KommuneKredit Reports Strong Interim Results for 2024
Summary
• KommuneKredit announced a profit before value adjustments and tax of DKK 230 million, which is an impressive year-on-year increase of DKK 143 million.
• For the first half of 2024, total net interest income reached DKK 336 million, reflecting a rise of DKK 145 million compared to the same period last year.
• By the end of June 2024, total loans and leases grew by DKK 3.6 billion, bringing the total to DKK 190.7 billion. This growth was fueled by an increase in net lending, although it was somewhat tempered by negative value adjustments due to rising interest rates.
• Common Equity Tier 1 (CET1) equity fell to DKK 9,968 million from DKK 10,180 million at the end of 2023, primarily as a result of negative value adjustments.
KommuneKredit functions as an association with local municipalities and regions as its members. It secures funding through bond issuances, which provide shared liabilities among its members. Consequently, KommuneKredit's bonds are considered very secure, yielding lower returns compared to the market, which enables the organization to operate on a non-profit basis without the obligation to pay dividends.
Our accomplishments are reflected in the competitive lending rates we offer our clients, which support significant investments while ensuring a commitment to equal opportunities for sustainable growth across all projects in Denmark.
Continued Growth Despite Negative Comprehensive Income
The profit before value adjustments and tax for the period was DKK 230 million, showing a significant year-on-year increase of DKK 143 million. This growth is supported by net interest income of DKK 336 million, with administrative expenses reported at DKK 99 million.
The rise in net interest income was mainly driven by enhanced earnings on securities, which reached DKK 95 million due to increasing interest rates throughout 2024.
However, despite the strong operational profit, negative value adjustments in the first half of 2024 totaled DKK 502 million, resulting in a comprehensive income of negative DKK 212 million. This comprehensive income was then allocated to equity, reducing it to DKK 9,968 million.
The Board of Directors has set a goal for capital adequacy, aiming for an equity ratio of at least 3 percent. As of June, the equity ratio was at 4.0 percent, slightly below the anticipated 4.2 percent for 2024, but still meeting the Board's targets.
Updated Outlook for 2024
KommuneKredit has revised its forecast for net interest income, increasing it from DKK 500 million to DKK 650 million, based on expected growth in interest income from investments. The projection for net lending has also been raised from DKK 4.5 billion to DKK 6.5 billion due to higher-than-anticipated lending activities. The forecast for administrative expenses remains steady at DKK 200 million.
The organization now anticipates an annual profit before value adjustments and tax of DKK 450 million. It is important to note that, following the negative value adjustments in the first half, the comprehensive income for the year is expected to remain negative, although KommuneKredit aims to maintain an equity ratio above 3 percent in both the short and long term.
Contact Information
For more information, please reach out to CEO Jens Lundager at +45 3369 7622 or via email at jlu@kommunekredit.dk.
Frequently Asked Questions
What is KommuneKredit's main financial result for the first half of 2024?
KommuneKredit reported a profit before value adjustments and tax of DKK 230 million in the first half of 2024.
How has KommuneKredit's net interest income changed compared to last year?
Net interest income increased by DKK 145 million, reaching DKK 336 million in the first half of 2024.
What were the total loans and leases at the end of June 2024?
The total loans and leases amounted to DKK 190.7 billion, reflecting a rise of DKK 3.6 billion from the end of 2023.
What is the equity situation of KommuneKredit?
Common Equity Tier 1 (CET1) decreased to DKK 9,968 million due to negative value adjustments, remaining within operational targets.
What is the revised guidance for KommuneKredit for the remainder of 2024?
KommuneKredit has raised its guidance for net interest income to DKK 650 million and net lending to DKK 6.5 billion, while maintaining a projection for administrative expenses at DKK 200 million.
