Jyske Bank Interim Financial Report - First quarter of 2018

Summary

  • Profit before tax and excl. derived effects from IFRS 9: DKK 1,170m, corresponding to a return of 14.5% p.a. on average equity. 
  • Profit after tax and excl. derived effects from IFRS 9: DKK 927m, corresponding to a return of 11.4% p.a. on average equity.
  • Profit before tax: DKK 763m (Q1 2017: DKK 1,243m), corresponding to a return of 9.3% p.a. on average equity (Q1 2017: 15.7% p.a.).
  • Profit after tax: DKK 610m (Q1 2017: DKK 976m), corresponding to a return of 7.4% p.a. on average equity (Q1 2017: 12.3% p.a.).
  • Core profit: DKK 356m (Q1 2017: DKK 894m).
  • Core expenses at DKK 1,272m fell by 8% relative to 2017 and by 1% when adjusted for one-off expenses.
  • Reversed loan impairment charges and provisions for guarantees due to improving credit quality of loans, etc. affected the core profit by DKK 99m. (Q1 2017: DKK 45m).
  • The implementation of IFRS 9 and related adjustments affected core profit by DKK -407m and equity by DKK -628m before tax, and the balance of impairment charges was increased by DKK 1,035m. The range of DKK 1,000m-1,200m had been expected.
  • Capital ratio: 20.0%, of which the Common Equity Tier 1 capital ratio was 16.5% (end of 2017: 19.8% and 16.4%).


Comments by management

In connection with the publication of the interim financial report for the first quarter of 2018, Anders Dam, CEO and Managing Director states:

"The Group generated a profit of DKK 927m in the first quarter of 2018, corresponding to a return on equity of 11.4% p.a. adjusted for IFRS 9.

Inclusive of IFRS 9, the Group generated a profit of DKK 610m for the first quarter of 2018, corresponding to a return of 7.4% p.a. on equity.

The financial statements show a satisfactory development when allowing for IFRS 9 in the Group.

Net interest and fee income amounted to DKK 1,913m against DKK 1,817m in the first quarter of 2018, i.e. a satisfactory increase by just above 5%.

Widening of yield spreads and increasing interest rates affected the value adjustments of the Group's bond portfolio adversely, and on the whole, value adjustments amounted to DKK -68m against DKK 346m in the first quarter of 2017 under core profit.

IFRS 9 affected the profit for the period by DKK -407m, as the effect from the changed estimates at BRFkredit are recognised as an expense in the income statement as opposed to the effect at Jyske Bank, where the effect is deducted directly from equity", concludes Anders Dam.