KommuneKredit Reports Impressive H1 2024 Financial Results
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KommuneKredit Reports Impressive H1 2024 Financial Results
Key Highlights
• The result for the period before value adjustments and tax was 230 million DKK, an increase of 143 million DKK compared to the first half of the previous year.
• Net interest income for the first half of 2024 amounted to 336 million DKK, showing a growth of 145 million DKK compared to the same period last year.
• The total value of loans and leasing increased by 3.6 billion DKK from the end of 2023 to 190.7 billion DKK at mid-year. This growth in net lending is partially offset by negative value adjustments due to slightly rising interest rates.
• The core tier 1 capital (CET1), equivalent to equity, decreased to 9.968 billion DKK from 10.180 billion DKK at the end of 2023, attributed to negative value adjustments.
KommuneKredit operates as an association where all municipalities and regions are members. We fund our activities by issuing bonds, which the members are collectively liable for. This collective responsibility means that our bonds are very secure and can be traded at low interest rates relative to market rates. Additionally, our goal is not to generate profit from our business, nor do we pay dividends.
Our success is measured by the low lending rates we provide to our clients as we assist in financing their investments—regardless of the investment's size or where the project is located. In other words, we contribute to ensuring more local value for citizens' money.
Continued Growth in Lending and Negative Total Income
KommuneKredit's result before value adjustments and tax for the first half of 2024 stood at 230 million DKK, reflecting an increase of 143 million DKK compared to the same period last year. The result includes net interest income of 336 million DKK, which is higher than the same period last year, along with administrative costs of 99 million DKK during the period. The higher net interest income is primarily attributed to improved earnings on securities totaling 95 million DKK due to higher interest rates in 2024.
In the first half of 2024, negative value adjustments amounted to -502 million DKK, in contrast to the positive value adjustments in previous years, which were significant. This led to a negative total income at mid-year of -212 million DKK, which is transferred entirely to equity, resulting in 9.968 billion DKK in total equity.
The board's goal is to ensure that earnings maintain a suitable capitalization corresponding to at least a 3% equity ratio. The current equity ratio is 4.0%, slightly lower than the expected 4.2% for 2024, but it still meets the board's objectives.
Expectations for 2024
In relation to previous announcements, we have revised our expectations for net interest income upward from 500 million DKK to 650 million DKK, primarily due to increased interest income on investments. Furthermore, we have adjusted our expectations for net lending up from 4.5 billion DKK to 6.5 billion DKK, as net lending has exceeded expectations so far this year.
We maintain our expectations for administrative costs at 200 million DKK. Therefore, we anticipate that the result for the year before value adjustments and tax will be 450 million DKK.
Given the -502 million DKK in value adjustments during the first half of 2024, it is likely that total income for the year will remain negative. However, we continue to expect that the equity ratio can be preserved at a minimum of 3% in both the short and long term.
Contact Information
Managing Director Jens Lundager,
phone 3369 7622, email: jlu@kommunekredit.dk
Frequently Asked Questions
What were the key financial results for KommuneKredit in H1 2024?
The key financial results include a pre-tax profit of 230 million DKK and net interest income of 336 million DKK, marking significant growth from the previous year.
How has KommuneKredit's lending growth performed?
Lending increased by 3.6 billion DKK, reflecting a robust growth in net lending, although it was partially offset by negative value adjustments.
What are the expectations for KommuneKredit in the coming year?
Expectations have been revised for net interest income to 650 million DKK and net lending to 6.5 billion DKK, indicating a positive outlook for 2024.
How does KommuneKredit ensure low interest rates for its loans?
KommuneKredit's unique structure as an association of municipalities allows it to offer low interest rates by issuing secure bonds.
Who can be contacted for more information about KommuneKredit's results?
For further inquiries, Managing Director Jens Lundager is available at phone 3369 7622 or via email at jlu@kommunekredit.dk.
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