alm. brand bank...alm. brand bank a/s – q3 201 3 page 5 of 26 report for the 9m period, value...
TRANSCRIPT
Alm. Brand Bank A/S · Midtermolen 7 · 2100 Copenhagen Ø · Registration (CVR) NO. 81753512
Alm. Brand Bankthird quarter
Alm. Brand Bank A/S – Q3 2013
Page 1 of 26
CONTENTS
COMPANY INFORMATION
2 Company information
2 Group structure
MANAGEMENT’S REVIEW
3 Financial highlights and key ratios
4 Report
7 Business activities
SIGNATURES
11 Statement by the Board of Directors and the Management Board
FINANCIAL STATEMENTS
12 Income statement and comprehensive income
14 Balance sheet
16 Statement of changes in equity
17 Cash flow statement
18 Notes to the financial statements
Alm. Brand Bank A/S – Q3 2013
Page 2 of 26
COMPANY INFORMATION MANAGEMENT BOARD Kim Bai Wadstrøm , Chief Executive BOARD OF DIRECTORS Jørgen H. Mikkelsen , Chairman Boris N. Kjeldsen , Deputy Chairman Arne Nielsen Jan Skytte Pedersen Ebbe Castella Søren Boe Mortensen Christian Bundgaard , elected by the employees Torben Jensen , elected by the employees Pia Støjfer , elected by the employees AUDITORS Deloitte Statsautoriseret Revisionspartnerselskab
INTERNAL AUDITOR Poul-Erik Winther , Group Chief Auditor REGISTRATION Alm. Brand Bank A/S Company registration (CVR) no. 81 75 35 12 ADDRESS Midtermolen 7 DK-2100 Copenhagen Ø Phone: +45 35 47 48 49 Fax: +45 35 47 47 35 Internet: www.almbrand.dk E-mail: [email protected]
GROUP STRUCTURE
100% 43%
ALM. BRANDLEASING
ALM. BRAND
ALM. BRANDBANK
FORMUE
The bank has two subsidiaries: • Alm. Brand Leasing A/S • Alm. Brand Formue A/S The group also comprises four wholly-owned subsidiaries, which have been established or acquired in connection with properties taken over temporarily.
In addition, the bank acts as depositary bank for: • Investeringsforeningen Alm. Brand Invest
OWNERSHIP The bank is wholly-owned by the listed company Alm. Brand A/S. The consolidated financial statements of Alm. Brand Bank A/S are a component of the consolidated financial statements of Alm. Brand A/S and Alm. Brand af 1792 fmba.
Alm. Brand Bank A/S – Q3 2013
Page 3 of 26
FINANCIAL HIGHLIGHTS AND KEY RATIOS
DKKm Q3 2013 Q3 2012 Q1-3 2013
Q1-3 2012
Year 2012 Q3 2013 Q3 2012
Q1-3 2013
Q1-3 2012
Year 2012
INCOME STATEMENT
Interest receivable 139 177 436 556 720 142 180 445 562 728
Interest payable 72 102 250 348 452 73 104 253 352 457
Net interest income 67 75 186 208 268 69 76 192 210 271
Fees and commissions receivable (net) and dividend etc. 38 30 113 93 125 37 30 113 94 124
Net interest and fee income 105 105 299 301 393 106 106 305 304 395
Value adjustments (excl. credit-related) -17 -11 -62 23 37 -2 8 -52 56 75
Other operating income 22 13 53 35 50 22 13 53 35 51
Profit before expenses 110 107 290 359 480 126 127 306 395 521
Staff costs and administrative expenses 96 100 305 348 441 96 100 307 349 443
Depreciation, amortisation and impairment of property, plant and equipment 14 8 35 22 33 14 8 35 22 33
Other operating expenses 10 8 38 29 43 10 9 38 30 43
Profit from investments in associates and group enterprises - -1 -1 -1 -2 0 -1 -1 -1 -2
Profit before credit losses and tax -10 -10 -89 -41 -39 6 9 -75 -7 -
Writedowns and credit-related value adjustments 93 166 276 332 480 94 166 276 332 480
Profit before tax -103 -176 -365 -373 -519 -88 -157 -351 -339 -480
Tax -25 -43 -50 -92 -128 -25 -43 -50 -92 -128
Profit for the period -78 -133 -315 -281 -391 -63 -114 -301 -247 -352
Share attributable to minority interests - - - - - 15 19 14 34 39
Profit after tax excluding minority interests - - - - - -78 -133 -315 -281 -391
Profit before tax excluding minority interests - - - - - -103 -176 -365 -373 -519
BALANCE SHEET
Loans and advances 7,760 9,169 7,760 9,169 8,698 7,532 8,960 7,532 8,960 8,396
Deposits 10,825 10,647 10,825 10,647 11,325 10,825 10,647 10,825 10,647 11,325
Shareholders' equity 1,579 1,107 1,579 1,107 996 1,761 1,277 1,761 1,277 1,169
Share attributable to minority interests - - - - - 182 170 182 170 173
Total assets 16,038 19,154 16,038 19,154 17,550 16,418 19,510 16,418 19,510 17,903
KEY RATIOS ETC.
Average number of employees, full-time equivalents 262 277 262 278 275 262 277 262 278 275
Interest margin (%) - - - - - 1.7 1.6 1.6 1.4 1.4
Income/cost ratio 0.41 0.30 0.30 0.41 0.37 0.50 0.38 0.33 0.47 0.42
Impairment ratio 0.5 1.1 1.4 2.0 2.8 0.6 1.2 1.4 2.1 2.8
Solvency ratio - - - - - 19.1 18.2 19.1 18.2 18.5
Financial highlights and key ratios are based on the definitions and guidelines of the Danish FSA and on “Recommendations & Financial Ratios 2010” issued by the Danish Society of Financial Analysts.
PRO RATA GROUP
Alm. Brand Bank A/S – Q3 2013
Page 4 of 26
REPORT
Financial results
The bank posted a loss of DKK 103 million before tax in Q3 2013. Of this amount, DKK 3 million was attributable to the bank's continuing activities and DKK 100 million to the bank's discontinued activities. While the performance was in line with the guidance provided in connection with the H1 financial statements, it was still not satisfactory. Excluding losses and writedowns of DKK 93 million, the bank reported a loss of DKK 10 million, marking an improvement of DKK 34 million on Q2 2013. The performance was composed of a profit of DKK 15 million from continuing activities and a loss of DKK 25 million from discontinued activities. The bank posted an operating profit of DKK 7 million excluding losses and writedowns and value adjustments in Q3 2013, marking an improvement of DKK 15 million on Q2 2013. The improvement was primarily driven by a decline in funding costs and staff costs and administrative expenses and by a decline in expenses for value adjustment of properties taken over temporarily. In Q3, the bank repaid an additional DKK 200 million of the remaining state-funded hybrid core capital. Accordingly, the bank has repaid hybrid core capital in a total amount of DKK 630 million to date in 2013. Moreover, the bank repaid the last DKK 2 billion of issued government guaranteed bonds in 2013. For the 9M period, the bank posted a pre-tax loss of DKK 365 million. Total impairment writedowns on loans, including credit-related value adjustments, amounted to DKK 276 million, resulting in a loss of DKK 89 million excluding impairment writedowns. Net interest and fee income Net fee and commission income was DKK 105 million in Q3, against DKK 108 million in Q2 2013. Interest income and expenses Net interest income amounted to DKK 67 million in Q3 2013, against DKK 65 million in Q2 2013.
The positive development was mainly driven by a combination of a decline in the bank's funding costs for hybrid capital, issued bonds and deposits of DKK 7 million in total. On the other hand, interest income from the bank's bond portfolio fell by DKK 6 million as a result of a smaller bond portfolio. The interest margin for both the parent company and the banking group was 1.7% in Q3, against 1.6% and 1.7%, respectively, in Q2 2013. For the 9M period, net interest income amounted to DKK 186 million, against DKK 208 million in the same period of last year. The interest margin for the parent company and the banking group was 1.5% and 1.6%, respectively, in 9M 2013, compared with 1.4% for both in 9M 2012. Fee income and expenses Net fee income amounted to DKK 38 million in Q3, against DKK 43 million in Q2 2013. The slightly lower level compared with the second quarter was in line with expectations and, among other things, due to lower trading activity in July and August. For the 9M period, net fee income rose to DKK 113 million from DKK 93 million 9M 2012. Value adjustments In Q3, the bank posted negative value adjustments of DKK 17 million, compared with negative value adjustments of DKK 36 million in Q2 2013. The negative value adjustments of DKK 17 million were mainly due to the bond portfolio, a part of which was placed in high coupon bonds, and to value adjustment losses as a result of the bond maturity effect. In Q3, the bank's bond portfolio produced a return corresponding to 1.4% p.a., which was satisfactory considering market developments. For the 9M period, the total bond return was 1.5% p.a., which is also considered satisfactory. Both equity-related value adjustments and foreign currency translation adjustments were nil in the third quarter.
In order to increase the transparency of Alm. Brand Bank A/S’ financial statements, the bank publishes pro rata consolidated figures. The figures are set out in the financial highlights and key ratios above and, unless otherwise indicated, the comments provided in the review below concern pro rata figures. Banking group figures are commented on only when found relevant. To the extent it is deemed relevant, 9M 2012 and Q2 2013, respectively, are used as benchmarks. The pro rata figures reflect the bank's proportionate ownership interests in the subsidiaries.
Alm. Brand Bank A/S – Q3 2013
Page 5 of 26
REPORT For the 9M period, value adjustments excluding credit-related value adjustments produced a loss of DKK 62 million, against a gain of DKK 23 million in 9M 2012. Other operating income Other operating income derives primarily from the bank's leasing activities. In Q3, this item increased to DKK 22 million from 15 million in Q2 2013. The increase was driven by a higher volume of operating leases, resulting, among other things, from the fact that Alm. Brand Leasing was the largest provider of private leases in terms of new car leases signed in the third quarter. Costs The bank’s staff costs and administrative expenses totalled DKK 96 million in Q3, marking a decline of DKK 10 million relative to Q2 2013. The bank’s staff costs and administrative expenses amounted to DKK 305 million in 9M, against DKK 348 million in 9M 2012. Total depreciation and amortisation charges amounted to DKK 35 million in 9M, against DKK 22 million in 9M 2012. The increase was attributable to the higher level of leasing activity. Other operating expenses Other operating expenses came to DKK 10 million in Q3, against DKK 16 million in Q2 2013. The bank had expenses related to the Danish Guarantee Fund for Depositors and Investors of DKK 7 million and expenses and value adjustments in a total amount of DKK 3 million related to properties taken over temporarily. For the 9M period, other operating expenses amounted to DKK 38 million, of which DKK 23 million concerned the bank's expenses related to the Guarantee Fund for Depositors and Investors and DKK 15 million concerned properties taken over temporarily. In 9M 2012, other operating expenses were DKK 29 million. Writedowns and credit-related value adjustments Total impairment writedowns on loans, including credit-related value adjustments, amounted to DKK 93 million in Q3, against DKK 91 million in Q2 2013. Losses and writedowns were within the projected range but remain high. For the 9M period, this item was DKK 276 million, against DKK 332 million in the same period of last year. The bank’s impairment writedowns on loans totalled DKK 56 million in Q3, against DKK 43 million in Q2 2013. Impairment writedowns remain
high in the bank's agricultural and private customer segments. Moreover, the bank recognised credit-related value adjustments of DKK 37 million in Q3, against DKK 48 million in Q2 2013. Balance sheet
Loans and advances The bank’s loans and advances amounted to DKK 7.8 billion at 30 September 2013, compared with DKK 8.7 billion at 31 December 2012. Excluding developments in reverse transactions, intra-group transactions and writedowns, this marked a decline in loans and advances of DKK 524 million, of which DKK 373 million was attributable to the bank's discontinued activities. Deposits The bank’s deposits amounted to DKK 10.8 billion at 30 September 2013, compared with DKK 11.3 billion at 31 December 2012. The bank's continuous focus on reducing the deposit balance in step with the reduction of the bank's total lending resulted in a decline in deposits of DKK 0.3 billion in Q3. Despite the decline in deposits, the bank's deposit surplus increased by DKK 0.3 billion to DKK 3.1 billion in Q3. Liquidity At 30 September 2013, the bank had cash funds of DKK 4.2 billion and excess liquidity of DKK 2.8 billion, equivalent to an excess cover of 188% relative to the statutory requirement. In line with expectations, the repayment of the remaining government guaranteed bonds reduced the excess cover relative to the 256% reported at 31 December 2012. It is the bank's objective to further reduce the excess cover. Capitalisation The bank’s equity stood at DKK 1.6 billion at 30 September 2013. The capital base totalled DKK 1.9 billion, and the risk-weighted items amounted to DKK 9.4 billion at 30 September 2013. Accordingly, the solvency ratio was 19.7, and the core capital ratio was 18.2. The bank's individual solvency need was calculated at 14.6%, which means that the solvency ratio exceeded the individual solvency need by 5.1 percentage points.
Alm. Brand Bank A/S – Q3 2013
Page 6 of 26
REPORT The banking group’s equity stood at DKK 1.8 billion at 30 September 2013, and the capital base totalled DKK 1.9 billion. Risk-weighted items in the banking group amounted to DKK 10.1 billion at 30 September 2013. Accordingly, the banking group had a solvency ratio of 19.1, and a core capital ratio of 17.7. The banking group's individual solvency need was calculated at 14.6%, which means that the solvency ratio exceeded the individual solvency need by 4.5 percentage points. New capital adequacy rules (CRD IV) New capital adequacy rules adopted by the EU will enter into force on 1 January 2014. The new rules prescribe, among other things, that equity should constitute a greater part of the capital base and set stricter requirements for the quality of the capital. The rules also provide for a toughened scaling-down of the inclusion of supplementary capital and a tightening of the requirements for hybrid capital. The rules will be phased in from 2014 to 2019, but the most significant changes for the bank will take place already in 2014. As a result of the new rules, the value of the bank's supplementary capital in the solvency calculation will decline by DKK 160 million on 1 January 2014. The bank expects to continue to maintain capital excess coverage relative to the statutory capital requirement. Supervisory diamond
At 30 September 2013, the bank was in compliance with all five threshold values of the Danish FSA's supervisory diamond as shown in the figure below:
The changes in the bank's supervisory diamond values are in line with expectations.
Major events
Repayment of government guaranteed bonds On 1 July 2013, the bank repaid the remaining DKK 950 million of the original DKK 6 billion bond issue, which has now been repaid in full. Capital injection into the bank and repayment of hybrid core capital On 22 August 2013, Alm. Brand A/S injected DKK 200 million into Alm. Brand Bank A/S as equity. The capital injection was used on 11 September 2013 to repay an additional DKK 200 million of the remaining state-funded hybrid core capital, bringing it to DKK 226 million. Outlook
The full-year guidance excluding losses and writedowns of a loss of DKK 100 million is maintained. The bank adjusts its guidance for losses and writedowns in 2013 to DKK 350-400 million. The amount of losses and writedowns and credit-related value adjustments is subject to considerable uncertainty, and the guidance is based on current economic and market conditions. Expectations for the reduction in lending excluding losses and writedowns related to the bank's discontinued activities remain unchanged at about DKK 0.6 billion in 2013.
Large exposures Growth in lendingThreshold value < 125% Threshold value < 20%
30 Sept. 2013 2012 30 Sept. 2013 201230% 32% -10% - 13%
Funding ratio Property exposureThreshold value < 1 Threshold value < 25%
30 Sept. 2013 2012 30 Sept. 2013 20120.58 0.62 19% 17%
Excess liquidity coverageThreshold value > 50%
30 Sept. 2013 2012188% 256%
Alm. Brand Bank A/S – Q3 2013
Page 7 of 26
BUSINESS ACTIVITIES Continuing activities
The bank's continuing activities are divided into the business areas Private Customers, Leasing and Financial Markets. Private Customers handles activities related to servicing the bank's new and existing private customers. The business area Leasing is focused on private leasing of passenger and commercial vehicles with related car fleet management for businesses. Financial Markets handles the bank’s activities related to financial markets and comprises the areas Markets and Asset Management. Continuing activities generated a profit of DKK 15 million excluding losses and writedowns in Q3 2013. After losses and writedowns, continuing activities produced a loss of DKK 3 million. Private Customers In Private Customers, the strong inflow of full-service customers seen in the first half of 2013 continued in the third quarter. The increase was driven both by entirely new customers and by existing customers who increased the scope of their business to become full-service customers. Among other things as a result of the development in full-service customers, earnings per household seen in isolation increased by 3% in Q3 and by close to 6% in 9M. The gross increase in lending continued the positive trends seen in H1, totalling more than DKK 75 million in Q3. In the final part of the quarter, the decrease in lending to customers levelled off, resulting in a DKK 5 million increase in total loans and advances to private customers adjusted for losses and writedowns in the third quarter. Total loans and advances to private customers declined by DKK 127 million from 31 December 2012 to DKK 2,315 million at 30 September 2013. Adjusted for losses and writedowns, the decline was DKK 51 million. Among other things, the decline was attributable to conversion of home loans to mortgage loans through the bank's business partner Totalkredit. The portfolio of Totalkredit loans for which the bank acted as intermediary continued the positive
trend from the first six months of the year, increasing by more than DKK 100 million. Accordingly, the total portfolio of Totalkredit loans for which the bank acted as intermediary has now passed the DKK 4 billion mark. The bank's continuous focus on reducing the private customer deposit balance in step with the reduction of the bank's total lending resulted in a decline in deposits of close to 300 million in Q3. Since 31 December 2012, the bank has reduced its deposit balance by more than DKK 500 million. Losses and writedowns amounted to DKK 18 million in Q3 and DKK 76 million in 9M, corresponding to 3.2% of the average portfolio. In spite of the decline recorded in the third quarter, the bank's impairment writedowns on private customers remain fairly high. Leasing In the first nine months of the year, more than twice as many cars were ordered and delivered as in all of 2012. In the third quarter, Leasing was the largest provider of private leases in terms of the number of new car leases and, for the 9M period, the number of new car leases equalled a market share of just over 25%. Leasing for businesses and car fleet management continue to develop favourably, reporting a strong inflow of new business customers and a fair replacement rate in the existing portfolio. Financial Markets Earnings in Financial Markets were in line with expectations in the third quarter, driven equally by Markets and Asset Management. Asset Management delivered a strong perfor-mance on the mandates under management. In the lending portfolio table, the segment “Other loans and advances” covers exposures for which an investment mandate has also been placed with Markets. These loans form part of the bank's continuing portfolio. Other loans and advances declined by DKK 99 million relative to 31 December 2012. The decline was mainly attributable to the discontinuation of a single exposure.
Alm. Brand Bank A/S – Q3 2013
Page 8 of 26
BUSINESS ACTIVITIES
Discontinued activities
Discontinued activities are continuously reduced and relate mainly to loans provided to agricultural and commercial customers and for mortgage deeds. As part of the implementation of a controlled winding up of the individual exposures, there are cases in which the bank grants additional loans as part of its credit defence efforts to protect assets the bank holds as collateral. This means that lending may increase in individual segments, although the lending segment is being wound up. Discontinued activities produced a loss of DKK 25 million excluding losses and writedowns in Q3 2013. Total loans and advances provided to discontinued activities declined by DKK 574 million to DKK 5,068 million in 2013 to date, now representing just over 65% of the bank's overall lending portfolio. Adjusted for losses and writedowns, loans and advances were reduced by DKK 373 million, which was in line with the expected level. Agriculture The agricultural portfolio amounted to DKK 904 million at 30 September 2013, marking a decline of DKK 51 million relative to 31 December 2012. Adjusted for losses and writedowns, the portfolio increased by DKK 40 million because the bank
has granted loans for necessary investments and to secure continuing operations, thereby protecting the underlying value to the bank. In the nine months ended 30 September 2013, losses and writedowns amounted to DKK 91 million, equivalent to 9.8% of the average portfolio. Just over 60% of this amount was attributable to milk producers, while the remaining share of almost 40% was attributable to pig farmers. In general, times are still difficult for the bank's agricultural customers. The increase in impairment writedowns in the third quarter was due to additional drawings on existing credit facilities as well as and to a reduction of the value of the underlying collateral. Car finance The overall portfolio has declined by DKK 90 million in 2013 to date to stand at DKK 140 million at 30 September. No losses or writedowns have been recognised on this segment in 2013 to date. Commercial lending The portfolio consists of loans for financing of investment properties, loans provided to small businesses and syndicated loans provided to medium-sized Danish businesses.
LOSSES AND WRITEDOWNS
DKKm 31.12.2012 30.09.2013 2012 Q1 2013 Q2 2013 Q3 2013 Q1 -3 2013
Continuing portfolio 2,647 2,421 31.2% 57 29 27 18 74 2.9%
Lending to private customers 2,442 2,315 29.8% 57 28 30 18 76 3.2%
Other loans and advances 205 106 1.4% - 1 -3 - -2 -1.3%
Discontinuing portfolio 5,642 5,068 65.3% 423 63 64 75 202 3.8%
Agriculture 955 904 11.6% 156 26 18 47 91 9.8%
Car finance b) 230 140 1.8% -1 - - - - 0.0%
Commercial lending 1,158 1,104 14.2% 73 -18 -7 -3 -28 -2.5%
Property development projects 254 292 3.8% 1 2 - - 2 0.7%
Mortgage deed financing 115 21 0.3% 23 3 5 -6 2 2.9%
Mortgage deeds c) 2,930 2,607 33.6% 155 50 47 37 134 4.8%
Shares d) - - - 16 - 1 - 1 -
8,289 7,489 96.5% 480 92 91 93 276 3.5%
107 44 0.6% - - - - - -
Total group lending 8,396 7,533 97.1% 480 92 91 93 276 3.5%
Minority interests 302 227 2.9% - - - - - -
Total pro rata 8,698 7,760 100.0% 480 92 91 93 276 3.4%
a) Losses and writedowns as a percentage of the average portfolio in Q1-3 2013. The percentage is not comparable with the impairment ratioin the bank's financial highlights and key ratiosb) Leases (continuing portfolio) is not included, as it is recognised as other property, plant and equipment and not as loans and advancesc) Credit losses and writedowns on mortgage deeds are recognised in value adjustmentsd) Shareholding taken over in connection with the winding up of a former credit exposure. Value adjustment of the shareholding is recognisedunder value adjustments
Loss
ratio % a)
Loans
Reverse Transactions including intercompany transactions
Share of portfolio (%)
Total group lending - excl. Reverse Transactions
Total loss and writedowns
Alm. Brand Bank A/S – Q3 2013
Page 9 of 26
BUSINESS ACTIVITIES During 2013, the overall portfolio declined by DKK 54 million to stand at DKK 1,104 million. Adjusted for losses and writedowns, the portfolio declined by DKK 82 million. In Q3, the portfolio – adjusted for losses and writedowns – increased by DKK 27 million due to reclassification of a DKK 12 million exposure from mortgage financing to commercial lending and to additional drawings on existing credit facilities by a few major customers. For the 9M period, losses and writedowns produced an income of DKK 28 million, resulting from writedowns reversed in connection with the closing down of exposures and to the underlying operations of certain commercial customers. Property development projects The portfolio consists of a limited number of property development projects. At 30 September 2013, almost 90% of lending in this segment related to a single project. The portfolio has increased by DKK 38 million in 2013 to date, as the bank finances the completion of ongoing projects pursuant to existing agree-ments. Losses and writedowns amounted to DKK 2 million, corresponding to 0.7% of the average portfolio. Mortgage deed exposure The bank's overall mortgage deed exposure, comprising mortgage deed financing and mortgage deeds, has been reduced by DKK 417 million to DKK 2,628 million in 2013 to date. Mortgage deeds run off naturally as a result of regular payments and redemptions. The natural run-off on the overall mortgage deed portfolio was approximately 7% p.a. in the 9M period. Mortgage deed financing At 30 September 2013, the portfolio totalled DKK 21 million, marking a decline of DKK 94 million in 2013 to date. The main reason for the decline was that the bank closed out a number of investment exposures and in that connection took over the collateral provided in the form of mortgage deeds. In addition, a single exposure of DKK 12 million was reclassified to commercial lending. Losses and writedowns amounted to DKK 2 million in 9M, corresponding to 2.9% of the average portfolio.
Mortgage deeds This segment comprises the bank’s own portfolio of private mortgage deeds and commercial mortgage deeds. Private mortgage deeds amounted to DKK 1,939 million, comprising the bank’s portfolio of mortgage deeds secured primarily against single-family houses, commonhold flats and summer houses. The properties are located throughout Denmark. Commercial mortgage deeds amounted to DKK 668 million and comprise mortgage deeds secured against residential rental property, commercial property for office, trade and industrial use as well as land and mixed residential/ commercial property. The portfolio is marked to market on a current basis using a cash flow-based pricing model, which takes into account factors such as estimated prepayments and credit losses. Individual writedowns are taken on all delinquent mortgages or mortgages known to be showing signs of weakness. For the 9M period, the portfolio declined by DKK 323 million. Credit-related value adjustments amounted to DKK 134 million in the reporting period, equivalent to 4.8% of the average portfolio value. Of this amount, DKK 80 million was private mortgage deeds and DKK 54 million was commercial mortgage deeds. Private mortgage deeds are still adversely affected by the general economic conditions, and the number of private mortgage deed delinquencies remains high. There was a small increase in the delinquency rate in the third quarter, and the decline seen in the second quarter hence proved to be transient. The commercial property letting market remains weak and, although credit-related value adjustments of commercial mortgage deeds declined in the third quarter, a market recovery failed to materialise.
Alm. Brand Bank A/S – Q3 2013
Page 10 of 26
BUSINESS ACTIVITIES Capital reservation
The banking group's total capital reservation amounted to DKK 3,258 million at 30 September 2013, against DKK 3,478 million at 31 December 2012, corresponding to a decline of DKK 220 million. The capital reservation equalled 34% of gross loans and advances and residual debt on mortgage deeds at 30 September 2013, which was an increase of 1 percentage point relative to 31 December 2012. The capital reservation on the continuing portfolio corresponds to 19% of gross loans and advances,
and the capital reservation on the discontinued portfolio represents 39% of gross loans and advances and residual debt on mortgage deeds. Of the banking group's total capital reservation at 30 September 2013, accumulated writedowns amounted to DKK 1,435 million, compared with DKK 1,557 million at 31 December 2012. Accumulated writedowns in Q3 broke down as follows: DKK 249 million on the continuing portfolio and DKK 1,186 million on the discontinued portfolio.
CAPITAL RESERVATION
DKKm
Continuing portfolio 2,670 2,421 249 260 509 19% 515 18%
Discontinuing portfolio 7,007 5,068 1,939 796 2,735 39% 2,952 38%Total - excl. Reverse Transactions 9,677 7,489 2,188 1,056 3,244 34% 3,467 33%
44 44 - 14 14 32% 11 10%
Total group 9,721 7,533 2,188 1,070 3,258 34% 3,478 33%
a) Accumulated writedowns and value adjustments of mortgage deeds
Reverse Transactions including intercompany transactions
31.12.2012Gross lending/
outstanding debt Balance Difference a)
Required capital
Total reservation
Reservation relative to
gross lendingTotal
reservation
Reservation relative to
gross lending
30.09.2013
Disclaimer The forecast is based on the interest rate and price levels that prevailed at mid-November 2013. All other forward-looking statements are based exclusively on the information available when this interim report was released. The actual performance may be affected by major changes in a number of factors. Such impacts include changes in conditions in the financial market, legislative changes, changes in the competitive environment, loans and advances, etc. and guarantees, etc. The above-mentioned risk factors are not exhaustive. Investors and others who base their decisions on the information contained in this report should independently consider any uncertainties of significance to their decision. This interim report has been translated from Danish into English. In the event of any discrepancy between the Danish text and the English-language translation, the Danish text shall prevail.
Alm. Brand Bank A/S – Q3 2013
Page 11 of 26
STATEMENT BY THE BOARD OF DIRECTORS AND THE MANAGEMENT BOARD The Board of Directors and the Management Board have today considered and adopted the interim report for the nine months ended 30 September 2013 of Alm. Brand Bank A/S. The consolidated interim financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting” as adopted by the EU, and the interim financial statements of the parent company have been prepared in accordance with the Danish Financial Business Act. In addition, the consolidated and parent company interim financial statements have been presented in accordance with additional Danish disclosure requirements for the interim financial statements of listed financial companies.
In our opinion, the consolidated and parent company interim financial statements give a true and fair view of the group's and the parent company's assets and liabilities and financial position at 30 September 2013 and of the results of the group's and the parent company's operations and the cash flows of the group for the six months ended 30 September 2013. Moreover, in our opinion, the management’s review includes a fair review of developments in the activities and financial position of the group and the parent company and fairly describes significant risk and uncertainty factors that may affect the group and the bank.
MANAGEMENT BOARD Copenhagen, 21 November 2013 Kim Bai Wadstrøm Chief Executive BOARD OF DIRECTORS Copenhagen, 21 November 2013 Jørgen H. Mikkelsen Boris N. Kjeldsen Arne Nielsen Chairman Deputy Chairman Jan Skytte Pedersen Ebbe Castella Søren Boe Mortens en Christian Bundgaard Torben Jensen Pia Støjfer
Alm. Brand Bank A/S – Q3 2013
Page 12 of 26
INCOME STATEMENT AND COMPREHENSIVE INCOME
Parent company
DKK '000 Note Q3 2013 Q3 2012 Q1-3 2013 Q1-3 2012 Year 2012
Interest receivable 1 136,498 173,388 425,633 542,906 702,373
Interest payable 2 71,545 101,977 247,474 345,022 447,448
Net interest income 64,953 71,411 178,159 197,884 254,925
Dividend on participating interests 104 - 887 694 694
Fees and commissions receivable 41,469 35,963 127,046 110,984 149,815
Fees and commissions payable 5,846 6,025 20,924 22,729 31,338
Net interest and fee income 100,680 101,349 285,168 286,833 374,096
Value adjustments 3 -65,983 -58,176 -205,134 -98,887 -165,476
Other operating income 993 2,325 3,479 4,371 5,952
Profit before expenses 35,690 45,498 83,513 192,317 214,572
Staff costs and administrative expenses 4 87,061 92,376 279,025 325,688 409,912
Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 23 80 109 277 354
Other ordinary expenses 10,112 8,460 38,089 29,686 42,557
Impairment of loans, advances and receivables, etc. 5 55,671 134,495 141,300 238,328 309,657
Profit from participating interests in associated and group undertakings 13,439 14,343 1,022 27,909 28,776
Profit before tax -103,738 -175,570 -373,988 -373,753 -519,132
Tax -25,107 -43,027 -59,020 -92,722 -127,939
Profit for the period -78,631 -132,543 -314,968 -281,031 -391,193
Other comprehensive income - - - - -
Total comprehensive income -78,631 -132,543 -314,968 -281,031 -391,193
PROFIT/LOSS ALLOCATION
Share attributable to Alm. Brand Bank -78,631 -132,543 -314,968 -281,031 -391,193
Transferred to Total shareholders' equity -78,631 -132,543 -314,968 -281,031 -391,193
Alm. Brand Bank A/S – Q3 2013
Page 13 of 26
INCOME STATEMENT AND COMPREHENSIVE INCOME
Group
DKK '000 Note Q3 2013 Q3 2012 Q1-3 2013 Q1-3 2012 Year 2012
Interest receivable 1 141,555 179,572 444,545 561,712 727,497
Interest payable 2 73,473 104,205 253,137 352,375 456,620
Net interest income 68,082 75,367 191,408 209,337 270,877
Dividend on participating interests 335 357 6,284 5,776 6,168
Fees and commissions receivable 42,769 35,682 127,840 110,966 149,533
Fees and commissions payable 5,850 6,048 20,981 22,791 31,435
Net interest and fee income 105,336 105,358 304,551 303,288 395,143
Value adjustments 3 -38,079 -23,372 -186,371 -37,742 -96,125
Other operating income 21,653 13,555 52,503 35,377 50,485
Profit before expenses 88,910 95,541 170,683 300,923 349,503
Staff costs and administrative expenses 4 96,374 100,335 306,114 349,242 442,560
Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 13,995 7,764 35,406 21,824 32,638
Other ordinary expenses 10,216 8,488 38,425 29,765 42,773
Impairment of loans, advances and receivables, etc. 5 55,751 134,729 140,894 237,885 309,120
Profit from participating interests in associated and group undertakings -81 -1,034 -609 -1,089 -2,345
Profit before tax -87,507 -156,809 -350,765 -338,882 -479,933
Tax -24,554 -43,066 -49,995 -91,656 -127,410
Profit for the period -62,953 -113,743 -300,770 -247,226 -352,523
Other comprehensive income - - - - -
Total comprehensive income -62,953 -113,743 -300,770 -247,226 -352,523
PROFIT/LOSS ALLOCATION
Share attributable to Alm. Brand Bank -78,631 -132,543 -314,968 -281,031 -391,193
Share attributable to minority interests 15,678 18,800 14,198 33,805 38,670
Transferred to Total shareholders' equity -62,953 -113,743 -300,770 -247,226 -352,523
Alm. Brand Bank A/S – Q3 2013
Page 14 of 26
BALANCE SHEET
Parent company Group
DKK '000 Note 30.09.2013 30.09.2012 31.12.2012 30.09.2013 30.09.2012 31.12.2012
ASSETS
Cash in hand and receivables at call from central banks 297,703 495,896 304,623 297,703 495,896 304,623
Receivables from credit institutions and central banks 591,416 582,804 554,086 591,416 582,804 554,086
Loans, advances and other receivables at fair value 2,606,516 2,991,047 2,930,050 2,606,516 2,991,047 2,930,050
Loans, advances and other receivables at amortised cost 6 5,619,101 6,348,304 6,213,956 4,925,443 5,968,469 5,465,944
Bonds at fair value 4,973,177 6,616,063 5,785,654 5,688,618 7,305,333 6,643,258
Shares etc. 279,664 260,892 247,873 597,513 548,713 539,356
Participating interests in associated undertakings 42,467 43,748 43,748 42,468 43,748 43,748
Participating interests in group undertakings 211,591 372,347 223,090 - 147 -
Other property, plant and equipment 466 1,399 1,322 247,252 137,883 158,000
Current tax assets 402,261 346,574 299,314 418,669 323,330 286,009
Deferred tax assets 242,809 374,502 286,736 338,362 503,929 420,250
Assets held temporarily 95,555 137,965 117,461 249,758 158,632 136,455
Other assets 353,711 430,847 392,411 401,481 443,475 414,480
Prepayments 12,701 6,874 6,370 12,711 6,885 6,381
Total assets 15,729,138 19,009,262 17,406,694 16,417,910 19,510,291 17,902,640
Alm. Brand Bank A/S – Q3 2013
Page 15 of 26
BALANCE SHEET
Parent company Group
DKK '000 Note 30.09.2013 30.09.2012 31.12.2012 30.09.2013 30.09.2012 31.12.2012
LIABILITIES AND EQUITY
Payables
Payables to credit institutions and central banks 1,985,824 3,107,980 1,105,289 2,302,449 3,399,605 1,396,914
Deposits and other payables 10,825,681 10,647,216 11,324,932 10,824,681 10,647,213 11,324,932
Issued bonds - 2,000,000 2,000,000 - 2,000,000 2,000,000
Liabilities temporarily acquired 16,141 21,169 19,214 166,080 39,968 36,899
Other liabilities 612,769 685,265 522,040 654,404 705,654 535,480
Deferred income 760 1,364 1,216 760 1,364 1,216
Total payables 13,441,175 16,462,994 14,972,691 13,948,374 16,793,804 15,295,441
Provisions
Provisions for pensions and similar liabilities 1,361 1,796 1,361 1,361 1,796 1,361
Provisions for losses on guarantees 6,344 7,476 7,094 6,344 7,476 7,094
Total provisions 7,705 9,272 8,455 7,705 9,272 8,455
Subordinated debt
Supplementary capital 7 300,000 400,000 400,000 300,000 400,000 400,000
Hybrid tier 1 capital 7 400,855 1,029,978 1,030,108 400,855 1,029,978 1,030,108
Total subordinated debt 700,855 1,429,978 1,430,108 700,855 1,429,978 1,430,108
Shareholders' equity
Share capital 8 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000
Other reserves 79,398 1,456 78,734 - - -
Retained earnings 479,005 84,562 -104,294 558,403 86,018 -25,560
Minority interests - - - 181,573 170,219 173,196
Total shareholders' equity 1,579,403 1,107,018 995,440 1,760,976 1,277,237 1,168,636
Total liabilities and equity 15,729,138 19,009,262 17,406,694 16,417,910 19,510,291 17,902,640
See note 10 for a specification of off-balance sheet items.
Alm. Brand Bank A/S – Q3 2013
Page 16 of 26
STATEMENT OF CHANGES IN EQUITY
Parent company Group
DKK '000Share
capitalOther
reservesRetained earnings Total
Minority interests Total
Shareholders' equity at 1 January 2012 1,021,000 1,456 70,405 1,092,861 140,839 1,233,700
Equity movements in Q1-3 2012
Other change in respect of subsidiaries - -4,425 -4,425
Profit/loss for the period -281,031 -281,031 33,805 -247,226
Comprehensive income in Q1-3 2012 - - -281,031 -281,031 29,380 -251,651
Capital increases 300,000 300,000 300,000
Other change in respect of subsidiaries -5,185 -5,185 -5,185
Tax of equity entries 373 373 373
Total equity movements in Q1-3 2012 - - 14,157 14,157 29,380 43,537
Shareholders' equity at 30 June 2012 1,021,000 1,456 84,562 1,107,018 170,219 1,277,237
Shareholders' equity at 1 January 2012 1,021,000 1,456 70,405 1,092,861 140,839 1,233,700
Equity movements in 2012
Profit/loss for the year 26,086 -417,279 -391,193 38,670 -352,523
Comprehensive income 2012 - 26,086 -417,279 -391,193 38,670 -352,523
Capital increases 300,000 300,000 300,000
Other change in respect of subsidiaries - 14,275 14,275
Other change in respect of subsidiaries 201,192 -207,420 -6,228 -20,588 -26,816
Dividend paid -150,000 150,000 - -
Total changes in equity in 2012 - 77,278 -174,699 -97,421 32,357 -65,064
Shareholders' equity at 31 December 2012 1,021,000 78,734 -104,294 995,440 173,196 1,168,636
Shareholders' equity at 1 January 2013 1,021,000 78,734 -104,294 995,440 173,196 1,168,636
Equity movements in Q1-3 2013
Dividend subsidiaries - -
Other change in respect of subsidiaries - -5,821 -5,821
Profit for the period -314,968 -314,968 14,198 -300,770
Comprehensive income in Q1-3 2013 - - -314,968 -314,968 8,377 -306,591
Capital increases 900,000 900,000 900,000
Other change in respect of subsidiaries 664 -1,733 -1,069 -1,069
Tax of equity entries - - -
Dividend paid - - -
TotaI equity movements in Q1-3 2013 - 664 583,299 583,963 8,377 592,340
Shareholders' equity at 30 June 2013 1,021,000 79,398 479,005 1,579,403 181,573 1,760,976
Alm. Brand Bank A/S – Q3 2013
Page 17 of 26
CASH FLOW STATEMENT
Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012
Operating activities
Profit for the period before tax -350,765 -338,882 -479,933
Tax paid during the period -777 -714 156,039
Adjustment for amounts with no cash flow impact:
Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 35,406 21,824 32,638
Impairment of loans, advances and receivables, etc. 123,851 225,578 271,244
Other adjustments to cash flows from operating activities 78,722 -69,859 -75,847
Total, operating activities -113,563 -162,053 -95,859
Working capital
Loans and advances 640,922 1,066,355 1,568,625
Deposits -500,251 2,652,515 3,330,235
Bonds 1,066,799 972,441 1,512,227
Shares -15,296 51,309 59,426
Total, working capital 1,192,174 4,742,620 6,470,513
Investing activities
Investments in associates - 4,200 9,200
Investments in group enterprises 3 -1,341 1,486
Property, plant and equipment -123,897 -61,011 -81,086
Total, investing activities -123,894 -58,152 -70,400
Financing activities
Net proceeds from capital increase 900,000 300,000 300,000
Distribution of dividends -730,000 - -
Payables to credit institutions 905,693 -760,432 -2,762,262
Bonds issued -2,000,000 -4,000,000 -4,000,000
Total, financing activities -924,307 -4,460,432 -6,462,262
Change in cash and cash equivalents 30,410 61,983 -158,008
Cash and cash equivalents, beginning of year 858,709 1,016,717 1,016,717
Change in cash and cash equivalents 30,410 61,983 -158,008
Cash and cash equivalents, end of period 889,119 1,078,700 858,709
Cash and cash equivalents, end of period
Cash in hand and balances at call with central banks 297,703 495,896 304,623
Balances due from credit institutions less than 3 months 591,416 582,804 554,086
Cash and cash equivalents, end of period 889,119 1,078,700 858,709
Alm. Brand Bank A/S – Q3 2013
Page 18 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012 Q1-3 2013 Q1-3 2012 Year 2012
NOTE 1 Interest receivable
Balances due from credit institutions and central banks 472 3,687 3,916 472 3,687 3,916
Loans, advances and other receivables 345,493 417,121 544,002 339,076 418,071 543,922
Bonds 108,854 143,095 185,732 134,063 160,843 210,788
Total derivatives -29,191 -21,049 -31,354 -29,072 -20,947 -31,212
Of which:
Foreign exchange contracts -1,001 -2,620 -3,130 -882 -2,518 -2,988
Interest rate contracts -28,190 -18,429 -28,224 -28,190 -18,429 -28,224
Other interest income 5 52 77 6 58 83
Total interest receivable 425,633 542,906 702,373 444,545 561,712 727,497
Interest receivable from genuine purchase and resale transactions:
Balances due from credit institutions and central banks -49 33 35 -49 33 35
Loans, advances and other receivables -14 135 138 -14 135 138
NOTE 2 Interest payable
Credit institutions and central banks 2,526 25,017 26,998 8,189 32,365 36,164
Deposits and other payables 173,938 166,117 228,053 173,935 166,117 228,053
Bonds issued 10,662 66,169 75,550 10,663 66,169 75,550
Total subordinated debt 59,793 86,657 115,549 59,793 86,657 115,549
Other interest expenses 555 1,062 1,298 557 1,067 1,304
Total interest payable 247,474 345,022 447,448 253,137 352,375 456,620
Interest payable on genuine sale and repurchase transactions:
Payables to credit institutions and central banks 147 1,023 1,095 147 1,023 1,095
Deposits and other payables 3 15 18 3 15 18
NOTE 3 Value adjustments
Loans, advances and other receivables at fair value -201,943 -16,484 -76,975 -201,943 -16,484 -76,975
Bonds -42,746 -33,299 -26,902 -62,329 -27,893 -16,096
Shares, etc. 18,120 1,706 4,200 59,592 58,110 65,392
Foreign currency -9,890 -10,326 -9,942 -12,400 -7,852 -8,791
Total derivatives 31,325 -40,760 -56,568 30,709 -43,899 -60,366
Other liabilities - 276 711 - 276 711
Total value adjustments -205,134 -98,887 -165,476 -186,371 -37,742 -96,125
Alm. Brand Bank A/S – Q3 2013
Page 19 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012 Q1-3 2013 Q1-3 2012 Year 2012
NOTE 4 Staff costs and administrative expenses
Remuneration to the Management Board and Board of Directors:
Remuneration to the Management Board:
Salaries and wages 2,117 1,971 2,730 2,117 1,971 2,730
Pensions 249 248 332 249 248 332
Total remuneration to the Management Board 2,366 2,219 3,062 2,366 2,219 3,062
Remuneration to the Board of Directors:
Fees 812 225 1,050 812 225 1,050
Total remuneration to the Management Board and Board of Directors 3,178 2,444 4,112 3,178 2,444 4,112
Staff costs:
Salaries and wages 120,581 138,812 170,794 120,915 139,198 171,270
Pensions 13,006 13,624 18,582 13,028 13,647 18,612
Social security costs 13,111 13,817 18,250 13,139 13,843 18,285
Total staff costs 146,698 166,253 207,626 147,082 166,688 208,167
Other administrative expenses 129,149 156,991 198,174 155,854 180,110 230,281
Total staff costs and administrative expenses 279,02 5 325,688 409,912 306,114 349,242 442,560
Number of employees
Average number of employees during the financial year, full-time equivalents 262 278 275 262 278 275
NOTE 5 Impairment of loans, advances and receiva bles, etc.
Individual assessment:
Impairment and value adjustments, respectively, during the year 249,742 316,090 434,356 250,709 317,970 436,165
Reversal of impairment in previous years 105,973 175,243 236,532 106,898 178,593 239,909
Total individual assessment 143,769 140,847 197,824 143,811 139,377 196,256
Group assessment:
Impairment and value adjustments, respectively, during the year 48,623 107,711 104,526 48,773 108,088 104,877
Reversal of impairment in previous years 45,649 17,810 22,660 46,932 19,949 25,278
Total group assessment 2,974 89,901 81,866 1,841 88,139 79,599
Losses not previously provided for 22,127 18,840 48,001 23,744 22,496 52,575
Bad debts recovered 27,570 11,260 18,034 28,502 12,127 19,310
Total impairment of loans, advances and receivables, etc., end of period 141,300 238,328 309,657 140,894 237,885 309,120
Alm. Brand Bank A/S – Q3 2013
Page 20 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012 Q1-3 2013 Q1-3 2012 Year 2012
NOTE 6 Loans, advances and other receivables at amortised cost
Loans and advances 7,044,274 7,974,696 7,758,431 6,299,172 7,515,599 6,941,835
Leases - - - 54,516 85,069 73,696
Total before impairment, etc. 7,044,274 7,974,696 7,758,431 6,353,688 7,600,668 7,015,531
Impairment, etc. 1,425,173 1,626,392 1,544,475 1,428,245 1,632,199 1,549,587
Loans, advances and other receivables at amortised cost, end of period 5,619,101 6,348,304 6,213,956 4,925,443 5,968,469 5,465,944
NOTE 7 Subordinated debts
Supplementary capital:
Floating rate bullet loans in DKK maturing 9 May 2013 - 100,000 100,000 - 100,000 100,000
Floating rate bullet loans in DKK maturing 9 May 2014 100,000 100,000 100,000 100,000 100,000 100,000
Floating rate bullet loans in DKK maturing 3 December 2015 200,000 200,000 200,000 200,000 200,000 200,000
Supplementary capital, end of period 300,000 400,000 400,000 300,000 400,000 400,000
Hybrid Tier 1 capital:
Fixed rate bullet loans in DKK with indefinite terms 175,000 175,000 175,000 175,000 175,000 175,000
State-funded capital injection, bullet loan in DKK with an indefinite term 225,855 854,978 855,108 225,855 854,978 855,108
Hybrid Tier 1 capital, end of period 400,855 1,029,978 1,030,108 400,855 1,029,978 1,030,108
Subordinated debt, end of period 700,855 1,429,978 1,430,108 700,855 1,429,978 1,430,108
Interest on subordinated debt 59,793 86,657 115,549 59,793 86,657 115,549
Of this, amortisation of costs incurred on raising the debt 747 387 517 747 387 517
Extraordinary instalments 630,000 - - 630,000 - -
Costs incurred in raising subordinated debt - - - - - -
Alm. Brand Bank A/S – Q3 2013
Page 21 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012 Q1-3 2013 Q1-3 2012 Year 2012
NOTE 8 Share capital
Unlisted share capital:
Nominal value at 1 January 2008 351,000 351,000 351,000 351,000 351,000 351,000
Capital increase April 2009 300,000 300,000 300,000 300,000 300,000 300,000
Capital increase September 2009 90,000 90,000 90,000 90,000 90,000 90,000
Capital increase November 2009 280,000 280,000 280,000 280,000 280,000 280,000
Nominal value, end of period 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000
The share capital consists of 1,021,000 shares of DKK 1,000 nominal value and is paid up in full.
NOTE 9 Capital Base
Shareholders' equity 1,579,403 1,107,018 995,440 1,760,976 1,277,237 1,168,636
Proposed dividends - - - - - -
Deferred tax assets -242,809 -374,502 -286,736 -338,362 -503,929 -420,250
Tier 1 capital after deductions 1,336,594 732,516 708,704 1,422,614 773,308 748,386
Hybrid Tier 1 capital 400,855 1,029,978 1,030,108 400,855 1,029,978 1,030,108
Transferred to Supplementary capital - -297,462 -321,404 - -256,670 -281,722
Deduction of ownership interest in financial institution -28,747 -15,740 -15,740 -33,874 -15,740 -15,740
Tier 1 capital including hybrid Tier 1 capital after deduction 1,708,702 1,449,292 1,401,668 1,789,596 1,530,876 1,481,032
Supplementary capital 300,000 400,000 400,000 300,000 400,000 400,000
Transferred from Hybrid Tier 1 capital - 297,462 321,404 - 256,670 281,722
Deduction of ownership interest in financial institution -28,747 -15,740 -15,740 -33,874 -15,740 -15,740
Reduction of 25% per year in the three final years of the term to maturity -125,000 -125,000 -175,000 -125,000 -125,000 -175,000
Capital base 1,854,955 2,006,014 1,932,332 1,930,722 2,046,806 1,972,014
Risk-weighted items:
Weighted items involving credit risk 7,864,294 8,849,442 8,313,354 7,708,815 8,645,777 8,102,528
Weighted items involving market risk 1,119,388 1,247,837 1,205,991 1,879,713 2,039,042 2,023,763
Weighted items involving operational risk 424,893 522,931 424,893 520,436 533,897 520,436
Risk-weighted items, end of period 9,408,575 10,620,210 9,944,238 10,108,964 11,218,716 10,646,727
The solvency requirement represents 8% of the risk-weighted items 752,686 849,617 795,539 808,717 897,497 851,738
Core capital including hybrid Tier 1 capital and capital base is calculated in accordance with the Executive Order on Calculation of Capital Base.
Alm. Brand Bank A/S – Q3 2013
Page 22 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company Group
DKK '000 Q1-3 2013 Q1-3 2012 Year 2012 Q1-3 2013 Q1-3 2012 Year 2012
NOTE 10 Off-balance sheet items
Contingent liabilities:
Financial guarantees 359,128 578,627 360,838 359,128 578,627 360,838
Loss guarantees for mortgage loans 331,236 154,514 370,841 331,236 154,514 370,841
Tinglysnings- og konverteringsgarantier 12,802 17,796 17,575 12,802 17,796 17,575
Other contingent liabilities 329,741 218,434 220,661 329,741 218,434 220,661
Contingent liabilities, end of period 1,032,907 969,371 969,915 1,032,907 969,371 969,915
Other commitments:
Irrevocable loan commitments - - - - - -
Other miscellaneous commitments - - - - - -
Other commitments, end of period - - - - - -
Off-balance sheet items, end of period 1,032,907 969,371 969,915 1,032,907 969,371 969,915
Other contingent liabilities
Alm. Brand Bank A/S is taxed jointly with Alm. Brand A/S as administration company. As from 1 July 2012, the bank is therefore jointly and severally liable with the other jointly taxed companies for any obligation to withhold tax on interest, royalties and dividends on behalf of the jointly taxed companies.
Alm. Brand Bank A/S has entered into operating leases with Alm. Brand Leasing A/S. The residual value of future lease payments under these operating leases totalled DKK 6 million at 30 September 2013.
Alm. Brand Bank A/S is a member of Bankdata, which operates the bank's key banking systems. Termination of this membership would cause the bank to incur a significant liability which would have to be calculated in accordance with Bankdata's by-laws.
Being an active financial services group, the group is a party to a number of lawsuits. The cases are reviewed on an ongoing basis, and the necessary provisions are made. Management believes that these cases will not inflict further losses on the group.
Collateral securityMonetary-policy counterparties with Danmarks Nationalbank can obtain credit only against security through the pledging of approved securities.
As part of its current operations, the bank provided collateral security to Danmarks Nationalbank at 30 September 2013 in the form of bonds representing a nominal value of DKK 1,364 million (Q3 2013: DKK 1,677 million) and loans representing a loan value of DKK 491 million (Q3 2012: DKK 0 million).
values of derivative financial instruments, respectively, cash in the amount of DKK 3 million was received and cash in the amount of DKK 321 million was paid at 30 June 2013 (Q3 2012: DKK 2 million and DKK 433 million).
Alm. Brand Bank A/S – Q3 2013
Page 23 of 26
NOTES TO THE FINANCIAL STATEMENTS
Group
Q1-3 2013
DKK '000Banking
activities
Markets & Asset Ma-nagement
Alm. Brand Leasing
Alm. Brand Formue
Other/Elimina-
tions
Alm. Brand Bank
Group
NOTE 11 Segment infomation
Interest receivable 524,768 62,487 10,401 25,328 -178,439 444,545
Interest payable 426,230 2,058 6,126 16,354 -197,631 253,137
Net interest income 98,538 60,429 4,275 8,974 19,192 191,408
Net fee and commission income, etc. 33,151 76,538 5,723 412 -2,681 113,143
Value adjustments -142,272 -9,301 - 18,763 -53,561 -186,371
Other operating income 2,242 707 49,024 - 530 52,503
Profit/loss on ordinary activities before expenses (Net income) -8,341 128,373 59,022 28,149 -36,520 170,683
Operating expenses 170,446 38,636 59,788 2,599 70,051 341,520
Other operating expenses 21,392 - 336 - 16,697 38,425
Impairment of loans, advances and receivables, etc. 142,992 -1,692 -406 - 0 140,894
Profit/loss on participating interests 2,216 433 - - -3,258 -609
Profit/loss on activities before tax -340,955 91,862 -696 25,550 -126,526 -350,765
In 2013, the segment information will be changed so as to show the continuing activities and activities being wound up.
Group
Q1-3 2012
DKK '000Banking
activities
Markets & Asset Ma-nagement
Alm. Brand Leasing
Alm. Brand Formue
Other/Elimina-
tions
Alm. Brand Bank
Group
NOTE 11 Segment information - continued
Interest receivable 613,463 53,401 16,399 17,850 -139,401 561,712
Interest payable 505,627 4,345 7,766 15,028 -180,394 352,375
Net interest income 107,836 49,056 8,633 2,822 40,993 209,337
Net fee and commission income, etc. 28,765 62,653 4,069 933 -2,469 93,951
Value adjustments -54,065 1,427 - 61,145 -46,249 -37,742
Other operating income 2,587 877 31,006 - 907 35,377
Profit/loss on ordinary activities before expenses (Net income) 85,123 114,013 43,708 64,900 -6,818 300,923
Operating expenses 203,843 40,311 42,711 2,392 81,812 371,066
Other operating expenses 15,623 - 80 - 14,062 29,765
Impairment of loans, advances and receivables, etc. 237,478 396 -443 - 454 237,885
Profit/loss on participating interests 3,931 1,648 - - -6,668 -1,089
Profit/loss on activities before tax -367,890 74,954 1,360 62,508 -109,814 -338,882
Alm. Brand Bank A/S – Q3 2013
Page 24 of 26
NOTES TO THE FINANCIAL STATEMENTS
Group
DKK '000 Q1-3 2013 Q1-3 2012 Q1-3 2011 Q1-3 2010 Q1-3 2009
NOTE 12 Financial highlights and key ratios
Net interest and fee income 304,551 303,288 397,761 545,071 470,587
Value adjustments -186,371 -37,742 -274,835 -220,388 -119,460
Staff costs and administrative expenses 306,114 349,242 352,490 396,398 394,420
Impairment of loans, advances and receivables, etc. 140,894 237,885 287,889 548,891 1,235,605
Profit/loss from investments in associates group enterprises -609 -1,089 -472 18,862 782
Profit for the year -300,770 -247,226 -420,508 -474,232 -1,001,022
Loans and advances 7,531,959 8,959,516 11,060,734 14,010,159 15,476,058
Shareholders' equity 1,760,976 1,277,237 1,766,434 1,076,287 1,434,253
Total assets 16,417,910 19,510,291 23,420,065 27,339,149 25,185,702
Solvency ratio 19.1 18.2 20.6 12.6 16.5
Tier 1 ratio 17.7 13.6 18.0 7.3 11.0
Return on equity before tax (%) -26.9 -28.5 -37.9 -49.4 -206.0
Return on equity after tax (%) -23.0 -20.8 -29.2 -35.6 -154.5
Income/cost ratio 0.33 0.47 0.21 0.35 0.22
Interest rate risk (%) 2.7 0.5 -2.2 9.1 8.4
Foreign exchange position (%) 8.5 8.0 5.0 11.6 10.3
Foreign exchange risk (%) 0.1 0.1 0.1 0.2 0.3
Loans and advances as a percentage of deposits (%) 82.8 99.5 159.5 162.2 148.5
Gearing of loans and advances 4.3 7.0 6.3 13.0 10.8
Annual growth in lending (%) -10.3 -12.3 -11.4 -5.5 -10.5
Excess cover relative to statutory liquidity requirement (%) 180.8 201.5 336.8 225.0 98.8
Total amount of large exposures (%) 62.3 57.9 44.2 69.1 63.1
Impairment ratio for the year 1.4 2.1 2.2 3.2 6.4
Financial highlights and key ratios are based on the definitions and guidelines of the Danish FSA and on “Recommendations & Financial Ratios 2010” issued by the
Danish Society of Financial Analysts.
Alm. Brand Bank A/S – Q3 2013
Page 25 of 26
NOTES TO THE FINANCIAL STATEMENTS
Parent company
DKK '000 Q1-3 2013 Q1-3 2012 Q1-3 2011 Q1-3 2010 Q1-3 2009
NOTE 12 Financial hightlights and key ratios - c ontinued
Net interest and fee income 285,168 286,833 376,406 495,248 414,810
Value adjustments -205,134 -98,887 -198,171 -185,339 -101,529
Staff costs and administrative expenses 279,025 325,688 328,406 364,058 353,708
Impairment of loans, advances and receivables, etc. 141,300 238,328 284,256 538,472 1,199,541
Profit/loss from investments in associates group enterprises 1,022 27,909 -34,295 -10,624 -7,498
Profit for the year -314,968 -281,031 -378,287 -475,926 -978,323
Loans and advances 8,225,617 9,339,351 11,329,794 14,391,235 15,490,074
Shareholders' equity 1,579,403 1,107,018 1,633,281 886,277 1,158,403
Total assets 15,729,138 19,009,262 22,861,686 26,920,698 24,622,340
Solvency ratio 19.7 18.9 20.3 11.9 14.9
Tier 1 ratio 18.2 13.6 17.8 6.1 9.0
Return on equity before tax (%) -33.1 -36.1 -39.6 -58.7 -226.9
Return on equity after tax (%) -27.9 -27.1 -29.7 -42.3 -170.5
Income/cost ratio 0.18 0.37 0.23 0.32 0.19
Interest rate risk (%) 1.1 -2.0 -3.0 3.8 5.0
Foreign exchange position (%) 1.7 2.4 1.9 5.5 6.2
Foreign exchange risk (%) 0.0 0.1 0.1 0.2 0.1
Loans and advances as a percentage of deposits (%) 89.1 103.0 162.5 165.8 148.9
Gearing of loans and advances 5.2 8.4 6.9 16.2 13.4
Annual growth in lending (%) -10.0 -11.2 -11.8 -4.5 -8.9
Excess cover relative to statutory liquidity requirement (%) 187.6 207.2 345.6 227.8 101.2
Total amount of large exposures (%) 96.8 59.1 48.1 160.0 78.1
Impairment ratio for the year 1.3 2.0 2.1 3.1 6.3
Financial highlights and key ratios are based on the definitions and guidelines of the Danish FSA and on “Recommendations & Financial Ratios 2010” issued by the Danish Society of Financial Analysts.
Alm. Brand Bank A/S – Q3 2013
Page 26 of 26
NOTES TO THE FINANCIAL STATEMENTS
NOTE 13 Accounting policies group
The consolidated interim financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU. The parent company interim financial statements are prepared in accordance with the provisions of the Danish Financial Business Act, including the Executive Order on financial reports presented by credit institutions and investment companies.
In addition, the interim consolidated financial statements are presented in accordance with additional Danish disclosure requirements for interim financial statements of listed financial companies.
IFRS 13 “Fair value measurement” was implemented with effect from 1 January 2013, when the standard entered into force. The standard provides a single framework for measuring fair value and provides guidance on how to measure fair value along with disclosure requirements. The implementation did not have any significant effect on the financial results. The accounting policies are otherwise unchanged from the policies applied in the financial statements for 2012.
The interim financial statements for Q1-3 2013 are unaudited.