Jyske Bank Interim Financial Report - First quarter of 2017

Summary

  • Pre-tax profit: DKK 1,243m (Q1 2016: DKK 478m) corresponding to a return of 15.8% p.a. on opening equity (Q1 2016: 6.4% p.a.)
  • Net profit: DKK 976m (Q1 2016: DKK 384m) corresponding to a return of 12.3% p.a. on opening equity (Q1 2016: 5.1% p.a.)
  • Core profit: DKK 894m (Q1 2016: DKK 623m)
  • Core expenses of DKK 1,390m, of which DKK 110m for non-recurring expenses in the form of write-offs relating to intangible assets and anniversary activities
  • Reversal of loan impairment charges and provisions for guarantees under core profit: DKK 45m (Q1 2016: DKK 172m as impairment charges)
  • The Supervisory Board will make a motion at an extraordinary general meeting in the second quarter of 2017 for the distribution of an extraordinary dividend in the amount of DKK 500m
  • Capital ratio: 17.6%, of which the Common Equity Tier 1 capital ratio was 15.8% after deduction of extraordinary dividend (end of 2016: 18.3% and 16.5%)
    - If the current profit and the issue of subordinated loan of DKK 2.2bn were recognised, the capital ratio would be 19.4% and the Common Equity Tier 1 capital ratio 16.3%
  • Implementation of a new client-centric organisation will adjust the number of employees by about -50

Comments by management

In connection with the publication of the interim financial report for the first quarter of 2017, Anders Dam, CEO and Managing Director states:

”The Jyske Bank Group will implement a new client-centric organisation. This implementation will take place to accommodate various types of clients' wishes, needs and requirements and to achieve the most simple and efficient client service and production. Due to this new client-centric organisation, the number of employees will be adjusted by
about -50.

In the first quarter, the net profit came to DKK 976m, which corresponds to a return of 12.3% p.a. on equity. The profit was in particular fuelled by continuing progress in sales of home loans, improvement of the credit quality and solid earnings on capital market activities.

Credit quality is still improving, and reversals in the amount of DKK 45m were made in the first quarter. To the greatest extent, reversals were made in connection with banking clients. Also in the first quarter, general improvement was seen in respect of agricultural clients, when a reversal in the amount of DKK 6m was made compared to a reversal of DKK 92m
in the fourth quarter of 2016.

The development in the financial markets and client-driven activities in the first quarter supported solid earnings in the capital market area. In the first quarter of 2017, DKK 110m was recognised as one-off expenses relating to write-offs of intangible assets and anniversary activities. 

A change to the capital structure was also made in the first quarter through the issue of a subordinated loan in the amount of EUR 300m. Therefore, subordinated debt totalling 3.1% of the weighted risk exposure has been issued. The target is to make issues amounting to 3.5%, which is expected to be met, at the latest, in the first half of 2018.

Based on the profit generated in the first quarter of 2017 and the capital position, the Supervisory Board will make a motion at an extraordinary general meeting in the second quarter of 2017 for the distribution of an extraordinary dividend in the amount of DKK 500m.