Results – the Nykredit Realkredit Group
- The Nykredit Realkredit Group recorded a profit before tax of DKK 3,090m against a loss of DKK 145m in 2009. In addition, the divestment of Nykredit Forsikring generated a profit of DKK 1,511m
- Profit after tax was DKK 3,816m, including profit from the divestment of Nykredit Forsikring, against DKK 129m in 2009
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Customer-oriented business was up by 10.2%
- Core income from customer-oriented business increased by DKK 882m to DKK 9,522m in 2010
- Mortgage lending in nominal terms and bank lending went up by DKK 42bn to DKK 1,088bn in 2010
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Operating costs, depreciation and amortisation excluding special value adjustments rose by DKK 104m or 1.9%
- Costs as a percentage of core income from business operations were trimmed from 62.4% in 2009 to 57.8%
- Special value adjustments etc produced a charge of DKK 129m
- Nykredit Bank's commission payable under the government guarantee scheme amounted to DKK 371m against DKK 500m in 2009
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Loan impairment losses declined by DKK 5,499m to DKK 2,103m
- Impairment losses on mortgage lending were DKK 888m, equal to 0.09% of loans and advances
- Impairment losses on bank lending came to DKK 1,215m, excluding the government guarantee scheme, equal to 1.31% of loans and advances
- Impairment losses under the government guarantee scheme were DKK 279m
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Core income from securities amounted to DKK 470m against DKK 829m in 2009
- Money market rates averaged 1.05% against 1.83% in 2009
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Investment portfolio income was DKK 2,003m against DKK 4,620m in 2009
- In 2010 investment portfolio income mainly derived from earnings from short-term bonds and tighter yield spreads between mortgage bonds and government bonds
- Cost of capital in the form of net interest on hybrid core capital amounted to DKK 461m against DKK 95m in 2009
- The Group's costs relating to Bank Rescue Package I totalled DKK 1,643m from 2008 up to the expiry of the scheme on 30 September 2010. No further payments are expected to be made under the scheme.
Capital
- The core capital and capital adequacy ratios were 18.5% and 18.5%, respectively
- The internal capital adequacy requirement (ICAAP) stood at 9.4%
- A dividend distribution of DKK 300m is proposed
- Group equity increased by DKK 4.1bn to DKK 55.0bn after proposed dividend.
Outlook for 2011
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Nykredit expects growth in both retail and commercial lending leading to higher core income. Further, Markets & Asset Management is set to continue growth in earnings. Core earnings before impairment losses are projected to range between DKK 4.3bn and DKK 4.8bn.
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Impairment losses on loans and advances are likely to be in the region of DKK 1.5bn, with an uncertainty margin of DKK 0.5bn. As in 2010, the highest impairment losses are expected for small and medium-sized enterprises (SMEs).
- Results before tax will hinge on trends in financial markets and the Danish economy. Profit before tax is forecast at DKK 3.0bn-3.5bn.
Peter Engberg Jensen, Group Chief Executive, says:
Nykredit improved its market position markedly in 2010 as business operations grew by more than 10%. This trend, coupled with only 2% growth in costs, tentative normalisation of impairment loss levels and high investment portfolio income produced a rather good profit of DKK 3.1bn before tax and exclusive of a DKK 1.5bn profit from the divestment of Nykredit Forsikring.
Nykredit has set its strategic course – we have merged Nykredit Bank and Forstædernes Bank. Banking operations contribute 44% of core income today, and our total lending in Denmark represents just below 30% of aggregate lending by the Danish financial sector.
