Interim Report H1 2017 Approved and published 17 August 2017
DLR Kredit A/S, Nyropsgade 21, 1780 København V, CVR NR.: 25781309
Contents
Contents Financial highlights H1 2017 ................................................................................................ 3 Financial summary ............................................................................................................... 4 Executive summary ............................................................................................................. 4 Financial review ................................................................................................................... 4 Capital and solvency ............................................................................................................ 7 Risk
............................................................................................................................... 7
Full-year outlook for 2017 .................................................................................................... 8 Accounting policies .............................................................................................................. 8 Events scheduled for H2 2017 ............................................................................................. 9 Forthcoming accounting rule changes ................................................................................. 9 Further information .............................................................................................................. 9 Contacts............................................................................................................................... 9
2
Financial highlights H1 2017 Year to date
Profit and Loss Account
Administration fee income Other core income, net Interest expenses, senior debt Fee and commission income, net Core income (mortgage credit income) Staff costs and administrative expenses, etc. Other operating expenses Provision for loan and receivable impairment, etc. Results from core activities Portfolio earnings (securities) Profit before tax Profit after tax
Balance Sheet
H1 2017 750 39 -22 -164 603 -123 -6 67 541 39 581 454
H1 2016 725 35 -24 -155 582 -115 -7 -61 398 118 517 403
H1 2017
H1 2016
Assets Loans and advances Bonds and shares Other assets Total assets
141,105 12,016 2,298 155,419
136,891 12,673 1,167 150,731
Liabilities and equity Issued bonds Other debt and payables Equity Total liabilities and equity
140,872 1,243 13,303 155,419
137,203 1,206 12,322 150,731
H1 2017
H1 2016
Financial ratios* Return on equity (ROE) Profit before tax in pc of equity Profit after tax in pc of equity Return on hybrid core capital Return on equity excl. hybrid core capital Solvency Capital ratio *** Lending Activity Growth in loan portfolio, pc (nominel) New loans, gross (DKKm) Number of new loans Loan/equity ratio
Com parison w ith other quarters
Ratio 17/16 103 111 91 106 104 107 81 -109 136 33 112 113
Ratio 17/16
Q2 2017
Q1 2017
376 20 -11 -90 295 -62 -3 50 281 -3 278 218
374 19 -11 -74 308 -61 -3 17 261 42 303 236
Q4 2016 369 27 -13 -47 337 -62 -4 9 281 -14 266 208
Q3 2016 367 21 -13 -80 295 -57 -4 -10 224 32 256 200
Q2 2017
Q1 2017
Q4 2016
Q3 2016
103 95 197 103
141,105 12,016 2,298 155,419
140,060 11,471 3,361 154,892
139,053 13,683 3,002 155,737
137,875 14,970 3,964 156,809
103 103 108 103
140,872 1,243 13,303 155,419
140,928 1,458 12,506 154,892
142,074 1,404 12,259 155,737
143,032 1,706 12,072 156,809
Q2 2017
Q1 2017
Q4 2016
Q3 2016
4.5% 3.6% 4.1% 3.3%
4.2% 3.2% 4.2% 2.9%
2.2% 1.7% 2.1% 1.5%
2.4% 1.9% 2.1% 1.7%
2.2% 1.7% 2.1% 1.5%
2.1% 1.6% 2.1% 1.5%
15.7%
14.5%
15.7%
14.7%
14.3%
14.1%
1.2 11,624 3,641 10.6
0.5 3,914 2,740 11.1
0.7 5,720 1,652 10.6
0.5 5,904 1,989 11.2
1.2 8,812 2,775 11.3
1.4 5,513 1,838 11.4
*) The financial ratios have been calculated on the basis of the definitions by the Danish Financial Supervisory Authority.
3
Financial summary
Core income amounted to DKK 603m, an increase of DKK 21m on the same period in 2016. The operational impact of losses and impairments amounted to an income of DKK 67m, which was due to improved conditions for the agricultural sector and DLR’s loss mitigating schemes established in collaboration with our partner banks. Pre-tax profit was DKK 581m, which is 12 pc up compared to the same period last year. After paying tax on the profit for the period and the holders of hybrid core capital (Tier 1), DKK 412m has been added to DLR’s equity capital. DLR’s net lending on agricultural and urban trade property amounted to DKK 1.5bn. DLR is raising its full-year guidance by DKK 100m and now expects core earnings of DKK 900-1,000m for 2017.
Executive summary Chief Executive Officer Jens Kr. A. Møller states in connection with the release of the interim report for the first half of 2017: “DLR’s pre-tax profit for H1 2017 of DKK 581m is satisfactory and exceeds expectations. Improved conditions in the agricultural sector enabled DLR to reduce impairments by DKK 59m (net) in H1. This has contributed to the operational impact of losses and impairments posting an income of DKK 67m. The result was also positively affected by DLR’s still growing loan portfolio, which led to administration margin income increasing by DKK 25m despite the average margin remaining unchanged. The positive trend in lending activity that DLR could note in 2016 has continued into 2017. DLR’s capital base was strengthened in H1 through the sale of treasury shares at a market value of DKK 632m. DLR’s total capital ratio was thus 15.7 as of 30 June 2017, not including the H1 result.”
Financial review Income statement DLR achieved a satisfactory pre-tax profit for the period of DKK 581m, which is DKK 64m up on the same period in 2016.
Net profit for the period was DKK 454m after tax. DLR’s earnings primarily stem from:
Core earnings: Earnings from mortgage credit activity in the form of administration margins, fees and commissions, etc. less associated administration costs, losses and impairments. Portfolio earnings: Return on securities portfolio.
4
Table 1. Income statement, DKKm
Profit and Loss Account
Administration fee income Other core income, net Interest expenses, senior debt Fee and commission income, net Core income (mortgage credit income) Staff costs and administrative expenses, etc. Other operating expenses Provision for loan and receivable impairment, etc. Results from core activities Portfolio earnings (securities) Profit before tax Profit after tax
H1 2017 750 39 -22 -164 603 -123 -6 67 541 39 581 454
H1 2016 725 35 -24 -155 582 -115 -7 -61 398 118 517 403
Core earnings Administration margin income amounted to DKK 750m, which is DKK 25m up on the same period in 2016. The increase is due to the loan portfolio expanding, as the average margin was the same as in 2016. Interest expenses on senior debt amounted to DKK 22m, which is similar to the same period in 2016. The figure for interest expenses conceals a rising volume of issued senior debt relative to the previous year. However, this was offset by the average interest rate in 2017 being lower than for the same period in 2016. Fees and commissions (net) include, on the one hand, fee and brokerage income connected with the disbursement and repayment of mortgage loans plus spread income stemming from loan refinancing and disbursing and, on the other hand, commission expenses to the banks that intermediate DLR’s loans. These expenses include both intermediation commissions and commissions for the provision of loss guarantees, etc. Fees and commissions (net) amounted to an expense of DKK 164m, which is slightly higher than the same period in 2016. The increase should be seen in light of the expanding loan portfolio and the resulting rise in commission expenses for loss guarantees, etc. Core income was subsequently DKK 603m, an increase of DKK 21m on the same period in 2016. The increase equates to a rise of 4 pc. Staff costs and administration, etc. expenses amounted to DKK 123m, an increase of DKK 8m, or 7 pc, relative to the same period in 2016. Other operating expenses concern a contribution to the Resolution Fund. Losses and impairments on loans and receivables, including adjustments from previous years, amounted to an income of DKK 67m, calculated as follows:
Realised loss DKK -31m.
5
Net change in impairments DKK + 59m. Losses offset in commission payments from the banks DKK +39m. The amount includes netting connected with losses realised in previous years.
Portfolio earnings Portfolio earnings amounted to an income of DKK 39m. Relatively high portfolio earnings were due to yields falling further in 2017 and bond prices subsequently rising. DLR’s investment portfolio (securities excl. temporary liquidity) amounted to DKK 22.9bn at the end of H1 2017. Allocation of comprehensive income for the period The period’s comprehensive income amounted to DKK 454m. Of this, DKK 54m was paid to the owners of hybrid core capital. As this expense is tax deductible, DLR’s net expense was DKK 42m. Overall, this means DKK 412m has been added to DLR’s equity capital.
Balance sheet Mortgage credit lending amounted to DKK 139.2bn (nom.) at the end of H1 2017. The bond portfolio stood at DKK 26.2bn. Of this, DLR’s own bonds accounted for DKK 14.2bn, which is netted in “Issued bonds at fair value”, while DKK 12.0bn was attributable to positions in government securities and other mortgage bonds. As well as bond holdings of DKK 26.2bn, DLR held other securities for DKK 2.0bn; hence, the total securities holding amounted to DKK 28.2bn (gross) at the end of the half-year. Temporary surplus liquidity connected with mortgage payments, loan redemptions and refinancing auctions comprised DKK 5.3bn, in all, of the securities holding, so the investment holding was therefore DKK 22.9bn. DLR’s balance sheet stood at DKK 155.4bn at the end of H1 2017.
6
Capital and solvency Tablel 2. DLR’s capital and solvency Capital and solvency
DKKm
30 Jun. 2017 Equity Profit not recognised in equity Hybrid core capital recognised in equity Deductions as a consequence of prudent valuation Difference between expected loss and write downs Deferred tax Actual core capital Hybrid core capital Capital base Risk-weighted exposure with credit risk, etc. Risk-weighted exposure with market risk Risk-weighted exposure with operational risk Total risk-weighted exposure Actual core capital ratio Capital ratio
31 Dec. 2016
13,303 -412 -1,300 -26 -658 -1 10,906
12,259 0 -1,300 -22 -676 -1 10,260
1,300
1,300
12,206
11,560
72,782 2,590 2,456 77,828
75,327 2,892 2,456 80,674
14.0% 15.7%
12.7% 14.3%
Capital base: DLR’s capital base at the end of H1 2017 does not include the result for the half-year, as the accounts have not been audited. DLR’s capital base increased by DKK 646m in H1 2017, with the main contributor to the rise being the sale of treasury shares for DKK 632m. Risk-weighted exposure amount: DLR’s risk-weighted exposure amount declined from DKK 80.7bn to DKK 77.8bn in H1 2017. The decline should be seen against the improved situation for DLR’s agricultural customers. Capital ratios: DLR’s total capital ratio was 15.7 at the end of H1 2017 compared to 14.3 at year-end 2016. The common equity tier 1 capital ratio was 14.0 compared to 12.7 at year-end 2016. Including the result for the period would produce a total capital ratio of 16.2 and a common equity tier 1 capital ratio of 14.5.
Risk DLR’s credit and market risk are estimated as limited due to both the statutory requirements and DLR’s internal credit policy guidelines. Additionally, DLR has established loan loss schemes, including a guarantee provision that has been set up to cover DLR’s various lending areas in accordance with agreements made with DLR’s partner/shareholder banks. For further details on credit and market risk, please refer to DLR’s Risk and Capital Management Report 2016, available at www.dlr.dk/risk-reports.
7
Arrears and losses As of the end of H1 2017, mortgage payments outstanding amounted to DKK 107m versus DKK124m at year-end 2016. Of the amount in arrears, the bulk stems from mortgage payments that are less than 3½ months overdue. DLR recorded a loss on 65 cases in H1 2017 compared to 54 during the same period in 2016. DLR had 18 foreclosed mortgages in its portfolio at the end of H1 2017. The value of these properties amounted to DKK 62m at the end of H1 compared to DKK 159m at year-end 2016.
Full-year outlook for 2017 DLR’s Annual Report 2016 indicated expected core earnings for 2017 as a whole of DKK 800900m. After H1, we now expect core earnings for full-year 2017 to be DKK 900-1,000m. The main uncertainty for full-year core earnings is the operational impact of losses and impairments for the remainder of 2017. Furthermore, the year’s pre-tax profit is subject to interest rate uncertainty and its potential impact on DLR’s portfolio earnings during the rest of the year.
Accounting policies DLR’s interim report has been prepared in accordance with the accounting provisions for mortgage banks laid down by the Danish Financial Supervisory Authority as well as the requirements provided by NASDAQ Copenhagen for the financial statements of issuers of listed bonds. Accounting policies were changed in the Q1 financial statement with respect to the classification of the following items:
Fees paid to agricultural property valuation experts: Previously this cost in the expenses note was classified as “Other administrative expenses”. From 2017 it will be classified under “Staff costs”. Losses offset in commission payments to shareholder banks were previously included in the accounting item “Fees and commissions paid”. From 2017 income will be posted under “provision for loan and receivable impairment”.
These reclassifications have no effect on DLR’s pre-tax profit, comprehensive income or equity. Comparative figures for the relevant items have also been adjusted. No changes have been made to DLR’s accounting policies in Q2 2017. This financial statement has not been subject to audit or review.
8
Events scheduled for H2 2017 Capital position DLR plans to repay DKK 1,300m in hybrid Tier 1 capital at the end of August 2017 and at the same time issue new regulatory Tier 2 capital of DKK 650m. The transaction should be seen in connection with DLR having sold treasury shares in H1 2017 at a market value of DKK 632m. The net effect of the above-mentioned transactions in Q1-Q3 of 2017 will thus mean DLR’s capital base remaining unchanged after the transactions have been performed.
Administration agreement signed DLR has signed a framework agreement to undertake the administration of Landbrugets Finansieringsbank (LFB) in connection with the bank’s recent reorganisation. DLR will assume no credit risk in administering LFB’s loan portfolio. The framework agreement will run for five years and have a very limited impact on DLR’s earnings.
Forthcoming accounting rule changes International financial reporting standard IFRS 9 is set to come into force on 1 January 2018, which will prompt adjustments to the Danish FSA’s accounting standards, particularly concerning loan impairment rules. Work is under way at DLR to develop the impairment models that will derive from the new set of rules. DLR expects the initial application of the new accounting standard to result in increased provisions for impairments (allowance account balance). However, there is uncertainty related to give an estimate on the first time effect with the transition to the new rules. According to the current knowledge it is expected, that the capital effect will be less than DKK 100m, and therefore without material effect on DLRs capital base.
Further information For further information on DLR please refer to www.dlr.dk/welcome-investorpage, where the Annual Report 2016 and DLR’s Risk and Capital Management Report, etc. can be downloaded. You will also find further information here on DLR’s cover pools and ratings.
Contacts Please direct any enquiries concerning this financial statement to: CEO Jens Kr. A. Møller, tel. 33 42 07 24, or Managing Director Michael Jensen, tel. 33 42 07 06
9
Profit and Loss Account and Statement of Comprehensive Income
Note
1 2
Profit and loss account Interest income Interest expenses Net interest income Dividends from shares etc. Fee and commission income Fee and commission paid Net interest and fee income
3
Value adjustments Other operating income
4
5
Staff costs and administrative expenses
DKKm
H1 2017
H1 2016
1,666 (825) 841
1,706 (866) 840
78 (242) 677
62 (217) 685
(43)
6
9
9
(121)
(113)
Depreciation and impairment losses
(2)
(2)
Other operating expenses
(6)
(7)
Provisions for loan and receivable impairment, etc.
67
(61)
581
517
(127)
(114)
Profit
454
403
H1
H1
Statement of Comprehensive Income Profit
2017 454
2016 403
Total comprehensive income
454
403
Shareholders of DLR Kredit A/S* Owners of hybrid core capital
400 54
348 55
Total comprehensive income
454
403
Profit before tax Tax
Note
Attributable to:
* As a consequence of tax deductions for payments to holders of additional tier 1 capital, the consolidation was increased beyond the amount stated, i.e. by an additional DKK 12m in 2017 (22% of DKK 54m). For 2016, consolidation was similarly increased by DKK 12m.
10
Balance Sheet
DKKm
30 Jun. 2017
Note
31 Dec. 2016
Assets
6 7 8 12 13
14
Cash in hand and demand deposits with central banks Receivables from credit institutions and central banks Loans, advances and other receivables at fair value amortised cost Bonds at fair value Shares, etc. Land and buildings, domicile properties Other tangible assets Deferred tax assets Assets temporarily foreclosed Other assets Prepayments
48 1,935 141,085 20 11,958 57 97 4 1 62 126 24
48 2,428 139,032 20 13,625 58 98 4 1 159 246 18
Total assets
155,419
155,737
131,872 9,000 89 1,140 9 142,112
134,074 8,000 18 1,378 4 143,474
4 4
4 4
570 43 2,338 9,052 1,300 13,303
570 43 2,338 8,008 1,300 12,259
155,419
155,737
7 4,202
17 4,220
Liabilities and equity
15 16 17
Debt to credit institutions and central banks Issued bonds at fair value Issued bonds at amortised cost Current tax liabilities Other debt and payables Deferred income Total debt Provisions for deferred tax Total provisions Share capital Revaluation reserve Undistributable reserve Retained earnings Owners of hybrid core capital Total equity Total liabilities and equity
18
Off-balance sheet items Guarantees Other liabilities
11
Statement of Changes in Equity
DKKm
Share capital 1)
2016 Equity at 1 January 2016
Revaluation reserve
Undistributable reserve
Retained earnings
Owners of hybrid core capital 2)
Total
570
43
2,338
8,252
1,300
12,503
Profit
0
0
0
702
109
811
Transactions with owners Purchase of own shares Interest on hybrid core capital Tax value of deduction of interest on additional tier 1 capital
0 0 0
0 0 0
0 0 0
-970 0 24
0 -109 0
-970 -109 24
Equity at 31 December 2016
570
43
2,338
8,008
1,300
12,259
2017 Equity at 1 January 2017
570
43
2,338
8,008
1,300
12,259
Profit
0
0
0
400
54
454
Transactions with owners Own shares Interest on hybrid core capital Tax value of deduction of interest on additional tier 1 capital
0 0 0
0 0 0
0 0 0
632 0 12
0 -54 0
632 -54 12
570
43
2,338
9,052
1,300
13,303
Equity at 30 June 2017
1) The share capital is divided into shares of each DKK 1.00. The total number of shares is 569,964,023. DLR Kredit A/S has only one class of shares. All shares carry equal rights. 2) Additional tier 1 capital that complies with the rules in the Capital Requirements Regulation (CRR). The DKK 1,300m with a conversion obligation was raised on 27 August 2012. The maturity is perpetual. The rate of interest is floating and based on the 6m money-market rate (CIBOR) plus 8.25 per cent p.a. The aggregate additional tier 1 capital can be included in total capital. 3) Own shares DLR Kredit has in the first half of 2017 sold own shares corresponding to a market value of 632 DKKm.
12
Capital and solvency
DKKm
30 Jun. 2017 Equity Profit not recognised in equity Hybrid core capital recognised in equity Deductions as a consequence of prudent valuation Difference between expected loss and write downs Deferred tax Actual core capital Hybrid core capital Capital base Risk-weighted exposure with credit risk, etc. Risk-weighted exposure with market risk Risk-weighted exposure with operational risk Total risk-weighted exposure Actual core capital ratio Capital ratio
31 Dec. 2016
13,303 -412 -1,300 -26 -658 -1 10,906
12,259 0 -1,300 -22 -676 -1 10,260
1,300
1,300
12,206
11,560
72,782 2,590 2,456 77,828
75,327 2,892 2,456 80,674
14.0% 15.7%
12.7% 14.3%
13
List of notes to the financial statements
Nr. Name of note
1 2 3 4 5
Notes to the financial statements - income statement Interest income Interest expenses Value adjustments Staff costs and administrative expenses Provisions and impairment losses for loans and receivables etc.
6 7 8 9 10 11 12 13 14
Notes to the financial statements - assets Receivables from credit institutions and central banks Loans and advances at fair value Loans and advances at amortised cost Mortgage loans (nominal value) by property category (as a percentage) Number of loans Provisions for loans and receivables impairment at fair value and amortised cost Bonds at fair value Land and buildings (domicile properties) Other assets
15 16 17 18 19
Notes to the financial statements - liabilities and equity Issued bonds at fair value Issued bonds at amortised cost Other debt and payables Off-balance sheet items Contingent assets
20 21
Notes to the financial statements - key figures and ratios Key figures in DKKm Financial ratios
22
Notes - other Reconciliation of income statement "basic portfolio earnings" vs "official statements"
14
Notes - income statement DKKm
1
2
H1 2017
H1 2016
Interest income Receivables from credit institutions and central banks Loans and advances Administration fees Bonds Other interest income Total interest income
0 843 750 85 23 1701
0 913 725 114 19 1771
Interest from own mortgage bonds offset agains interest on issued bonds Total
-35 1666
-65 1706
Interest expenses Credit institutions and central banks Issued bonds at fair value Issued bonds at amortised cost Hybrid core capital (non CRR-compliant) Other interest expenses Total interest expenses
-1 -837 -22 0 0 -860
-1 -905 -24 0 0 -931
Total
35 -825
65 -866
Value adjustments Mortgage loans Bonds Shares etc. Other assets Foreign exchange Derivative financial instruments Issued bonds Total value adjustments
361 -49 0 0 1 5 -361 -43
1,295 15 2 0 -3 -9 -1,295 6
Staff costs Salaries * Pension costs Social security costs Total
-63 -5 -10 -78
-60 -5 -10 -74
Other administrative expenses IT expenses Audit, supervision and industry association Other operating costs Total
-21 -4 -18 -43
-18 -4 -17 -38
Total staff and administrative expenses
-121
-113
3.5 0.0 3.5
3.4 0.0 3.4
2
2
-32 1 -61 119 39 67
-64 1 -153 133 22 -61
Interest from own mortgage bonds
3
4
Staff costs and administrative expenses
Executive Board* Fixed remuneration Variable remuneration Total Number of members of the Executive Board - end of period
5
Provisions and impairment losses for loans and receivables etc. Impairment losses for the period Recovery of debt previously written off Provisions for the period Reversal of provisions Losses offset in comission payments to banks Total provisions and impairment losses for loans and receivables etc.
15
Notes - assets DKKm
6
30 Jun. 2017
31 Dec. 2016
0 1,935 1,935
0 2,428 2,428
Loans and advances at fair value Mortgage loans, nominal value Adjustment to fair value of underlying bonds Adjustment for credit risk Total mortgage loans at fair value
139,190 2,319 -515 140,994
137,493 1,966 -566 138,893
Arrears before provisions Other loans and charges before provisions Provisions for arrears and charges Total
107 7 -22 141,085
124 44 -28 139,032
Loans and advances at amortised cost Loans and advances Adjustment for credit risk Total
25 -5 20
26 -6 20
Receivables from credit institutions and central banks Receivables at notice from central banks Receivables from credit institutions and central banks Total receivables from credit institutions and central banks* DLR had no reverse repo transactions at the end of the period.
7
8
9
Mortgage loans (nominal value) by property category (as a percentage) Agricultural properties Owner-occupied dwellings Subsidised rental housing properties Private rental housing properties Office and business properties Properties for manufacturing and manual industries Properties for social, cultural and educational purposes Other properties Total, as a percentage
10
Number of loans - end of period
11
Provisions for loans and receivables impairment at fair value and amortised cost
63 6 0 15 16 1 0 1 100
63 6 0 14 16 1 0 1 100
59,797
59,119
411 -119 54 345
445 -191 156 411
Collective provisions* Provisions on loans and guarantees, beginning of year Reversal of provisions Provisions for the period Provisions - end of period
190 0 7 197
145 -25 70 190
Total provisions for loans and receivables impairment, end of period
542
601
Individual provisions Provisions on loans and guarantees, beginning-of-year Reversal of provisions Provisions for the period Provisions - end of period
16
Notes - assets DKKm
12
Bonds at fair value - Own mortgage bonds - Other mortgage bonds - Government bonds - Other bonds Total bonds Own mortgage bonds offset against issued bonds Own non-mortgage bonds offset against issued bonds Total
13
31 Dec. 2016
14,201 9,786 2,172 0 26,159
23,866 11,441 2,184 0 37,492
-14,201 0 11,958
-23,866 0 13,625
98 0 0 0 97
98 0 -1 0 98
0 72 53
10 107 129
126
246
Land and buildings (domicile properties) Fair value, beginning of year Additions during the year Depreciation Value changes recognised in other comprehensive income Fair value, end of period The value of domicile properties is measured on an annual basis by DLR's commercial valuation experts.
14
30 Jun. 2017
Other assets Positive market value of derivative financial instruments etc. Interest and commission receivable Other receivables Total
17
Notes - liabilities and equity DKKm
15
16
17
18
30 Jun. 2017
31 Dec. 2016
Issued bonds at fair value Mortgage bonds - nominal value Fair value adjustment Issued bonds - gross
143,722 2,351 146,073
155,775 2,165 157,940
Own mortgage bonds set off - at fair value Total
-14,201 131,872
-23,866 134,074
Of which pre-issued, market value Drawn callable bonds for redemption in next term
0 1,139
10,228 2,152
Issued bonds at amortised cost Issues in connection with senior debt Own mortgage bonds set off Total
9,000 0 9,000
8,000 0 8,000
Other debt and payables Negative market value of derivative financial instruments Interest and commission payable Other payables Total
0 907 233 1,140
5 1,180 193 1,378
3 4 7
3 15 17
4,202 4,209
4,220 4,237
Off-balance sheet items Guarantees etc. Financial guarantees Other guarantees Total Other contingent liabilities Irrevocable credit commitments (loan offers) Total
In addition to the above garantees and contigent liabilities, DLR´s bond portfolio is used as collateral for intraday settlement of VP sumclearing. It is not estimated that it would entail a pull on the company´s financial resources.
19
Contingent assets Loss guarantee agreements have been established between DLR and the banks holding shares in DLR which makes it possible for DLR to offset losses against commissions paid to the banks that hold shares in DLR. The set-off of losses against commissions can be made over severals years going forward, which means that DLR may offset losses against commissions in the years to come in cases where the exposures lead to an actual losses.
18
Notes - financial highlights and ratios DKKm
20
Key figures in DKKm H1 2017
H1 2016
H1 2015
H1 2014
H1 2013
677 9
685 9
739 9
640 9
582 9
Staff costs and administrative expenses etc. Earnings
-129 557
-122 572
-110 638
-103 546
-103 488
Provision for loan and receivable impairment Value adjustments Profit before tax Profit after tax
67 -43 581 454
-61 6 517 403
-49 -155 434 332
-42 -72 432 326
-47 -153 289 216
Balance sheet Assets Loans and advances Bonds, shares, etc. Other assets Total assets
141,105 12,016 2,298 155,419
136,891 12,673 1,167 150,731
132,621 7,898 3,663 144,182
134,111 4,668 2,616 141,396
135,479 1,677 4,316 141,472
Liabilities and equity Issued bonds Other debt and payables Subordinated debt Equity Total liabilities and equity
140,872 1,243 0 13,303 155,419
137,203 1,206 0 12,322 150,731
126,945 5,030 0 12,207 144,182
126,955 2,044 2,067 10,329 141,396
123,290 4,911 4,086 9,185 141,472
Income statement Net interest and fee income Other operating income etc.
19
Notes - key figures and ratios DKKm
21
Financial ratios
Return on equity Profit before tax in per cent of equity(*) Profit after tax in per cent of equity(*) Return on capital employed Return on capital employed(*) Costs Costs in per cent of loan portfolio Income/cost ratio*) Income/cost ratio, excl. write-downs for impairment Solvency **) Total capital ratio Tier 1 capital ratio Losses and arrears Arrears, end of period (DKKm) Loss and impairment ratio for the period (in per cent of loan portfolio)(*) Accumulated loss and impairment ratio (in per cent of loan portfolio) Lending activity Growth in loan portfolio, per cent (nominal)*) New loans, gross (DKKm) Number of new loans Loan/equity ratio(*) Margins Percentage of average loan portfolio (nominal): Profit before tax Administrative margin in per cent of average loan portfolio
H1 2017
H1 2016
H1 2015
H1 2014
H1 2013
4.5 3.6
4.2 3.2
3.8 2.9
4.3 3.2
3.2 2.4
0.29
0.27
0.23
0.23
0.15
0.09 10.37 4.98
0.09 3.82 5.74
0.08 3.73 5.39
0.08 3.98 5.60
0.08 2.92 4.25
15.7 15.7
14.5 14.5
12.4 12.4
12.8 12.8
12.6 12.6
107
134
142
123
149
-0.05
0.06
0.04
0.03
0.03
0.38
0.44
0.43
0.29
0.26
1.2 11,624 3,641 10.6
1.9 8,793 2,740 11.1
-0.1 13,641 5,314 10.9
-0.4 6,460 2,125 13.0
0.0 5,644 2,499 14.8
0.42
0.54
0.55
0.53
0.53
0.54
0.54
0.55
0.53
0.53
12.1
5.2
1.4
0.8
Percentage of tier 1 capital after deductions: Foreign exchange position as a percentage of tier 1 capital after deductions(**) 9.9
( *) The financial ratios have been calculated in accordance with the definitions of the Danish Financial Supervisory Authority. (**) In March 2016, DLR received approval from the Danish FSA to use IRB models to determine the credit risk on the portfolio of
20
Notes - others DKKm
22
Reconciliation of income statement "basic portfolio earnings" vs "official statements"
H1 2017 Interest income Interest expenses Net interest income Dividends from shares etc. Fee and commission income Fees and commissions paid Net interest and fee income Value adjustments Other operating income Staff costs and administrative expenses Depreciation and impairment losses Other operating expenses Impairment of loans and receivables, etc. Profit before tax Tax Profit after tax
Basic earnings 1,583 -825 758 0 78 -242 594 0 9 -121 -2 -6 67 541 -127 415
Portfolio earnings 83 83
83 -43
39 39
Total
1,666 -825 841 0 78 -242 677 -43 9 -121 -2 -6 67 581 -127 454
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Management’s statement on the interim report The Board of Directors and the Executive Board have today considered and approved the interim report of DLR Kredit A/S for the period 1 January – 30 June 2017. DLR’s interim report has been prepared in accordance with the accounting provisions for mortgage banks laid down by the Danish Financial Supervisory Authority as well as the requirements provided by NASDAQ Copenhagen for the financial statements of issuers of listed bonds. The management’s review includes a fair review of developments in the Company’s operations and financial position and describes significant risks and uncertainties that may affect the Company. In our opinion, the accounting policies applied are appropriate and the interim financial statements give a true and fair view of the Company’s assets, liabilities and financial position at 30 June 2017 and of the results of the Company’s operations for the period 1 January – 30 June 2017. DLR’s interim report has not been subject to audit or review by the Company’s auditors.
Copenhagen, 17 August 2017 Executive Board
Jens Kr. A. Møller CEO
Michael Jensen Managing Director
Board of Directors
Vagn Hansen Chairman
Lars Møller Vice Chairman
Claus Andersen
Randi Franke
Karen Frøsig
Peter Gæmelke
Jakob G. Hald
Kim Hansen
Søren Jensen
Gert R. Jonassen
Agnete Kjærsgaard
Torben Nielsen
Jan Pedersen
Lars Petersson
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