Morningstar | Jyske's 9-Month Results Lag Last Year as IFRS 9 Impact Hits 3Q
Jyske reported third-quarter net profit of DKK 578 million versus DKK 748 million in the same period last year. Year to date, the bank’s performance is lagging last year’s results as lower net interest income and higher loan-impairment charges more than offset savings on employee and administrative expenses. We maintain our no-moat and stable trend rating as well as our fair value estimate of DKK 395 per share.Banking activities in the first nine months, although relatively stable in income generation, were held back by lower value adjustments and lower loan-impairment reversals relative to 2017, more than negating improvements in core expenses. As a result, pretax profits declined to DKK 1.5 billion from DKK 2.1 billion last year. Mortgage activities showed higher loan-impairment charges of DKK 451 million versus DKK 100 million last year, owing to the implementation of IFRS 9 rules. Excluding this effect, pretax profits grew 18% to DKK 1 billion, supported by good mortgage loan growth of 5% and 15% lower core expenses. Leasing activities showed a good performance as higher net interest income and income from operating leases lifted pretax profits to DKK 252 million from DKK 105 million last year.
The bank announced that it plans to increase its dividend to DKK 6.12 per share from the current DKK 5.85 per share subject to approval at the next shareholder meeting in March 2019. At the end of the third quarter, Jyske had bought back DKK 448 million of its own shares in the open market under its current share-buyback program. Until year-end, management is authorized to repurchase another DKK 552 million.
Jyske Bank is a commercial bank. Co. operates in four segments: banking activities, which comprise personal advisory service in relation to financial solutions including lease and financing activities; mortgage activities, which comprise financial solutions for the financing of real property; Trading and investment, which targets Danish and international investors and includes investment advisory service and asset management including money-market transactions and trading in foreign exchange, bonds, equities, commodities and derivatives; and other.As of Dec. 31, 2014, total assets and total deposits were DKK541,679,000,000 and DKK152,693,000,000 respectively.
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