KommuneKredit Reports Strong Financial Results for H1 2024
Key Highlights
• For the first half of 2024, KommuneKredit reported a pre-tax profit of 230 million DKK, an increase of 143 million DKK compared to the same period last year.
• The net interest income for this period reached 336 million DKK, reflecting a growth of 145 million DKK compared to the first half of 2023.
• The overall value of loans and leasing rose by 3.6 billion DKK, bringing the total to 190.7 billion DKK at mid-year, although this growth was somewhat offset by negative value adjustments due to a slight increase in interest rates.
• The core tier 1 capital (CET1), which represents equity, decreased to 9.968 billion DKK from 10.180 billion DKK at the end of 2023, primarily due to negative value adjustments.
KommuneKredit functions as an association with all municipalities and regions as members. We finance our operations by issuing bonds, for which members share collective responsibility. This arrangement ensures that our bonds are secure and can be traded at lower interest rates compared to market rates. Importantly, our mission is not to generate profit or distribute dividends.
Our success is gauged by the low lending rates we offer our clients, aiding them in financing their investments—regardless of the investment size or project location. In essence, we strive to create more local value for the citizens' money.
Continued Lending Growth Amid Negative Total Income
KommuneKredit's pre-tax result for the first half of 2024 was 230 million DKK, marking an increase of 143 million DKK from the same period last year. This result includes a net interest income of 336 million DKK, which is an improvement over the previous year, alongside administrative expenses of 99 million DKK during this period. The increase in net interest income is largely due to enhanced earnings on securities, which totaled 95 million DKK as a result of higher interest rates in 2024.
During the first half of 2024, negative value adjustments totaled -502 million DKK, a stark contrast to the positive adjustments seen in previous years. Consequently, the total income at mid-year stood at -212 million DKK, which has been fully transferred to equity, resulting in a total equity of 9.968 billion DKK.
The board aims to ensure that earnings support a suitable capitalization level, targeting at least a 3% equity ratio. Currently, the equity ratio is 4.0%, slightly below the anticipated 4.2% for 2024, yet still aligns with the board's objectives.
Outlook for 2024
In light of prior announcements, we have raised our expectations for net interest income from 500 million DKK to 650 million DKK, primarily driven by increased interest income on investments. Additionally, we have updated our projections for net lending from 4.5 billion DKK to 6.5 billion DKK, as net lending has outperformed expectations thus far this year.
We are maintaining our expectations for administrative costs at 200 million DKK. As a result, we anticipate that the pre-tax profit for the year will be 450 million DKK.
Given the -502 million DKK in value adjustments recorded in the first half of 2024, it is probable that the total income for the year will remain negative. Nonetheless, we still expect to maintain the equity ratio at a minimum of 3% in both the short and long term.
Contact Information
For inquiries, please reach out to 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 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.
