Danske Andelskassers Bank
Danske Andelskassers Bank A/S – Annual Report 2011
Danske Andelskassers Bank 29.02.2012 17:12 --------------------------------------------------------------------------- Company announcement no. 4/2012 The core earnings of Danske Andelskassers Bank A/S came to DKK 223m in 2011 against DKK 213m in 2010. This is in the middle of the bank's outlook for core earnings in the region of DKK 210-240m. The core earnings confirm a positive trend throughout the year Due to impairments and market value adjustments - particularly in H2 2011 - the pre-tax loss of Danske Andelskassers Bank is DKK -240m. This is in line with the pre-tax loss of 2010. The pre-tax loss is affected by impairments in the order of DKK 112m due to an assessment by the Danish Financial Supervisory Authority The Board of Directors of Danske Andelskassers Bank A/S has on this day adopted the financial statements for 2011. The annual report shows core earnings of DKK 223m against core earnings of DKK 213m in 2010 corresponding to an increase of just below 5 per cent. The core earnings - pre-tax profits excluding market value adjustments, impairments, expenses for sector solutions and one-time costs relating to the conversion of the organisation - are in line with the outlook for core earnings in the region of DKK 210-240 as presented in the financial statements for the third quarter 2011, when the outlook was revised up. A positive development is seen throughout 2011 despite the global economic turmoil in H2. The core earnings of H2 2011 are thus 27 per cent above the core earnings of H1 2011. The pre-tax profit/loss of Danske Andelskassers Bank is affected negatively by market value adjustments of DKK -51m (against market value adjustments of DKK 46m in 2010) and impairments of DKK 378m (against DKK 414m in 2010). Despite a 9 per cent decrease the level of impairments is considered not satisfactory. Included in the impairments mentioned above are impairments in the order of DKK 112m due to the assessment of the Danish Financial Supervisory Authority following a routine visit in the end of the year. On the basis of this the pre-tax loss is DKK -240m. This is in line with the pre-tax loss of 2010. The net loss of 2011 is DKK -176m. The results are considered not satisfactory. Highlights from the annual report Highlights from the annual report are as follows (Results for 2010 are shown in parentheses): -- Pre-tax loss of DKK -240m (DKK -241m) -- Core earnings of DKK 223m (DKK 213m) corresponding to an increase of just below 5 per cent -- Impairment and losses of DKK 378m (DKK 414m) corresponding to a decrease of 9 per cent and an impairment percentage of 3.2 (3.8) -- Market value adjustments of DKK -51m (DKK 46m) -- Staff costs and administrative expenses of DKK 505m (DKK 570m) corresponding to a decrease of 11 per cent -- Deposits of DKK 9,014m (DKK 9,931m) -- Loans of DKK 8,914m (DKK 9,562m) -- Solvency ratio of 14.2 per cent (12.0 per cent) against a solvency requirement of 12.2 per cent (8.9 per cent) corresponding to excess solvency of 2.0 percentage points (3.1 percentage points) -- Core capital ratio of 14.0 per cent (11.8 per cent) -- Equity of DKK 1,617m (DKK 1,427m) Thus, Danske Andelskassers Bank continues to have a satisfactory balance between deposits and loans, increasing core earnings, significant lower expenses and a high core capital ratio. Danske Andelskassers Bank still complies satisfactory with all parameters of the Danish Financial Supervisory Authority's so-called Supervisory Diamond. However, it is the bank's judgement that the excess solvency is modest compared with the desired level, and the bank has thus launched initiatives to raise the excess solvency. Unusual circumstances - The Danish Financial Supervisory Authority In November and December 2011 the Danish Financial Supervisory Authority paid Danske Andelskassers Bank a routine visit. The report following this visit is published on the bank's website (in Danish) as of today. The Danish Financial Supervisory Authority scrutinised all of Danske Andelskassers Bank's commitments exceeding DKK 15m (totalling 76 commitments equal to 20 per cent of the bank's total commitments). Based on this scrutiny the Danish Financial Supervisory Authority assessed a need for impairments in the order of DKK 112m compared to impairments by 30 September 2011. Furthermore it was the assessment of the Danish Financial Supervisory Authority that Danske Andelskassers Bank's solvency requirement ought to be raised above the calculated 10.4 per cent by 30 September 2011. Using a new model for this, 'kreditreservationsmodellen', expected to match the model made mandatory from the beginning of 2013, the solvency requirement of Danske Andelskassers Bank is calculated to 12.2 percent by 31 December 2011. The Danish Financial Supervisory Authority finds this level to be sufficient. Based on the net loss of 2011 the solvency ratio of Danske Andelskassers Bank is 14.2 per cent by 31 December 2011. The excess solvency is thus 2.0 percentage points. A substantial part of Danske Andelskassers Bank's capital base consists of equity and it is thus labelled very 'pure'. As mentioned above the bank agrees with the Danish Financial Supervisory Authority finding the excess solvency to be modest. Initiatives to increase the excess solvency have been initiated, and they are expected to raise the excess solvency during H1 2012. The report from the Danish Financial Supervisory Authority includes different enforcement notices and risk statements. Danske Andelskassers Bank has informed the Danish Financial Supervisory Authority that these are taken note of. The work related to these notices and statements has already started and is in several cases well on the way. Unusual circumstances - Impairments Danske Andelskassers Bank's impairments in 2011 are significantly influenced by the economic turmoil in H2 with the European sovereign debt crisis affecting the Danish economy and thereby several of the bank's customers negatively. The level of impairments is seen 178 per cent higher in H2 compared to H1. The agricultural industry is the largest single segment in Danske Andelskassers Bank's portfolio of loans. Many of the agricultural customers are sound and accomplished and the outlook for the industry is improving in general. Despite this, the level of impairments within this segment has been relatively high in 2011. The agricultural industry is thus responsible for 39 per cent of the overall impairments. It is Danske Andelskassers Bank's assessment that the bank cooperates well with the agricultural customers. It is the assessment as well that the necessary impairments have been carried out on an ongoing basis. In relation hereto it is noted that the land prices quoted by the Danish Financial Supervisory Authority in its Christmas letter of 23 December 2011 didn't give rise to further impairment, as the prices didn't differ from the level already being used by Danske Andelskassers Bank. The Credit organisation of Danske Andelskassers Bank has been improved during 2011 and in the beginning of 2012. The improvements encompass a new structure as well as added resources. Based on this and the moderately - yet uncertain - positive expectations regarding the Danish economy (recently confirmed by the European Commission on 24 February 2012) the level of impairments are expected to be at a significantly lower level in 2012 and the years ahead. Outlook for 2012 2011 underlined that the financial sector, including Danske Andelskassers Bank, is being strongly affected by Danish and global economic trends. It also underlined that there is considerable uncertainty in the current financial/debt crisis and that growth expectations in both the Danish economy and the rest of the world are at a low level and quite uncertain. 2012 is therefore expected to offer only limited growth in the Danish economy, for which reason activity among customers must also be expected to remain at a limited level. In Danske Andelskassers Bank's assessment, however, the measures it has implemented in recent years - including merging the cooperative banks of the Danish Amalgamation of Cooperative Banks (Sammenslutningen Danske Andelskasser) and adjusting the number of branches and staff members - have brought it into line with current market conditions. These processes are expected to have a rising positive effect through 2012. Provided that the socio-economic conditions/crisis carries on as expected Danske Andelskassers Bank expects the bank to be in profit in 2012. This applies to both pre-tax profit and core earnings. In concrete terms, Danske Andelskassers Bank expects core earnings of DKK 270-300m in 2012. Comments on the annual report Managing Director Jan Pedersen says about the interim report 'The results of 2011 can't be described as positive. But throughout the year our core earnings have become still more satisfactory, our loans and deposits are balanced and our capital base is sound - consisting primarily of money we've set aside over the years instead of money lend. We've adapted our bank to the present and the expected demands of the financial sector. Based on this we have a sound foundation for the years ahead.' 'Looking ahead we would like our excess solvency to increase, thereby ensuring e.g. that no customers feel uneasy. As a result of this initiatives to increase the excess solvency - besides the increase from making a profit - have been initiated.' Further information For further information, please contact Head of Human Resources and Communications, Martin Rask Pedersen Tel.: +45 8799 3033 This Company Announcement contains forward looking statements, including statements regarding the activities of Danske Andelskassers Bank. These statements are based upon information, assumptions and assessments found to be reasonable by Danske Andelskassers Bank. The forward looking statements encompass known and unknown risks, uncertainties and other significant factors which may cause the actual results, development or performance of Danske Andelskassers Bank or the results of the industry to differ materially from any future results, development or performance expressed or implied by such statements. If one or more of these risk factors or factors of uncertainty are released or an underlying condition proves itself wrong, the actual economic situation or results or the operating profit of Danske Andelskassers Bank may differ materially from what is descriped as presupposed, assessed, anticipated or expected. News Source: NASDAQ OMX 29.02.2012 Dissemination of a Corporate News, transmitted by DGAP - a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP's Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Danske Andelskassers Bank Denmark Phone: Fax: E-mail: Internet: ISIN: DK0060299063 WKN: End of Announcement DGAP News-Service ---------------------------------------------------------------------------
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