P/F BankNordik : Q3 Interim Report 2022

Interim Report

Q3 2022

3 November 2022

Q3 Interim Report 2022

CONTENTS
MANAGEMENT'S REPORT
• Financial highlights and ratios..................................................................................................	3
• Financial review .....................................................................................................................	4
-	Q3 2022 highlights .........................................................................................................	4
-	Income statement .............................................................................................................	4
-	Balance sheet ...................................................................................................................	5

• Capital ratios……..……………………..…........................................................................... 6

-	Compliance with the Danish FSA Supervisory Diamond …...............................................	6
-	Events after the balance sheet date .................................................................................	6

• Guidance for 2022……………………………...................................................................... 6
• Adjusted results……………….………………………………………………………………….. 7

•	Segments ...............................................................................................................................	8
	-	Personal Banking...............................................................................................................	9
	-	Corporate Banking.............................................................................................................	10
	-	Insurance: Trygd.................................................................................................................	11
FINANCIAL STATEMENTS
•	Income statement .................................................................................................................	12
•	Balance sheet ........................................................................................................................	14
•	Statement of capital ...............................................................................................................	16
•	Capital and Solvency .............................................................................................................	18
•	Cash flow statement ..............................................................................................................	19
• Notes to the financial statements .........................................................................................	20
Statement by the Executive Board and the Board of Directors	…............................................. 28

CONTACT DETAILS …................................................................................................................. 29

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Q3 Interim Report 2022

Financial highlights and ratios - BankNordik Group

Highlights	Q1-Q3	Q1-Q3	Index	Q3	Q2	Q1	Q4	Q3
DKK 1,000	2022	2021	21/20	2022	2022	2022	2021	2021
Net interest income	194,349	200,285	97	69,597	60,405	64,346	66,244	68,557
Dividends from shares and other investments	6,475	3,429	189	0	6,111	364	0	7
Net fee and commision income	65,229	56,811	115	22,028	21,665	21,536	22,549	18,923
Net interest and fee income	266,053	260,525	102	91,626	88,181	86,246	88,794	87,486
Net insurance income	37,896	27,986	135	10,974	15,381	11,542	5,909	6,844
Interest and fee income and income from insurance activities, net	303,949	288,510	105	102,600	103,562	97,787	94,703	94,329
Market value adjustments	-35,159	-1,329	2,646	-28,904	-17,619	11,364	5,720	1,855
Other operating income	5,021	7,553	66	1,159	1,622	2,240	3,456	2,666
Staff costs and administrative expenses	179,394	188,227	95	60,211	60,371	58,812	43,698	57,215
Impairment charges on loans and advances etc.	-43,251	-36,344	119	-11,829	-21,716	-9,706	-40,216	-12,919
Net profit continuing operations	110,542	111,292	99	20,555	41,761	48,227	80,655	41,417
Net profit discontinued operations	0	83,117	0	0	0	0	-4,134	1,241
Net profit	110,542	194,409	57	20,555	41,761	48,227	76,521	42,658
Loans and advances	7,976,907	7,591,918	105	7,976,907	7,724,274	7,690,628	7,624,093	7,591,918
Bonds at fair value	1,614,329	2,225,511	73	1,614,329	816,577	1,306,122	1,880,565	2,225,511
Intangible assets	2,567	2,551	101	2,567	2,620	2,684	2,684	2,551
Assets held for sale	0	3,564		0	0	0	0	3,564
Assets in disposals groups classified as held for sale	0	0		0	0	0	0	0
Total assets	12,099,703	11,416,425	106	12,099,703	12,772,239	11,946,751	11,789,746	11,416,425
Amounts due to credit institutions and central banks	857,703	548,255	156	857,703	867,612	846,689	838,608	548,255
Issued bonds at amortised cost	551,868	349,008	158	551,868	555,601	562,870	348,938	349,008
Deposits and other debt	8,210,426	7,417,275	111	8,210,426	8,897,153	8,025,283	7,899,659	7,417,275
Liabilities directly associated w ith assets in disposal groups
classified as held for sale	0	0		0	0	0	0	0
Total shareholders' equity	1,756,273	2,408,289	73	1,756,273	1,737,457	1,697,436	2,035,853	2,408,289

	Sept. 30	Sept. 30	Sept. 30	June 30	March 31	Dec. 31	Sept. 30
Ratios and key figures	2022	2021	2022	2022	2022	2021	2021
Solvency
Total capital ratio, incl. MREL capital, %	31.4	31.7	31.4	32.0	32.9	29.6	31.7
Total capital ratio, %	26.4	29.6	26.4	26.9	27.5	27.5	29.6
Core capital ratio, %	25.0	28.2	25.0	25.5	26.1	26.0	28.2
CET 1 capital	22.9	26.1	22.9	23.3	23.8	23.8	26.1
RWA, DKK mill	7,096	7,035	7,096	7,002	6,800	6,841	7,035
Profitability
Return on shareholders' equity after tax, %	5.8	8.3	1.2	2.4	2.6	3.4	1.8
Cost / income, %	51.1	53.3	67.6	44.0	46.0	4.9	46.9
Cost / income, % (excl. value adjustm. and impairments)	59.2	65.3	60.2	56.6	61.0	46.2	61.1
Return on assets	0.9	1.7	0.2	0.3	0.4	0.6	0.4
Market risk
Interest rate risk, %	1.1	-0.3	1.1	1.2	-0.5	-0.4	-0.3
Foreign exchange position, %	0.9	0.6	0.9	1.3	0.7	0.8	0.6
Foreign exchange risk, %	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Liquidity
Liquidity Coverage Ratio (LCR), %	225.8	185.9	225.8	223.4	198.4	191.4	185.9
Credit risk
Change in loans and advances, %	4.6	-0.2	3.3	0.4	0.9	0.4	-0.1
Gearing of loans and advances	4.5	3.2	4.5	4.4	4.5	3.7	3.2
Impairment and provisioning ratio, end of period, %	2.0	2.9	2.0	2.1	2.4	2.6	2.9
Write-off and provisioning ratio, %	-0.4	-0.4	-0.1	-0.2	-0.1	-0.4	-0.1
Share of amounts due on w hich interest rates
have been reduced, end of period, %	0.6	0.3	0.6	0.2	0.2	0.3	0.3
Shares
Earnings per share after tax (nom. DKK 20), DKK	11.5	20.3	2.1	4.4	5.0	8.0	4.5
Market price per share (nom. DKK 20), DKK	118.0	160.5	118.0	127.5	127.5	140.5	160.5
Book value per share (nom. DKK 20), DKK	183.5	251.6	183.5	181.5	177.3	212.7	251.8
Other
Number of full-time employees, end of period	201	199	201	203	199	195	199

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Q3 Interim Report 2022

Financial review

"The positive trend of recent quarters in our core banking operations continued in the third quarter, and we're pleased to note that our operating profit before impairment charges improved by 15% in the first nine months of the year. The third quarter was marked by a high level of customer activity, rising interest and fee income, reversed impairment charges and increased employee costs during a transition period. The positive developments in the insurance business were offset by a high claims ratio for the quarter, but we continue to see good growth potential for the business area," said BankNordik CEO Árni Ellefsen.

"The turbulence in the financial markets had a negative impact on our investment portfolio during the third quarter, and we responded in October by lowering our FY net profit guidance from DKK 160-190m to DKK 140-170m. We have a well-diversified and financially strong customer portfolio, but in light of the generally uncertain economic environment, we have decided to maintain the management estimated provision of DKK 52m," said Ellefsen.

Q3 2022 highlights

Adjusted Income statement, Group (Note: Other operating income in Q1 2022 has been corrected negatively by DKK 1.1m)
										Q1-Q3	Q1 - Q3
DKKm				Q3 2022	Q2 2022	Index	Q1 2022	Q4 2021	Q3 2021	2022	2021	Index
Net interest income			67	65	103	66	66	65	197	194	102
Net fee and commission income	22	22	102	22	23	19	65	57	115
Net insurance income		11	15	71	12	6	7	38	28	135
Other operating income (less reclassification)	11	9	123	10	8	8	29	26	112
Operating income		110	111	100	109	103	99	330	305	108
Operating costs	1			-62	-62	100	-61	-57	-59	-185	-178	104
Sector costs				0	0		0	0	0	-1	-1	83
Profit before impairment charges	48	48	100	48	46	40	144	125	115
Impairment charges, net		12	22	54	10	40	13	43	36
Operating profit			60	70	86	57	86	53	187	161	116
Non-recurring items	2		0	0		0	6	2	0	82
Profit before investment portfolio earnings and tax	60	70	86	57	93	54	187	244	77
Investment portfolio earnings	3	-36	-16		2	2	-1	-50	-9
Profit before tax, continuing operations	24	54	45	59	95	53	136	235	58
Profit before tax, discontinued operations	0	0		0	0	0	0	9	-
Profit before tax, total		24	54	45	59	95	53	136	245	56
Tax				4	10	36	12	17	11	26	50	52
Net profit				20	43	47	47	78	41	111	194	57

Operating cost/income, %
Number of FTE, end of period
1	Comprises staff costs, administrative expenses
2	Reclassified from Other operating income, Staff
3	Incl. net income from investments accounted for

56	56		56	55	59	56	59
201	203	99	199	195	199	201	199	101
and amortisation, depreciation and impairment charges (less reclassification to non-recurring items).
costs and administrative expenses and from Amortisation, depreciation and impairment charges.
under the equity method (excl. sector shares).

Income statement

The following comments are generally stated relative to Q2 2022. Due to seasonal variations, comments provided on the insurance segment relate to Q3 2021.

Operating income

The BankNordik Group generated operating income of DKK 110m in Q3 2022, DKK 1m less than in Q2 2022, maily driven by a quarter-to-quarter decrease in net insurance income.

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Q3 Interim Report 2022

Net interest income

Net interest income was DKK 67m in Q3 2022, an increase of DKK 2m compared to Q2 2022.

Net fee and commission income

Net fee and commission income amounted to DKK 22m in Q3 2022, flat relative to Q2 2022.

Net insurance income

Net insurance income was DKK 11m in Q3 2022, DKK 4m higher than in Q3 2021.

Operating and sector costs

Operating costs amounted to DKK 62m in Q3 2022, flat compared to Q2 2022.

Profit before impairment charges

Profit before impairment charges was DKK 48m in Q3 2022, flat compared to Q2 2022.

Impairment charges

Net impairments were a reversal of DKK 12m in Q3 2022 compared to a reversal of DKK 22m in Q2 2022. The provision taken in relation to COVID-19 in 2020 is unchanged at DKK 52m due to continued economic uncertainty.

Operating profit

The resulting operating profit for the third quarter was DKK 60m in Q3 2022 compared to DKK 70m in Q2 2022.

Non-recurring items

No non-recurring items occurred in the first nine months of 2022.

Investment portfolio earnings

Investment portfolio earnings yielded a negative return of DKK DKK 36m in Q3 2022 compared to a negative return of DKK 16m in Q2 2022.

Profit before tax

Profit before tax in Q3 2022 was DKK 24m, DKK 30m less than the pre-tax profit of DKK 54m reported for Q2 2022.

Profit before tax for the first nine months of the year totalled DKK 136m compared to DKK 245m in the same period in 2021. The main reason for the large difference was non-recurring income of DKK 92m Q1 2021 as well as a difference of DKK 42m in investment portfolio earnings between the two periods.

Balance sheet

BankNordik's total assets at 30 September 2022 amounted to DKK 12.2bn, up by DKK 419m compared to 31 December 2021. Loans and advances were DKK 8.0bn, DKK 353m more than at 31 December 2021. Deposits were DKK 8.2bn, up by DKK 311m compared to 31 December 2021.

Liquidity invested in bonds, primarily in Danish mortgage bonds and Danish government bonds, amounted to

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