The BANK of Greenland's Annual Report 2018

Best result in the history of the BANK of Greenland.

The BANK of Greenland achieved a profit of DKK 140.3 million before tax in 2018, compared to DKK 132.6 million in 2017. The return on opening equity after dividend and before tax was 15.6% p.a., which is considered to be satisfactory. The profit sets a new record in the Bank's history and is just over the estimate of DKK 120-140 million given by the Bank at the beginning of the year.

The profit before value adjustments and write-downs is at the 2017 level. The profit amounts to TDKK 152,799, compared to TDKK 152,709 in 2017.

The dividend payment for 2018 recommended to the Annual General Meeting is DKK 30 per share. The capital ratio of 22.7% is unchanged from 2017, in view of the wish to comply with the coming MREL capital requirement in reasonable time before full phasing-in is required.

Net interest and fee income increased satisfactorily by DKK 4.1 million to DKK 313.6 million, while staff and administration expenses increased by DKK 4.9 million to DKK 157.4 million. This includes DKK 4.1 million for the special development of IT support, primarily concerning the Bank's new pension business, while depreciation and other operating expenses declined by DKK 0.8 million.

Overall for the year, value adjustment of securities and currencies results in a loss of TDKK 1,546, compared to a loss of TDKK 6,368 in 2017.

Impairment of loans, etc. amounts to TDKK 10,938, which is somewhat lower than in 2017. The total impairment in 2018 is a modest 0.2% of the Bank's loans and guarantees.

Lending increased again in Q4 and showed a very satisfactory increase in 2018, by TDKK 137,055 to TDKK 3,472,174, or 5.0%, after adjustment for the effect of the amended accounting policy concerning lending at the beginning of the year.

Guarantees increased during the year, by TDKK 116,423 to TDKK 1,277,604.

Total loans and guarantees thereby increased very satisfactorily by a total of TDKK 253,478 to TDKK 4,749,778 and are thus at the highest-ever level.

The BANK of Greenland's capital ratio is 22.7 at year-end 2018 and the Bank has compiled the individual solvency requirement at 10.3%.

Outlook for 2019

In 2018, Greenland continued to achieve favourable economic development. We also expect Greenland’s economy to perform moderately positively in 2019.  The Bank has seen a good increase in lending during recent years and expects a further moderate increase in 2019.

With the expectation of slightly declining interest rate margins and a continued very low level of interest rates, with unchanged bond yields, total income is expected to increase slightly compared to 2018.

Total costs including write-offs are expected to be moderately higher than in 2018, based on wage increases under collective agreements, a small increase in the number of employees, increasing compliance and IT costs, and declining development costs.

The Bank assesses that the quality of the loan portfolio is satisfactory. Write-downs for impairment of lending are therefore expected to remain at a low level.

In view of the continued low level of interest rates, moderate capital losses on the Bank's bond portfolio must be expected, just as there is generally greater uncertainty in the market area.

Based on these conditions, a profit before tax at the level of DKK 130-150 million is expected, compared to DKK 140 million in 2018. 

Attachment