- Earnings per share 31.5 DKK (Q1-Q3 2020: 8.9) DKK
- Basic income DKK 6,425 million (Q1-Q3 2020: DKK 5,856 million)
- Basic expenditure DKK 3,516 million (Q1-Q3 2020: DKK 3,669 million)
- Depreciation charges on loans – DKK 37 million (Q1-Q3 2020: 963 million Danish kroner)
- Profit before tax was DKK 3,064 million, which corresponds to a return on equity before tax of 11.4% per year (Q1-Q3 2020: DKK 1,011 million and 3.6% per year). year)
- Net profit amounted to DKK 2,391 million, which corresponds to a return on equity of 8.8% per annum (Q1-Q3 2020: DKK 778 million and 2.7% per annum)
- Capital ratio of 22.6%, including Common Equity Tier 1 ratio of 18.0% (Q1-Q3 2020: 22.3 and 17.5, respectively)
- The interest charges for the additional Tier 1 capital are expected to decrease to approx. 36m DKK versus 52m DKK in the third quarter.
“Jyske Bank’s earnings per share in the first nine months of 2021 were the highest since the merger with Jyske Realkredit. This is the effect of a high level of activity throughout the organization, driven by the development of the real estate and automotive markets, favorable financial markets and increased economic activity in the Danish company. The strong credit quality triggered a reversal of loan impairment charges of DKK 73 million and despite the high level of activity, costs were reduced. Based on the continuing positive development, earnings forecasts were revised upwards in October, so Jyske Bank now expects earnings per share of DKK 40-41 against the previous estimate of DKK 34. -38 DKK in 2021,Says Anders Dam, Managing Director and CEO.
After the Danish company reopened in the spring and the removal of COVID-19 restrictions, the Danish economy has reached a higher level of activity than before the COVID-19 outbreak. This development is due, among other things, to the deployment of COVID-19 vaccines and a global economic recovery which has led to a new employment record and has resulted in positive growth prospects for the Danish economy. Recruitment difficulties in several sectors, questioned supply chains and shortage of raw materials can, however, lead to somewhat volatile economic development. This is supported by the reimbursement of VAT and tax loans by customers and the risk of further outbreaks of COVID-19. Jyske Bank has approx. 3,800 corporate clients who have loans from the government amounting to DKK 3.2 billion.
The COVID-19 pandemic and social restrictions have further heightened the desire of customers to meet their financial needs and demands digitally. Jyske Bank has introduced enhanced functions in Jyske Mobilbank in the form of, for example, Jyske NemInvestering, which makes it easier and easier for retail clients to invest even small amounts of money.
Combined with a strong digital presence, Jyske Bank strives to be accessible with knowledgeable advisory services when clients need them. Jyske Bank has merged several personal customer branches, paving the way for a higher degree of specialization for the benefit of customers and employees. In 2021, Jyske Bank was awarded by Voxmeter to the best of private banking for the sixth consecutive year and received an award from Jobindex for the highest job satisfaction in the financial sector.
In the third quarter of 2021, the strategic cooperation with Købstædernes Forsikring called Jyske Forsikring was launched, and it got off to a good start. From the fourth quarter of 2021, Jyske Finans will become a strategic financing business partner of Volvo Car Denmark. Jyske Finans will therefore contribute to Volvo Car Denmark’s digitization of the customer journey and its transformation into a pure electric vehicle company in the years to come. The cooperation should support the growth of the business volume of leasing activities and the objective of increasing the proportion of new loans for the financing of low-emission vehicles.
Climate is identified as Jyske Bank’s most significant impact area, and estimated indirect CO2 emissions from loans and investments were reduced by 13% in 2020. As an additional measure, Jyske Capital joined the Net Zero Asset Managers initiative and was therefore obliged to report net investments carbon neutral by 2050 at the latest Jyske Realkredit launched green mortgages for corporate clients and increased transparency on the institution’s home loans and their energy consumption by being a member of the Energy Efficient mortgage label. Driven by the CO offsetting goal2 emissions from its own activities, the replacement of cars with low-emission cars was launched in 2021.
Q1-Q3 2021 DKK 31.5 earnings per share
The net profit for the period at DKK 2,391 million corresponds to a return on equity of 8.8% per annum compared to DKK 778 million and 2.7% per annum, respectively, for the corresponding period of 2020. Profit per share rose from DKK 8.9 to DKK 31.5. The significantly higher result has to be seen against the fact that the result for the first nine months of 2020 was affected by management’s estimate of depreciation charges after the COVID-19 outbreak. Add to this, for example, a favorable development in the financial markets and an overall high level of activity in the first nine months of 2021.
Jyske Bank’s business volume showed a general increase in the first nine months of 2021. Nominal mortgages increased by 2% compared to the end of 2020, thanks to the increase in loans to corporate clients. Leasing and automobile financing recorded an increase of 7%. Loans and advances for banking activities remained more or less stable, the increase in loans to businesses being offset by the fall in loans to individuals and public authorities. Bank deposits fell 4%, mainly attributable to large corporate clients.
Basic income increased by 10% compared to the first nine months of 2020. Investment as well as the automotive and real estate sector were supported by high levels of activity while value adjustments and costs related to investments were supported by favorable developments in the financial markets.
Base expenses were down 4% from the first nine months of 2020. This decrease is mainly due to a 3% reduction in the number of full-time employees.
The loan impairment charges amounted to income of DKK 73 million compared to an expense of DKK 963 million in the first nine months of 2020 when a management estimate of impairment charges was made due to of the COVID-19 pandemic. The credit quality remains very strong with a low level of bad debts.
Jyske Bank’s Tier 1 capital ratio was calculated at the end of the third quarter at 18.0, which corresponds to a capital surplus of DKK 14.3 billion over regulatory requirements.
During the first nine months of 2021, Jyske Bank issued senior non-preferred debt as well as subordinated debt and additional Tier 1 capital. The issues mainly refinance repaid capital and debt securities over the same period and translate into considerable savings for shareholders in the years to come. In the first nine months of the year, a DKK 750 million share buyback program was completed. 2,592,073 shares were repurchased at an average price of DKK 289.34. A new share buyback program of up to DKK 1 billion was launched on October 1 and runs until March 31, 2022 at the latest.
Due to development and expectations for the rest of the year, Jyske Bank has improved its expectations for 2021 in March, April, July and October. Jyske Bank is now forecasting earnings per share of DKK 40-41 in 2021 against the initial expectation of DKK 25-31. This corresponds to pre-tax profit of DKK 3.8-3.9 billion compared to initial expectations of DKK 2.5-3.0 billion and net profit of DKK 3.0-3.1 billion compared to initial expectations of 1.9-2.3 billion DKK.
In 2021, the bank’s volume of activity should be affected by the increase in bank loans and advances and the decrease in deposits. Nominal mortgages are also expected to increase.
Basic income is expected to be at a higher level in 2021 compared to 2020.
For 2021, efforts will be made to reduce the underlying base spending compared to 2020.
Loan impairment charges are expected to rise to income in 2021.
Anders Dam, Managing Director and CEO, Tel. +45 89 89 20 01
Birger Krøgh Nielsen, Chief Financial Officer, tel. +45 89 89 64 44
Jyske Bank Q1-Q3 2021 interim financial report