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Sydbank Interim / Quarterly Report 2011
3387_rns_2011-06-30_f62dc4d9-da8e-4253-ae8f-f62f756c6cab.pdf
Interim / Quarterly Report
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Sydbank
Interim Report – First Half 2011
Company Announcement No 13/2011
16 August 2011
INTERIM REPORT – 1H 2011
1/32
Sydbank
Contents
Financial Review
- Group Financial Highlights 3
- Summary 4
- Financial Review 6
Financial Statements
- Income Statement 12
- Statement of Comprehensive Income 12
- Balance Sheet 13
- Holdings in Subsidiaries and Associates etc 14
- Group Financial Highlights – Quarterly 15
- Group Financial Highlights – Half-yearly 16
- Capital 17
- Cash Flow Statement 19
- Segment Statements 20
- Notes 21
Statement
- Management Statement 31
Supplementary Information 32
INTERIM REPORT – 1H 2011
Sydbank
Group Financial Highlights
| | 1H
2011 | 1H
2010 | Index
11/10 | Full year
2010 |
| --- | --- | --- | --- | --- |
| Income statement (DKKm) | | | | |
| Core income excl trading income | 1,588 | 1,660 | 96 | 3,304 |
| Trading income | 534 | 726 | 74 | 1,290 |
| Total core income | 2,122 | 2,386 | 89 | 4,594 |
| Costs, core earnings | 1,303 | 1,281 | 102 | 2,479 |
| Core earnings before impairment | 819 | 1,105 | 74 | 2,115 |
| Impairment of loans and advances etc | 490 | 633 | 77 | 1,400 |
| Core earnings | 329 | 472 | 70 | 715 |
| Profit on investment portfolios | 13 | 124 | 10 | 227 |
| Profit before contributions to deposit guarantee and PCA | 342 | 596 | 57 | 942 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | 161 | 261 | 62 | 384 |
| Profit before tax | 181 | 335 | 54 | 558 |
| Tax | 45 | 84 | 54 | 147 |
| Profit for the period | 136 | 251 | 54 | 411 |
| Balance sheet highlights (DKKbn) | | | | |
| Loans and advances at amortised cost | 71.9 | 74.1 | 97 | 73.0 |
| Loans and advances at fair value | 12.0 | 6.6 | 182 | 10.7 |
| Deposits and other debt | 67.4 | 64.9 | 104 | 64.2 |
| Bonds issued at amortised cost | 7.5 | 8.6 | 87 | 11.2 |
| Subordinated capital | 2.3 | 3.1 | 74 | 2.3 |
| Shareholders' equity | 9.5 | 9.4 | 100 | 9.6 |
| Total assets | 145.7 | 154.4 | 94 | 150.8 |
| Financial ratios per share (DKK per share of DKK 10) | | | | |
| EPS Basic ** | 1.9 | 3.4 | | 5.6 |
| EPS Diluted ** | 1.9 | 3.4 | | 5.6 |
| Share price at end of period | 114.8 | 124.8 | | 151.3 |
| Book value | 128.6 | 127.5 | | 129.8 |
| Share price/book value | 0.89 | 0.98 | | 1.17 |
| Average number of shares outstanding (millions) | 73.5 | 73.7 | | 73.5 |
| Dividend per share | - | - | | 1.0 |
| Other financial ratios and key figures | | | | |
| Solvency ratio | 15.1 | 15.7 | | 15.4 |
| Core capital ratio | 14.1 | 13.5 | | 14.3 |
| Pre-tax profit as % of average shareholders' equity ** | 1.9 | 3.6 | | 6.0 |
| Post-tax profit as % of average shareholders' equity ** | 1.4 | 2.7 | | 4.4 |
| Costs (core earnings) as % of core income | 61.4 | 53.7 | | 54.0 |
| Interest rate risk | 0.9 | 0.2 | | 1.5 |
| Foreign exchange position | 2.7 | 1.5 | | 1.2 |
| Foreign exchange risk | 0.0 | 0.0 | | 0.0 |
| Loans and advances relative to deposits * | 1.0 | 1.0 | | 1.0 |
| Loans and advances relative to shareholders' equity * | 7.5 | 7.9 | | 7.6 |
| Growth in loans and advances for the period * | (1.5) | (0.6) | | (2.0) |
| Excess cover relative to statutory liquidity requirements | 99.5 | 96.8 | | 106.3 |
| Total large exposures | 34.6 | 0.0 | | 54.4 |
| Accumulated impairment ratio excl PCA ** | 2.0 | 2.1 | | 2.0 |
| Impairment ratio for the period excl PCA ** | 0.57 | 0.77 | | 1.70 |
| Number of full-time staff at end of period | 2,274 | 2,323 | 98 | 2,284 |
Financial ratios are prepared according to "Recommendations & Financial Ratios 2010" published by the Danish Society of Financial Analysts. * Financial ratios calculated on the basis of loans and advances at amortised cost.
** Half-year ratios have not been converted to a full-year basis.
INTERIM REPORT - 1H 2011
Sydbank
Summary
The Sydbank Group recorded a pre-tax profit of DKK 181m. The result is adversely affected by a provision for the Deposit Guarantee Fund in connection with the bankruptcies of Amagerbanken and Fjordbank Mors.
The return on average shareholders' equity before tax of 3.8% p.a. is not satisfactory in absolute terms albeit acceptable given the current market conditions.
The development is slightly below the expectations at the beginning of the year.
The Interim Report is characterised by:
- 4% decrease in core income excl trading income
- 26% decline in trading income
- Growth in costs (core earnings) of just under 2%
- Decrease in impairment charges of 23% to DKK 490m as well as improved credit quality
- Profit on investment portfolios of DKK 13m
- Provision for the Deposit Guarantee Fund etc of DKK 161m
- 3% reduction in bank loans and advances to DKK 71.9bn
- 4% growth in deposits to DKK 67.4bn
- Core capital ratio of 14.1%
- Solvency ratio of 15.1%
- Satisfactory influx of clients
- Sydbank’s good performance in the EU-wide stress test which confirms the robust capital structure.
| Income statement – 1H (DKKm) | 2011 | 2010 |
|---|---|---|
| Core income excl trading income | 1,588 | 1,660 |
| Trading income | 534 | 726 |
| Total core income | 2,122 | 2,386 |
| Costs, core earnings | 1,303 | 1,281 |
| Core earnings before impairment | 819 | 1,105 |
| Impairment of loans and advances etc | 490 | 633 |
| Core earnings | 329 | 472 |
| Profit on investment portfolios | 13 | 124 |
| Profit before contributions to deposit guarantee and PCA | 342 | 596 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | 161 | 261 |
| Profit before tax | 181 | 335 |
| Tax | 45 | 84 |
| Profit for the period | 136 | 251 |
Core earnings before impairment represent DKK 819m against DKK 1,105m for the first six months of 2010. The reduction of DKK 286m consists of a decline in core income excl trading income of DKK 72m, a decrease in trading income of DKK 192m and a rise in costs (core earnings) of DKK 22m.
Core earnings before impairment are slightly below our announcement in the 2010 Annual Report. The difference can be ascribed to lower trading income.
Impairment charges for loans and advances etc represent DKK 490m (1H 2010: DKK 633m). Impairment charges for loans and advances are at their lowest level since 2008 and credit quality continues to improve.
Investment portfolio earnings constitute DKK 13m and the provision for the Deposit Guarantee Fund etc amounts to DKK 161m. Less a calculated tax charge of DKK 45m, profit for the period stands at DKK 136m.
INTERIM REPORT - 1H 2011
Sydbank
Profit for the period equals a return on average shareholders' equity of 2.8% p.a. against 5.4% p.a. in 2010. Earnings per share represents DKK 1.9 compared with DKK 3.4 in 2010.
The Group's solvency ratio stands at 15.1%, of which 14.1 percentage points are ascribable to core capital, compared with 15.4% and 14.3 percentage points, respectively, at end-2010. The core capital ratio excluding hybrid core capital is 12.5% compared with 12.7% at the beginning of the year.
Sydbank and 89 other banks have participated in an EU-wide stress test conducted at the request of the European Banking Authority (EBA). Sydbank performed well in the test.
The Group's liquidity measured under the 15% and 10% statutory requirements constitutes 31.3% and 20.0%, respectively, at 30 June 2011.
Sydbank recorded a highly satisfactory influx of clients in the first six months.
The Group continues to project core earnings before impairment charges for loans and advances in the region of DKK 1.7-2.0bn in 2011 – unchanged compared with previous announcements. In 2011 the international as well as Danish economic climate has deteriorated and the market conditions for banking have changed, causing greater uncertainty about the Group's trading income in particular. However the range announced has not been narrowed given the Group's expectations of:
- Higher income from interest margins in 2H 2011 as a consequence of interest rate increases
- Lower costs in 2H 2011 as a consequence of continued tight cost control.
INTERIM REPORT - 1H 2011
Sydbank
Financial Review
Core income excl trading income
Total core income excl trading income declined by 4% to DKK 1,588m.
| Core income excl trading income – 1H (DKKm) | 2011 | 2010 |
|---|---|---|
| Interest margins etc | 1,333 | 1,381 |
| Mortgage credit | 87 | 110 |
| Payment services | 75 | 73 |
| Remortgaging and loan fees | 41 | 44 |
| Other commission | 41 | 42 |
| Other operating income | 11 | 10 |
| Total | 1,588 | 1,660 |
Income from interest margins went down by DKK 48m due to a decline in bank loans and advances of 3% and a rise in deposits of 4% compared with 30 June 2010.
Net income from the cooperation with Totalkredit represents DKK 69m (2010: DKK 86m). Total mortgage credit income amounts to DKK 87m (2010: DKK 110m).
The remaining income components of core income excl trading income are unchanged compared with 1H 2010.
Trading income
Total trading income decreased by 26% – from DKK 726m in 2010 to DKK 534m in 2011.
The development must be seen in light of the fact that income in 1H 2010 was exceptionally high in a favourable market whereas income in 1H 2011 was adversely affected by lower trading activity and high volatility in financial markets.
| Trading income – 1H (DKKm) | 2011 | 2010 |
|---|---|---|
| Bonds | 83 | 180 |
| Equities | 109 | 147 |
| Currency | 92 | 121 |
| Money market | 22 | 73 |
| Asset management | 228 | 205 |
| Total | 534 | 726 |
Costs and depreciation
The Group's total costs and depreciation recorded DKK 1,464m, which is largely unchanged compared with 2010. This includes unchanged DKK 5m which can be ascribed to investment portfolio earnings and DKK 156m for the provision for the Deposit Guarantee Fund. In 1H 2010 costs included a guarantee commission of DKK 157m to the Private Contingency Association.
INTERIM REPORT - 1H 2011
Sydbank
| Costs and depreciation – 1H (DKKm) | 2011 | 2010 |
|---|---|---|
| Staff costs | 769 | 744 |
| Other administrative expenses | 500 | 495 |
| Depreciation and impairment of property, plant and equipment | 38 | 46 |
| Other operating expenses | 157 | 158 |
| Total costs and depreciation | 1,464 | 1,443 |
| Distributed as follows: | ||
| Costs, core earnings | 1,303 | 1,281 |
| Costs, investment portfolio earnings | 5 | 5 |
| Costs, deposit guarantee and the Private Contingency Association | 156 | 157 |
Costs (core earnings) of DKK 1,303m have increased by DKK 22m compared with one year ago, which corresponds to the expectations for the half-year. At end-1H 2011 the Group's staff numbers 2,274 (full-time equivalent) compared with 2,323 at 30 June 2010.
Sydbank has closed one small branch in 2011. As part of the continuing expansion in Zealand, Q2 2011 saw the opening of two new branches in Amager – in Amagerbrogade and in Dragør – as well as a new branch in Hørsholm. Sydbank's branches total 104 in Denmark and unchanged three in Germany.
Core earnings before impairment of loans and advances
Core earnings before impairment of loans and advances represent DKK 819m – a decrease of DKK 286m or 26% compared with one year ago.
Impairment of loans and advances etc
Impairment charges for loans and advances constitute DKK 490m (2010: DKK 633m). The impairment ratio represents 0.67% relative to bank loans and advances at 30 June 2011 and 0.60% relative to bank loans and advances and guarantees. At end-June 2011 accumulated impairment and provisions amount to DKK 1,707m. A decline of DKK 56m compared with the beginning of the year.
For a number of years the Group has been tightening its credit management of the agricultural sector and therefore the Group does not have significant, risky agricultural exposures with exposure to CHF. Moreover impairment charges and the individual solvency need take into account the result of the Group's internal stress test of agricultural exposures based on a 2 percentage point interest rate increase and on a substantially lower hectare price.
INTERIM REPORT - 1H 2011
Sydbank
Compared with 30 June 2010 impaired bank loans and advances before impairment charges have decreased by DKK 997m to DKK 2,804m, equal to 26%. During the same period individually impaired bank loans and advances after impairment charges have declined by DKK 897m, equal to 41%. Impairment charges for bank loans and advances subject to individual impairment constitute 53.8% at 30 June 2011 compared with 42.3% one year ago and 51.8% at year-end 2010.
| Individually impaired bank loans and advances (DKKm) | 30 Jun 2011 | 30 Jun 2010 |
|---|---|---|
| Non-defaulted bank loans and advances | 1,684 | 1,990 |
| Defaulted bank loans and advances | 1,120 | 1,811 |
| Impaired bank loans and advances | 2,804 | 3,801 |
| Impairment charges for bank loans and advances subject to individual impairment | 1,509 | 1,609 |
| Impaired bank loans and advances after impairment charges | 1,295 | 2,192 |
| Impaired bank loans and advances as % of bank loans and advances before impairment charges | 3.8 | 5.0 |
| Impairment charges as % of bank loans and advances before impairment charges | 2.1 | 2.1 |
| Impaired as % of impaired bank loans and advances | 53.8 | 42.3 |
Impairment charges for loans and advances are at their lowest level since 2008 and credit quality continues to improve.
Core earnings
Core earnings represent DKK 329m compared with DKK 472m in 2010.
Investment portfolio earnings
Less funding charges and less related costs of DKK 5m, investment portfolios generated a profit of DKK 13m (2010: DKK 124m).
The Group's interest rate risk comprises DKK 93m at 30 June 2011. Moreover the Group's exchange rate risk continues to be very low and its equity portfolio remains modest.
Contributions to deposit guarantee/the Private Contingency Association
In connection with the bankruptcies of Amagerbanken and Fjordbank Mors a provision of DKK 156m has been made to cover the Bank's expected contribution to the Deposit Guarantee Fund. Finally an amount of DKK 5m has been charged to income, representing the Group's share of Amagerbanken's outstanding payment of the guarantee to the Private Contingency Association. In 1H 2010 the guarantee commission and provision concerning the Private Contingency Association constituted DKK 141m and DKK 104m, respectively, and the provision for the Deposit Guarantee Fund in connection with the bankruptcy of Capinordic Bank amounted to DKK 16m, or a total of DKK 261m.
The Group's total costs relating to the Private Contingency Association and the Deposit Guarantee Fund since autumn 2008 amount to DKK 1,151m.
Subsidiaries
The subsidiary bank, Sydbank (Schweiz) AG, which conducts private banking activities in St. Gallen, Switzerland, recorded a loss after tax of DKK 2m (2010: profit of DKK 4m). Profit after tax of Ejendomsselskabet represents DKK 2m compared with DKK 1m in 2010.
Profit for the period
Profit before tax amounts to DKK 181m. Less a calculated tax charge of DKK 45m, profit for the period stands at DKK 136m compared with DKK 251m in 2010.
Return
Profit for the period equals a return on average shareholders' equity of 2.8% p.a. against 5.4% p.a. in 2010. Earnings per share stands at DKK 1.9 compared with DKK 3.4 in 2010.
INTERIM REPORT - 1H 2011
Sydbank
Q2 compared with Q1
Pre-tax profit for Q2 has declined by DKK 169m and reflects:
- A decrease in core income excl trading income of DKK 10m.
- A decline in trading income of DKK 64m due to lower trading activity and high volatility in the financial markets.
- A rise in costs (core earnings) of DKK 3m, which corresponds to the expectations for the quarter.
- A decrease in impairment charges for loans and advances of DKK 10m.
- A decline in investment portfolio earnings from DKK 75m in the preceding quarter to a loss of DKK 62m.
- An additional provision for the Deposit Guarantee Fund etc of DKK 63m where the amount for Q1 2011 represented DKK 98m.
| Profit for the period (DKKm) | 2011 | 2010 | ||||
|---|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | |
| Core income excl trading income | 789 | 799 | 812 | 832 | 831 | 829 |
| Trading income | 235 | 299 | 239 | 325 | 327 | 399 |
| Core income | 1,024 | 1,098 | 1,051 | 1,157 | 1,158 | 1,228 |
| Costs, core earnings | 653 | 650 | 610 | 588 | 625 | 656 |
| Core earnings before impairment | 371 | 448 | 441 | 569 | 533 | 572 |
| Impairment of loans and advances etc | 240 | 250 | 456 | 311 | 310 | 323 |
| Core earnings | 131 | 198 | (15) | 258 | 223 | 249 |
| Profit/(Loss) on investment portfolios | (62) | 75 | (8) | 111 | 8 | 116 |
| Profit before contributions to deposit guarantee and PCA | 69 | 273 | (23) | 369 | 231 | 365 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | 63 | 98 | - | 123 | 122 | 139 |
| Profit before tax | 6 | 175 | (23) | 246 | 109 | 226 |
| Tax | 1 | 44 | 2 | 61 | 27 | 57 |
| Profit for the period | 5 | 131 | (25) | 185 | 82 | 169 |
Balance sheet
The Group's total assets made up DKK 145.7bn at 30 June 2011 against DKK 150.8bn at year-end 2010.
| Assets (DKKbn) | 30 Jun 2011 | 31 Dec 2010 |
|---|---|---|
| Amounts owed by credit institutions etc | 9.7 | 8.4 |
| Loans and advances at fair value (reverse transactions) | 12.0 | 10.7 |
| Loans and advances at amortised cost (bank loans and advances) | 71.9 | 73.0 |
| Securities and holdings etc | 33.0 | 37.2 |
| Assets related to pooled plans | 8.1 | 7.9 |
| Other assets etc | 11.0 | 13.6 |
| Total | 145.7 | 150.8 |
The Group's bank loans and advances total DKK 71.9bn – a decline of DKK 1.1bn compared with year-end 2010 and DKK 2.2bn compared with 30 June 2010. The development in bank loans and advances derives from a positive trend in loans and advances to retail clients and a cyclical decline in corporate lending.
| Shareholders' equity and liabilities (DKKbn) | 30 Jun 2011 | 31 Dec 2010 |
|---|---|---|
| Amounts owed to credit institutions etc | 37.2 | 40.2 |
| Deposits and other debt | 67.4 | 64.2 |
| Deposits in pooled plans | 8.1 | 7.9 |
INTERIM REPORT - 1H 2011
Sydbank
The Group's deposits make up DKK 67.4bn against DKK 64.2bn at year-end 2010 and DKK 64.9bn at end-June 2010.
Capital
At end-1H 2011, shareholders' equity constitutes DKK 9,546m – a decline of DKK 8m since year-end 2010. The change comprises additions from dividends on own shares of DKK 4m, profit for the period of DKK 136m as well as disposals deriving from dividend distribution etc of DKK 84m and net purchase of own shares of DKK 64m.
Since year-end 2010, risk-weighted assets have increased by DKK 1.8bn to DKK 75.5bn. The increase consists of a decrease in credit risk of DKK 1.9bn and a rise in market risk and operational risk of DKK 3.0bn and DKK 0.7bn, respectively. The decrease in credit risk is ascribable to a decline in loans and advances and guarantees as well as a positive trend in the average rating of the exposures covered by IRB. The development in the distribution at 30 June 2010, 31 December 2010 and 30 June 2011 appears below.
Gross exposures consist of loans and advances, undrawn credit commitments, interest receivable, guarantees and counterparty risk on derivatives. The graph comprises exposures treated according to IRB. Exposures relating to clients in default are not included in the breakdown. Impairment charges for exposures have not been deducted from the exposures.
The transition to IRB of exposures relating to corporate and retail clients in Germany took place in Q2 2011. As a result more than 98% of the Group's exposures are covered by IRB.
The Group's solvency ratio stands at 15.1%, of which 14.1 percentage points are ascribable to core capital, compared with 15.4% and 14.3 percentage points, respectively, at end-2010. The core capital ratio excluding hybrid core capital is 12.5% compared with 12.7% at the beginning of the year.
At 30 June 2011 the individual solvency need remained unchanged at 9.6% compared with 31 December 2010.
INTERIM REPORT - 1H 2011
Sydbank
Sydbank and 89 other banks have participated in an EU-wide stress test conducted at the request of the European Banking Authority (EBA), the results of which were published on 15 July 2011.
The stress test uses two scenarios subject to different assumptions of macro-economic developments. The scenarios do not reflect the current or expected economic developments, rather they seek to assess the resilience of the banking sector to an unexpected deterioration in the macro-economy.
In order to pass the stress test banks must post a Core Tier 1 capital of a minimum of 5%, which has been fixed by the EBA. Under the adverse scenario Sydbank’s Core Tier 1 capital stands at 13.6% at end-2012. Sydbank performed well in the test and the Group’s individual results indicate:
- great resilience to adverse economic developments in the period 2011-2012
- no appreciable exposure to governments and banks in countries with increased risk
- a very robust capital structure.
For the results of the stress test, reference is made to Company Announcement No 12/11.
Liquidity
The Group’s liquidity measured under the 15% and 10% statutory requirements constitutes 31.3% and 20.0%, respectively, at 30 June 2011.
Rating
Effective 19 May 2011, Moody’s changed the rating of the Bank’s long-term debt from A1 (negative outlook) to A2 (stable outlook) and its individual financial strength (BFSR) from C+ (negative outlook) to C (stable outlook).
Sydbank’s ratings are:
- Long-term debt: A2 (stable outlook)
- Short-term debt: P-1
- Individual financial strength: C (stable outlook)
Clients
In 1H 2011 Sydbank recorded a highly satisfactory influx of clients. The number of clients rose by 3% in the first six months of 2011.
Regulation
In July 2011, the European Commission published its proposal for a revision of the Capital Requirements Directives (CRD IV). The main purpose of the proposal is to implement the Basel III rules in the EU. The draft directive must now be considered by the European Parliament and the Council of Ministers. The final directive will be adopted in 2012. The general rules will come into force in early 2013, but decisions on detailed rules regarding liquidity, for example, will be made subsequently, and transitional rules on capital requirements will apply for a number of years.
The proposal does not appear to significantly change the capital requirements introduced by the Basel III rules as described in the 2010 Annual Report. The Group estimates that its core capital ratio (excl hybrid core capital) of currently 12.5% will be impacted only marginally when the Directive has been fully phased in. The Group thus already complies with the future minimum capital requirements.
However as regards liquidity the proposal differs from Basel III in that Danish mortgage bonds can be accommodated to a greater extent.
Outlook for 2011
The Group continues to project core earnings before impairment charges for loans and advances in the region of DKK 1.7-2.0bn in 2011 – unchanged compared with previous announcements. In 2011 the international as well as Danish economic climate has deteriorated and the market conditions for banking have changed, causing greater uncertainty about the Group’s trading income in particular. However the range announced has not been narrowed given the Group’s expectations of:
- Higher income from interest margins in 2H 2011 as a consequence of interest rate increases
- Lower costs in 2H 2011 as a consequence of continued tight cost control.
INTERIM REPORT - 1H 2011
Sydbank
Income Statement
| Sydbank Group | Sydbank A/S | ||||
|---|---|---|---|---|---|
| DKKm | Note | 1H 2011 | 1H 2010 | 1H 2011 | 1H 2010 |
| Interest income | 2 | 2,069 | 2,149 | 2,063 | 2,144 |
| Interest expense | 3 | 561 | 484 | 561 | 485 |
| Net interest income | 1,508 | 1,665 | 1,502 | 1,659 | |
| Dividends on shares | 18 | 16 | 18 | 16 | |
| Fee and commission income | 4 | 680 | 668 | 664 | 648 |
| Fee and commission expense | 107 | 93 | 106 | 93 | |
| Net interest and fee income | 2,099 | 2,256 | 2,078 | 2,230 | |
| Market value adjustments | 5 | 39 | 245 | 35 | 240 |
| Other operating income | 11 | 10 | 11 | 10 | |
| Staff costs and administrative expenses | 6 | 1,269 | 1,239 | 1,247 | 1,215 |
| Depreciation and impairment of property, plant and equipment | 38 | 46 | 36 | 44 | |
| Other operating expenses | 157 | 158 | 156 | 158 | |
| Impairment of loans and advances etc | 8 | 495 | 737 | 495 | 737 |
| Profit on holdings in associates and subsidiaries | 9 | (9) | 4 | (9) | 9 |
| Profit on assets temporarily acquired | 0 | 0 | 0 | 0 | |
| Profit before tax | 181 | 335 | 181 | 335 | |
| Tax | 10 | 45 | 84 | 45 | 84 |
| Profit for the period | 136 | 251 | 136 | 251 | |
| EPS Basic (DKK) * | 1.9 | 3.4 | |||
| EPS Diluted (DKK) * | 1.9 | 3.4 | |||
| Dividend per share (DKK) | - | - |
- Based on average number of shares outstanding, see page 17.
Statement of Comprehensive Income
| Profit for the period | 136 | 251 | 136 | 251 |
|---|---|---|---|---|
| Other comprehensive income | ||||
| Translation of foreign entities | 9 | 25 | 9 | 25 |
| Hedge of net investment in foreign entities | (9) | (25) | (9) | (25) |
| Property revaluation | - | - | - | - |
| Other comprehensive income after tax | 0 | 0 | 0 | 0 |
| Comprehensive income after tax | 136 | 251 | 136 | 251 |
INTERIM REPORT - 1H 2011
Sydbank
Balance Sheet
| Sydbank Group | Sydbank A/S | ||||
|---|---|---|---|---|---|
| DKKm | Note | 30 Jun 2011 | 31 Dec 2010 | 30 Jun 2011 | 31 Dec 2010 |
| Assets | |||||
| Cash and balances on demand | |||||
| at central banks | 1,575 | 855 | 1,559 | 840 | |
| Amounts owed by credit institutions and central banks | 11 | 8,092 | 7,527 | 8,638 | 8,017 |
| Loans and advances at fair value | 11,973 | 10,724 | 11,973 | 10,724 | |
| Loans and advances at amortised cost | 71,904 | 73,028 | 71,052 | 72,228 | |
| Bonds at fair value | 31,053 | 35,021 | 31,052 | 35,021 | |
| Shares etc | 1,609 | 1,894 | 1,609 | 1,894 | |
| Holdings in associates etc | 298 | 307 | 298 | 307 | |
| Holdings in subsidiaries etc | - | - | 275 | 257 | |
| Assets related to pooled plans | 8,065 | 7,923 | 8,065 | 7,923 | |
| Intangible assets | 12 | 13 | 12 | 13 | |
| Total land and buildings | 1,047 | 1,045 | 843 | 840 | |
| investment property | - | - | - | - | |
| owner-occupied property | 1,047 | 1,045 | 843 | 840 | |
| Other property, plant and equipment | 88 | 105 | 83 | 99 | |
| Current tax assets | 83 | 82 | 83 | 83 | |
| Deferred tax assets | 11 | 11 | 7 | 7 | |
| Assets held for sale | 2 | 1 | 2 | 1 | |
| Other assets | 12 | 9,848 | 12,256 | 9,847 | 12,253 |
| Prepayments | 62 | 51 | 60 | 51 | |
| Total assets | 145,722 | 150,843 | 145,458 | 150,558 | |
| Shareholders’ equity and liabilities | |||||
| Amounts owed to credit institutions and central banks | 13 | 37,174 | 40,250 | 37,612 | 40,327 |
| Deposits and other debt | 14 | 67,419 | 64,161 | 66,731 | 63,815 |
| Deposits in pooled plans | 8,065 | 7,923 | 8,065 | 7,923 | |
| Bonds issued at amortised cost | 7,522 | 11,242 | 7,522 | 11,242 | |
| Current tax liabilities | 8 | 8 | 7 | 8 | |
| Other liabilities | 15 | 13,385 | 15,084 | 13,375 | 15,071 |
| Deferred income | 9 | 11 | 9 | 11 | |
| Total liabilities | 133,582 | 138,679 | 133,321 | 138,397 | |
| Provisions | 16 | 263 | 281 | 260 | 278 |
| Subordinated capital | 17 | 2,331 | 2,329 | 2,331 | 2,329 |
| Shareholders’ equity: | |||||
| Share capital | 742 | 742 | 742 | 742 | |
| Revaluation reserves | 110 | 110 | 110 | 110 | |
| Other reserves: | |||||
| Reserves according to articles of association | 423 | 423 | 423 | 423 | |
| Other reserves | 26 | 26 | 26 | 26 | |
| Retained earnings | 8,245 | 8,169 | 8,245 | 8,169 | |
| Proposed dividend etc | - | 84 | - | 84 | |
| Total shareholders’ equity | 9,546 | 9,554 | 9,546 | 9,554 | |
| Total shareholders’ equity and liabilities | 145,722 | 150,843 | 145,458 | 150,558 |
INTERIM REPORT - 1H 2011
Sydbank
Holdings in Subsidiaries and Associates etc
| Sydbank Group | |||||||
|---|---|---|---|---|---|---|---|
| DKKm | Activity | Ownership share (%) | Shareholders' equity (DKKm) | Total assets | Total liabilities | Income | Result |
| Consolidated subsidiaries | |||||||
| Sydbank (Schweiz) AG, St. Gallen, Switzerland | Banking | 100 | 250 | 3 | |||
| Ejendomsselskabet af 1. juni 1986 A/S, Aabenraa | Real property | 100 | 7 | (10) | |||
| Associates | |||||||
| Value-Call S.A., Luxembourg | Investment and finance | 50 | 31 | 39 | 8 | 27 | 16 |
| Foreningen Bankdata, Fredericia | IT | 31 | 373 | 460 | 87 | 668 | 1 |
| Core Property Management A/S, Copenhagen | Real property | 20 | 30 | 32 | 2 | 21 | 5 |
| Other enterprises in which the Group owns more than 10% of the share capital | |||||||
| PRAS A/S, Copenhagen | Investment and finance | 11 | 1,782 | 1,782 | 0 | 134 | 133 |
| ValueInvest Asset Management S.A., Luxembourg | Investment and finance | 14 | 60 | 69 | 9 | 62 | 33 |
| Scandinavian Private Equity Partners A/S, Copenhagen | Investment and finance | 17 | 10 | 11 | 1 | 4 | 1 |
| BI Holding A/S, Copenhagen | Investment and finance | 12 | 290 | 358 | 68 | 134 | 37 |
Financial information according to the most recently published annual report of the companies.
INTERIM REPORT - 1H 2011
Sydbank
Group Financial Highlights – Quarterly
| Q2 2011 | Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | |
|---|---|---|---|---|---|---|
| Income statement (DKKm) | ||||||
| Core income excl trading income | 789 | 799 | 812 | 832 | 831 | 829 |
| Trading income | 235 | 299 | 239 | 325 | 327 | 399 |
| Total core income | 1,024 | 1,098 | 1,051 | 1,157 | 1,158 | 1,228 |
| Costs, core earnings | 653 | 650 | 610 | 588 | 625 | 656 |
| Core earnings before impairment | 371 | 448 | 441 | 569 | 533 | 572 |
| Impairment of loans and advances etc | 240 | 250 | 456 | 311 | 310 | 323 |
| Core earnings | 131 | 198 | (15) | 258 | 223 | 249 |
| Profit/(Loss) on investment portfolios | (62) | 75 | (8) | 111 | 8 | 116 |
| Profit before deposit guarantee and PCA | 69 | 273 | (23) | 369 | 231 | 365 |
| Deposit guarantee and contribution to the Private Contingency Association (PCA) | 63 | 98 | - | 123 | 122 | 139 |
| Profit before tax | 6 | 175 | (23) | 246 | 109 | 226 |
| Tax | 1 | 44 | 2 | 61 | 27 | 57 |
| Profit for the period | 5 | 131 | (25) | 185 | 82 | 169 |
| Balance sheet highlights (DKKbn) | ||||||
| Loans and advances at amortised cost | 71.9 | 71.4 | 73.0 | 73.6 | 74.1 | 73.3 |
| Loans and advances at fair value | 12.0 | 9.3 | 10.7 | 6.5 | 6.6 | 7.4 |
| Deposits and other debt | 67.4 | 64.6 | 64.2 | 61.5 | 64.9 | 62.2 |
| Bonds issued at amortised cost | 7.5 | 11.2 | 11.2 | 16.1 | 8.6 | 8.6 |
| Subordinated capital | 2.3 | 2.3 | 2.3 | 3.1 | 3.1 | 3.1 |
| Shareholders' equity | 9.5 | 9.6 | 9.6 | 9.5 | 9.4 | 9.3 |
| Total assets | 145.7 | 140.6 | 150.8 | 153.7 | 154.4 | 149.0 |
| Financial ratios per share (DKK per share of DKK 10) | ||||||
| EPS Basic ** | 0.1 | 1.8 | (0.3) | 2.5 | 1.1 | 2.3 |
| EPS Diluted ** | 0.1 | 1.8 | 1.1 | 2.5 | 1.1 | 2.3 |
| Share price at end of period | 114.8 | 132.8 | 151.3 | 127.4 | 124.8 | 147.8 |
| Book value | 128.6 | 130.5 | 129.8 | 130.1 | 127.5 | 126.5 |
| Share price/book value | 0.89 | 1.02 | 1.17 | 0.98 | 0.98 | 1.17 |
| Average number of shares outstanding (millions) | 73.4 | 73.5 | 73.5 | 73.4 | 73.7 | 73.7 |
| Dividend per share | - | - | 1.0 | - | - | - |
| Other financial ratios and key figures | ||||||
| Solvency ratio | 15.1 | 15.4 | 15.4 | 16.1 | 15.7 | 15.3 |
| Core capital ratio | 14.1 | 14.4 | 14.3 | 14.1 | 13.5 | 13.1 |
| Pre-tax profit as % of average equity ** | 0.1 | 1.8 | (0.2) | 2.6 | 1.2 | 2.4 |
| Post-tax profit as % of average equity ** | 0.1 | 1.4 | (0.3) | 2.0 | 0.9 | 1.8 |
| Costs (core earnings) as % of core income | 63.8 | 59.2 | 58.0 | 50.9 | 54.0 | 53.4 |
| Interest rate risk | 0.9 | 1.1 | 1.5 | 0.4 | 0.2 | 1.0 |
| Foreign exchange position | 2.7 | 4.5 | 1.2 | 1.4 | 1.5 | 2.8 |
| Foreign exchange risk | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Loans and advances relative to deposits * | 1.0 | 1.0 | 1.0 | 1.1 | 1.0 | 1.1 |
| Loans and advances relative to equity * | 7.5 | 7.5 | 7.6 | 7.7 | 7.9 | 7.9 |
| Growth in loans and advances for the period * | 0.6 | (2.2) | (0.8) | (0.7) | 1.1 | (1.7) |
| Excess cover relative to statutory liquidity req. | 99.5 | 110.3 | 106.3 | 126.3 | 96.8 | 121.1 |
| Total large exposures | 34.6 | 23.9 | 54.4 | 19.6 | 0.0 | 13.6 |
| Accumulated impairment ratio excl PCA ** | 2.0 | 2.2 | 2.0 | 2.4 | 2.1 | 2.1 |
| Impairment ratio for the period excl PCA ** | 0.28 | 0.30 | 0.40 | 0.38 | 0.38 | 0.39 |
| Number of full-time staff at end of period | 2,274 | 2,285 | 2,284 | 2,303 | 2,323 | 2,344 |
Financial ratios are prepared according to "Recommendations & Financial Ratios 2010" published by the Danish Society of Financial Analysts.
* Financial ratios calculated on the basis of loans and advances at amortised cost.
** Quarterly ratios have not been converted to a full-year basis.
INTERIM REPORT - 1H 2011
Sydbank
Group Financial Highlights – Half-yearly
| 1H 2011 | 1H 2010 | 1H 2009 | 1H 2008 | 1H 2007 | |
|---|---|---|---|---|---|
| Income statement (DKKm) | |||||
| Core income excl trading income | 1,588 | 1,660 | 1,641 | 1,482 | 1,235 |
| Trading income | 534 | 726 | 641 | 635 | 772 |
| Total core income | 2,122 | 2,386 | 2,282 | 2,117 | 2,007 |
| Costs, core earnings | 1,303 | 1,281 | 1,288 | 1,276 | 1,116 |
| Core earnings before impairment | 819 | 1,105 | 994 | 841 | 891 |
| Impairment of loans and advances etc | 490 | 633 | 565 | (13) | (270) |
| Core earnings | 329 | 472 | 429 | 854 | 1,161 |
| Profit/(Loss) on investment portfolios | 13 | 124 | 211 | (192) | (30) |
| Profit before non-recurring items | 342 | 596 | 640 | 662 | 1,131 |
| Non-recurring items, net | - | - | - | 196 | 46 |
| Profit before contributions to deposit guarantee and PCA | 342 | 596 | 640 | 858 | 1,177 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | 161 | 261 | 214 | - | - |
| Profit before tax | 181 | 335 | 426 | 858 | 1,177 |
| Tax | 45 | 84 | 107 | 190 | 276 |
| Profit for the period | 136 | 251 | 319 | 668 | 901 |
| Balance sheet highlights (DKKbn) | |||||
| Loans and advances at amortised cost | 71.9 | 74.1 | 75.6 | 82.5 | 68.9 |
| Loans and advances at fair value | 12.0 | 6.6 | 12.9 | 11.5 | 8.0 |
| Deposits and other debt | 67.4 | 64.9 | 71.6 | 67.6 | 57.1 |
| Bonds issued at amortised cost | 7.5 | 8.6 | 10.1 | 10.1 | 10.0 |
| Subordinated capital | 2.3 | 3.1 | 3.5 | 4.2 | 3.8 |
| Shareholders’ equity | 9.5 | 9.4 | 7.5 | 7.1 | 6.2 |
| Total assets | 145.7 | 154.4 | 160.1 | 149.8 | 121.1 |
| Financial ratios per share (DKK per share of DKK 10) | |||||
| EPS Basic ** | 1.9 | 3.4 | 5.0 | 10.5 | 13.1 |
| EPS Diluted ** | 1.9 | 3.4 | 5.0 | 10.5 | 13.1 |
| Share price at end of period | 114.8 | 124.8 | 122.3 | 180.5 | 264.0 |
| Book value | 128.6 | 127.5 | 116.2 | 112.0 | 94.2 |
| Share price/book value | 0.89 | 0.98 | 1.05 | 1.61 | 2.80 |
| Average number of shares outstanding (millions) | 73.5 | 73.7 | 63.6 | 63.5 | 68.6 |
| Dividend per share | - | - | - | - | - |
| Other financial ratios and key figures | |||||
| Solvency ratio | 15.1 | 15.7 | 13.8 | 14.8 | 12.6 |
| Core capital ratio | 14.1 | 13.5 | 11.4 | 10.7 | 9.3 |
| Pre-tax profit as % of average shareholders’ equity ** | 1.9 | 3.6 | 5.8 | 12.4 | 18.7 |
| Post-tax profit as % of average shareholders’ equity ** | 1.4 | 2.7 | 4.4 | 9.7 | 14.3 |
| Costs (core earnings) as % of core income | 61.4 | 53.7 | 56.4 | 60.3 | 55.6 |
| Interest rate risk | 0.9 | 0.2 | 2.2 | 3.0 | 0.3 |
| Foreign exchange position | 2.7 | 1.5 | 3.4 | 12.9 | 16.1 |
| Foreign exchange risk | 0.0 | 0.0 | 0.1 | 0.0 | 0.2 |
| Loans and advances relative to deposits * | 1.0 | 1.0 | 1.0 | 1.1 | 1.1 |
| Loans and advances relative to shareholders’ equity * | 7.5 | 7.9 | 10.1 | 11.6 | 11.1 |
| Growth in loans and advances for the period * | (1.5) | (0.6) | (8.3) | 10.8 | 5.2 |
| Excess cover relative to statutory liquidity requirements | 99.5 | 96.8 | 106.8 | 69.7 | 48.4 |
| Total large exposures | 34.6 | 0.0 | 34.6 | 39.5 | 29.5 |
| Accumulated impairment ratio excl PCA ** | 2.0 | 2.1 | 1.3 | 0.9 | 1.5 |
| Impairment ratio for the period excl PCA ** | 0.57 | 0.77 | 0.63 | (0.01) | (0.35) |
| Number of full-time staff at end of period | 2,274 | 2,323 | 2,414 | 2,457 | 2,237 |
Financial ratios are prepared according to "Recommendations & Financial Ratios 2010" published by the Danish Society of Financial Analysts. Financial ratios calculated on the basis of loans and advances at amortised cost.
** Half-year ratios have not been converted to a full-year basis.
INTERIM REPORT - 1H 2011
Sydbank
Capital – Sydbank Group
| DKKm | Share capital | Revaluation reserves | Reserves acc to articles of association | Reserve for net revaluation acc to equity method | Retained earnings | Proposed dividend etc | Total |
|---|---|---|---|---|---|---|---|
| Shareholders’ equity at 1 Jan 2011 | 742 | 110 | 423 | 26 | 8,169 | 84 | 9,554 |
| Changes in equity in 2011 | |||||||
| Purchase of own shares | - | - | - | - | (1,617) | - | (1,617) |
| Sale of own shares | - | - | - | - | 1,553 | - | 1,553 |
| Adopted dividend etc | - | - | - | - | - | (84) | (84) |
| Dividends, own shares | - | - | - | - | 4 | - | 4 |
| Comprehensive income for the period | - | - | - | - | 136 | - | 136 |
| Total changes in equity | - | - | - | - | 76 | (84) | (8) |
| Shareholders’ equity at 30 Jun 2011 | 742 | 110 | 423 | 26 | 8,245 | - | 9,546 |
| Shareholders’ equity at 1 Jan 2010 | 742 | 112 | 418 | 33 | 7,813 | - | 9,118 |
| Changes in equity in 2010 | |||||||
| Purchase of own shares | - | - | - | - | (1,033) | - | (1,033) |
| Sale of own shares | - | - | - | - | 1,030 | - | 1,030 |
| Comprehensive income for the period | - | - | - | - | 251 | - | 251 |
| Total changes in equity | - | - | - | - | 248 | - | 248 |
| Shareholders’ equity at 30 Jun 2010 | 742 | 112 | 418 | 33 | 8,061 | - | 9,366 |
| 1H | Full year | 1H | |||||
| The Sydbank share | 2011 | 2010 | 2010 | ||||
| Share capital (DKK) | 742,499,990 | 742,499,990 | 742,499,990 | ||||
| Shares issued (number) | 74,249,999 | 74,249,999 | 74,249,999 | ||||
| Shares outstanding at end of period (number) | 73,105,347 | 73,588,089 | 73,438,476 | ||||
| Average number of shares outstanding (number) | 73,450,563 | 73,522,284 | 73,673,196 |
INTERIM REPORT – 1H 2011
Sydbank
Capital – Sydbank Group
| DKKm | 30 Jun 2011 | 31 Dec 2010 | 30 Jun 2010 |
|---|---|---|---|
| Solvency | |||
| Solvency ratio | 15.1 | 15.4 | 15.7 |
| Core capital ratio | 14.1 | 14.3 | 13.5 |
| Capital base after deductions | |||
| Shareholders’ equity | 9,546 | 9,554 | 9,366 |
| Revaluation reserves | (109) | (110) | (112) |
| Proposed dividend | - | (84) | - |
| Intangible assets and capitalised tax assets | (24) | (24) | (25) |
| Core capital (excluding hybrid core capital) | 9,413 | 9,336 | 9,229 |
| Hybrid core capital | 1,385 | 1,384 | 1,383 |
| 50% of holdings > 10% | (158) | (161) | (135) |
| Core capital (including hybrid core capital) after deductions | 10,640 | 10,559 | 10,477 |
| Subordinated loan capital | 946 | 945 | 1,745 |
| Revaluation reserves | 109 | 110 | 112 |
| Difference between expected losses and impairment charges | - | - | 151 |
| Capital base before deductions | 11,695 | 11,614 | 12,485 |
| 50% of holdings > 10% | (158) | (161) | (135) |
| Holdings in associates | (112) | (124) | (125) |
| Capital base after deductions | 11,425 | 11,329 | 12,225 |
| Credit risk | 56,121 | 58,040 | 63,985 |
| Market risk | 11,306 | 8,298 | 6,437 |
| Operational risk | 8,071 | 7,378 | 7,378 |
| Risk-weighted assets | 75,498 | 73,716 | 77,800 |
| Capital requirement under Pillar I | 6,040 | 5,897 | 6,224 |
INTERIM REPORT – 1H 2011
Sydbank
Cash Flow Statement – Sydbank Group
| | 1H
2011 | Full year
2010 | 1H
2010 |
| --- | --- | --- | --- |
| Operating activities | | | |
| Pre-tax profit for the period | 181 | 558 | 335 |
| Taxes paid | (46) | (187) | (79) |
| Adjustment of non-cash operating items | 515 | 1,519 | 882 |
| Cash flows from working capital | 6,459 | (8,344) | (6,290) |
| Cash flows from operating activities | 7,109 | (6,454) | (5,152) |
| Investing activities | | | |
| Purchase and sale of holdings in associates | 9 | (4) | 4 |
| Purchase and sale of property, plant and equipment | (22) | (119) | (29) |
| Cash flows from investing activities | (13) | (123) | (25) |
| Financing activities | | | |
| Purchase and sale of own holdings | (60) | 26 | (3) |
| Dividend etc | (84) | - | - |
| Raising of subordinated capital | 2 | (795) | 4 |
| Issue of bonds | (3,720) | 2,620 | 10 |
| Cash flows from financing activities | (3,862) | 1,851 | 11 |
| Cash flows for the period | 3,234 | (4,726) | (5,166) |
| Cash equivalent positions at 1 Jan | 2,695 | 7,421 | 7,421 |
| Cash flows for the period | 3,234 | (4,726) | (5,166) |
| Total cash equivalent positions at end of period | 5,929 | 2,695 | 2,255 |
INTERIM REPORT - 1H 2011
Sydbank
Segment Statements – Sydbank Group
| DKKm | Banking | Sydbank Markets | Treasury | Other | Total |
|---|---|---|---|---|---|
| Business segments 1H 2011: | |||||
| Core income excl trading income | 1,564 | 24 | - | - | 1,588 |
| Trading income | 382 | 152 | - | - | 534 |
| Core income | 1,946 | 176 | - | - | 2,122 |
| Costs and depreciation | 1,114 | 161 | 5 | 28 | 1,308 |
| Core earnings before impairment | 832 | 15 | (5) | (28) | 814 |
| Impairment of loans and advances etc | 490 | - | - | - | 490 |
| Core earnings | 342 | 15 | (5) | (28) | 324 |
| Investment portfolio income | - | - | 10 | 8 | 18 |
| Profit before contributions to deposit guarantee and PCA | 342 | 15 | 5 | (20) | 342 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | - | - | - | 161 | 161 |
| Profit before tax | 342 | 15 | 5 | (181) | 181 |
| DKKm | Banking | Sydbank Markets | Treasury | Other | Total |
| --- | --- | --- | --- | --- | --- |
| Business segments 1H 2010: | |||||
| Core income excl trading income | 1,677 | (17) | - | - | 1,660 |
| Trading income | 406 | 320 | - | - | 726 |
| Core income | 2,083 | 303 | - | - | 2,386 |
| Costs and depreciation | 1,095 | 160 | 5 | 26 | 1,286 |
| Core earnings before impairment | 988 | 143 | (5) | (26) | 1,100 |
| Impairment of loans and advances etc | 633 | - | - | - | 633 |
| Core earnings | 355 | 143 | (5) | (26) | 467 |
| Investment portfolio income | - | - | 121 | 8 | 129 |
| Profit before contributions to deposit guarantee and PCA | 355 | 143 | 116 | (18) | 596 |
| Contributions to deposit guarantee and the Private Contingency Association (PCA) | - | - | - | 261 | 261 |
| Profit before tax | 355 | 143 | 116 | (279) | 335 |
INTERIM REPORT – 1H 2011
Sydbank
Notes
Note 1
Accounting policies
The Interim Report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as adopted by the EU and in compliance with additional Danish disclosure requirements for interim reports. As a result of the use of IAS 34, the presentation is less complete compared with the presentation of an annual report and the measurement principles are in compliance with IFRS.
The accounting policies are consistent with those adopted in the 2010 Annual Report, to which reference is made.
The 2010 Annual Report provides a comprehensive description of the accounting policies applied.
The measurement of certain assets and liabilities requires managerial estimates as to how future events will affect the value of such assets and liabilities. The significant estimates made by the management in the use of the Group’s accounting policies and the inherent considerable uncertainty of such estimates used in the preparation of the condensed interim report are identical to those used in the preparation of the annual report as at 31 December 2010.
The Group’s significant risks and the external elements which may affect the Group are described in detail in the 2010 Annual Report.
INTERIM REPORT - 1H 2011
21 / 32
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |||
|---|---|---|---|---|
| 1H | 1H | 1H | 1H | |
| DKKm | 2011 | 2010 | 2011 | 2010 |
| Note 2 | ||||
| Interest income | ||||
| Reverse transactions with credit institutions and central banks | 10 | 14 | 10 | 14 |
| Amounts owed by credit institutions and central banks | 42 | 43 | 44 | 44 |
| Reverse loans and advances | 42 | 45 | 42 | 45 |
| Loans and advances and other amounts owed | 1,552 | 1,585 | 1,544 | 1,579 |
| Bonds | 398 | 406 | 398 | 406 |
| Derivatives | 23 | 45 | 23 | 45 |
| Other interest income | 2 | 11 | 2 | 11 |
| Total | 2,069 | 2,149 | 2,063 | 2,144 |
| Note 3 | ||||
| Interest expense | ||||
| Repo transactions with credit institutions and central banks | 57 | 63 | 57 | 63 |
| Credit institutions and central banks | 88 | 95 | 88 | 96 |
| Repo deposits | 0 | 1 | 0 | 1 |
| Deposits and other debt | 284 | 257 | 284 | 257 |
| Bonds issued | 102 | 37 | 102 | 37 |
| Subordinated capital | 29 | 31 | 29 | 31 |
| Other interest expense | 1 | 0 | 1 | 0 |
| Total | 561 | 484 | 561 | 485 |
| Note 4 | ||||
| Fee and commission income | ||||
| Securities trading and custody accounts | 393 | 369 | 379 | 354 |
| Payment services | 107 | 95 | 107 | 95 |
| Loan fees | 40 | 46 | 40 | 46 |
| Guarantee commission | 56 | 61 | 56 | 61 |
| Other fees and commission | 84 | 97 | 82 | 92 |
| Total | 680 | 668 | 664 | 648 |
| Note 5 | ||||
| Market value adjustments | ||||
| Other loans and advances and amounts owed at fair value | 1 | 1 | 1 | 1 |
| Bonds | (63) | 351 | (63) | 351 |
| Shares etc | (77) | (81) | (77) | (81) |
| Investment property | - | - | - | - |
| Currency | 91 | 133 | 87 | 128 |
| Total derivatives | 87 | (159) | 87 | (159) |
| Assets related to pooled plans | (176) | 268 | (176) | 268 |
| Deposits in pooled plans | 176 | (268) | 176 | (268) |
| Other assets/liabilities | 0 | 0 | 0 | 0 |
| Total | 39 | 245 | 35 | 240 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |||
|---|---|---|---|---|
| 1H | 1H | 1H | 1H | |
| DKKm | 2011 | 2010 | 2011 | 2010 |
| Note 6 | ||||
| Staff costs and administrative expenses | ||||
| Salaries and emoluments to: | ||||
| Executive Management: | ||||
| Wages | 7 | 8 | 7 | 8 |
| Pensions | 0 | 0 | 0 | 0 |
| Severance pay | 0 | 8 | 0 | 8 |
| Board of Directors | 2 | 2 | 2 | 2 |
| Shareholders' Committee | 1 | 1 | 1 | 1 |
| Total | 10 | 19 | 10 | 19 |
| Staff costs: | ||||
| Wages and salaries | 620 | 598 | 608 | 585 |
| Pensions | 67 | 65 | 66 | 64 |
| Social security contributions | 6 | 3 | 5 | 3 |
| Payroll tax etc | 66 | 59 | 66 | 58 |
| Total | 759 | 725 | 745 | 710 |
| Other administrative expenses: | ||||
| IT | 254 | 258 | 249 | 254 |
| Rent etc | 75 | 66 | 79 | 68 |
| Marketing and entertainment expenses | 40 | 40 | 39 | 38 |
| Other expenses | 131 | 131 | 125 | 126 |
| Total | 500 | 495 | 492 | 486 |
| Total | 1,269 | 1,239 | 1,247 | 1,215 |
| Note 7 | ||||
| Staff | ||||
| Average number of staff (full-time equivalent) | 2,322 | 2,382 | 2,295 | 2,351 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |||
|---|---|---|---|---|
| 1H | 1H | 1H | 1H | |
| DKKm | 2011 | 2010 | 2011 | 2010 |
| Note 8 | ||||
| Impairment of loans and advances recognised in the income statement | ||||
| Impairment and provisions | 355 | 551 | 355 | 551 |
| Write-offs | 165 | 201 | 165 | 201 |
| Recovered from debt previously written off | 25 | 15 | 25 | 15 |
| Impairment of loans and advances etc | 495 | 737 | 495 | 737 |
| Impairment and provisions at end of period | ||||
| Individual impairment and provisions | 1,537 | 1,955 | 1,537 | 1,955 |
| Collective impairment and provisions | 170 | 137 | 170 | 137 |
| Impairment and provisions at end of period | 1,707 | 2,092 | 1,707 | 2,092 |
| Individual impairment of loans and advances and provisions for guarantees | ||||
| Impairment and provisions at 1 Jan | 1,597 | 1,637 | 1,597 | 1,605 |
| Exchange rate adjustment | 0 | 4 | 0 | 0 |
| Impairment and provisions during the period | 362 | 565 | 362 | 565 |
| Other movements | 0 | 94 | 0 | 94 |
| Write-offs covered by impairment and provisions | 422 | 345 | 422 | 309 |
| Impairment and provisions at end of period | 1,537 | 1,955 | 1,537 | 1,955 |
| Individual impairment of loans and advances | 1,512 | 1,609 | 1,512 | 1,609 |
| Individual provisions for guarantees | 25 | 346 | 25 | 346 |
| Impairment and provisions at end of period | 1,537 | 1,955 | 1,537 | 1,955 |
| Sum of loans and advances and amounts owed subject to collective impairment and provisions | 11,651 | 19,758 | 11,651 | 19,758 |
| Collective impairment and provisions | 170 | 137 | 170 | 137 |
| Loans and advances and amounts owed after collective impairment and provisions | 11,821 | 19,895 | 11,481 | 19,895 |
| Collective impairment of loans and advances and provisions for guarantees | ||||
| Impairment and provisions at 1 Jan | 166 | 141 | 166 | 141 |
| Impairment and provisions during the period | 4 | (4) | 4 | (4) |
| Impairment and provisions at end of period | 170 | 137 | 170 | 137 |
| Individual impairment of loans and advances subject to objective evidence of impairment | ||||
| Balance before impairment of individually assessed loans and advances | 2,804 | 3,801 | 2,804 | 3,801 |
| Impairment of individually assessed loans and advances | 1,509 | 1,609 | 1,512 | 1,609 |
| Balance after impairment of individually assessed loans and advances | 1,295 | 2,192 | 1,292 | 2,192 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |||
|---|---|---|---|---|
| 1H | 1H | 1H | 1H | |
| DKKm | 2011 | 2010 | 2011 | 2010 |
| Note 9 | ||||
| Profit on holdings in associates and subsidiaries | ||||
| Profit on holdings in associates etc | (9) | 4 | (9) | 4 |
| Profit on holdings in subsidiaries etc | - | - | 0 | 5 |
| Total | (9) | 4 | (9) | 9 |
| Note 10 | ||||
| Effective tax rate | ||||
| Current tax rate of Sydbank | 25.0 | 25.0 | 25.0 | 25.0 |
| Permanent differences | - | - | - | - |
| Adjustment of prior year tax charges | - | - | - | - |
| Effective tax rate | 25.0 | 25.0 | 25.0 | 25.0 |
| Note 11 | ||||
| Amounts owed by credit institutions and central banks | ||||
| Amounts owed at notice by central banks | - | 215 | - | 215 |
| Amounts owed by credit institutions | 5,149 | 5,063 | 5,695 | 5,553 |
| Reverse transactions | 2,943 | 2,249 | 2,943 | 2,249 |
| Total | 8,092 | 7,527 | 8,638 | 8,017 |
| Note 12 | ||||
| Other assets | ||||
| Positive market value of derivatives etc | 7,856 | 9,363 | 7,856 | 9,363 |
| Sundry debtors | 255 | 263 | 254 | 260 |
| Interest and commission receivable | 412 | 563 | 412 | 563 |
| Cash collateral provided, CSA agreements | 1,318 | 2,066 | 1,318 | 2,066 |
| Other assets | 7 | 1 | 7 | 1 |
| Total | 9,848 | 12,256 | 9,847 | 12,253 |
| Note 13 | ||||
| Amounts owed to credit institutions and central banks | ||||
| Amounts owed to central banks | 7,000 | 2,700 | 7,000 | 2,700 |
| Amounts owed to credit institutions | 18,310 | 18,864 | 18,748 | 18,941 |
| Repo transactions | 11,864 | 18,686 | 11,864 | 18,686 |
| Total | 37,174 | 40,250 | 37,612 | 40,327 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |||
|---|---|---|---|---|
| DKKm | 30 Jun 2011 | 31 Dec 2010 | 30 Jun 2011 | 31 Dec 2010 |
| Note 14 | ||||
| Deposits and other debt | ||||
| On demand | 39,987 | 38,357 | 39,299 | 38,012 |
| At notice | 538 | 603 | 538 | 603 |
| Time deposits | 21,822 | 19,923 | 21,822 | 19,922 |
| Special categories of deposits | 5,072 | 5,278 | 5,072 | 5,278 |
| Repo transactions | - | - | - | - |
| Total | 67,419 | 64,161 | 66,731 | 63,815 |
| Note 15 | ||||
| Other liabilities | ||||
| Negative market value of derivatives etc | 7,594 | 9,138 | 7,594 | 9,138 |
| Sundry creditors | 1,068 | 1,886 | 1,058 | 1,879 |
| Negative portfolio, reverse transactions | 4,092 | 3,437 | 4,092 | 3,437 |
| Interest and commission etc | 192 | 97 | 192 | 97 |
| Cash collateral received, CSA agreements | 439 | 520 | 439 | 520 |
| Other liabilities | 0 | 6 | 0 | 0 |
| Total | 13,385 | 15,084 | 13,375 | 15,071 |
| Note 16 | ||||
| Provisions | ||||
| Provisions for pensions and similar obligations | 4 | 4 | 4 | 4 |
| Provisions for deferred tax | 225 | 225 | 225 | 225 |
| Provisions for guarantees | 25 | 32 | 25 | 32 |
| Other provisions | 9 | 20 | 6 | 17 |
| Total | 263 | 281 | 260 | 278 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Sydbank Group | Sydbank A/S | |
|---|---|---|
| 30 Jun | 31 Dec | 30 Jun 31 Dec |
| 2011 | 2010 | 2011 2010 |
Note 17
Subordinated capital
| Interest rate | Nominal (m) | Maturity | ||||||
|---|---|---|---|---|---|---|---|---|
| 2.80 (floating) | Bond loan | DKK | 200 | 14.11.14 | 200 | 200 | 200 | 200 |
| 1.59 (floating) | Bond loan | EUR | 100 | 04.04.15 | 746 | 745 | 746 | 745 |
| Total supplementary capital | 946 | 945 | 946 | 945 | ||||
| 2.45 (floating) | Bond loan | EUR | 100 | Perpetual | 741 | 740 | 741 | 740 |
| 3.64 (floating) | Bond loan | EUR | 75 | Perpetual | 559 | 559 | 559 | 559 |
| 6.36 (fixed) | Bond loan | DKK | 85 | Perpetual | 85 | 85 | 85 | 85 |
| Total hybrid core capital | 1,385 | 1,384 | 1,385 | 1,384 | ||||
| Total | 2,331 | 2,329 | 2,331 | 2,329 | ||||
| Sydbank Group | Sydbank A/S | |||||||
| --- | --- | --- | ||||||
| 30 Jun | 31 Dec | 30 Jun 31 Dec | ||||||
| 2011 | 2010 | 2011 2010 |
Note 18
Contingent liabilities and other obligating agreements
| Contingent liabilities | ||||
|---|---|---|---|---|
| Financial guarantees | 2,948 | 3,037 | 2,793 | 2,932 |
| Mortgage finance guarantees | 1,037 | 1,628 | 1,037 | 1,628 |
| Registration and remortgaging guarantees | 2,662 | 3,643 | 2,662 | 3,643 |
| Other contingent liabilities | 1,322 | 1,443 | 1,322 | 1,443 |
| Total | 7,969 | 9,751 | 7,814 | 9,646 |
| Other obligating agreements | ||||
| Irrevocable credit commitments | 3 | 99 | 3 | 99 |
| Other liabilities * | 50 | 51 | 96 | 104 |
| Total | 53 | 150 | 99 | 203 |
| * Including intra-group liabilities in relation to rented premises | - | - | 54 | 56 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
Note 18 – continued
In February 2008 a group of minority shareholders (“Foreningen af Minoritetsaktionærer i bankTrelleborg”) filed a class action against Fonden for bankTrelleborg, Sydbank and the Danish FSA. The lawsuit concerns the legality of the compulsory redemption and the pricing of the shares in connection with the compulsory redemption. The shares were priced by appraisers in accordance with section 144 (4) of the Danish Financial Business Act. In late summer 2008 Fonden for bankTrelleborg paid the difference to the minority shareholders. On 7 December 2010 the Eastern High Court ruled that the compulsory redemption was not legal as the conditions of section 144 of the Danish Financial Business Act had not been met. However the Eastern High Court did not find that the minority shareholders had suffered a loss exceeding the consideration they had already received in connection with the compulsory redemption. Consequently the court did not sustain the claim of the minority shareholders for payment of additional consideration. The minority shareholders have filed an appeal with the Supreme Court and have at the same time applied for free legal aid. Oral proceedings have been scheduled for early January 2012.
Moreover, in 2009 the group of minority shareholders – by three named shareholders – filed an action against Sydbank regarding an inadequate prospectus in connection with the conversion of sparTrelleborg to bankTrelleborg. Exchange of pleadings is still ongoing and oral proceedings have been scheduled for end-February 2012.
On 21 January 2011 two class action claims were filed with the City Court of Copenhagen against Sydbank A/S. Both claims concern a potential responsibility over a prospectus regarding bankTrelleborg, now Sydbank A/S, in connection with the conversion of sparTrelleborg to bankTrelleborg in Q2 2007.
In addition, the Group is party to a number of legal actions. These actions are under continuous review and the necessary provisions made are based on an assessment of the risk of loss. Pending legal actions are not expected to have any significant impact on the financial position of the Group.
Note 19
Repo and reverse transactions
In connection with repo transactions, which involve selling securities to be repurchased at a later date, the securities remain on the balance sheet, and consideration received is recognised as a debt. Repo transaction securities are treated as assets provided as collateral for liabilities. At 30 June 2011, the fair value of such securities stood at DKK 11,715m.
In connection with reverse transactions, which involve purchasing securities to be resold at a later date, the Group is entitled to sell or deposit them as collateral for other loans. The securities are not recognised in the balance sheet and consideration paid is recognised as a receivable. At 30 June 2011, the fair value of such securities stood at DKK 14,696m.
Assets received as collateral in connection with reverse transactions may be sold to a third party. In such cases a negative portfolio may arise as a result of the accounting rules. This is recognised under “Other liabilities”.
Note 20
Collateral
As of 30 June 2011 the Group had deposited as collateral securities at a market value of DKK 8,376m with Danish and foreign exchanges and clearing centres etc in connection with margin calls and securities settlements etc.
Note 21
Related parties
Sydbank is the bank of a number of related parties. Transactions with related parties are settled on an arm’s length basis.
No unusual transactions took place with related parties in 1H 2011. Reference is made to the Group’s 2010 Annual Report for a detailed description of related party transactions.
INTERIM REPORT – 1H 2011
28 / 32
Sydbank
Notes
Note 22
Reporting events occurring after the balance sheet date
After the expiry of the half year, no matters of significant impact on the financial position of the Sydbank Group have occurred.
Note 23
Large shareholders
Two shareholders have announced that they own at least 5% of Sydbank’s share capital:
Nykredit A/S, Copenhagen
Silchester International Investors LLP.
| Sydbank Group | ||||
|---|---|---|---|---|
| DKKm | 1H | |||
| 2011 | 1H | |||
| 2010 | Index | |||
| 11/10 | Full year | |||
| 2010 | ||||
| Note 24 | ||||
| Core income | ||||
| Core income excl trading income | ||||
| Interest margins etc | 1,333 | 1,381 | 97 | 2,757 |
| Mortgage credit | 87 | 110 | 79 | 210 |
| Payment services | 75 | 73 | 103 | 153 |
| Remortgaging and loan fees | 41 | 44 | 93 | 90 |
| Other commission | 41 | 42 | 98 | 71 |
| Other operating income | 11 | 10 | 110 | 23 |
| Total | 1,588 | 1,660 | 96 | 3,304 |
| Mortgage credit | ||||
| Totalkredit cooperation | 80 | 90 | 89 | 184 |
| Totalkredit, set-off of loss | 11 | 4 | 275 | 17 |
| Totalkredit cooperation, net | 69 | 86 | 80 | 167 |
| DLR Kredit | 15 | 19 | 79 | 34 |
| Other mortgage credit income | 3 | 5 | 60 | 9 |
| Total | 87 | 110 | 79 | 210 |
| Trading income | ||||
| Bonds | 83 | 180 | 46 | 273 |
| Equities | 109 | 147 | 74 | 273 |
| Currency | 92 | 121 | 76 | 217 |
| Money market | 22 | 73 | 30 | 107 |
| Asset management | 228 | 205 | 111 | 420 |
| Total | 534 | 726 | 74 | 1,290 |
INTERIM REPORT - 1H 2011
Sydbank
Notes
| Q2 2011 | Q1 2011 | Q4 2010 | Q3 2010 | Q2 2010 | Q1 2010 | |
|---|---|---|---|---|---|---|
| Note 24 - continued | ||||||
| Core income | ||||||
| Core income excl trading income | ||||||
| Interest margins etc | 665 | 668 | 684 | 692 | 689 | 692 |
| Mortgage credit | 44 | 43 | 45 | 55 | 61 | 49 |
| Payment services | 38 | 37 | 40 | 40 | 33 | 40 |
| Remortgaging and loan fees | 20 | 21 | 20 | 26 | 21 | 23 |
| Other commission | 16 | 25 | 17 | 12 | 22 | 20 |
| Other operating income | 6 | 5 | 6 | 7 | 5 | 5 |
| Total | 789 | 799 | 812 | 832 | 831 | 829 |
| Mortgage credit | ||||||
| Totalkredit cooperation | 41 | 39 | 45 | 49 | 47 | 43 |
| Totalkredit, set-off of loss | 8 | 3 | 7 | 6 | 3 | 1 |
| Totalkredit cooperation, net | 33 | 36 | 38 | 43 | 44 | 42 |
| DLR Kredit | 9 | 6 | 5 | 10 | 15 | 4 |
| Other mortgage credit income | 2 | 1 | 2 | 2 | 2 | 3 |
| Total | 44 | 43 | 45 | 55 | 61 | 49 |
| Trading income | ||||||
| Bonds | 29 | 54 | 16 | 77 | 73 | 107 |
| Equities | 43 | 66 | 62 | 64 | 66 | 81 |
| Currency | 42 | 50 | 48 | 48 | 65 | 56 |
| Money market | 6 | 16 | 3 | 31 | 23 | 50 |
| Asset management | 115 | 113 | 110 | 105 | 100 | 105 |
| Total | 235 | 299 | 239 | 325 | 327 | 399 |
INTERIM REPORT - 1H 2011
Sydbank
Management Statement
Today we have reviewed and approved the Interim Report – First Half 2011 of Sydbank A/S.
The Interim Report for 1H 2011 has been prepared in accordance with IAS 34 as adopted by the EU. Furthermore, the interim report has been prepared in compliance with additional Danish disclosure requirements for interim reports of listed financial companies. The interim report has not been audited or reviewed.
In our opinion the accounting policies applied are appropriate and the interim report gives a true and fair view of the Group's assets, shareholders' equity and liabilities and financial position at 30 June 2011 and of the results of the Group's operations and consolidated cash flows for the accounting period 1 January-30 June 2011 as well as a description of the most significant risks and elements of uncertainty which may affect the Group.
Aabenraa, 16 August 2011
Group Executive Management
| Karen Frøsig
(CEO) | Preben L. Hansen | Allan Nørholm |
| --- | --- | --- |
Board of Directors
| Anders Thoustrup
(Chairman) | Hanni Toosbuy Kasprzak
(Vice-Chairman) | Svend Erik Busk |
| --- | --- | --- |
| Claus Christensen | Peder Damgaard | Harry Max Friedrichsen |
| Erik Bank Lauridsen | Sven Rosenmeyer Paulsen | Steen Tophøj |
| Jan Uldahl-Jensen | Margrethe Weber | |
INTERIM REPORT - 1H 2011
Sydbank
Supplementary Information
Financial calendar
In 2011 the Group's preliminary announcement of financial statements will be released as follows:
- Interim Report Q1-Q3 2011
25 October 2011
Sydbank contacts
Karen Frøsig, CEO
Tel +45 74 37 20 00
Mogens Sandbæk, CFO
Tel +45 74 37 24 00
Niels Møllegaard, Group Executive Vice President
Tel +45 74 37 20 50
Address
Sydbank A/S
Peberlyk 4
DK-6200 Aabenraa
Tel +45 74 37 37 37
CVR No DK 12626509
Relevant links
sydbank.dk
sydbank.com
For further information reference is made to Sydbank's 2010 Annual Report at sydbank.com.
INTERIM REPORT - 1H 2011