Satisfactory third quarter performance
Announcement no. 17/2024
“The positive trends from the first half continued in the third quarter, resulting in a satisfactory profit of DKK 119m before tax, which was a 13% improvement on the preceding quarter. The solid core operations were supported by a favourable interest rate environment and a thriving business with growth in both lending and deposit volumes and higher insurance income. Costs were maintained at the same level as in the previous quarter and were in line with the original guidance for the year. In the period, we also saw an outstanding investment portfolio return and reversal of impairment charges that reflected our customers’ sound credit quality,” says Føroya Banki CEO Turið F. Arge.
Highlights of Føroya Banki’s interim report for the first nine months of 2024:
Q1-Q3 2024 vs. Q1-Q3 2023
- Operating profit before impairment charges declined from DKK 202m in Q1-Q3 2023 to DKK 200m in Q1-Q3 2024.
- Net interest income rose from DKK 260m in Q1-Q3 2023 to DKK 269m in Q1-Q3 2024.
- Fee and commission income amounted to DKK 54m in Q1-Q3 2024, which was DKK 5m lower than in Q1-Q3 2023.
- Net insurance income amounted to DKK 46m in Q1-Q3 2024, a DKK 1m decline relative to the year-earlier period.
- Other operating income amounted to DKK 32m in Q1-Q3 2024, a DKK 4m increase relative to Q1-Q3 2023.
- Operating costs amounted to DKK 200m in Q1-Q3 2024, a DKK 8m increase relative to Q1-Q3 2023.
- Non-recurring items amounted to DKK 0m in Q1-Q3 2024 against DKK 9m in Q1-Q3 2023.
- Impairments amounted to a net impairment charge of DKK 10m in Q1-Q3 2024 compared with a net reversal of DKK 15m in Q1-Q3 2023.
- Profit before tax for Q1-Q3 2024 was DKK 295m compared with DKK 271m for Q1-Q3 2023.
- The investment portfolio yielded a return of DKK 106m in Q1-Q3 2024 against DKK 63m in Q1-Q3 2023.
Q3 2024 vs. Q2 2024
- Føroya Banki’s operating profit before impairment charges was DKK 66m in Q3 2024, an increase of DKK 3m compared with Q2 2024.
- Net interest income amounted to DKK 87m in Q3 2024, which was DKK 3m less than in Q2 2024.
- Fee and commission income increased by DKK 1m to DKK 18m in Q3 2024 from DKK 17m in Q2 2024.
- Net insurance income amounted to DKK 20m in Q3 2024, a DKK 5m increase relative to Q2 2024.
- Other operating income amounted to DKK 10m in Q3 2024 on a par with Q2 2024.
- Operating costs amounted to DKK 68m in Q3 2024 on a par with Q2 2024.
- Non-recurring items amounted to DKK 0m in Q3 2024 against DKK 0m in Q2 2024.
- Impairments amounted to a net reversal of DKK 6m in Q3 2024 against a reversal of DKK 7m in Q2 2024.
- Profit before tax was DKK 119m in Q3 2024 against DKK 105m in Q2 2024.
- The investment portfolio yielded a return of DKK 48m in Q3 2024 against DKK 35m in the preceding quarter.
- Bank lending volumes were up by 1% from DKK 9,023m at 30 June 2024 to DKK 9,072m at 30 September 2024.
- Brokered mortgage credit was largely unchanged from DKK 2,585m at 30 June 2024 to DKK 2,579m at 30 September 2024.
- Deposits were up by 2% from DKK 9,180m at 30 June 2024 to DKK 9,359m at 30 September 2024.
Capital ratios
On 30 September 2024, the Group had a CET 1 capital ratio of 25.1% against 25.8% at 31 December 2023. The total capital ratio including MREL was 37.9% at 30 September 2024 against 41.1% at 31 December 2023. The reduction of the overall total capital ratio was due to the Bank’s repayment of hybrid capital in the amount of DKK 150m. The net profit of DKK 238.1m for Q1-Q3 2024 is not included in the calculation of capital ratios.
Guidance for 2024
On 18 October 2024, the Bank’s Management announced an upwards revision to its financial guidance for 2024. The original guidance for the year was for a net profit in the DKK 225-255m range. This range was raised to DKK 250-280m on 19 August and again in October to DKK 275-300m. The revision in October was driven by an improved outlook for core operations with growth in both lending and deposit volumes as well as solid investment portfolio returns. Furthermore, the credit quality of the Bank’s customers continues to be sound, as reflected in the relatively low impairment level.
The guidance is subject to uncertainty and will, amongst other things, depend on economic developments, loan impairment charges and market value adjustments.
Føroya Banki has banking activities in Greenland and the Faroe Islands and insurance activities in the Faroe Islands. Founded in the Faroe Islands more than a century ago, the Group has total assets of DKK 14.1bn and 206 employees. The Bank is subject to the supervision of the Danish Financial Supervisory Authority and is listed on Nasdaq Copenhagen.
Appendix: Føroya Banki’s Q1-Q3 2024 financial highlights and comparative figures
| Highlights and ratios | |||||||||
| DKKm | Q3 2024 | Q2 2024 | Index | Q1 2024 | Q4 2023 | Q3 2023 | Q1-Q3 2024 | Q1-Q3 2023 | Index |
| Net interest income | 87 | 90 | 97 | 92 | 100 | 96 | 269 | 260 | 103 |
| Net fee and commission income | 18 | 17 | 106 | 19 | 17 | 19 | 54 | 60 | 92 |
| Net insurance income | 20 | 15 | 133 | 12 | 12 | 24 | 46 | 48 | 97 |
| Other operating income (less reclassification) | 10 | 10 | 101 | 11 | 4 | 9 | 32 | 28 | 113 |
| Operating income | 135 | 132 | 102 | 135 | 133 | 148 | 401 | 395 | 102 |
| Operating costs | -68 | -68 | 101 | -64 | -65 | -65 | -200 | -192 | 104 |
| Sector costs | 0 | 0 | 0 | 0 | 0 | -1 | -1 | ||
| Profit before impairment charges | 66 | 63 | 104 | 70 | 68 | 83 | 200 | 202 | 99 |
| Impairment charges, net | 6 | 7 | 83 | -23 | -5 | 0 | -10 | 15 | -68 |
| Operating profit | 72 | 70 | 102 | 47 | 62 | 82 | 189 | 217 | 87 |
| Non-recurring items | 0 | 0 | 0 | 0 | 0 | 0 | -9 | ||
| Profit before investment portfolio earnings and tax | 72 | 70 | 102 | 47 | 62 | 82 | 189 | 208 | 91 |
| Investment portfolio earnings | 48 | 35 | 135 | 23 | 46 | 26 | 106 | 63 | 169 |
| Profit before tax | 119 | 105 | 113 | 70 | 109 | 108 | 295 | 271 | 109 |
| Tax | 23 | 18 | 128 | 15 | 20 | 20 | 57 | 52 | 110 |
| Net profit | 96 | 87 | 110 | 55 | 89 | 88 | 238 | 219 | 109 |
| Loans and advances | 9.072 | 9.023 | 101 | 8.915 | 8.883 | 8.790 | 9.072 | 8.790 | 103 |
| Deposits and other debt | 9.359 | 9.180 | 102 | 8.930 | 8.710 | 8.602 | 9.359 | 8.602 | 109 |
| Mortgage credit | 2.579 | 2.585 | 100 | 2.621 | 2.599 | 2.615 | 2.579 | 2.615 | 99 |
| Equity | 2.004 | 1.909 | 105 | 1.824 | 1.851 | 1.762 | 2.004 | 1.676 | 120 |
| Total capital ratio, incl. MREL capital, % | 37,9 | 40,8 | 39,9 | 41,1 | 29,9 | 37,9 | 29,9 | ||
| CET 1 capital, % | 25,1 | 25,6 | 25,0 | 25,8 | 21,5 | 25,1 | 21,5 | ||
| ROE, % | 19,6 | 18,6 | 12,0 | 19,6 | 20,9 | 16,5 | 16,8 | ||
| ROE, excl. one-offs, % | 19,6 | 18,6 | 12,0 | 19,6 | 20,9 | 16,5 | 17,4 | ||
| Liquidity Coverage Ratio (LCR), % | 302,2 | 285,6 | 283,6 | 228,2 | 196,6 | 302,2 | 196,6 | ||
| Operating cost/income, % | 51 | 52 | 48 | 49 | 44 | 50 | 49 | ||
| Number of FTE, end of period | 206 | 209 | 99 | 209 | 207 | 207 | 206 | 207 | 99 |
Contacts
- Turið F. Arge, Chief Executive Officer, +298 330 678, tfa@bankin.fo