
Tax	17	14	122	16	4	10	31	22	141
Net profit	70	61	114	54	20	43	131	90	145
Loans and advances	8.655	8.354	104	8.083	7.977	7.724	8.655	7.724	112
Deposits and other debt	8.426	8.524	99	8.351	8.225	8.897	8.426	8.897	95
Mortgage credit	2.567	2.634	97	2.648	2.652	2.730	2.567	2.730	94
Equity	1.694	1.626	104	1.817	1.756	1.737	1.694	1.737	97
Total capital ratio, incl. MREL capital, %	30,4	29,1		29,9	31,4	32,0	30,4	32,0
CET 1 capital, %	22,1	21,0		21,6	22,9	23,3	22,1	23,3
ROE, %	16,8	14,3		12,1	4,6	10,1	14,9	9,6
ROE, excl. one-offs, %	17,9	14,9		12,1	4,6	10,1	15,8	9,6
Liquidity Coverage Ratio (LCR), %	183,7	220,0		225,2	225,8	223,4	183,7	223,4
Operating cost/income, %	47	56		49	56	56	51	56
Number of FTE, end of period	203	203	100	200	201	203	203	203	100

Further details are available in the interim report.