The Danish Monetary Supervisory Authority
Nasdaq Copenhagen A/S
23 February 2021
Vestjysk Financial institution realised a revenue after tax of DKK 303 million in 2020 and the realised revenue was on the excessive finish of the vary of DKK 260-320 million. The efficiency was adversely affected by financial uncertainty brought on by the coronavirus disaster and African swine fever in Germany. These elements impacted the Financial institution’s impairment provisions based mostly on a administration estimate. The Financial institution has elevated the provisions I 2020 with DKK 180 million to whole provisions of DKK 310 million within the type of a administration estimate in response to the financial uncertainty, corresponding to three.3% of the Financial institution’s web loans.
Within the following, comparative figures for 2019 are affected by the Sparinvest transaction, on which Vestjysk Financial institution realised a revenue of 142 million.
- Revenue after tax of DKK 303 million, towards DKK 478 million in 2019 (DKK 336 million ex. Sparinvest), for an annualised return on fairness after tax of 9.8%.
- Core revenue of DKK 887 million, towards DKK 1,055 million in 2019 (DKK 913 million ex. Sparinvest).
- Worth changes of DKK 65 million, towards DKK 185 million in 2019 (DKK 58 million ex. Sparinvest).
- A price ratio of 59.8%, towards 48.2% in 2019 (55.6% ex. Sparinvest)
- Core earnings earlier than impairment of DKK 357 million, towards DKK 547 million in 2019 (DKK 405 million ex. Sparinvest).
- Impairment of loans and receivables, and many others. of DKK 29 million (2019: DKK 64 million). Impairment allowances on agriculture amounted to a web reversal.
- The Financial institution’s capital necessities totalled 12.8%, consisting of a person solvency want of 10.3% and a normal capital conservation buffer of two.5%.
- The Financial institution’s whole capital ratio was 24.7%. The surplus cowl was 11.9 share factors, or DKK 1,574 million. Adjusted for capital required to cowl the 1.9 share level MREL add-on at 31 December 2020, the surplus cowl was 10.0 share factors, or DKK 1,303 million.
Merger with Den Jyske Sparekasse
In November 2020, the Financial institution introduced plans of a merger with Den Jyske Sparekasse with Vestjysk Financial institution because the persevering with financial institution.
After various difficult years, being ready to hunt a merger with one other medium-sized financial institution marks an necessary step ahead for Vestjysk Financial institution.
Shareholders lastly accredited the merger on the extraordinary normal conferences held on 13 January 2021. The Danish Monetary Supervisory Authority accredited the merger on 14 January 2021. Following the merger, the financial institution is the eighth largest financial institution in Denmark by way of enterprise quantity, which is anticipated to be within the area of DKK 130 billion going ahead.
Our ambition is to be the strongest native financial institution in Denmark.
Future synergies from the merger are anticipated to quantity to DKK 150 million yearly. Non-recurring prices in relation to the merger are anticipated to whole DKK 200 million.
Particular circumstances affecting the Financial institution throughout the interval, together with affect to this point of the coronavirus disaster
In 2020, the Financial institution was notably impacted by the coronavirus disaster, which took maintain in March 2020 and continued all through 2020 and into 2021.
Regardless of the coronavirus disaster, the Financial institution has to this point been capable of keep operations, and the extent of buyer exercise has been excessive.
The Financial institution’s advisers have been in common contact with enterprise clients to determine what the Financial institution can do to assist them via the coronavirus disaster and to advise them in regard to the rescue packages supplied by the Danish authorities and parliament. To this point, the disaster has not had any main direct affect on the Financial institution’s loans or particular person impairment losses.
Vestjysk Financial institution has made a spread of amenities obtainable to retail clients within the type of mortgage compensation holidays, short-term overdraft amenities and elevated credit score amenities to assist clients immediately hit by the lockdown. To this point, these measures have additionally had a restricted affect on the Financial institution.
The sector distribution of the Financial institution’s lending has proved advantageous throughout the disaster. A lot of the Financial institution’s lending is in sectors that haven’t been notably badly affected by the coronavirus disaster. The lodge, restaurant, transport and retail sectors are the toughest hit, and these sectors solely account for 10% of the Financial institution’s whole lending.
Vestjysk Financial institution’s two important sectors, agriculture and actual property, have to this point been comparatively unaffected by the coronavirus disaster. The pandemic has devastated the mink business, nonetheless, bringing an finish to mink farming in Denmark. From an total monetary perspective, the Danish authorities’s compensation bundle for mink farmers is taken into account enough, and the bundle had a constructive impact on the Financial institution’s impairment losses regarding this business in 2020. The Financial institution’s publicity to the mink business is 0.7% of whole gross lending, or DKK 112 million.
In the actual property sector, the financial institution are to this point seeing an impact on business leases, the place agreements have been made to defer hire funds on account of the coronavirus disaster. Relying on the length and depth of the disaster, this impact may widen. Personal residential leases haven’t been considerably affected at this level, and this isn’t anticipated to vary considerably.
Our retail clients are usually doing properly and are in a powerful place to resist the results of the coronavirus disaster. In the long run, the Financial institution count on to see a rise in losses, however on a manageable degree total.
Till now, the disaster has not affected dairy farmers. Pork settlement costs declined over the course of the 12 months, nonetheless, and on the finish of 2020 stabilised at a acceptable degree. Due to the comparatively excessive pork costs within the first half, pig farmers, a few of that are credit-impaired, had been capable of repay debt to the Financial institution. This resulted in reversals of impairment allowances inside this sector throughout 2020. The present outbreak of African swine fever in Germany has made it tough for the Financial institution’s piglet producing clients to promote their output in Germany. This precipitated costs of piglets to fall sharply, and a downward development was additionally seen in costs of pigs for slaughter.
Brexit ended with a commerce settlement between the UK and the EU, underneath which Danish fishing boats are allowed to fish in UK waters underneath short-term licenses which might be anticipated to run out in 2026. The settlement stipulates a shift in quotas, with as much as 25% of whole EU fishing quotas being transferred to the UK. The settlement is taken into account acceptable to the Financial institution’s clients within the fishing business in contrast with the dreaded no-deal Brexit state of affairs.
Vestjysk Financial institution is intently monitoring coronavirus pandemic and African swine fever developments.
The Financial institution’s DKK 310 million impairment provision for financial uncertainty is assessed to be ample. Projections in regards to the future penalties of the coronavirus disaster and African swine fever are naturally topic to appreciable uncertainty.
Outlook for 2021
Vestjysk Financial institution guides a revenue after tax for 2021 of round DKK 500-550 million adjusted for non-recurring prices and earnings.
A convention name for analysts can be held on 23 February at 9:30 a.m. (Danish time) throughout which CEO Jan Ulsø Madsen will touch upon the annual report 2020. Please use this hyperlink to register for and take part within the convention name:
Please deal with any enquiries relating to the current announcement to Jan Ulsø Madsen, CEO, at tel. (+45) 96 63 21 04.
Vestjysk Financial institution A/S
Kim Duus Jan Ulsø Madsen
Vestjysk Financial institution A/S
Tel. (+45) 96 63 20 00
CVR no. 34 63 13 28