Sydbank — Earnings Release 2017

Aug 29, 2017

Aabenraa, Denmark, 2017-08-29 08:25 CEST (GLOBE NEWSWIRE) -- Sydbank has
delivered a highly satisfactory performance for the first six months of 2017
and continues the positive trend. Trading income as well as investment
portfolio earnings are at a very high level in 1H 2017. Impairment charges have
declined by DKK 90m compared to the same period in 2016. The Bank’s loans and
advances have effectively dropped by DKK 0.3bn adjusted for the effect of the
funding of mortgage-like loans.

CEO Karen Frøsig comments on Sydbank’s 1H result:

-- It is highly satisfactory to note an increase of DKK 173m in profit after
tax compared with the same period in 2016. The increase in profit is driven
by improvements in trading income, impairment charges and investment
portfolio earnings. Profit after tax equals a return on shareholders’
equity of 14.2% p.a.

Karen Frøsig elaborates:

-- The financial health of the Bank’s clients is generally good, which means
that the need for impairment charges for loans and advances is limited. As
a result of the current level of interest rates combined with relatively
low demand for new loans and advances as well as keen competition, net
interest income continues to be under pressure. But I am very pleased that
the drop in net interest income has been offset by a rise in other core
income, bringing total core income to the level achieved in the same period
in 2016.

1H 2017 – highlights

-- Profit of DKK 816m, equal to a return of 14.2% p.a. on shareholders’ equity
after tax.
-- Total income of DKK 2,232m on a par with the level in 1H 2016.
-- Impairment charges for loans and advances represent an income of DKK 9m and
have declined by DKK 90m compared with the same period in 2016.
-- Bank loans and advances including funded mortgage-like loans have declined
by DKK 0.3bn, equal to 0.4% compared to year-end 2016. Bank loans and
advances excluding funded mortgage-like loans have declined by DKK 6.6bn,
equal to 8.6% for the half year.
-- The Common Equity Tier 1 capital ratio has declined by 0.5 percentage
points compared to year-end 2016 and constitutes 15.6% excluding profit for
the period. When including 50% of profit for the period, the Common Equity
Tier 1 capital ratio stands at 16.3%.
-- A share buyback of DKK 664m was commenced on 2 March 2017.

Outlook for 2017

-- Limited growth is projected for the Danish economy in 2017.
-- Based on the level of interest rates at the beginning of 2017, core income
is expected to be on a par with the core income generated in 2016.
-- Trading income is anticipated to remain unchanged relative to income in
2016 but is dependent on financial market developments.
-- As a consequence of general pay rises for the financial sector and a
payroll tax increase of 0.5%, costs (core earnings) are projected to rise
slightly despite measures implemented.
-- Impairment charges in 2017 are forecast to be lower than the level recorded
in 2016.
-- As a result of intensified digitization of the Bank as well as the
establishment of a new mortgage platform, non-recurring costs are expected
to represent around DKK 75m.

Additional information

Jørn Adam Møller, CFO, tel +45 74 37 24 00

Dan Prangsgaard, Head of Communications, tel +45 21 54 18 74

Karen Frøsig, CEO, Bjarne Larsen, Deputy Group Chief Executive, and Jørn Adam
Møller, CFO, will present the Interim Report today at 10.00 (CET) at a
teleconference. The teleconference will be held in Danish and may be attended
via www.sydbank.dk/omsydbank

Danish attendees are invited to call 70 22 35 00. International attendees are
invited to call +44 207 57 21 187. Please quote the following code: 56039229#