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2020-08-11

Nykredit today publishes financial highlights for H1/2020 - Nykredit Realkredit A/S

To Nasdaq Copenhagen 

11 August 2020

Nykredit today publishes financial highlights for H1/2020 of:

Nykredit A/S, CVR no 12 71 92 48
Nykredit Realkredit A/S, CVR no 12 71 92 80

Michael Rasmussen, Group Chief Executive, comments on the financial highlights:

- The results presented today considerably exceed our expectations earlier this year. We have therefore raised our guidance for business profit and profit before tax for 2020 by DKK 1.5 billion.

- Our customers have generally steered well through the corona crisis so far. We have still not seen clear signs of credit quality deterioration, but have nevertheless made significant impairment provisions to absorb potential future losses. Particularly in March, April and May, demand for lending and liquidity rose considerably as a consequence of the corona crisis. Demand has receded since then concurrently with the reopening of Denmark, but it may increase again. If so, we will naturally stand by our customers once again.

- Despite the corona crisis, we have maintained strong momentum in our underlying core business. We are recording lending and customer growth in Totalkredit and Nykredit Bank, as illustrated by one of our core income items, net interest income, which continues to rise despite decreasing average administration margin payments from customers.

- Totalkredit has – for the first time – recorded lending growth in all 98 municipalities across the country. We are proud to have maintained lending activities throughout Denmark despite the corona crisis. To provide loans to people and businesses all over Denmark – also in times of crisis – lies at the heart of Nykredit's corporate responsibility commitment.

Selected financial highlights for H1/2020:

  • Business profit and profit before tax for H1/2020 (DKK 1,875 million and DKK 1,770 million, respectively) were satisfactory in the circumstances and significantly exceed expectations earlier this year, but are of course lower than last year due to the covid-19 crisis.
  • Our guidance for business profit and profit before tax for 2020 is raised from DKK 2.5-3.5 billion to now DKK 4.0-5.0 billion. Our earnings upgrade is driven by the recovery in financial markets following large fluctuations in Q1, the current economic outlook and positive underlying business trends. Our 2020 guidance is subject to greater uncertainty than usual due to the corona crisis.
  • Totalkredit's lending at nominal value has increased by 10% since 30 June 2019 to currently DKK 769.5 billion.
  • Nykredit Bank's lending* has grown by 5% since 30 June 2019 to currently DKK 73.9 billion.
  • Assets under management have increased by DKK 92.2 billion since 30 June 2019 and totalled DKK 325.0 billion at 30 June 2020. The increase was mainly due to recognition of Sparinvest in the Financial Statements as from September last year.
  • Nykredit still has a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 19.2%.
  • On balance, net interest income and net fee income increased markedly. Net interest income rose by DKK 240 million to DKK 4,832 million compared with H1 last year. Continued increasing bank and mortgage lending affected net interest income positively. Net fee income dropped by DKK 19 million to DKK 1,136 million compared with H1 last year, which is satisfactory in light of the exceptionally high remortgaging activity last year.
  • Trading, investment portfolio and other income, including value adjustment of swaps etc, was strongly impacted by covid-19 and dropped to a negative DKK 189 million (H1/2019: income of DKK 1,301 million). The decline was primarily attributable to negative unrealised value adjustment of swaps prompted by credit and funding spread widening, losses on investment portfolios following mortgage spread widening and equity market declines; all covid-19 impacts. However, financial markets recovered in Q2 compared with Q1 and had a positive impact on derivatives as well as investment portfolio income.
  • Impairment charges for loans and advances totalled DKK 1,755 million in H1/2020 (H1/2019: DKK 433 million). Impairments were considerably impacted by covid-19, but write-offs and individual impairment provisions remain low for homeowners and businesses alike.

* Including secured homeowner loans transferred to Totalkredit

H1 Interim Report 2020

The H1 Interim Reports 2020 of the Nykredit Group and the Nykredit Realkredit Group will be announced on 20 August 2020 as planned.


Contact

For further comments, please contact Nykredit Press Relations at tel +45 20 37 28 69.

Profit for H1/2020 of the Nykredit Realkredit Group is broadly on a level with that of the Nykredit Group. Comments in this announcement pertain to the Nykredit Group. See page 3 for Nykredit Realkredit Group financial highlights.

Financial highlights

 DKK million  Nykredit GroupNykredit Realkredit Group
  H1/ H1/ H1/ H1/
 2020201920202019
BUSINESS PROFIT AND PROFIT FOR THE PERIOD    
 Net interest income4,8324,5924,8324,592
 Net fee income1,1361,1551,1361,155
 Wealth management income987719987719
 Net interest from capitalisation(198)(172)(198)(172)
 Net income relating to customer benefits programmes(97)(103)(97)(103)
 Trading, investment portfolio and other income(189)1,301(189)1,301
Income 6,4707,4926,4717,492
 Costs2,8412,5022,8352,492
Business profit before impairment charges

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