Ringkjoebing Landbobank A/S / Half-yearly Results
09.08.2013 16:23
Dissemination of a UK Regulatory Announcement, transmitted by
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The issuer is solely responsible for the content of this announcement.
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Core earnings increased from DKK 206 million in the first half of 2012 to DKK
231 million in 2013, an increase of 12%. The profit before tax was DKK 245
million, representing a return of 19% p.a. on equity, which is considered
satisfactory in the current financial situation in society.
Core earnings increased from DKK 206 million in the first half of 2012 to DKK
231 million in 2013, an increase of 12%. The profit before tax was DKK 245
million, representing a return of 19% p.a. on equity, which is considered
satisfactory in the current financial situation in society.
(Million DKK) 1st half 1st half 2012 2011 2010 2009
2013 2012
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Total core income 424 418 823 767 758 753
Total costs and depreciations -132 -133 -265 -248 -240 -238
Core earnings before impairments 292 285 558 519 518 515
Impairment charges for loans etc. -61 -79 -157 -129 -138 -159
Core earnings 231 206 401 390 380 356
Result for portfolio +15 +33 +49 +1 +38 +56
Expenses for bank packages -1 -2 -2 -11 -80 -107
Profit before tax 245 237 448 380 338 305
The half-year - highlights:
-- The result before tax is equivalent to a 19% p.a. return on equity at the
beginning of the period after payment of dividend
-- Increase of 12% in core earnings from DKK 206 million in 2012 to DKK 231
million in 2013
-- The rate of costs improved by 2% to 31.2 - the lowest in the country
-- Solvency ratio of 20.7, equivalent to cover of 238%
-- Core capital ratio of 19.6
-- The bank's market value increased in 2013 to DKK 4.8 billion
-- Highly satisfactory number of new customers in both the branch network and
the niche concepts results in the best ever net increase in customers
Please do not hesitate to contact the bank's management if you have any
questions.
Yours sincerely,
Ringkjoebing Landbobank
John Fisker
Management report
Core income
The net interest income in the first half of 2013 was DKK 304 million against
DKK 316 million in 2012, a decrease of 4%. Since the first half of last year
the bank has experienced a decrease in volumes and a weakly falling interest
margin, and the very low interest level has resulted in a lower return on the
bank's securities portfolio and its liquid resources.
Fees, commissions and foreign exchange earnings amount to net DKK 113 million
in the first half of 2013 against net DKK 98 million in 2012, an increase of
15%. There are primarily greater activity and volumes within asset management
and pensions, which strengthen earnings relative to 2012, and the income from
guarantee commissions has been increasing.
Total core income was 1% higher in the first half of the year, increasing by
DKK 6 million from DKK 418 million in 2012 to DKK 424 million in 2013. The bank
considers the increase from the 2012 level satisfactory.
Costs and depreciations
Total costs including depreciation on tangible assets were DKK 132 million in
the first half of 2013 against DKK 133 million last year, a decrease of 1%. The
half-year's costs include DKK 7 million for the insurance scheme under The
Guarantee Fund for Depositors and Investors, under which the bank's current
share is 0.68%.
The rate of costs was computed at 31.2%, which is 2% better than the same
period last year. The rate of costs is still the lowest in the country. A low
rate of costs is especially important in periods of difficult economic
conditions as this provides a high level of robustness in the bank's results.
Impairment charges for loans
Impairment charges for loans etc. amounted to DKK 61 million in the first half
of 2013 against DKK 79 million in 2012. The level of impairments is falling
relative to the same period last year and is equivalent to 0.8% p.a. of total
average loans and guarantees. The bank's customers still appear to be coping
better with the weak economic conditions than the average in Denmark.
The bank's total account for impairment charges for loans and provisions for
guarantees amounted to DKK 828 million at the end of the half-year, equivalent
to 5.2% of total loans and guarantees. Actual write-offs for loans continue to
be very low, and they were exceeded during the period by the income items
'Interest concerning the impaired part of loans' and 'Receivables previously
written-off', such that the account for impairment charges for loans and
provisions for guarantees increased by net DKK 70 million during the half-year.
The portfolio of loans with suspended calculation of interest amounts to DKK 97
million, equivalent to 0.6% of the bank's total loans and guarantees at the end
of the half-year.
Given the low growth in the Danish economy in 2012, which is expected to
continue this year, the bank is satisfied with the conservative credit policy
on the basis of which it has always operated. As a natural part of the economic
cycle, the bank's losses are expected to remain at a relatively high level in
2013, but with a downward trend relative to the previous year.
Core earnings
(Million DKK) 1st half 1st half 2012 2011 2010 2009
2013 2012
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Total core income 424 418 823 767 758 753
Total costs and depreciations -132 -133 -265 -248 -240 -238
Core earnings before impairments 292 285 558 519 518 515
Impairment charges for loans etc. -61 -79 -157 -129 -138 -159
Core earnings 231 206 401 390 380 356
Core earnings before impairments for the half-year were DKK 292 million, the
best half-year ever in the bank's history for this figure.
Core earnings were DKK 231 million against DKK 206 million last year, an
increase of 12%, and core earnings are now approaching the top of the range of
DKK 350-425 million announced previously for the entire year.
Result for portfolio
The result for portfolio for the first half of 2013 was positive by DKK 15
million including funding costs for the portfolio.
The bank's holding of shares etc. at the end of the half-year amounted to DKK
253 million, DKK 36 million of which was in listed shares, while DKK 217
million was in sector shares etc. The bond portfolio amounted to DKK 3,671
million, and the majority of the portfolio consists of AAA-rated Danish
mortgage credit bonds and short-term bank bonds with rated counterparties.
The total interest rate risk, computed as the impact on the result of a one
percentage point change in the interest level, was 1.3% of the bank's core
capital after deduction at the end of the half-year.
The bank's total market risk within exposures to interest rate risk, listed
shares etc. and foreign currency remains at a low level. The bank's risk of
losses calculated on the basis of a Value-at-risk model (computed with a 10-day
horizon and 99% probability) in the first half of 2013 was as follows:
Risk in Risk relative to equity
million DKK end of 1st half 2013 in %
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Highest risk of loss: 26.1 0.95%
Lowest risk of loss: 2.5 0.09%
Average risk of loss 14.7 0.53%
The bank's policy remains to keep the market risk at a low level.
Profit after tax
The profit after tax was DKK 184 million for the first half of 2013 against DKK
178 million last year.
The profit after tax is equivalent to a return on equity of 14% p.a. after
payment of dividend.
Balance sheet
The bank's balance sheet total at the end of the half-year stood at DKK 17,800
million against last year's DKK 18,033 million.
The bank's deposits fell by 2% from DKK 12,939 million in 2012 to DKK 12,654
million at the end of the first half of 2013.
The bank's loans fell from DKK 12,869 million to DKK 12,570 million, a fall of
2%. In the first half of 2013, the bank enjoyed a very satisfactory underlying
growth in new customers from both its branch network and within the niches
Private Banking and wind turbine financing. The growth in loans in recent years
has been more than absorbed by a bigger return flow on the bank's loans
portfolio, inter alia because of the changed patterns of behaviour in society,
with a greater proportion of savings and with customers who want to trim their
balance sheets. There was, however, a weak increase of DKK 146 million in the
loans portfolio for the first half of 2013 relative to the end of 2012.
The bank's portfolio of guarantees etc. at the end of the half-year was DKK
2,615 million against DKK 1,687 million at the end of June 2012. The portfolio
of guarantees etc. increased by DKK 948 million relative to the end of 2012.
Liquidity
The bank's liquidity is good, with loans and deposits at the same level. The
excess solvency relative to the statutory requirement was 145%. The bank's
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