Sydbank — Regulatory Filings 2012

Dec 18, 2012

News Details

UK Regulatory | 18 December 2012 15:37

Sydbank to record additional impairment charges in 2012. Profit for the year is projected to represent around DKK 600m before tax.

Sydbank A/S / Miscellaneous

18.12.2012 15:37

Dissemination of a UK Regulatory Announcement, transmitted by
DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

---

Aabenraa, Denmark, 2012-12-18 15:37 CET (GLOBE NEWSWIRE) --
Effective Q2 2012, the Danish FSA implemented new and stricter impairment rules
for banks.

As a result, Sydbank recorded significant extraordinary impairment charges for
the Bank's corporate exposures in the first six months of 2012. In addition,
DKK 250m of the individual solvency need was set aside to cover the credit risk
on retail client exposures.

The reason for the solvency reservations was the special risks which, in a
situation of considerable interest rate increases, are associated with retail
clients who have financed their properties with floating-rate loans, in
particular if these clients have also opted for interest-only loans.

The Bank has subsequently reviewed its retail client lending portfolio as
regards these clients. We can see that the present financial situation of some
of these clients will be very tight if their budgets are strained by payments
relating to fixed-rate loans with repayment if the loans are taken out after an
interest rate increase. Moreover, we can see that some of these clients will
not be able to sell their properties without loss given the current climate in
the property market.

In general, the recent interest rate fixing of floating-rate loans has resulted
in a further decline in the interest rate on floating-rate mortgage loans.
Therefore, the capital payments on clients' housing loans will not result in an
increased strain on their personal finances in 2013.

It is estimated that the economic outlook for 2013 will not form the basis for
an interest rate increase which will have a significant impact on homeowners'
disposable amounts. However, it cannot be ruled out that the interest rate
increases will occur sooner than currently expected. As a result of recent
years' declines in property prices, many homeowners are today technically
insolvent.

Against this background, the Bank has decided to record additional impairment
charges of around DKK 300-350m for its retail client loans.

Sydbank has previously announced that impairment charges are projected to stand
at around DKK 1.4bn in 2012. In view of the above decision to convert the
solvency reservations to impairment charges, impairment charges are now
projected to represent around DKK 1,750m for 2012.

This decision does not change the Bank's overall risk scenario as the
calculated individual solvency need will decrease correspondingly.

As a consequence of the increased impairment charges, which are charged to the
Bank's interim financial statements for Q4 2012, a profit before tax of around
DKK 600m is expected, provided that no events occur in the final days of the
year which significantly change the Bank's investment portfolio earnings. For
the first nine months of the year, profit before tax represented DKK 574m. In
2011, profit before tax stood at DKK 301m.

Sydbank's 2012 Annual Report is scheduled for 20 February 2013.

Click on, or paste the following link into your web browser, to view the
associated documents

https://newsclient.omxgroup.com/cds/DisclosureAttachmentServlet?messageAttachmentId=413723

News Source: NASDAQ OMX

18.12.2012 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

Language: English
Company: Sydbank A/S

                Dänemark

Phone:
Fax:
E-mail:
Internet:
ISIN: DK0010311471
Category Code: MSC
LSE Ticker: 0G6U
Sequence Number: 1291
Time of Receipt: Dec 18, 2012 15:37:22

End of Announcement DGAP News-Service

---