Annual Report 2013
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Annual Report 2013 Nordjyske Bank Jernbanegade 4-8 9900 Frederikshavn Telephone +45 9633 5000 [email protected] www.nordjyskebank.dk CVR: 30828712 BIC/SWIFT ebandk22 Annual Report 2013 • page 2 Contents Contents – Annual Report 2013 Page Management Report 2013 ........................................................................ 4 The year’s result ................................................................................... 4 Development in the bank’s branches and staff ................................... 11 Expectations for 2014 ......................................................................... 12 Risk and risk management ................................................................. 13 Credit risk ............................................................................................ 13 Other risks .......................................................................................... 19 Liquidity ............................................................................................... 20 Capital................................................................................................. 21 The Supervision Diamond ................................................................... 22 Future capital and liquidity requirements ............................................ 22 Consolidation ...................................................................................... 23 Subsidiary ........................................................................................... 23 Uncertainty in relation to inclusion and calculation ............................. 23 Preparation of financial statements ..................................................... 24 Proposals to the General Meeting ...................................................... 24 Shareholders ...................................................................................... 25 Company announcements issued in 2013 .......................................... 26 Financial calendar 2014 ...................................................................... 26 Bank Management .............................................................................. 27 Good corporate management ............................................................. 28 Social responsibility ............................................................................ 28 Information about the Board of Directors ............................................ 29 Information about the Executive Board ............................................... 34 Annual Account 2013 ............................................................................. 35 Income Statement ............................................................................... 35 Other total income .............................................................................. 35 Balance Sheet, 31 December 2013 .................................................... 36 Changes to Equity .............................................................................. 38 Accounting policy ................................................................................ 39 Notes with five-year surveys ............................................................... 42 Notes for the Income Statement ......................................................... 44 Notes for the Balance Sheet ............................................................... 48 Notes with additional information ........................................................ 64 Statements and opinions ....................................................................... 67 Bank Management .................................................................................. 70 Annual Report 2013 • page 3 Management Report Satisfactory accounts and positive prospects The year’s result Stable lending and increasing deposits Pre-tax result in Nordjyske Bank for 2013 is DKK In 2013 the bank was successful in keeping lending 71 million. The result corresponds to a rate of at the same level in spite of generally decreasing return on the average equity of 5.3 per cent. lending in the sector. Keeping lending at DKK 5.6 billion was due to a net increase in both private and The bank considers the year’s result – which is at business customers in 2013, as we still register a the upper end of what was previously announced declining demand for lending and credits. about basic earnings in the interval DKK 190-210 million - satisfactory. Deposits increased by DKK 450 million to DKK 7.3 billion, the result of which is steadily increasing Basic earnings over DKK 200 million excess liquidity in the bank. The low interest rate It is the opinion of the bank that it is satisfactory to level means a challenge for the return on the keep the basic earnings above DKK 200 million increasing excess liquidity in the bank. during a period with a historically low interest rate level. Basic income amounts to DKK 482 million and falls by DKK 2 million. As a consequence of sharpened competition as well as a generally low interest rate level, net interest income falls, while fee and commission income increases due to a high activity level. Write-downs on lending amount to a total of DKK 20 per cent dividend 129 million and are at a relatively high level. on the basis on a Dividend at 20 per cent The bank’s management suggests increasing the robust capital dividend to 20 per cent on the basis of a robust capital structure. Condensed income statement 2013 2012 2011 2010 2009 (amounts in mill. DKK) Interest income, net 337 353 357 353 340 Fees and commission income, net 129 113 102 97 90 Other operating income etc. 16 18 14 13 18 Core income 482 484 473 463 448 Operating costs and operating depreciation 278 272 278 266 262 Core earnings 204 212 195 197 186 Payments to the Deposit Guarantee Fund etc. 16 11 14 20 25 Write-downs re. the Contingency Association - - - 16 15 Write-downs on own lending etc. 129 131 113 81 86 Market Price regulations for securities, etc. 12 17 0 40 10 Pre-tax result 71 87 68 120 70 Return of total assets 2013 2012 2011 2010 2009 (amounts in mill. DKK Pre-tax result as percentage of average equity 5.3 6.8 5.5 10.4 6.5 Result after taxes as percentage of average equity 4.0 4.8 4.1 8.0 5.8 Costs as a percentage of core earnings 57.6 56.3 58.9 57.4 58.5 Annual Report 2013 • page 4 Management Report Positive development in North Jutland The financial crisis has taken up a lot of space in to sell their house, which may be caused by Denmark, Europe, and the rest of the world for unemployment. some years. Signs of progress can be seen, and there are market analyses in which the European In North Jutland we have had fewer compulsory and the American economies are described as sales and bankruptcies than the other regions improving. An improvement of the international during the crisis – and the municipalities in our economies will have a positive influence on the primary market area have also had a lower number Danish economy by virtue of bigger sales, export, of compulsory sales than the other municipalities in employment and consumption. the region. However, the analyses are not one-sided positive, The bank’s customers in North Jutland have to a and the messages differ. lesser extent than other areas in the country had challenges by loss when selling their house, as In Denmark several analyses show improvement in North Jutland has experienced smaller price Danish companies’ accounts figures. A new increases before the crisis and smaller fall in prices analysis based on 190,000 examined companies during the crisis. from FSR – Danish auditors show that the accounts registered in 2013 on average are better than the This is confirmed by a statement from Totalkredit, last 5 years with regard to operating result. showing that a smaller share of loans in North However, one out of every 3 companies still has a Jutland is mortgaged beyond their value. loss, so in spite of improvements it does not look like the crisis is quite over yet. Unemployment has been slightly falling in North Jutland over the past year, and the number of Among private customers the messages differ people employed show improvement at the end of more. In some periods and in some areas optimism 2013. There are variations between the munici- can be registered, but it is still the impression that palities in North Jutland where Hjørring as well as private consumers are reluctant with regard to Brønderslev and Frederikshavn municipalities are investment and consumption. It is the opinion of the well placed. bank that there is some rubbing-off effect from much debate on unemployment, cash help, and Offshore and the maritime industries show very unsecure loans – in spite of the fact that many positive development in North Jutland, which private persons are still unable to feel much crisis in among other things means a number of jobs. There their everyday life. are good networks between the harbours whereby competences are exploited and cooperation Interest rates are still low. Financial challenges for between the companies is made. individual customers typically begin with the need Main activities in Nordjyske Bank Nordjyske Bank’s business model and principles Nordjyske Bank has 271 well-qualified employees, build on a desire to service both private and including specially qualified employees within the business customers in an independent bank in most important advice areas. The bank has high- which the decision-making powers are located in technological aids and a large number of