Announcement to the Copenhagen Stock Exchange 11/ August 2005 HALF-YEAR REPORT 2005

Transcription

1 Announcement to the Copenhagen Stock Exchange 11/ August 2005 HALF-YEAR REPORT 2005 The BANK of Greenland Half-Year Report /11

2 FINANCIAL HIGHLIGHTS and KEY FIGURES half-year half-year 2nd 2nd Whole quarter quarter year Net income from interest and charges 83,888 73,077 43,784 36, ,876 Price adjustment of securities 5,803-4,771 6,172-10,747-3,576 Other ordinary income 1,481 2, ,239 Staff costs and administrative expenses, etc. 37,747 38,670 18,585 17,886 74,728 Depreciation and write-downs of tangible assets 2,328 2,254 1,138 1,266 4,554 Other ordinary expenses 0 2, ,589 2,618 Loss on bad debts 529 2, ,409 Profit on ordinary activities 50,568 25,137 29,999 3,974 66,230 Tax 18,776 10,504 11,146 1,474 25,548 Profit for the period 31,792 14,633 18,853 2,500 40,682 Selected entries from the accounts: Loans and advances 1,545,600 1,138,003 1,318,551 Deposits 2,664,222 2,028,555 2,352,574 Shareholders Equity 585, , ,298 Balance sheet total 3,554,180 2,794,057 3,114,438 Off-balance sheet items 343, , ,153 Key Figures Return on equity (before tax) Basic earnings per expense DKr Solvency ratio (excl. the profit for the period) Stock exchange price at the end of the period Equity of the share The BANK of Greenland Half-Year Report /11

3 MANAGEMENT S REPORT FOR HALF-YEAR 2005 The BANK of Greenland had a profit on ordinary activities of DKr 50,568,000 in the first six months of 2005 as compared with DKr 25,137,000 during the same period of Base earnings rose by DKr 12,268,000 to DKr 44,765,000. Base income rose by 12.4% while expenses and depreciation fell by 2%. Developments in base earnings during the first half-year of 2005 were better than expected at the time of the publication of the Annual Report for 2004 and of the report for the first quarter of On 22 June 2005, expectations for growth in base earnings were increased to 10%. Based on developments in the volume of business conducted during the first six months, base earnings for the entire year are now expected to be approximately 15% higher than in Profit for the Half-Year The volume of business conducted calculated as the total of deposits, loans, advances and guarantees has increased by nearly 34% compared with last year. 1 st half-year 1 st half-year whole year (DKr 1,000) Base income from banking operations 85,369 75, ,115 (net income from interest and charges as well as ordinary income Operating expenses and depreciation 40,075 40,924 79,282 Base earnings before loss on bad debts 45,294 35,001 73,833 Loss on bad debts 529 2,504 1,409 Base earnings 44,765 32,497 72,424 Other ordinary expenses 0 2,589 2,618 Price adjustments of securities 5,803-4,771-3,576 Profit on ordinary activities 50,568 25,137 66,230 Tax 18,776 10,504 25,548 Net profit for the period 31,792 14,633 40,682 Profit and Loss Account Net income from interest has increased by 6% or DKr 3,697,000 to DKr 62,005,000. The large increase in loans and advances, resulting from an increased volume of business with existing customers and a sizable influx of new customers, has primarily been the result of the bank s new home loan product: ISERIT Boliglån as well as loans to business. Continued competition has led to a decrease in interest margins. Income from charges and commissions has increased by DKr 7,382,000 to DKr 21,140,000. This increase is a result of the significant increase in lending activity and the introduction of new customer services during the autumn of Price adjustments of securities accounted for a total plus of DKr 5,803,000 as compared with a loss of DKr 4,771,000 during the first half-year of Total costs and depreciation have fallen by DKr 849,000 to DKr 40,075,000. There were 86 full-time employees at the end of the first half-year. Write-offs on loans and advances were net DKr 529,000 as compared with losses and provisions for losses on bad debts of DKr 2,504,000 for the first six months of Tax has been calculated at 37.1% of the profit on ordinary activities, regulated for nontaxable income and non-deductible expenses. Balance and Shareholders Equity Since the first half-year of 2004, the bank s total loans, advances and guarantees rose by DKr 510,598,000 to DKr 1,889,011,000. This is the highest level in the history of the bank. Loans to private customers rose by 35% more than during the same period of This increase is very much the result of satisfactory sales of ISERIT Boliglån (loans for purchasing homes) and loans for consumer durables. The greatest increase stems from The BANK of Greenland Half-Year Report /11

4 MANAGEMENT S REPORT FOR HALF-YEAR 2005 commercial loans and in particular to onshore businesses. The bank s holdings of bonds have decreased in relation to last year s by DKr 122,230,000 and now amount to DKr 1,024,000,000. The bank s aggregate sensitivity to price fluctuations when the interest rate changes by one percentage point increased since last year by DKr 3,693,000 to DKr 25,893,000. Since the first six months of 2004, deposits have increased by DKr 635,667,000 to a total of DKr 2,664,222,000. The major share of the bank s deposits consists of deposits on demand. The total balance has increased by DKr 760,123,000 to DKr 3,554,180,000. The solvency ratio at the BANK of Greenland, in which the half-year profit has not been included, was, at the end June 2005, calculated to be 25.6% as compared to 28.1% at the end of At the end of the first half-year 2005, the number of shares in the BANK of Greenland held by members of the Board of Management and Board of Directors amounted to 6,498. Accounting Principles, etc. As of 1 January 2005, the BANK of Greenland s quarter, half-year and annual reports will be submitted according to the Danish Financial Supervisory Authority s new executive order on financial reports. There will be changes in the assessment of a number of assets and liabilities. A number of income and expense items will also now be accrued and deferred differently. The profit and loss account as well as the balance sheet will be presented slightly differently; the designation of certain entries has been changed and certain entries in the balance sheet have been subdivided, added to or removed. The most significant changes as well as the effect in monetary terms on the shareholders equity as of 1 January 2005 have been described in the report for the first quarter of These descriptions can be found at and are available in Danish only. According to the new executive orders on financial reports, the tax on shareholder equity entries must not affect the profit and loss account. The tax must be added directly to the shareholders equity. When calculating taxable income in Greenland, there is a deduction for paid dividends. The tax value of this amount is therefore added to the shareholders equity again. Comparative figures for 2004 have been adjusted in accordance with this new practice. This change in practice has no affect on the calculated shareholders equity from previous years. Outlook for 2005 The economic climate in Greenland in 2005 is somewhat more favourable than it was in previous years. Shrimp prices are still on the rise, but they start at low levels. The sizes of catches are also still satisfactory. Fishing for Greenland halibut is fine and prices are good. On the other hand, crab fishing is nearly nonexistent. The block grant from Denmark remains unchanged, but fiscal policy for 2005 is expansive. As in previous years, the level of activity and developments in income levels vary considerably from region to region. Only in the major towns are there any signs of lasting economic development. This more favourable economic climate has increased commercial demand for financing of construction projects as well as private demand for loans to finance home purchases and consumer durables. With an increase in its volume of business, coupled with continuing low interest rates and The BANK of Greenland Half-Year Report /11

5 MANAGEMENT S REPORT FOR HALF-YEAR 2005 pressure on interest margins, the bank expects net receivables from interest and charges to advance moderately. The bank will continue to focus on cost control measures, but general expense buoyancy will lead to slightly greater expenses than in Because the bank believes that the quality of its loan portfolio is satisfactory, low levels of losses continue to be expected. The base earnings are therefore expected to be approximately 15% higher than in As in previous years, the final profit on ordinary activities for 2005 will depend on developments within financial markets, including share prices at the end of the year. Financial Events The following financial events will take place during st 3rd quarterly report: 2 November 2005 Nuuk, 12 August 2005 The Board of Directors at the BANK of Greenland The BANK of Greenland Half-Year Report /11

6 PROFIT AND LOSS ACCOUNT Note 1st half-year Interest receivable... 81, Interest payable... 19,749 17,902 Net income from interest... 62,005 58,308 Dividend of holdings... 1,041 1,199 Charges and commissions receivable... 21,140 13,758 Charges and commissions payable Net income from interest and charges... 83,888 73,077 3 Price adjustments... 5,803-4,771 Other ordinary income... 1,481 2,848 4 Staff costs and administrative expenses... 37,747 38,670 Depreciation and write-downs of tangible assets... 2,328 2,254 Other ordinary charges ,589 7 Write downs on loans, etc ,504 Profit on ordinary activities... 50,568 25,137 5 Tax... 18,776 10,504 Net profit for the period... 31,792 14,633 The BANK of Greenland Half-Year Report /11

7 BALANCE SHEET Note 1st half-year ASSETS Cash in hand and claims at call on central banks ,462 34,749 6 Claims on credit institutions and central banks , ,305 7 Loans and other receivables at their redeemed cost price... 1,545,600 1,138,003 8 Bonds at the going rate... 1,024,504 1,146,734 Shares, etc ,183 42,970 Total property and buildings, headquarters... 75,604 41,918 Other material assets... 1,651 1,232 Other capital holdings Other assets... 27,944 46,675 Prepayments and accrued income.... 2,154 1,884 Total assets... 3,554,180 2,794,057 LIABILITIES Debt to credit institutions and central banks , ,318 9 Deposits and other debt... 2,664,222 2,028,555 Current tax obligations... 17,606 0 Other liabilities... 74,252 40,330 Accruals and deferred income... 1,725 1,057 Total debt... 2,950,908 2,229,260 Reserves for deferred tax... 8, Provisions for losses on guarantees... 9,090 7,636 Provisions... 18,088 7,636 Shareholders equity 10 Share capital , ,000 Brought forward from previous years... 23,259 0 Other adjustments... 14, Retained earnings , ,161 Total shareholders equity , ,161 Total liabilities... 3,554,180 2,794, Off-Balance Sheet Items 13 Solvency The BANK of Greenland Half-Year Report /11

8 NOTES ON THE HALF-YEAR REPORT Interest receivable/ premiums on futures of claims on credit institutions and central banks... 8,702 7,786 Loans and advances... 52,411 45,062 Bonds... 20,905 24,073 Total derivatives of which Currency contracts Interest contracts Total interest receivable... 81,754 76,210 2 Interest payable to Credit institutions and central banks Deposits... 18,919 17,016 Total interest payable... 19,749 17,902 3 Price adjustments of Bonds... 1,821-6,537 Shares... 3,457 1,110 Foreign currency Total price adjustments... 5,803-4,771 4 Staff costs and administrative expenses Salaries and remuneration to Board of Directors and Management Board of Directors Management... 1,555 1,666 Total... 1,593 1,683 Staff costs Wages and salaries... 15,393 15,094 Pensions... 1,546 1,556 Social security costs Total... 17,076 16,786 Other administrative expenses... 19,078 20,201 Total staff costs and administrative expenses... 37,747 38,670 5 Tax 35 % tax of profit on ordinary activities... 17,700 8,798 + tax impact of non-deductible expenses % addition Total tax on ordinary profit... 18,565 10,286 Paid dividend tax Total tax... 18,776 10,504 Tax value of deduction rights for paid dividends, cf. note ,686 10,286 Tax to be paid... 7, No corporate tax has been paid for the first half-year The BANK of Greenland Half-Year Report /11

9 NOTES ON THE HALF-YEAR REPORT Claims on credit institutions and central banks Claims at notice at central banks , ,808 Claims on credit institutions... 22, ,497 Total claims , ,305 7 Individual write-offs/provisions on loans, advances and guarantees... At the start of the period... 69, ,596 Write-offs/provisions during the period (net)... 1,257 3,317 At the end of the period... 70, ,913 of which guarantee debtors constitute... 9,090 7,636 Lost and not previously written off/lost Paid on previously written off claims Bonds Of which DKr 150,000,000 nominal value has been deposited as security at Danmarks Nationalbank (the Danish Central Bank) 9 Deposits On demand... 1,903,112 1,439,297 Deposits at notice , ,099 Time deposits , ,104 Special categories of deposits... 62,272 55,005 Total deposits... 2,664,222 2,028, Share capital The share capital in The BANK of Greenland consists of 1,800,000 DKr 100 shares. Own holdings Number of own shares... 1,952 1,618 Nominal holding of own holdings Accounting value Percentage of share capital, end Retained earnings Beginning of period , ,242 Tax impact of deduction right for paid dividend (accrued)... 11,686 10,286 Profit for the period... 31,792 14,633 End of period , ,161 The BANK of Greenland Half-Year Report /11

10 NOTES ON THE HALF-YEAR REPORT Off-balance sheet items Financial guarantees... 44,394 17,765 Other commitments , ,289 Total guarantees, etc , ,054 Irrevocable standby letters of credit... 14,043 17,356 Total other off-balance sheet items... 14,043 17, Solvency calculated in accordance with the Danish Financial Supervisory Authority s executive order: Risk-weighted assets... 2,158,125 1,645,022 Core capital after deduction, in percentage, of risk-weighted assets Solvency ratio The BANK of Greenland Half-Year Report /11

11 THE DANISH FINANCIAL SUPERVISORY AUTHORITY S KEY FIGURES (in percentage) Solvency ratio Solvency ration based on core capital Half-year return on equity (before tax) Half-year return on equity (after tax) Earnings per expense DKr Interest risk Foreign exchange position Foreign exchange risk Loans and advances plus provisions for losses on bad debts as a percentage of deposits Excess cover relative to legal requirements for liquidity Total of major exposures Percentage of claims at reduced interest rates Half-year percentage of loss and provisions for loss on bad debts Half-year growth in loans and advances Loans and advances as a percentage of shareholders equity Profit on ordinary activities per share for the half-year (before tax) Profit on ordinary activities per share for the half-year (after tax) Equity per share (DKr 100) Stock exchange price / profit per share for the year The BANK of Greenland Half-Year Report /11