The BANK of Greenland's Annual Report 2017

    The BANK of Greenland's Annual Report 2017 


 

Next-best result ever for The BANK of Greenland in 2017 – Return on equity of 15.4% p.a.

The profit before value adjustments and write-downs was DKK 152.7 million, which is a significant increase of DKK 12.4 million compared to 2016. The result is at the high end of the latest adjusted estimate of DKK 145-155 million, and the highest in the Bank's history.

The BANK of Greenland achieved a profit of DKK 132.6 million before tax, compared with DKK 113.4 million in 2016. The return on opening equity after dividend and before tax was 15.4% p.a., which is considered to be satisfactory.

The dividend for 2017 recommended to the Annual General Meeting is DKK 30 per share. This is lower than in recent years and must be viewed in the light of the wish to strengthen equity and thereby the Board of Directors’ objective to comply with the maximum MREL capital requirement in reasonable time prior to the requirement of full phasing-in.

On the basis of the favourable increase in lending in 2017, net interest income is TDKK 20,392 higher than in 2016. The positive effect of the increase in lending more than offsets the expected decline in interest income from bond holdings.

Fee and commission income increased by TDKK 1,858 to TDKK 87,737.

For the overall year, value adjustment of securities and currencies resulted in a loss of TDKK. 6,368, compared with a loss of TDKK 12,899 in 2016.

Impairment of loans, etc. amounted to TDKK 13,734, which is by and large unchanged compared to 2016. The total impairment in 2017 thus amounts to a modest 0.3% of the Bank's loans and guarantees.

Lending increased again in Q4 and showed a very satisfactory increase in 2017, by TDK 261,259 to TDKK 3,335,119, or 8.5%. As expected, guarantees declined during the year, by TDKK 55,356 to TDKK 1,161,181. Total loans and guarantees are thus at the highest-ever level.

The BANK of Greenland's capital ratio amounted to 22.7% at end-2017, and the Bank has calculated the individual solvency requirement at 10.4%.

Outlook for 2018 A moderate increase in GDP is expected in 2018, particularly in view of the increasing prawn quotas. The Bank has seen a good increase in lending during 2017 and expects a further moderate increase in 2018. 

With the expectation of a by and large unchanged interest rate margin and a continued extremely low level of interest rates, and with unchanged bond interest income, total revenue is expected to show a small increase compared with 2017.

Total costs including write-offs are expected to be moderately higher than in 2017, based on wage increases under collective agreements, a small increase in the number of employees, and additional IT and development costs.

The Bank assesses that the quality of the loan portfolio is satisfactory. Impairment of loans is therefore expected to be at a continued moderate to low level.

In view of the continued low level of interest rates, capital losses on the Bank's bond portfolio must be expected.

On this basis, a profit before tax at the level of DKK 120-140 million is expected, compared with DKK 133 million in 2017. 

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