UK Regulatory | 15 February 2011 13:41
Sydbank A/S / Annual Financial Report
15.02.2011 13:41
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Aabenraa, Denmark, 2011-02-15 13:41 CET (GLOBE NEWSWIRE) --
Announcement of
the 2010 financial statements
Company Announcement No 04/2011
15 February 2011
Contents
Financial Review
Group Financial Highlights 3
Summary 4
Performance in 2010 6
Financial Statements - Sydbank Group
Income Statement 16
Statement of Comprehensive Income 16
Balance Sheet 17
Capital 18
Supplementary Information 20
Group Financial Highlights
Index
2010 2009 10/09 2008 2007 2006
Income statement (DKKm)
Core income excl trading income 3,304 3,320 100 3,066 2,539 2,298
Trading income 1,290 1,266 102 1,159 1,488 1,319
Total core income 4,594 4,586 100 4,225 4,027 3,617
Costs, core earnings 2,479 2,466 101 2,484 2,200 2,030
Core earnings before impairment 2,115 2,120 100 1,741 1,827 1,587
Impairment of loans and advances etc 1,400 1,195 117 544 (568) (171)
Core earnings 715 925 77 1,197 2,395 1,758
Profit/(Loss) on investment portfolios 227 430 - (385) (193) 173
Profit before non-recurring items 942 1,355 70 812 2,202 1,931
Non-recurring items, net - 86 - 162 55 120
Profit before contribution to the 942 1,441 65 974 2,257 2,051
Private Contingency Association etc
Contribution to the Private 384 443 87 163 - -
Contingency Association etc
Profit before tax 558 998 56 811 2,257 2,051
Tax 147 217 68 205 547 537
Profit for the year 411 781 53 606 1,710 1,514
Balance sheet highlights (DKKbn)
Loans and advances at amortised cost 73.0 74.5 98 82.5 74.5 65.5
Loans and advances at fair value 10.7 12.9 83 13.3 8.6 7.7
Deposits and other debt 64.2 68.8 93 75.0 66.0 50.0
Bonds issued at amortised cost 11.2 8.6 130 10.1 10.1 10.0
Subordinated capital 2.3 3.1 74 4.2 3.8 3.5
Shareholders' equity 9.6 9.1 105 7.1 6.7 6.3
Total assets 150.8 157.8 96 156.0 132.3 114.8
Financial ratios per share (DKK per
share of DKK 10)
EPS Basic 5.6 11.7 9.5 25.6 22.1
EPS Diluted 5.6 11.7 9.5 25.6 22.1
Share price at year-end 151.3 133.8 64.3 219.3 270.0
Book value 129.8 124.1 112.5 104.6 92.1
Share price/book value 1.17 1.08 0.57 2.10 2.93
Average number of shares outstanding 73.5 66.9 63.4 66.7 68.5
(in millions)
Proposed dividend 1.0 - - 3.0 3.0
Other financial ratios and key figures
Solvency ratio 15.4 15.2 14.7 11.9 11.8
Core capital ratio 14.3 13.1 10.8 8.9 9.0
Pre-tax profit as % of average 6.0 12.3 11.8 34.6 36.2
shareholders' equity
Post-tax profit as % of average 4.4 9.6 8.8 26.2 26.7
shareholders' equity
Costs (core earnings) as % of core 54.0 53.8 58.8 54.6 56.1
income
Interest rate risk 1.5 1.0 1.4 2.6 2.0
Foreign exchange position 1.2 1.1 11.4 1.7 10.3
Foreign exchange risk 0.0 0.0 0.0 0.0 0.1
Loans and advances relative to 1.0 1.0 1.0 1.0 1.2
deposits
Loans and advances relative to 7.6 8.2 11.6 11.1 10.3
shareholders' equity
Growth in loans and advances for the (2.0) (9.6) 10.7 13.7 22.4
year
Excess cover relative to statutory 106.3 94.4 89.4 103.1 74.0
liquidity requirements
Total large exposures 54.4 17.2 23.8 46.4 34.7
Accumulated impairment ratio excl PCA 2.0 1.7 1.0 1.0 1.7
Impairment ratio for the year excl PCA 1.7 1.3 0.6 (0.7) (0.2)
Number of full-time staff at year-end 2,284 2,369 96 2,479 2,276 2,190
Summary
The Sydbank Group has generated a profit before tax of DKK 558m. The result is
considered to be acceptable given the difficult economic situation. The result
equals a return of 6.0% on average shareholders' equity.
The financial statements are characterised by:
? Unchanged level of core income excl trading income
? Slight rise in trading income
? Unchanged level of costs (core earnings)
? Unchanged core earnings before impairment
? Impairment charges for loans and advances of DKK 1,400m
? Profit on investment portfolios of DKK 227m
? Contribution of DKK 384m to the Private Contingency Association
? 2% reduction in bank loans and advances to DKK 73.0bn
? 7% decline in deposits to DKK 64.2bn
? Rise of DKK 436m in shareholders' equity to DKK 9.6bn
? Core capital ratio of 14.3%
? Solvency ratio of 15.4%
? Individual solvency need of 9.6%
? Dividend of DKK 1 per share - a total of DKK 74m.
Summary income statement (DKKm) 2010 2009
Core income excl trading income 3,304 3,320
Trading income 1,290 1,266
Total core income 4,594 4,586
Costs, core earnings 2,479 2,466
Core earnings before impairment 2,115 2,120
Impairment of loans and advances etc 1,400 1,195
Core earnings 715 925
Profit/(Loss) on investment portfolios 227 430
Profit before non-recurring items 942 1,355
Non-recurring items, net - 86
Profit before contribution to the Private Contingency Association 942 1,441
etc
Contribution to the Private Contingency Associations etc 384 443
Profit before tax 558 998
Tax 147 217
Profit for the year 411 781
Core earnings before impairment represent DKK 2,115m, an unchanged level
compared with DKK 2,120m in 2009. The unchanged level of core earnings before
impairment reflects a reduction in core income excl trading income of DKK 16m,
a rise in trading income of DKK 24m and an increase in costs (core earnings) of
DKK 13m.
Core earnings before impairment are at the low end of the projected level
announced in the Interim Report - Q1-Q3 2010. This can be ascribed to lower
trading income in Q4 2010.
Impairment charges for loans and advances represent DKK 1,400m against DKK
1,195m in 2009. This level exceeds the Group's expectations at the beginning of
the year. The ordinary inspection conducted by the Danish FSA of the Group's
lending portfolio was concluded at the end of Q3 2010, and the Danish FSA
assesses that the Group's overall level of impairment charges is satisfactory.
The development in Q4 2010 has been affected by a more cautious approach
adopted by the Bank as regards impairment charges for certain bank loans and
advances. Consequently the increase does not reflect a deterioration in credit
quality. Moreover the level reflects the situation in the real economy.
Investment portfolio earnings constitute DKK 227m compared with DKK 430m in
2009.
The contribution to the Private Contingency Association totals DKK 384m (2009:
DKK 443m).
Following a tax charge of DKK 147m, profit for the year constitutes DKK 411m.
In 2009 profit for the year amounted to DKK 781m. Profit for the year for 2010
equals a return on average shareholders' equity of 4.4% (2009: 9.6%) and
earnings per share has declined from DKK 11.7 to DKK 5.6 in 2010.
During the year, shareholders' equity grew by DKK 436m to DKK 9,554m. The
capital structure was strengthened during the year and core capital currently
accounts for 93.2% of the total capital base against 86.6% at the beginning of
the year.
The Group's solvency ratio stands at 15.4%, including a core capital ratio of
14.3%. At the beginning of the year, the solvency ratio stood at 15.2% and the
core capital ratio stood at 13.1%.
Risk-weighted assets went down from DKK 77.9bn to DKK 73.7bn at year-end 2010.
The decrease is solely ascribable to declining credit risk, due in part to a
reduction in loans and advances and guarantees as well as a positive trend in
the average rating of exposures comprised by the IRB approach.
At 30 September 2010 the Group changed the method for determining its
individual solvency need. After this date the individual solvency need is
determined on the basis of an economic capital model and a buffer is added to
allow for model and rating uncertainty as well as additional risks. At 31
December 2010 the individual solvency need represents 9.6% against 9.0% at
year-end 2009.
The Group's internal capital target continues to represent DKK 9,900m, equal to
13.4% of risk-weighted assets.
The Group's liquidity measured under the 15% and 10% statutory requirements
constitutes 33.0% and 20.6%, respectively, at year-end 2010.
The Board of Directors recommends to the general meeting that 18% of the
Group's profit be distributed in dividends, corresponding to DKK 1 per share or
a total of DKK 74m, and DKK 10m be paid to the sponsorship fund Sydbank Fonden.
Assuming that economic trends remain weak, the Group projects core earnings
before impairment charges for loans and advances in the region of DKK 1.7-2.0bn
in 2011.
Performance in 2010
Core income excl trading income
Total core income excl trading income decreased by DKK 16m to DKK 3,304m.
Core income excl trading income (DKKm) 2010 2009
Interest margins etc 2,757 2,776
Mortgage credit 210 221
Payment services 153 159
Remortgaging and loan fees 90 83
Other commission 71 59
Other operating income 23 22
Total 3,304 3,320
Income from interest margins fell by DKK 19m due to a 2% decline in bank loans
and advances, a 7% decrease in deposits as well as higher interest expenses
concerning longer-term funding since September 2010.
After a set-off of loss of DKK 17m (2009: DKK 8m) net income from the
cooperation with Totalkredit represents DKK 167m (2009: DKK 160m). The
cooperation with DLR Kredit has generated an income of DKK 34m (2009: DKK 52m).
Total mortgage credit income amounts to DKK 210m (2009: DKK 221m).
In 2010 the remaining income components increased by a total of DKK 14m or 4%
compared with 2009.
Trading income
Securities trading remained at a high level in 2010 and the favourable
developments in retail and institutional segments have continued. In Q4 2010
the bond and fixed income departments were hit by a sharp rise in long-term
interest rates as well as derived effects of the crisis in European peripheral
countries. Foreign exchange and derivatives trading has stabilised at a lower
level. The positive trend within Asset
Management is attributable to a greater demand for the Bank's asset management
products in general - including in particular units - by existing clients as
well as the many new clients the Group has welcomed during the year.
Furthermore the year's decent returns have made a substantial contribution to
the increase in assets under management.
Trading income (DKKm) 2010 2009
Bonds 273 292
Shares 273 258
Foreign exchange 217 234
Money market 107 178
Asset management 420 304
Total 1,290 1,266
Costs and depreciation
The Group's total costs and depreciation recorded DKK 2,717m against DKK 2,746m
in 2009. This includes a guarantee commission of DKK 227m to the Private
Contingency Association etc (2009: DKK 270m).
The level of costs (core earnings) remains unchanged for the third consecutive
year as a result of higher productivity and efficiency measures as well as a
continued decline in staff.
Costs and depreciation (DKKm) 2010 2009
Staff costs 1,453 1,454
Other administrative expenses 900 887
Depreciation and impairment of property, plant and equipment 153 135
Other operating expenses 211 270
Total 2,717 2,746
Distributed as follows:
Costs, core earnings 2,479 2,466
Costs, investment portfolio earnings 10 10
Costs, guarantee commission to the Private Contingency Association 227 270
Costs (core earnings) as a percentage of total core income are at an unchanged
level and represent 54.0% in 2010 against 53.8% in 2009.
At year-end 2010 the Group's staff numbered 2,284 (full-time equivalent)
compared with 2,369 in 2009.
Sydbank closed eight small branches in 2010, bringing the number of branches to
102 in Denmark and three in Germany.
Core earnings before impairment of loans and advances
The level of core earnings before impairment of loans and advances remains
unchanged at DKK 2,115m (2009: DKK 2,120m).
Impairment of loans and advances etc
Impairment charges for loans and advances represent DKK 1,400m against DKK
1,195m in 2009. This level exceeds the Group's expectations at the beginning of
the year.
The ordinary inspection conducted by the Danish FSA of the Group's lending
portfolio was concluded at the end of Q3 2010, and the Danish FSA assesses that
the Group's overall level of impairment charges is satisfactory.
The development in Q4 2010 has been affected by a more cautious approach
adopted by the Bank as regards impairment charges for certain bank loans and
advances. Consequently the increase does not reflect a deterioration in credit
quality. Moreover the level reflects the situation in the real economy.
The impairment charges are predominantly ascribable to the Group's
highly-diversified corporate lending portfolio.
As at 31 December 2010 the impairment ratio (excl impairment charges for the
year of DKK 157m concerning the Private Contingency Association) represents
1.89% relative to bank loans and advances and 1.67% relative to bank loans and
advances and guarantees.
The total provision of DKK 377m for the Private Contingency Association was
written off in Q4 2010. At year-end 2010 accumulated impairment and provisions
amount to DKK 1,763m. Excluding the provision for the Private Contingency
Association at year-end 2009, the rise constitutes DKK 205m compared with the
beginning of the year.
Individually impaired bank loans and advances increased up to and including Q2
2010. In Q3 and Q4 2010 individually impaired bank loans and advances declined
significantly, as did the share of impaired bank loans and advances before
impairment charges.
Impaired bank loans and advances before impairment charges declined by DKK 106m
to 3,020m (2009: DKK 3,126m) during the year. The defaulted share of
individually impaired bank loans and advances at year-end 2010 decreased to DKK
1,289m (2009: DKK 1,740m) and the non-defaulted share rose to DKK 1,731m (2009:
DKK 1,386m). Individually impaired bank loans and advances after impairment
charges fell by DKK 274m to DKK 1,455m during the year. At year-end 2010
impairment charges for bank loans and advances subject to individual impairment
represent 51.8% (2009: 44.7%) of impaired bank loans and advances..
Individually impaired bank loans and advances (DKKm) 2010 2009
Non-defaulted loans and advances 1,731 1,386
Defaulted loans and advances 1,289 1,740
Impaired bank loans and advances 3,020 3,126
Impairment charges for bank loans and advances subject to 1,565 1,397
individual impairment
Impaired bank loans and advances after impairment charges 1,455 1,729
Impaired bank loans and advances as % of bank loans and advances
before
impairment charges 4.0 4.1
Impairment charges as % of bank loans and advances before 2.1 1.9
impairment charges
Impaired as % of impaired bank loans and advances 51.8 44.7
Core earnings
Core earnings represent DKK 715m compared with DKK 925m in 2009.
Investment portfolio earnings
Less funding charges and less related costs of DKK 10m, investment portfolio
earnings constitute DKK 227m (2009: DKK 430m).
Contribution to the Private Contingency Association
Guarantee commission and the provision for the guarantee to the Private
Contingency Association amount to DKK 211m and DKK 157m, respectively,
totalling DKK 368m for 2010. In addition DKK 16m has been charged to income to
cover the expected payment to the Deposit Guarantee Fund regarding the
bankruptcy of Capinordic Bank.
According to the preliminary calculations of the Financial Stability Company,
the guarantee of the Private Contingency Association, which covers the losses
from DKK 0-10bn, will be paid in full. This is why the Group, as mentioned
above, decided to write off the provision of DKK 377m for the Private
Contingency Association in Q4 2010. The amount is expected to be paid in early
2011.
Losses exceeding DKK 10bn will be covered by the guarantee commission of DKK
15bn that the banks have paid under the general guarantee scheme via the
Private Contingency Association
The Group's total expense to the Private Contingency Association etc since
autumn 2008 amounts to DKK 990m.
Profit for the year
Profit before tax amounts to DKK 558m compared with DKK 998m in 2009. The tax
charge represents DKK 147m (2009: DKK 217m). Profit for the year constitutes
DKK 411m compared with DKK 781m in 2009.
Return
Return on shareholders' equity represents 4.4% against 9.6% in 2009. Earnings
per share has decreased from DKK 11.7 to DKK 5.6.
Q4 2010 compared with Q3 2010
Profit before tax declined by DKK 269m and reflected:
-- A decrease in core income excl trading income of DKK 20m, ascribable in
part to higher interest expenses concerning longer-term funding and lower
mortgage credit income
-- In Q4 2010 the bond and fixed income departments were hit by a sharp rise
in long-term interest rates as well as derived effects of the crisis in
European peripheral countries, which led to a decline in trading income
-- A rise in costs (core earnings) of DKK 22m, partly due to a lower holiday
frequency in Q4 2010
-- An increase in impairment charges for loans and advances of DKK 145m as a
result of a more cautious approach adopted by the Bank as regards
impairment charges for certain bank loans and advances
-- A decline in investment portfolio earnings from DKK 111m in Q4 to minus DKK
8m
-- The cessation of contributions to the Private Contingency Association has
resulted in a positive difference of DKK 123m.
Profit before tax and profit after tax for Q4 2010 amount to minus DKK 23m and
minus DKK 25m, respectively, compared with DKK 246m and DKK 185m in Q3 2010.
Possible table in table detected.
Object reference not set to an instance of an object.
Subsidiaries
The subsidiary bank, Sydbank (Schweiz) AG, which conducts private banking
activities in St. Gallen, recorded a profit after tax of DKK 3m (2009: DKK 0m).
Ejendomsselskabet recorded a loss after tax of DKK 10m (2009: profit of DKK 1m).
Balance sheet
The Group's total assets made up DKK 150.8bn at year-end 2010 against DKK
157.8bn at year-end 2009.
Assets year-end (DKKbn) 2010 2009
Amounts owed by credit institutions etc 8.4 14.5
Loans and advances at fair value (reverse transactions) 10.7 12.9
Loans and advances at amortised cost (bank loans and advances) 73.0 74.5
Securities and holdings etc 37.2 38.5
Assets related to pooled plans 7.9 6.7
Other assets etc 13.6 10.7
Total 150.8 157.8
The Group's bank loans and advances total DKK 73.0bn - a decrease of 2% which
is primarily ascribable to a decline in corporate lending.
Shareholders' equity and liabilities (DKKbn) 2010 2009
Amounts owed to credit institutions etc 40.2 45.4
Deposits and other debt 64.2 68.8
Deposits in pooled plans 7.9 6.7
Bonds issued 11.2 8.6
Other liabilities etc 15.1 15.6
Provisions 0.3 0.5
Subordinated capital 2.3 3.1
Shareholders' equity 9.6 9.1
Total 150.8 157.8
The Group's deposits make up DKK 64.2bn against DKK 68.8bn at year-end 2009 - a
decrease of 7%.
Subordinated capital
During the year the Group has prepaid supplementary capital amounting to DKK
800m. Supplementary capital represents DKK 945m and hybrid Tier 1 capital DKK
1,384m. Subordinated capital totals DKK 2,329m (2009: DKK 3,124m).
Share capital
Share capital is unchanged at DKK 742,499,990 at year-end 2010.
The Sydbank share (number) 2010 2009
Average number of shares outstanding 73,522,284 66,926,690
Number of shares outstanding at year-end 73,588,089 73,471,636
Number of shares issued at year-end 74,249,999 74,249,999
The number of shares outstanding increased from 73,471,636 (98.95%) at the end
of 2009 to 73,588,089 (99.11%) at the end of 2010. The Sydbank share's book
value represents 129.8. At year-end 2010 the closing price of the Sydbank share
stood at 151.3 and share price/book value at 1.17.
Shareholders' equity
At year-end 2010 shareholders' equity constitutes DKK 9,554m - an increase of
DKK 436m since 1 January 2010. The change comprises additions from:
? net sale of own shares of DKK 26m
? profit for the year of DKK 411m
as well as disposals deriving from a DKK 1m adjustment of revaluation reserves.
Solvency and capital
The capital structure was strengthened during the year and core capital
currently accounts for 93.2% of the total capital base against 86.6% at the
beginning of the year.
Solvency (DKKm) 2010 2009
Risk-weighted assets 73,716 77,909
Core capital (excl hybrid core capital) 9,336 8,981
Core capital 10,559 10,224
Capital base 11,329 11,809
Core capital ratio (excl hybrid core capital) 12.7 11.5
Core capital ratio 14.3 13.1
Solvency ratio 15.4 15.2
Risk-weighted assets went down from DKK 77.9bn to DKK 73.7bn at year-end 2010.
The decrease is solely ascribable to declining credit risk, due in part to a
reduction in loans and advances and guarantees as well as a positive trend in
the average rating of the exposures comprised by the IRB approach. The
development in the distribution of ratings from 2009 to 2010 appears below.
At year-end 2010 the solvency ratio stands at 15.4%, of which 14.3 percentage
points is ascribable to core capital, compared with 15.2% and 13.1%,
respectively, at year-end 2009. The core capital ratio (excl hybrid core
capital) has risen from 11.5% to 12.7%.
At 30 September 2010 the Group changed the method for determining its
individual solvency need. After this date the individual solvency need is
determined on the basis of an economic capital model and a buffer is added to
allow for model and rating uncertainty as well as additional risks. At 31
December 2010 the individual solvency need represents 9.6% against 9.0% at
year-end 2009.
The Group's internal capital target continues to represent DKK 9,900m, equal to
13.4% of risk-weighted assets.
Funding and liquidity
The expiry of Bank Package I on 30 September 2010 has not had a negative effect
on the Group's liquidity positions.
In August 2010 the Bank raised a non state-guaranteed bond loan of EUR 1bn with
a maturity period of two years on the international market, broadly diversified
across countries as well as investors.
The Group's liquidity measured under the 15% and 10% statutory requirements
constitutes 33.0% and 20.6%, respectively, at year-end 2010.
Rating
Sydbank's rating - A1 (long-term debt), P-1 (short-term debt) and C+ (financial
strength) - was maintained in 2010.
Shareholders
In 2010 the Sydbank share returned 13% as a result of the increase in the share
price during the year. The Board of Directors recommends to the general meeting
that 18% of the Group's profit be distributed in dividends, corresponding to
DKK 1 per share or a total of DKK 74m, and DKK 10m be paid to the sponsorship
fund Sydbank Fonden.
Supervisory diamond
The supervisory diamond sets up a number of benchmarks to indicate banking
activities which initially should be regarded as involving a higher risk. After
the end of 2012 any breach of the supervisory diamond will be subject to
reactions by the Danish FSA.
The Group's calculations of the benchmarks of the supervisory diamond at
year-end 2010 are shown below.
Supervisory diamond benchmarks 2010
Sum of large exposures < 125% 54%
Funding ratio < 1 0.87
Commercial property exposure < 25% 11%
Growth in loans and advances < 20% -4%
Excess liquidity cover relative to 10% requirement > 50% 106%
At 31 December 2010 the Group complies with all the benchmarks of the
supervisory diamond.
Regulation
In December 2010 the Basel Committee issued the so-called Basel III guidelines.
The G20 countries endorsed the complete Basel III guidelines at the summit in
Seoul on 11-12 November 2010.
The EU Commission has announced that a draft directive (CRD IV) will be
published in summer 2011 to implement Basel III within the EU.
The liquidity rules in Basel III remain problematic for the Danish mortgage
finance system because the liquidity requirements do not allow Danish mortgage
bonds to be counted as liquid assets to a sufficient degree. If consideration
is not given to the special financing system in Denmark, this may not only
create
challenges for banks and mortgage credit institutions but also lead to
increased borrowing costs for clients.
The new capital standards entail a significant increase in the minimum capital
requirement for credit institutions. The minimum capital requirement for core
capital (excl hybrid core capital) will be raised gradually from the present 2%
of risk-weighted assets to 7% in 2019, including a buffer requirement of
2.5%. Failure to comply with the buffer requirement will result in restrictions
on for instance dividend payments. In addition there are stricter requirements
for capital that may count as hybrid core capital and subordinated loan
capital.
The Group estimates that its current core capital ratio (excl hybrid core
capital) of 12.7% will be impacted only marginally when the Basel III
guidelines have been fully phased in. The Group thus already complies with the
future minimum capital requirements.
In addition to the above, the Basel Committee has introduced a requirement for
countercyclical buffers when the ratio of credit growth in the economy and GDP
differs from its long-term trend and when the relevant national authorities
judge credit growth to be associated with a build-up of economic risk.
It is expected that the Basel Committee will propose initiatives regarding
so-called systemically important banks during the first six months of 2011.
Sydbank will not be directly impacted by this proposal. However spillover
effects cannot be ruled out.
Outlook for 2011
The 2011 outlook is based on the central assumption that the Danish economy is
gradually regaining its strength. However the outlook for economic growth in
2011 is extremely modest and uncertain. The recovery will be slow, for one
thing because the competitiveness of the Danish economy has weakened
substantially over the last many years and will therefore be one of the last to
gain speed - and consequently many businesses will continue to struggle.
Moreover 2011 is an election year and the uncertainty surrounding the
composition of the government after the referendum could have a negative impact
on the industrial policy climate in Denmark.
The Group's bank loans and advances are projected to display weak growth.
Core income excl trading income is expected to decline slightly, primarily as a
result of higher funding costs and secondarily as a result of lower mortgage
credit income due in part to the normalisation of the speed of registration.
It is assumed that trading income will show a falling trend compared with the
trading income recorded in 2010. Much will however depend on financial market
developments.
The level of costs is projected to remain largely unchanged since rises in pay
and payroll taxes are expected to be offset by a budgeted reduction in staff of
50.
Based on the above assumptions, the Group projects core earnings in the region
of DKK 1.7-2.0bn before impairment charges for loans and advances.
The prospects for many industries continue to seem uncertain, which will
trigger a continued need for impairment charges as regards the Bank's corporate
client portfolio. In contrast it is expected that the financial situation of
the broad portfolio of retail clients will be satisfactory also in 2011.
Overall the
Group's impairment charges are projected to display a clear declining trend in
2011.
Investment portfolio earnings will depend on financial market developments. At
the beginning of 2011 the Bank's position-taking is characterised by positions
in Danish floating-rate mortgage bonds, which involves limited interest rate
risk.
The collapse of Amagerbanken on 6 February 2011 is projected to result in an
expense for the Group in Q1 2011 in connection with the payment by the Deposit
Guarantee Fund of secured net deposits in Amagerbanken. The expense will be
determined at a later date.
The Group's tax is budgeted at 25%.
Income Statement - Sydbank Group
DKKm 2010 2009
Interest income 4,189 5,695
Interest expense 971 2,290
Net interest income 3,218 3,405
Dividends on shares 22 31
Fee and commission income 1,330 1,114
Fee and commission expense 184 151
Net interest and fee income 4,386 4,399
Market value adjustments 420 667
Other operating income 23 23
Staff costs and administrative expenses 2,353 2,341
Depreciation and impairment of property, plant and equipment 153 135
Other operating expenses 211 270
Impairment of loans and advances etc 1,556 1,368
Profit/(Loss) on holdings in associates and subsidiaries 2 23
Profit before tax 558 998
Tax 147 217
Profit for the year 411 781
Distribution of profit for the year
Profit for the year 411 781
Total amount to be allocated 411 781
Proposed dividend 74 -
Proposal for allocation for other purposes 10 -
Transfer to shareholders' equity 327 781
Total amount allocated 411 781
EPS Basic (DKK) 5.6 11.7
EPS Diluted (DKK) 5.6 11.7
Proposed dividend per share (DKK) 1.0 -
Statement of Comprehensive Income - Sydbank Group
Profit for the year 411 781
Other comprehensive income
Translation of foreign entities 40 1
Hedge of net investment in foreign entities (40) (1)
Property revaluation (1) 23
Other comprehensive income after tax (1) 23
Comprehensive income after tax 410 804
Balance Sheet - Sydbank Group
DKKm 2010 2009
Assets
Cash and balances on demand at central banks 855 862
Amounts owed by credit institutions and central banks 7,527 12,489
Loans and advances at fair value 10,724 12,930
Loans and advances at amortised cost 73,028 74,544
Bonds at fair value 35,021 36,642
Shares etc 1,894 1,552
Holdings in associates etc 307 310
Assets related to pooled plans 7,923 6,735
Intangible assets 13 14
Total land and buildings 1,045 1,046
investment property - 2
owner-occupied property 1,045 1,044
Other property, plant and equipment 105 139
Current tax assets 82 32
Deferred tax assets 11 11
Assets in temporary possession 1 -
Other assets 12,256 10,464
Prepayments 51 51
Total assets 150,843 157,821
Shareholders' equity and liabilities
Amounts owed to credit institutions and central banks 40,250 45,314
Deposits and other debt 64,161 68,780
Deposits in pooled plans 7,923 6,735
Bonds issued at amortised cost 11,242 8,622
Current tax liabilities 8 8
Other liabilities 15,084 15,616
Deferred income 11 27
Total liabilities 138,679 145,102
Provisions 281 477
Subordinated capital 2,329 3,124
Shareholders' equity:
Share capital 742 742
Revaluation reserves 110 112
Other reserves:
Reserves according to articles of association 423 418
Reserve for net revaluation according to the equity method 26 33
Retained earnings 8,169 7,813
Proposed dividend etc 84 -
Total shareholders' equity 9,554 9,118
Total shareholders' equity and liabilities 150,843 157,821
Capital - Sydbank Group
Reserve
for
Reserve net
s
acc. to revaluat Propos
ion ed
Share Revalua article acc to Retain divide
tion s of ed nd
DKKm capita reserve associa equity earnin etc Total
l s tion method gs
Shareholders' equity 742 112 418 33 7,813 - 9,118
at 1 Jan 2010
Changes in equity in
2010
Purchase of own - - - - (2,464 - (2,464
shares ) )
Sale of own shares - - - - 2,490 - 2,490
Adjustment - (1) - - 1 - -
concerning property
sold
Comprehensive income - (1) 5 (7) 329 84 410
for the period
Total changes in - (2) 5 (7) 356 84 436
equity in 2010
Shareholders' equity 742 110 423 26 8,169 84 9,554
at 31 Dec 2010
Shareholders' equity 675 91 411 20 5,891 - 7,088
at 1 Jan 2009
Changes in equity in
2009
Purchase of own - - - - (2,679 - (2,679
shares ) )
Sale of own shares - - - - 3,112 - 3,112
Share issue * 67 - - - 788 - 855
Adjustment - (2) - - 2 - -
concerning property
sold
Tax on equity items - - - - (62) - (62)
Comprehensive income - 23 7 13 761 - 804
for the period
Total changes in 67 21 7 13 1,922 - 2,030
equity in 2009
Shareholders' equity 742 112 418 33 7,813 - 9,118
at 31 Dec 2009
* Shares issued in connection with the capital increase of Sydbank A/S of DKK
67,499,990 nominal (6,749,999 shares of DKK 10 nominal). As at 31 December 2010
the share capital comprises 74,249,999 shares at a nominal value of DKK 10 or a
total of DKK 742.5m. The Bank has only one class of shares as all shares carry
the same rights.
Capital - Sydbank Group
DKKm 2010 2009
Solvency
Solvency ratio 15.4 15.2
Core capital ratio 14.3 13.1
Capital base after deductions
Shareholders' equity 9,554 9,118
Revaluation reserves (110) (112)
Proposed dividend (84) -
Intangible assets and capitalised tax assets (24) (25)
Core capital (excl hybrid core capital) 9,336 8,981
Hybrid core capital 1,384 1,386
50% of holdings > 10% (161) (105)
50% of difference between expected losses and
accounting provisions and accounting value adjustment - (33)
50% of the value of transferred payments etc with delivery risk - (5)
Core capital (incl hybrid core capital) after deductions 10,559 10,224
Subordinated loan capital 945 1,744
Revaluation reserves 110 112
Capital base before deductions 11,614 12,080
50% of holdings > 10% (161) (105)
50% of difference between expected losses and
accounting provisions and accounting value adjustment - (33)
50% of the value of transferred payments etc with delivery risk - (5)
Holdings in associates (124) (128)
Capital base after deductions 11,329 11,809
Credit risk 58,040 62,608
Market risk 8,298 8,764
Operational risk 7,378 6,537
Risk-weighted assets 73,716 77,909
Capital requirement under Pillar I 5,897 6,233
Supplementary Information
Financial calendar
In 2011 Sydbank's financial statements will be announced as follows:
- Annual General Meeting
10 March 2011
- Interim Report - Q1 2011
26 April 2011
- Interim Report - First Half 2011
16 August 2011
- Interim Report - Q1-Q3 2011
25 October 2011
Contacts
Karen Frosig, CEO
Tel +45 74 37 20 00
Mogens Sandbaek, CFO
Tel +45 74 37 24 00
Niels Mollegaard, Group Executive Vice President
Tel +45 74 37 20 50
Address
Sydbank A/S
Peberlyk 4
6200 Aabenraa
Denmark
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 audited Annual Report
2010 at
sydbank.com.
News Source: NASDAQ OMX
15.02.2011 DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de
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Language: English
Company: Sydbank A/S
Denmark
Phone:
Fax:
E-mail:
Internet:
ISIN: DK0010311471
Category Code: ACS
LSE Ticker: 0G6U
Sequence Number: 690
Time of Receipt: Feb 15, 2011 13:41:37
End of Announcement DGAP News-Service
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