Company announcement no. 10/2013
In H1 2013, Danske Andelskassers Bank A/S recorded a loss before tax of DKK -81m against a loss before tax of DKK -75m in H1 2012. The loss is particularly related to an impairment of a loan to one one of the bank’s customers amounting to DKK 45m and apart from this impairment the bank has experienced a positive development in impairments. The impairment has no effect on the bank’s excess solvency cover as the amount was incorporated in the solvency requirement beforehand.
The core earnings of Danske Andelskassers Bank are at a level below that of H1 2012. This is particularly due to a reduced loan portfolio through the year, but it should be noticed, that the bank has experienced a slow but increasing activity in its market areas as well as a stabilisation of the total loan sum in Q2 2013. As many of the bank’s customers have opportunities within e.g. property and investment this will be a focus area of the quarters ahead as it has been in previous quarters. Simultaneously the bank will continue the ongoing adjustment of the expense level in the organisation.
The bank has a solid deposit-loan gap and liquidity surplus cover of 171% relative to the statutory requirement, and the bank also has an acceptable solvency surplus cover of 2.9 percentage points. Danske Andelskassers Bank maintains its core earnings outlook for 2013.
The Board of Directors of Danske Andelskassers Bank A/S has on this day adopted the financial statements for H1 2013. Danske Andelskassers Bank's loss before tax amounted to DKK -81m in H1 2013 against DKK -75m in H1 2012. The net loss for the year amounted to DKK -83m in H1 2013 against DKK -64m in H1 2012.
The loss is particularly affected by two elements. The one element is impairments amounting to DKK158m. The other element is a loan portfolio which has been reduced with DKK 836m since H1 2012 and thereby naturally has lowered the banks interest income as well. A common denominator is however that the development through 2013 has been more positive.
The impairment level in H1 2013 is particularly affected by an impairment of DKK 45m relating to a single customer. The amount was incorporated in the solvency requirement beforehand and the impairment has thus no effect on the bank’s excess solvency cover which stood at 2.9 percentage points as of 30 June 2013 compared to 2.4 percentage points as of 30 June 2012. Despite of the impairment mentioned above the overall impairments of the bank are still on the decline. This confirms the effect of the bank’s initiatives in the credit area and the bank expects the level of impairments to decline further in the periods ahead.
When comparing the overall loan portfolio as of 30 June 2013 with that of 30 June 2012 the total amount of the loans are particularly affected by a decline through 2012 and the beginning of 2013 due to low economic activity in the primary market areas of the bank as well as with the primary customer segments of the bank. The level has however stabilised in Q2 2013 and the bank is experiencing a slow but increasing activity in the market areas, even though a real economic recovery still isn’t visible. As many of the bank’s customers have opportunities within e.g. property and investment this will be a focus area of the quarters ahead as it has been in previous quarters.
As a consequence of the low economic activity and to strengthen the organisation going forward, the bank merged branches and cut jobs in H1, which affects the interim financial statements negatively, but will have a positive effect on future financial statements. The bank expects to make similar adjustments in the quarters ahead by e.g. making changes at the head office, merging branches and cutting jobs in the entire organisation in order to adjust the level of expenses to the market situation and earnings.
The core earnings of the bank – profit/loss before tax excl. market value adjustments, impairment and sector solution expenses – are DKK 97m in H1 2013 against DKK 123m in H1 2012.
Highlights from the interim report Highlights from the interim report are as follows (results for H1 2012 are shown in brackets):
- Loss before tax of DKK -81 m (DKK -75m)
- Core earnings of DKK 97m (DKK 123m)
- Impairment and losses of DKK 158m (DKK 166m)
- Market value adjustments of DKK -1m (DKK 20m)
- Staff costs and administrative expenses of DKK 253m (DKK 254m)
- Sector solution contributions of DKK 13m (DKK 10m)
- Deposits of DKK 9,287m (DKK 9,378m)
- Loans of DKK 7,345m (DKK 8,181m)
- Solvency ratio of 13.1% (14.6%) against a solvency requirement of 10.2% (12.2%), corresponding to a surplus cover of 2.9 percentage points (2.4 percentage points)
- Core capital ratio of 13.1% (14.5%)
- Liquidity surplus cover relative to Section 152 of the Danish Financial Business Act (Lov om finansiel virksomhed) of 171% (183%)
- Equity of DKK 1,116m (DKK 1,311m).
Danske Andelskassers Bank has a solid deposit surplus, a good liquidity surplus cover and an acceptable solvency surplus cover.
The bank is therefore well equipped for meeting the needs and wishes of its customers, and in the next quarters the bank will work to strengthen the bank further thereby being able to deliver even better solutions to the customers.
Danske Andelskassers Bank maintains its outlook for 2013 as stated in the interim report of 15 May 2013. The bank thus expects core earnings in the region of DKK 160-190m.
Comment on charge for breaking the Danish Securities Trading Act As published in company announcement no. 8/2013 as of 7 August 2013 (in Danish only) and company announcement no. 9/2013 as of 22 August 2013 (in Danish only), Danske Andelskassers Bank and one of the bank’s leading employees (who are not a part of the Board of Executives or the Board of Directors) has been charged with price manipulation pursuant to Section 39 of the Danish Securities Trading Act (Værdipapirhandelsloven).
The bank denies the charge on the present basis and is cooperating fully with the authorities to resolve the matter, as it is the bank’s wish that the matter is resolved as soon as possible.
If there is any kind of development in this matter that requires e.g. further comments or the publication of a company announcement the bank will do so in accordance with present laws.
Comment on newspaper articles During the summer of 2013, Danske Andelskassers Bank was the subject of a number of articles in the Danish newspaper Morgenavisen Jyllands-Posten which focused negatively on the bank's share issue in June 2011, among other things.
As a result, the Danish Financial Supervisory Authority launched an inquiry into the points raised and the bank has also launched its own internal inquiry, the results of which will form part of the bank's dialogue with the Authority. The bank is cooperating fully with the authorities to resolve the matter as well and wish for a clarification as soon as possible.
Danske Andelskassers Bank is of the view that the articles were generally characterised by misunderstandings, omissions and lack of proportionality, but the articles nevertheless pointed out various errors and inexpediencies warranting an inquiry.
As the Danish Financial Supervisory Authority has not yet finished its inquiry, the bank does not want to comment further on the matters raised, nor does it want to comment on any liability for damages or its potential impact on results.
Comments on the interim report CEO of Danske Andelskassers Bank, Jan Pedersen, says about the interim report:
“The results are not satisfactory. It is satisfactory however that our loan total has stabilised which is testimony to a growing activity in the local areas as well as a great effort from the bank’s employees who have worked hard to secure that no customers missed out on opportunities because they weren’t aware of them.”
“In recent years we have reduced our expenses significantly while simultaneously strengthening the organisation in many areas. As a result of the facts that a real economic recovery still being sometime into the future, that the ways customers are using banks are changing and that the entire financial sector are transforming our expenses are however still at an unacceptable high level. We will thus cut jobs, make changes at the head office, combine branches and make other changes in the near future. This is unfortunate but it is necessary as well to secure that we’re still able to deliver good and valuable solutions to our customers.”
Further information For further information, please contact Jan Pedersen, CEO, Danske Andelskassers Bank, via
Martin Rask Pedersen, Communications Director Tel.: +45 87 99 30 33
This company announcement contains certain forward-looking statements, including statements on Danske Andelskassers Bank's activities. Such statements are based on information, assumptions and assessments deemed reasonable by Danske Andelskassers Bank. The forward-looking statements comprise known and unknown risks, uncertainties and other significant matters which may result in Danske Andelskassers Bank's actual results, development or performance or the performance of the sector as a whole deviating significantly from the future results, development or performance expressed or implied in the forward-looking statements. If one or more of these risk or uncertainty factors are triggered, or if the underlying assumption turns out to be incorrect, Danske Andelskassers Bank's actual financial position or operating profit/loss may deviate significantly from the expressed assumptions, assessments, estimates or outlook.
