| Nasdaq Copenhagen A/S London Stock Exchange Bourse de Luxembourg Other stakeholders Company Announcement No 14/2020 | Peberlyk 4 6200 Aabenraa, Denmark Tel +45 74 37 37 37 Fax +45 74 37 35 36 Sydbank A/S CVR No DK 12626509, Aabenraa sydbank.dk |
| 15 April 2020 |
Dear Sirs
Profit after tax for Q1 2020 represents DKK 55m
Referring to Company Announcement No 10 dated 17 March 2020 in which the Bank suspended its outlook for the annual result for 2020 due to covid-19 this is to publish the Bank’s profit for Q1 2020.
Profit for the first three months of 2020 is impacted by the negative effects of covid-19 but also by a positive development in the Group’s core income. In terms of performance the negative effects of covid-19 are mainly related to trading income, impairment of loans and advances etc and investment portfolio earnings.
Income statement
| DKKm | Q1 2020 | Q1 2019 | Index | Q1 2020 | Q4 2019 | Index |
| Core income | 960 | 900 | 107 | 960 | 926 | 104 |
| Trading income | 7 | 96 | 7 | 7 | 38 | 18 |
| Total income | 967 | 996 | 97 | 967 | 964 | 100 |
| Costs, core earnings | 718 | 719 | 100 | 718 | 703 | 102 |
| Core earnings before impairment | 249 | 277 | 90 | 249 | 261 | 95 |
| Impairment of loans and advances etc | 84 | -14 | - | 84 | -48 | - |
| Core earnings | 165 | 291 | 57 | 165 | 309 | 53 |
| Investment portfolio earnings | -78 | -14 | - | -78 | -14 | - |
| Profit before non-recurring items | 87 | 277 | 31 | 87 | 295 | 29 |
| Non-recurring items, net | -17 | -17 | 100 | -17 | -24 | 71 |
| Profit before tax | 70 | 260 | 27 | 70 | 271 | 26 |
| Tax | 15 | 55 | 27 | 15 | 76 | 20 |
| Profit for the period | 55 | 205 | 27 | 55 | 195 | 28 |
Core income
Core income represents DKK 960m in Q1 2020 – the highest level of core income since Q3 2018. As a result of the positive development in core income an increase of 7% can be recorded for Q1 2020 compared to Q1 2019 and an increase of 4% compared to Q4 2019.
Core income is composed as follows:
| DKKm | Q1 2020 | Q1 2019 | Index | Q1 2020 | Q4 2019 | Index |
| Net interest etc | 389 | 381 | 102 | 389 | 363 | 107 |
| Mortgage credit | 154 | 141 | 109 | 154 | 153 | 101 |
| Payment services | 40 | 48 | 83 | 40 | 39 | 103 |
| Remortgaging and loan fees | 48 | 34 | 141 | 48 | 52 | 92 |
| Commisison and brokerage | 107 | 78 | 137 | 107 | 89 | 120 |
| Commission etc investment funds and pooled plans | 73 | 84 | 87 | 73 | 78 | 94 |
| Asset management | 70 | 66 | 106 | 70 | 72 | 97 |
| Custody account fees | 20 | 18 | 111 | 20 | 18 | 111 |
| Other operating income | 59 | 50 | 118 | 59 | 62 | 95 |
| Total | 960 | 900 | 107 | 960 | 926 | 104 |
Net interest etc constitutes DKK 389m in Q1 2020 compared to DKK 381m in Q1 2019 and DKK 363m in Q4 2019 respectively. The DKK 26m increase compared to Q4 2019 is mainly attributable to a widening range of deposits on which customers pay negative interest.
Commission and brokerage represent DKK 107m in Q1 2020 compared to DKK 78m in Q1 2019 and DKK 89m in Q4 2019 respectively. The DKK 18m increase compared to Q4 2019 is attributable to increased trading volume throughout the quarter.
Other core income amounts to DKK 464m in Q1 2020 compared to DKK 441m in Q1 2019 and DKK 474m in Q4 2019 respectively.
Trading income and investment portfolio earnings
The impact on trading income and investment portfolio earnings is a consequence of increased uncertainty, which has also resulted in widening credit spreads on mortgage bonds and corporate bonds. Moreover the uncertainty has prompted a significant decline in share prices. Both factors have had an adverse impact on trading income and the widening credit spreads on bonds have impacted investment portfolio earnings.
Impairment of loans and advances etc
In the first quarter Sydbank recorded impairment charges due to covid-19 of around DKK 175m. Moreover the Bank has recorded reversals as regards agriculture for instance. Impairment charges for the quarter represent DKK 84m.
The Bank’s collective impairment charges include a management estimate of DKK 225m to cover the consequences of the covid-19 outbreak. The estimate is based on a current assessment of the effects of covid-19 on the Bank’s lending portfolio and therefore the estimate may change in the coming quarters.
Outlook for 2020
In connection with the release of Group’s Interim Report – Q1 2020 we expect that we will be able to give an update as regards the Group’s financial outlook for the year’s result.
Yours sincerely
Karen Frøsig Jørn Adam Møller
CEO Deputy Group Chief Executive
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