Nasdaq Copenhagen A/S
21 November 2018
Vestjysk Bank's Q1-Q3 2018 Quarterly Report
Q1-Q3 2018 Highlights
Vestjysk Bank realised a profit after tax of DKK 166 million in Q1-Q3 2018. The Bank's core operations are sound and core earnings of DKK 315 million before impairment are considered satisfactory. Impairment charges are at a lower level than they were in Q1-Q3 2017. However, the overall level of impairment charges is still relatively high. The Bank's profit after tax in Q1-Q3 2018 is considered satisfactory under the given circumstances.
Summary of Vestjysk Bank's results in Q1-Q3 2018:
- Profit after tax of DKK 166 million (Q1-Q3 2017: DKK 150 million), equaling a return on equity after tax of 9.3 per cent.
- Core income of DKK 685 million (Q1-Q3 2017: DKK 711 million).
- Cost ratio of 54.0 (Q1-Q3 2017: 52.9).
- Core earnings before impairments of DKK 315 million (Q1-Q3 2017: DKK 335 million).
- Impairment of loans and receivables, etc. of DKK 134 million (Q1-Q3 2017: DKK 177 million).
- The total capital ratio stood at 17.8 per cent, corresponding to excess coverage of 5.6 percentage points or DKK 813 million.
- The combined capital requirement stood at 12.2 per cent, which consists of an individual solvency need of 10.3 per cent and a capital conservation buffer of 1.875 per cent.
- The Bank's LCR stood at 213 per cent, compared with a requirement of 100 per cent.
- Implementation of the new IFRS 9 rules at 1 January 2018 resulted in additional impairment charges of DKK 225 million. The impact net of tax is recognised directly in the Bank's equity at 1 January 2018, which has thus been reduced by DKK 207 million, equal to 9.0 per cent of shareholders' equity.
- The Bank has decided not to apply the European Commission's transitional arrangement for partial recognition of the IFRS 9 impairment rules in total capital. The DKK 207 million adverse effect of the impairment rules under IFRS 9 did thus have full effect on the Bank's capital ratios at 1 January 2018.
Organisational adjustments
As described in the half-year report, the Bank implemented organisational adjustments effective at 1 September 2018, reducing its headcount by 24 FTE, corresponding to a staff reduction of 6 per cent. In large part, the staff cuts were effected through voluntary redundancy. Non-recurring expenses in connection with these redundancies amounted to approximately DKK 30 million, which amount is taken to staff costs and administrative expenses for the period and, by extension, to the Bank's profit for the period.
Outlook for 2018 maintained
Given an unchanged economic climate and an overall decrease in impairment losses, the Bank's total business volume is still expected to generate a profit after tax of around DKK 175-250 million.
The agricultural sector was struck by a long period of drought in 2018 that reduced the harvest yield. Currently, this is expected to have a negative effect, but there will be large differences from region to region and from one farm to the next. Moreover, the Bank’s pig producers are currently struck by very low settlement prices. Based on the available facts, the Bank has reflected these factors in its current impairment charges involving the agricultural sector.
If the effects of the drought prove to be worse than anticipated and the very depressed settlement prices of particularly pork, but also milk, persist or become further aggravated, the Bank's significant exposure to agriculture may entail an increase in impairment losses relative to Management's current estimates for 2018.
Enquiries
Please address any enquiries regarding the present announcement to Jan Ulsø Madsen, CEO, at tel. +45 96 63 21 04.
Vestjysk Bank A/S
Vagn Thorsager Jan Ulsø Madsen
Chairman CEO
Vestjysk Bank A/S
Torvet 4-5
DK-7620 Lemvig
Denmark
Phone +45 96 63 20 00
CVR no. 34631328
www.vestjyskbank.dk
Attachments
