Information about the bank
BankA/S Nørresundby Bank
Torvet 4 · DK - 9400 Nørresundby CVR-nr. 34 79 05 15
Tel. +45 98 70 33 33 · Fax +45 98 70 30 19 · SWIFT NRSBDK24 [email protected] · www.noerresundbybank.dk
Mads Hvolby, Chairman
Specific competencies
• Strategy and business development • Financial reporting and budgeting • Management of a medium-sized company • Financial legislation
Poul Søe Jeppesen, Deputy Chairman
Specific competencies
• Management of a large company • Budgeting and resource management • HR
• Communication and marketing
Kresten Skjødt
Specific competencies
• Audit and financial reporting
• Business law
• Finance and risk management • Properties
John Chr. Aasted
Specific competencies
• Management of a large company • Strategy and business development • Agriculture and agro-industry • Sales, export and IT
Bo Bojer
Specific competencies
• Sales and communication • Credit risks
• Finance and risk management • Strategy
Helle Rørbæk Juul Lynge
Specific competencies
• Organisation
• Financial reporting and funding • Market risks
Bank Manager
Andreas Rasmussen Bank ManagerFinn Øst Andersson
Audit committee Remuneration committee Auditors
Kresten Skjødt, chairman Mads Hvolby Beierholm State-authorised audit
Board of Management Board of Directors
Contents
Contents
Please note that Danish number formatting applies to all figures in the financial statements. This means that thousands separator is a point (.), and the decimal separator is a comma (,). The figure one million is written as 1.000.000,00.
Page
Financial highlights for five years 4
Statement by the Management and the
Board of Directors 5
Managerial posts 6
Internal audit department reports 8
Independent auditor’s reports 10
Management’s review 12
Financial statements:
Income statement including statement of comprehensive income
33
Distribution of net profit 33
Balance sheet 34
Changes in equity 36
Solvency statement and capital
requirement 37
Cash flow statement 38
List of notes 39
Notes 40
Board of Representatives 73
Internal departments 74
Financial highlights for five years
Financial highlights for five years
2013 2012 2011 2010 2009
Summary income statement items (DKK 1.000)
Net interest and fee income 423.014 424.195 421.431 419.490 418.950
Market value adjustments 22.418 31.637 -15.185 25.185 49.000
Other operating income 3.336 3.826 5.369 5.526 3.037
Staff costs and administrative expenses 246.458 256.555 258.494 251.325 242.832
Depr., amort. and imp. of intang. and tang. assets 6.446 5.753 11.629 9.163 18.202
Other operating costs *) 15.305 11.237 15.084 24.616 28.744
Imp. losses on loans and advances etc. **) 59.633 88.193 66.386 88.567 138.694
Profit/loss on investments in group entities 0 0 0 0 97
Profit before tax 120.926 97.920 60.022 76.530 42.612
Tax 31.607 24.446 19.198 17.382 12.159
Net profit for the year 89.319 73.474 40.824 59.148 30.453
15.282 11.237 15.084 24.616 28.744
**) Impairment losses concerning Bank Package I, etc. 0 0 183 16.762 18.713
Key balance sheet figures (DKK 1.000)
Loans and advances 5.513.713 5.268.881 5.748.379 6.109.495 5.935.854
*) The Depositor Guarantee Fund concerning failing banks / Commission concerning Bank Package I
Loans and advances 5.513.713 5.268.881 5.748.379 6.109.495 5.935.854
Deposits, excluding pooled schemes 6.146.611 6.334.204 5.988.515 5.886.967 6.173.385
Deposits in pooled schemes 934.976 933.369 835.518 861.638 742.387
Subordinated debt 0 0 50.000 100.000 100.000
Share capital 46.000 46.000 46.000 46.000 46.000
Shareholders' equity 1.432.823 1.342.551 1.281.640 1.254.829 1.208.478
Balance sheet 9.253.141 9.352.389 9.358.656 9.903.173 10.051.309
Contingent liabilities, etc. 1.331.079 1.262.885 1.193.827 1.461.215 1.856.256
Selected financial ratios
Core income over costs ***) 1,59 1,56 1,50 1,49 1,46
Income / cost ratio 1,37 1,27 1,17 1,20 1,10
Return on shareholders' equity before tax 8,7 7,5 4,7 6,2 3,6
Capital adequacy ratio 19,0 17,7 17,7 16,8 16,8
Core capital ratio 18,9 17,6 16,7 15,3 15,2
Excess cover relative to stat. liquidity requirements 212 249 194 259 269
Share price 206 151 148 182 183
Equity value per share 318 301 287 280 267
Share price / equity value per share 0,65 0,50 0,52 0,65 0,68
Number of full-time employees (average) 249 260 271 279 284
***) Core income consists of interest and fee income
and other operating income, net of market value adjustments. Costs are net of impairment losses and provisions for losses on guarantees.
Statement by the Management
and the Board of Directors
Statement by the Management and the Board
of Directors
We have discussed and approved the Annual Report for 1 January – 31 December 2013 for A/S Nørresundby Bank on the date written below.
The Annual Report is presented in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions etc.
It is our opinion that the financial statements give a true and fair view of the bank’s assets and liabilities and financial position as at 31 December 2013 and the results of the bank’s activities and cash flows for the financial year 1 January – 31 December 2013.
We consider the management’s review to contain a true and fair report on the development in the bank’s activities and financial situation, the profit for the year and the bank’s financial position and a description of the principal risks and uncertainties that the bank is facing.
We consider the accounting policies applied appropriate, so that the Annual Report gives a true and fair view of the bank’s assets and liabilities, financial position, profit and cash flows for the year.
We recommend that the Annual Report be adopted at the General Meeting. Nørresundby, 11 February 2014.
Board of Management
Andreas Rasmussen Finn Øst Andersson
/Pia Foss Henriksen CFO
Board of Directors
Mads Hvolby Chairman
Poul Søe Jeppesen
Deputy Chairman Bo Bojer
Managerial posts
Managerial posts
Board of Directors
Chairman
Mads Hvolby
Nørresundby
Born in 1956. Joined the Board in 2006. *
Managing owner, Nellemann & Bjørnkjær I/S Firm of Surveyors
• Nellemann Survey A/S (Chairman of the Board)
• Landinspektørernes gensidige Erhvervsansvarsforsikring (LgE) (General Manager)
Deputy Chairman
Poul Søe Jeppesen
Aalborg
Born in 1952. Joined the Board in 2007. * Director, Aalborg Commercial College
• Erhvervsskolernes Forlag (publishing house) (Board member) • Blegkildekollegiet Aalborg (Board member)
• Handelskollegiet Aalborg (Board member) • Aalborg Studenterkursus (Board member) Bo Bojer
Frejlev
Born in 1974. Joined the Board in 2010. ** Branch Manager, Nørresundby Bank, Kastetvej
Helle Rørbæk Juul Lynge
Vester Hassing Born in 1963. Joined the Board in 2006.
Re-elected in 2010. **
Housing and Asset Manager, Nørresundby Bank, Securities
Kresten Skjødt
Aalborg
Born in 1952. Joined the Board in 2003. *
General Manager, state-authorised public accountant (certificate deposited)
• Netserk ApS (General Manager) • Stenvest ApS (General Manager) • Candorevi ApS (General Manager)
• Agnes & Magnus Winbergs Foundation (Board member) • Jenny Dorthea og Valter Skovhus Thomsens Foundation
(Foundation trustee) John Chr. Aasted
Aalborg
Born in 1961. Joined the Board in 2009. * General Manager, Aasted Consult Aalborg
• Svend Aage Christiansen – Hellum A/S (Chairman of the Board)
• FirstFarms A/S (Board member) • System Cleaners A/S (Board member) • Graintec A/S (Board member) • SKIOLD A/S (Board member)
• Fonden Gisselfeld Kloster (Foundation trustee)
* Elected by the Board of Representatives – up for election yearly.
Maximum age of 66 years defined in the Articles of Association.
The members of the Board of Directors are considered to be independent.
** Elected by the employees – up for election every fourth year.
Neither of the members of the Board of Directors has assumed any demanding organisational tasks.
Board of Management
In accordance with Section 80 (8) of the Danish Financial Business Act, it is hereby disclosed that the Board of Directors have accepted that the Board of Management holds the following directorships:
Andreas Rasmussen
Bank Manager
•Bankdata (Board member)
•Erhvervsklub KUNSTEN (Business Club) (Board member) •Vækst-Invest Nordjylland A/S (Board member)
Finn Øst Andersson
Bank Manager
• 4 July committee (Chairman)
• C. Nøhr Frandsens Familiefond (Chairman of the Board) • The Danish Maritime and Commercial Court (Expert Judge)
Internal audit department reports
Internal audit department reports
For the shareholders of A/S Nørresundby Bank
Audit report on the financial statements
We have audited the financial statements for A/S Nørresundby Bank for the financial year 1 January – 31 December 2013, comprising income statement, statement of comprehensive income, balance sheet, changes in equity, solvency statement and capital requirement, cash flow statement as well as notes, including
accounting policies. The financial statements are prepared in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies, etc.
Basis of opinion
We conducted our audit on the basis of the Executive Order of the Danish Financial Supervisory Authority on the performance of the audit in financial institutions, etc., and financial groups and in accordance with
international standards on audit. This requires that we plan and conduct our audit to obtain reasonable assurance that the financial statements are free of material misstatement.
The audit is carried out in accordance with the distribution of duties agreed with the external auditors and has comprised an assessment of established procedures and internal controls, including the risk management arranged by the management, directed towards reporting processes and material business risks. Based on an evaluation of materiality and risk, we have also examined, on a test basis, evidence supporting the amounts and other disclosures in the financial statements. The audit also included an assessment of the
appropriateness of the accounting policies chosen by the management and the accounting estimates made by the management and an evaluation of the overall financial statement presentation.
We have participated in the audit of the material and risk-exposed areas, and it is our view that the audit evidence obtained is sufficient and provides a suitable basis for our opinion.
Our audit has not given rise to any qualifications.
Opinion
In our opinion, the established procedures and internal controls, including the risk management arranged by the management, which is directed towards the bank’s reporting processes and material business risks, function satisfactorily.
It is also our opinion that the financial statements give a true and fair view of the bank’s assets and liabilities and financial position as at 31 December 2013 and the results of the bank’s activities and cash flows for the financial year 1 January – 31 December 2013 in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies, etc.
Internal audit department reports
Statement on the management’s review
The management is responsible for preparing a management’s review that contains a true and fair report in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies etc.
In accordance with the Danish Financial Business Act, we have read the management’s review. We have not performed any further procedures in addition to our audit of the financial statements. Against this background, we are of the opinion that the disclosures in the management’s review are in accordance with the financial statements.
Nørresundby, 11 February 2014.
Internal Audit Department
Ove Steen Nielsen
Chief Auditor
Independent auditor’s reports
Independent auditor’s reports
For the shareholders of A/S Nørresundby Bank
Audit report on the financial statements
We have audited the financial statements for A/S Nørresundby Bank for the financial year 1 January – 31 December 2013, comprising income statement, statement of comprehensive income, balance sheet, changes in equity, solvency statement and capital requirement, cash flow statement as well as notes, including
accounting policies. The financial statements are prepared in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies, etc.
The management’s liability for the financial statements
The management is responsible for the preparation and fair presentation of financial statements in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit
Institutions and Investment Services Companies etc. The management is also responsible for internal controls deemed necessary by the management to prepare financial statements that are free from material
misstatement, whether due to fraud or errors.
The auditor’s liability
It is our responsibility to express an opinion on the financial statements on the basis of our audit. We have conducted our audit in accordance with international auditing standards and additional requirements under Danish legislation on auditing. This requires that we comply with ethical requirements and plan and conduct our audit to obtain reasonable assurance that the financial statements are free from material misstatement. An audit includes performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The audit procedures selected depend on the assessment made by the auditor, including the assessment of the risk of material misstatement in the financial statements, whether due to fraud or errors. During such risk assessment, the auditor considers internal controls that are relevant to the bank’s preparation and fair presentation of financial statements. The purpose of this is to design audit procedures that are appropriate under the circumstances but not to express an opinion on the efficiency of the bank’s internal control. An audit also includes an assessment of the appropriateness of the accounting policies chosen and the accounting estimates made by the management and an evaluation of the overall financial statement
presentation.
It is our view that the audit evidence obtained is sufficient and provides an adequate basis for our opinion. Our audit has not given rise to any qualifications.
Opinion
It is our opinion that the financial statements give a true and fair view of the bank’s assets and liabilities and financial position as at 31 December 2013 and the results of the bank’s activities and cash flows for the financial year 1 January – 31 December 2013 in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies, etc.
Independent auditor’s reports
Statement on the management’s review
The management is responsible for preparing a management’s review that contains a true and fair report in accordance with the Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and Investment Services Companies etc.
In accordance with the Danish Financial Business Act, we have read the management’s review. We have not performed any further procedures in addition to our audit of the financial statements. Against this background, we are of the opinion that the disclosures in the management’s review are in accordance with the financial statements.
Aalborg, 11 February 2014.
Beierholm
State-authorised audit firm - limited partnership company
Jens Rytter Andersen
State-Authorised Public Accountant
Management’s review
Management’s review
Profit exceeding DKK 100 million
Nørresundby Bank realised a profit before tax of DKK 120.9 million in 2013, representing a 23% improvement on the 2012 profit of DKK 23.0 million.
This is the best performance since 2007, providing a return on equity of 8.7% and resulting in a
recommendation for the general meeting to distribute dividends of 50% or DKK 23 million, corresponding to a return of 2.4% p.a.
The main reasons underlying the improved performance are declining costs, fewer impairment losses on loans, advances, etc., as well as positive market value adjustments.
The bank’s income remains affected by the general uncertainty as to cyclical trends and low interest-rate levels.
Against this backdrop, it is satisfactory that the bank’s top line performance, mainly comprised of net interest and fee income, is at the same level as last year.
Expenditure for wages, salaries, etc., and administrative expenses declined by 4% or DKK 10.1 million to DKK 246.5 million, against DKK 256.6 million in 2012. The lower cost level is in accordance with the expectations set out in the 2012 annual report. The costs for 2013 also included non-recurring expenses approximating DKK 4 million related to the implemented adjustments of the branch network and staff.
With income from operating activities (before market value adjustments and impairment losses on loans, advances, etc.) in the amount of DKK 158.1 million against DKK 154.5 million last year, the bank realised a performance in the upper range of the previously announced expectations.
For the year as a whole, securities markets saw favourable developments, resulting in overall capital gains of DKK 22.4 million against DKK 31.6 million in 2012.
The need to post impairment losses on loans and advances, etc., followed a declining trend throughout 2013. Total impairment losses on loans, advances, etc., thus declined by DKK 28.6 million, or 32%, to DKK 59.6 million, against DKK 88.2 million in 2012.
The tax payable on the earnings attained amounted to DKK 31.6 million, providing a profit after tax of DKK 89.3 million, compared to DKK 73.5 million in 2012.
Overall, the management considers the results obtained in 2013 to be satisfactory in light of the market situation and the organisational adjustments initiated and implemented by the bank, and the Board of Directors consequently recommends to the General Meeting that a dividend of 50% be distributed, corresponding to DKK 23.0 million.
Management’s review
Management’s review
Income statement
Net interest and fee income
Being locally anchored, the bank's purpose is to service the market area and provide advice concerning financial services, mainly consisting of deposit and loan products and securities trading. Income from these activities is typically reflected in the financial statements under net interest and fee income.
Net interest income totalled DKK 273.6 million in 2013, against DKK 294.6 million in 2012, which represents a decline of DKK 21.0 million.
The development in net interest income should be considered in the context of the economic trends which generally resulted in declining demand for lending products and lower interest-rate levels. For the year as a whole, the bank consequently realised interest income from a lower average level of loans and advances than that of last year, and the interest margin was also lower.
In addition, the declining interest-rate levels resulted in lower interest income of DKK 6.3 million from the bank’s considerable bond portfolio.
Net fee income is up DKK 12.2 million to DKK 139.7 million against DKK 127.5 million last year. The higher fee income is attributable to the low interest-rate level which induced considerably greater interest in investing savings in securities, combined with favourable developments in the equity markets.
Management’s review
Management’s review
Market value adjustments
Despite a generally positive atmosphere in equity markets, the bank realised an aggregate decline in market value adjustments of DKK 9.2 million to a total of DKK 22.4 million compared to last year, when the bank realised positive market value adjustments of DKK 31.6 million.
This is primarily due to a calculated capital loss on high-yield convertible mortgage bonds. The capital loss on bonds totalled DKK 3.2 million in 2013 against an aggregate capital gain on the bond portfolio of DKK 9.8 million in 2012.
The positive market-value adjustment results are consequently attributable to equity market trends which generated capital gains of DKK 26.1 million against DKK 17.0 million last year, of which DKK 4.8 million concerns sector shares and DKK 21.3 million concerns other shares.
Trading in foreign exchange and financial instruments, etc., resulted in a minor capital loss of DKK 0.5 million.
Operating costs
The total costs of operating the bank (staff, administrative expenses, depreciation, amortisation and impairment of tangible and intangible assets) exclusive of other operating costs declined by DKK 9.4 million to DKK 252.9 million, compared to DKK 262.3 million in 2012. The total costs are currently at a five-year low.
The above amount for 2013 also included non-recurring expenses of around DKK 4 million related to adjustments of the branch network and staffing.
The declining cost level is a direct consequence of technological developments, such as in the self-service area, which brought about a behavioural change amongst customers who now perform far more self-service transactions than previously. Combined with lower demand, mainly for lending as a result of the crisis, this change in behaviour also prompted the removal of three branches from the branch network for a current total of 13 branches in 2013, and reduced staff by 19. In total, the branch network was reduced from 19 to 13 during the crisis, while the staff number declined from 291 to 241 in the same period.
Management’s review
Management’s review
Other operating costs/Depositor Guarantee Fund
This item expresses the bank’s share of the sector’s expenses for failing banks and amounts to DKK 15.3 million for 2013, compared to DKK 11.2 million last year.
Under the new insurance-based model, ordinary contributions to the Depositor Guarantee Fund amount to DKK 13.1 million. The remaining amount of DKK 2.2 million is mainly attributable to losses in Fjordbank Mors. The bank’s total expenses for failing banks and the Depositor Guarantee Fund during the crisis amount to approximately DKK 145 million so far.
Future annual expenses for the insurance scheme are expected to exceed DKK 13 million.
Impairment losses on loans, advances, etc.
The total effect on operations from impairment losses on loans, advances, etc., was DKK 59.6 million in 2013, thus declining by 32% or DKK 28.6 compared to last year. The level of impairment losses is acceptable and corresponds to 0.8% of the bank’s loans, advances and guarantees before impairment losses and provisions. The bank regularly assesses the need for write-downs. The assessments are based on the bank’s policy in the area and applicable rules.
As is apparent in the bank’s interim announcements in 2013, the bank has seen a declining trend in the need to post impairment losses during the year. There is still insufficient evidence to interpret this as an expression of an overall improvement in the customers’ financial positions due to uncertainty concerning the economic trend.
It is assessed that the bank's lending portfolio is robust and adequately dispersed among sectors. In addition, the bank’s credit policy ensures a continuous, active involvement in commitments that exhibit signs of
Management’s review
The portfolio of loans and advances subject to suspended interest accrual amounts to DKK 112.6 million before impairment losses, equating to DKK 1.6% of the total loans, advances and guarantees. The impairment losses on these commitments amount to DKK 83.1 million.
The bank’s accumulated impairment losses amount to DKK 343.8 million, corresponding to 4.8% of the bank’s loans, advances and guarantees.
Net profit for the year
The profit after tax of DKK 89.3 million is the best since 2007. Compared to 2012, this is an increase of 22%.
Balance sheet
The bank’s overall business volume (deposits including pooled schemes, loans, advances and guarantees) amounts to DKK 13.9 billion, which is on a par with 2012.
At the end of the year, the bank’s loans, advances and guarantees amount to DKK 5,514 million, compared to DKK 5,269 million last year. Lending was consequently up DKK 245 million, corresponding to 5%.
Following the decline in lending in recent years, it is satisfactory to note a higher demand for loans once again. It is mainly the bank’s business customers that have demanded new credit facilities, as lending to personal customers remains unchanged.
Due to the low interest-rate levels, there has been greater interest in investing deposited funds in securities. For this reason, the bank’s deposits, excluding pooled schemes, has declined by DKK 188 million to DKK 6,147 million.
Management’s review
Liquidity
In terms of liquidity, the bank maintains an objective for deposits and equity to exceed the volume of lending. The current balance sheet composition with deposits exceeding lending by DKK 633 million and an equity in the area of DKK 1.4 billion gives the bank considerable excess liquidity cover. In relation to the statutory liquidity requirements, this excess cover is at 211.6%, corresponding to DKK 1,936 million. The liquidity resources also include a loan of DKK 100 million which the bank raised without a government guarantee. The loan matures in Q1 2014.
Currently, the bank does not have to procure additional liquid resources and does not expect to raise liquid resources in 2014.
Capital position
After allocation of the profit for the year, the shareholders’ equity amounts to DKK 1,433 million. The equity consists of share capital of DKK 46 million and retained earnings of DKK 1,342 million.
The satisfactory capital position leaves the bank with a capital adequacy ratio of 19.0% and core capital at 18.9%.
The bank's solvency requirement, specified in accordance with the so-called 8+ method, is at 10.6%. A corresponding calculation based on the 8+ method at the end of 2012 showed a solvency requirement of 10.5%.
This means that the bank has an excess coverage of 8.4 percentage points or DKK 607 million, which is the difference between the current capital requirement (solvency requirement) and the actual capital base (solvency).
The solvency requirement fully recognises the provisions for concentration risks, notwithstanding that the Danish Financial Supervisory Authority generally accepts that provisions for these risks may be carried at only 50% in 2013.
Management’s review
For further details, reference is made to the bank’s risk report for 2013 (in Danish) on http://alm.nrsbank.dk/media/risikorapport_2013.pdf.
Concurrently, the robust capital position means that the bank already at this time, with full recognition of provisions for capital conservation buffer and countercyclical buffer, meets the new capital adequacy rules under the CRD IV Directive which will enter into force on 31 March 2014 and gradually be phased in leading up to 2019.
The bank has estimated the consequences of capital as well as weighted assets in relation to the CRD IV Directive. Calculations show that the new CRD IV rules will only marginally affect the bank’s core capital ratio and capital adequacy ratio.
Share capital and reserves
The bank’s share capital was unchanged at DKK 46 million at the end of 2013, distributed among 4,600,000 shares with a nominal value of DKK 10.
Since the bank’s founding in 1898, the bank’s articles of association have included a provision concerning a limited voting right, scaled according to the number of shares, so that each individual shareholder owning 7,000 shares or more may at most be entitled to 11 votes. These protective rules in the articles of association have been adopted by the shareholders at the Annual General Meeting and should be perceived as the expression of a wish to keep Nørresundby Bank intact as a strong, local, independent bank with a wide circle of shareholders for the benefit of all our stakeholders.
The bank’s shares are dispersed over more than 23,000 shareholders, the vast majority of whom reside within the bank’s market area.
The General Meeting held on 8 March 2011 authorised the Board of Directors – effective until 8 March 2016 – to acquire own shares up to a cumulative nominal value of 10% of the bank’s share capital, cf. Section 198 of
Management’s review
the Danish Companies Act. The consideration may not deviate by more than 10% from the official price calculated by NASDAQ OMX Copenhagen A/S on the date of acquisition. Acquisition of treasury shares in excess of 3% requires the approval of the Danish Financial Supervisory Authority.
The price of the bank’s share was listed at 206 at the end of the year. The market value of the bank thus amounted to almost DKK 950 million at the turn of the year.
In order to ensure greater transparency in respect of pricing of the bank’s shares, the bank has entered into a market-making agreement with a nationwide bank.
Spar Nord Bank A/S, Skelagervej 15, Aalborg, is the only shareholder registered on the list of major
shareholders, with an ownership share of 50.2%. In consequence of the restrictions on voting rights, Spar Nord Bank A/S has 11 votes.
Distribution of profits, dividends and Annual General Meeting
The Board of Directors proposes to the General Meeting that a dividend of 50% be distributed based on the year’s satisfactory financial statements. Two other reasons for the recommended increase in dividends are that the bank’s capital structure is ready for the new rules under the CRD IV Directive and that the bank has not raised funding under the government guarantee scheme. The Board proposes that the remainder of the profit be transferred to the reserves.
Proposals to amend the articles of association may be presented by the Board of Representatives, Board of Directors or shareholders of the bank for consideration at the Annual General Meeting. Proposals are adopted on the basis of the rules set out in the articles of association.
However, any resolutions to amend the articles of association or dissolve the Company require at least 2/3 (two-thirds) of the share capital to be represented at the general meeting and that the proposed resolution be passed by at least 2/3 (two-thirds) of the votes cast and of the share capital entitled to vote represented at the general meeting.
Management’s review
In the event that the amount of share capital represented at the general meeting is insufficient but the proposed resolution is otherwise adopted, the Board of Directors convenes a new general meeting within fourteen days, to be held no later than six weeks after the first general meeting. At this meeting, the proposed resolution may be passed by 2/3 (two-thirds) of the votes cast without regard to the amount of share capital represented. Proposed resolutions to amend the articles of association, excluding proposed resolutions to dissolve the Company or merge with other banks, which have been unanimously passed by the Board of Representatives may be finally adopted at a single general meeting by a majority of at least 2/3 (two-thirds) of the votes cast and of the share capital entitled to vote represented at the general meeting, however, without regard to the share capital represented.
The next annual general meeting will be held at Aalborg Kongres & Kultur Center, Aalborghallen, Aalborg, Denmark, Tuesday 11 March 2014, at 5.30 p.m.
Uncertainty in relation to recognition and measurement
In connection with preparing the financial statements, the management has applied estimates and assessments relating to future situations as the basis for measuring assets and liabilities for accounting purposes on the balance sheet date.
The estimates and assessments rest on assumptions found prudent by the management. However, it may be the case that such estimates and assessments are subject to some uncertainty if things develop differently than expected in the bank’s external environment or in respect of matters of customers or business relations in general.
As is shown in the section ”Credit Risks” and note 1 “Accounting Policies”, effective from 2007, the bank has applied a model developed by the Association of Local Banks (Lokale Pengeinstitutter) for determining impairment losses by groups. The model has been and is regularly being improved, for instance in relation to procedures for testing the historical calculations in the model, but some uncertainty may still apply to the calculations for 2013.
The measurement of a number of other balance sheet items, including sector shares, land and buildings and provisions includes matters subject to some uncertainty.
It is the overall opinion of the management, however, that the uncertainty of the items mentioned is insignificant in relation to the Annual Report.
Business development
The bank makes a continuous effort to develop its business under the heading “The best version of Nørresundby Bank.”
One aspect of this is that the bank must regularly gauge and relate to developments in its market area to ensure that the bank’s organisational setup supports the strategic objectives.
Management’s review
This consideration is one reason why the number of branches has been reduced in recent years from 19 to 13 and why the number of staff has been reduced from 291 to 241.
In order to accommodate the greater demands on advice of business customers, the bank has set up Corporate Centres South and North, which has been conducive to an increased number of new business customers. Efforts in this area will continue in 2014.
In terms of personal customers, the implementation of a new advisory service system has generated increased business with existing customers, and the canvassing of new customers has resulted in a customer influx above expectations. An independent agency has carried out an analysis which reveals that the bank gets top marks from its customers in relation to advisory services in particular.
To attract the segment of young customers, the bank has launched a campaign on Facebook and at major education centres to offer young people advice on budgets, study grants, tax, etc.
Material events after the balance sheet date
No matters have arisen from the balance sheet date up until the present which alter the assessment of the bank’s 2013 Annual Report.
Outlook for 2014
After five years of crisis, weak indicators of improving economic trends are now generally being reported. The prospects have improved for a number of our largest export markets: Germany, the UK and, to a certain extent, Sweden.
Denmark has seen weak growth in the last three quarters of 2013 which means that the basis for increased private consumption seems to have been established, not least due to the considerable savings accumulated in recent years. Interest rates are also low, the unemployment rate is not historically high and the housing markets seems to be on the mend in certain parts of Denmark, evidenced by higher cash prices.
Despite these factors, the bank’s income is expected to come under pressure due to a continued low demand for lending and a slightly declining interest-rate margin, among other things due to keener competition, particularly in the area of corporate lending.
In terms of costs, we expect to see a stabilisation at the current level after the declines realised in the last few years.
The bank consequently forecasts a profit before market value adjustments and impairment losses on loans, advances, etc., of DKK 150–170 million. This amount includes expenses in the approximate amount of DKK 13.7 million for the insurance scheme for failing banks.
Management’s review
Management
Board of Directors
Pursuant to the articles of association, the Board of Directors is elected by the Board of Representatives. The Executive Committee, which consists of four members of the Board of Directors elected by the Board of Representatives, encourages the Board of Representatives to propose members. The proposals are discussed by the Executive Committee who subsequently recommends candidates for election to the Board of Directors at a meeting of the Board of Representatives. The recommendation is based on a desire to ensure that the Board of Directors meets the competency requirements in accordance with the bank’s business model. In addition, the recommendation also considers the need for diversity in relation to experience, gender, age, etc. The Board of Directors has discussed the range of competencies it should cover in order to best perform its tasks. Based on the bank’s business model, the Board of Directors has performed its annual evaluation and, based on their CVs, each Board member has made a description of their specific competencies in relation to the tasks of the bank’s Board of Directors.
The Board of Directors is of the opinion that its competencies support the bank’s business model and the individual members complement each other so that the Board of Directors’ aggregate skill-sets meet the requirements inherent in the business model.
The Board of Directors has four members who are elected by the Board of Representatives and two members elected by the employees. Just under 20% are women and 80% are men, aged 40 to 61.
In accordance with the Danish Financial Business Act, the bank has implemented a policy and an objective of equal gender distribution in the bank’s managerial positions. As from the 2013 financial year, the Act requires the bank to report on target figures for the gender composition of the Board of Directors and on the policy for increasing the share of the under-represented sex at the other executive levels in the bank.
For further details, reference is made to the bank’s report for 2013 (in Danish) on http://alm.nrsbank.dk/media/Det_underrepræsenterede_køn_ 2013.pdf.
Information about the management’s posts is provided on page 6 of the Annual Report and is considered an integral part of the Management’s Review.
Board of Management and general management
The bank’s Board of Management has two members.
The bank’s management has an objective of ensuring diversity in the management in relation to factors such as qualifications, experience and gender. Diversity at managerial level is endeavoured by investing in the development of managers, for instance.
As a general rule, manager and deputy manager positions are advertised in-house in the bank, and emphasis is put on representation of both genders when selecting candidates.
Management’s review
Employees meeting the requirements are encouraged to apply for vacant manager positions. This allows for promotion of women employees’ interested in managerial duties when managerial vacancies are announced internally. The combined management comprises 24% women and 76% men aged 38 to 66.
Employment agreements between the bank and its executive management are described in note 24, pages 56–57.
Audit committee
Nørresundby Bank has set up an audit committee as required by law. In 2013, the audit committee was supplemented with an additional member. The committee currently consists of four members of the Board of Directors, one of whom is elected by the employees.
Kresten Skjødt, chairman of the audit committee, is the independent and expert member. Based on Kresten Skjødt’s professional experience and educational background as a state-authorised public accountant, the bank’s Board of Directors has assessed that Kresten Skjødt possesses the requisite qualifications, cf. the Danish “Executive Order on Audit Committees in Undertakings and Groups subject to Supervision by the Danish Financial Supervisory Authority”.
The committee’s tasks include:
• monitoring the presentation of the financial statements;
• monitoring the efficient functioning of the bank’s internal control system, internal audit and risk management systems;
• monitoring the statutory audit of financial statements, etc.; and
• monitoring and control of the auditor’s independence.
The committee meets according to a fixed schedule 4–6 times a year.
Remuneration committee
In late 2010, the bank set up a remuneration committee in accordance with Section 77a of the Danish Financial Business Act. The remuneration committee includes Mads Hvolby, Chairman of the Board of Directors, and Poul Søe Jeppesen, Deputy Chairman.
The bank has drawn up a salary policy aimed at ensuring sound and effective risk management. Nørresundby Bank’s strategic management employs salary as an active instrument to reward employee qualifications and functions. The salary policy supports the bank’s business strategy, values and long-term objectives.
The salary is determined on the basis of a specific assessment and defined criteria.
There are no variable pay elements, neither in the form of salary, shares, options or pensions. The salary policy applies to the Board of Directors, Board of Management and major risk-takers.
Management’s review
In accordance with the salary policy, the remuneration committee has ensured that the remuneration of the above group of persons complies with the salary policy.
Meetings are held when required.
For further details, reference is made to the bank’s website http://alm.nrsbank.dk/media/lønpolitik.pdf. (in Danish)
Company announcements
Nørresundby Bank has published the following company announcements in 2013:
29 January 2013 Nørresundby Bank changes its branch structure
12 February 2013 Preliminary Announcement of Financial Statements 2012
12 February 2013 Annual Report 2012
13 February 2013 Report concerning register of insiders
17 February 2013 Notice convening the Annual General Meeting on 12 March 2013
12 March 2013 Course of events at the Annual General Meeting, 12 March 2013
30 April 2013 Quarterly Report for Q1 2013
27 August 2013 Interim Report 2013
13 September 2013 Report concerning register of insiders
22 October 2013 Quarterly Report for Q1–Q3 2013
29 November 2013 Financial Calendar 2014
Risk factors
Risk-taking is a necessary prerequisite for operating a bank. Risk management is consequently also a central focus area for Nørresundby Bank. The various types of risk affecting the bank and the measures taken to control and minimise risks are described in the bank’s risk report, which is available (in Danish) at the bank’s website on http://alm.nrsbank.dk/media/risikorapport_2013.pdf.
The bank has a two-tier management structure with a Board of Directors and a Board of Management. In terms of risk, the Board of Directors has laid down a set of written guidelines for the Board of Management, clearly specifying the responsibilities of each management level. The Board of Directors defines the overall policies and the Board of Management is responsible for the day-to-day management of the bank.
Risk management in its various forms is regularly discussed by the Board of Directors, and Nørresundby Bank has implemented a number of procedures and systems aimed at ensuring that risks are identified and
managed expediently and in accordance with applicable law.
Management’s review
The Board of Directors aims to safeguard the proper organisation of the bank and to establish risk policies and limits for all material risk types, including the presence of a detailed annual plan for the internal audit as well as the risk and compliance functions. In addition, all major credit facilities must be presented to the Board of Directors for approval. The Board of Directors also decides on general principles for risk management and monitoring. Regular reporting is made to the Board of Directors with a view to enabling the Board of Directors to verify whether the overall risk policies and the defined limits for this are complied with.
Among those responsible for this reporting to the Board of Directors is the bank’s risk manager whose tasks include the bank’s risk-prone activities across risk areas and organisational units. The risk manager is
responsible for the satisfactory performance of risk management in the bank, including creating an overview of the bank’s risks and overall risk exposure.
Furthermore, the bank’s compliance function is responsible for monitoring compliance with financial legislation, industry standards and the bank’s internal guidelines in all areas.
Finally, as mentioned on page 23, the bank has set up an audit committee, tasked with monitoring and verifying accounting and audit issues as well as preparing the Board of Directors' treatment of accounting and audit-related issues.
For the individual risk areas, the bank continues its overall policy of only assuming risks which comply with the business principles governing the operation of the bank and which the bank has the requisite resources to control in terms of competence.
Danish banks are required to publish certain risk information (Pillar III information) in consequence of the capital adequacy rules. Some of these disclosures appear in this Annual Report, and the bank has decided to publish the full body of disclosures required in the risk report at the above-mentioned website.
A general outline of the risk area is given below.
Credit risk
The credit risk is the risk of incurring a loss caused by customers’ failure, in full or in part, to meet their payment obligations.
Nørresundby Bank’s overarching strategy is to operate a locally rooted bank with a clearly defined market area, mainly comprising the North Denmark Region. Furthermore, the bank aims to obtain a suitable distribution between personal and business customers in its customer portfolio. The bank also emphasises long-term customer relations and does not desire to use risk-taking as a competitive parameter.
Nørresundby Bank’s credit risk is managed on the basis of the bank’s credit policy, one of the aims of which is to ensure that there is a balance between earnings and risk, and any risk-taking must be calculated in
advance.
Management’s review
The purpose is to ensure clear coherence, from the bank’s vision and strategy to its risk profile and daily risk-taking, and to ensure that the ratio of the bank’s risk profile to the capital base is expedient at all times. Nørresundby Bank believes that all granting of credit must be based on knowledge of the customers’ financial situation and that credit-worthiness constitutes a significant parameter for all customers.
The bank endeavours to reduce the credit risk as much as possible by requiring security for commitments. The most common types of security for commitments with personal customers are mortgage on real property, securities and vehicles. For business customers, the most common types of security are mortgage on real property, securities, operating equipment, inventories and debtors, as well as guarantees.
In relation to the bank’s equity, the lending leverage is 3.8, which is at the lowest end of the scale in relation to comparable banks. The bank thus desires to obtain suitable growth in loans and advances within the
framework of a lending leverage of 5.0.
The day-to-day management of credit risk is handled by the customer advisors together with the department managers. If an exposure exceeds the granting allowance of the department, the granting will be handled by the bank‘s central credit department, the Board of Management or the Board of Directors, depending on the extent of the commitment.
The Credit Department is responsible for the overall monitoring of the bank’s combined credit risk and carries out ongoing creditworthiness controls of the bank’s commitment portfolio.
Total large exposures, i.e. the share of credit exposures exceeding 10% of the bank’s capital base, amount to 44% of the capital base. This means that the bank’s share is low in relation to the Supervisory Diamond’s limit of 125% set out by the Danish Financial Supervisory Authority.
In an effort to reduce the credit risk, there has been increasing focus on exposures that have shown signs of weakness over the year. This has typically given rise to demands to reduce the exposures, for instance by divesting assets, providing further security and regularly submitting financial statement and budget follow-up material.
Based on the bank’s exposure in the property segment, focus naturally continues to be brought to bear on the development in the property area in general and on the bank’s property commitments in particular. In this connection, regular reassessments are made of the valuations. Through this follow-up procedure, it is ensured that a regular assessment is made of any needs for write-downs. At the Danish Financial Supervisory
Authority's latest ordinary inspection, the bank received confirmation that the valuations on which the bank has based its assessment of the individual property commitments are realistic.
Based on lists prepared by the Credit Department, the bank’s external and internal auditors perform annual reviews of selected commitments, among other things to assess the need for recognising impairment losses. The conclusions are discussed with the Board of Management and the Board of Directors. This review has included 20% of the bank’s total credit exposure (lending, guarantees, frameworks and unused credit facilities).
Management’s review
In addition to its usual credit follow-up and management in the Credit Department, the bank has credit-rating models in place which are used to assess the quality of the credit exposure. Statistical models are used for personal customers and small business customers, while an expert model is applied to major business customers. The statistical models include seven to ten different factors, including information about the customer’s assets and a range of behavioural data. The expert model for business customers is based on information about the customer’s solidity and earning capacity.
In connection with the debate in the daily newspapers on the bank’s increased risk of incurring losses on customers holding mortgages with instalment-free (interest-only) periods, the bank has prepared analyses of the ensuing consequences.
The bank’s total provision of mortgages on real property through Totalkredit currently amounts to
approximately DKK 9 billion, distributed among some 10,000 loans, approximately half of which are instalment-free.
Based on various approaches and criteria, the risk manager and the Credit Department have each made independent examinations of the consequences for loans whose instalment-free periods expire at the end of 2017. The aim was to assess whether these commitments exhibited a documented higher risk of losses related to the expiry of the instalment-free period.
The analyses showed that a higher risk of losses cannot be documented, which is also supported by the fact that 75 days after the September payment deadline only 4 properties were in arrears. There is additional support in the fact that only 2% of the bank’s total provision of mortgages through Totalkredit is in the lending range above 80% of the property’s assessed value.
Loans, advances and receivables are individually assessed in case of significant commitments. Loans, advances and receivables are also assessed in cases where individual impairment losses have already been realised or where the commitment is considered weak.
Finally, an assessment is made of whether loans, advances and receivables must be characterised as weak commitments. This assessment, which is based on signs of weakness, comprises loans for which an objective indication of impairment does not exist as well as loans that are not fully written down in consequence of expected payments or security provision.
Loans, advances and receivables not subject to individual impairment losses will be assessed in groups to determine whether objective indication of impairment exists at group level. The calculation of impairment losses by groups is based on the segmentation model developed by the Association of Local Banks, based on statistical loss data for the entire banking sector, adjusted to reflect local conditions. The basis for the model was adjusted on a quarterly basis in 2013 to incorporate the economic trends.
Please refer to Note 26 on pages 59–65.
Management’s review
Market risks
Market risk is the risk of the market value of the bank’s assets and liabilities changing due to altered market conditions. Market risk occurs as part of trading in and portfolios of securities, foreign currency and derivative financial instruments. Market risk is a consequence of the bank’s open positions on financial markets and can be divided into interest-rate risk, currency risk, shareholding risk and property risk.
The bank’s policy is to maintain market risks at a low level. For each type of risk, specific risk frameworks have been defined for monitoring and management, and the aim is to obtain a sensible ratio between risk and return.
If the bank desires to minimise or reduce the risks to which it is exposed, management and hedging will be effected by means of derivatives.
Market risks mainly arise in the Securities Department, which is also where they are hedged.
In connection with the management and monitoring of the bank’s market risks, the Board of Management receives daily reports from the Finance Department about the developments in market-value adjustments of bonds and equities in the bank’s own portfolio, including own shares, and currency developments. The reporting also includes the developments in deposits and loans and advances compared to budget expectations.
At least fortnightly, the Board of Management also receives reports prepared by the Finance Department on the aggregate exposure in securities and foreign exchange and, for the individual instrument and currency position, how much of the authorisation has been exploited, with a comment if authorisation limits have been exceeded. This reporting also includes a statement of market-value adjustments to the bank’s own portfolio, interest-rate risk and a statement of surplus liquidity since the last statement. The report is presented to the Board of Directors at each board meeting.
Please refer to Note 27 on pages 66–67.
Interest rate risk
The bank’s lending and deposit activities as well as balances with credit institutions are mainly contracted on a floating-rate basis. The primary interest-rate risk is associated with the bank’s bond portfolio which is related to the bank’s liquidity management. In 2013, the bond portfolio transactions reflected the volatile market so that both the price risk and interest-rate risk were taken into consideration. This investment strategy fully met the objective of ensuring a very limited interest-rate risk.
Interest-rate risks are also associated with the bank’s fixed-rate positions, which are hedged subject to individual assessments.
The bank’s interest-rate risk is managed daily by the Securities Department. Monitoring and reporting of the interest-rate risk to Board of Directors and Board of Management are handled by the Finance Department. The bank’s interest rate risk was 1–2% during the year.
Management’s review
Please refer to Note 27 on pages 66–67.
Currency risk
The bank desires the currency risk to be low and therefore reduces currency transactions through hedging. As part of the normal servicing of the bank’s customers, the bank conducts lending and deposit activities in foreign currencies.
The Securities Department performs the day-to-day management of currency positions, and the Finance Department monitors compliance with lines and is responsible for reporting to the bank’s Board of Directors and Board of Management.
The bank’s currency risk has been insignificant for a number of years. Please refer to Note 27 on pages 66–67.
Shareholding risk
The bank’s total equity portfolio amounted to DKK 265.7 million at the end of 2013, including a shareholding in strategic partners of DKK 194.7 million. The strategic partners include DLR Kredit A/S, PRAS A/S, BankInvest Holding A/S, Sparinvest Holding A/S and Letpension. This shareholding concerns companies that are
necessary for the operation of the bank, and these interests are consequently not considered part of the trading portfolio.
In several of the sector companies, the shares are redistributed so that the banks’ ownership shares always reflect the volume of the individual bank’s business with the sector company. The redistribution is typically based on the equity value of the sector company. The bank employs this calculation to adjust the recognised value of these shares when new information appears that supports a change in valuation.
The remaining part are shares in listed companies which make up only a modest part of the total shareholding, based on a desire to limit exposure.
The Securities Department performs the day-to-day management, whereas monitoring and reporting to Board of Directors and Board of Management is the Finance Department’s responsibility.
Please refer to Note 27 on pages 66–67.
Property risk
The bank has a policy of owning the premises where it operates. The bulk of the bank’s property portfolio therefore comprises owner-occupied properties, and the volume of investment properties is thus limited. The total property portfolio, which is modest compared to the bank’s balance sheet total, is regularly assessed by an external appraiser who determines their current fair value.
The assessments have only given rise to small adjustments under the financial statement items depreciation of tangible assets, market-value adjustments and equity.
Management’s review
Please refer to Note 15 on page 53.
Liquidity risk
Liquidity risks include the risk of the bank’s funding costs rising disproportionately, of the bank being prevented from engaging in new business due to insufficient access to liquidity and of the bank being unable to meet its payment obligations due to insufficient liquid resources.
To mitigate these risks, the bank has an internal objective of an excess cover of at least 50% in relation to the liquidity requirement.
The bank’s liquidity management is based on regular monitoring and management of the bank’s short and long-term liquidity risk, including stress testing
The Securities and Finance Department manages and monitors the bank’s liquidity risk. The Board of Management receives daily reports on surplus liquidity and trends in deposits and loans during the past five banking days compared to budget expectations. A statement of surplus liquidity is presented at each meeting of the Board of Directors.
Furthermore, the liquidity budgets prepared cover one year at a time, including a stress test. The report is presented to the Board of Directors each quarter.
The bank has raised funding that is not guaranteed by the government, maturing in Q1 2014. The funding is not significant and after maturing, the bank’s excess liquidity cover will remain at a highly satisfactory level with a good margin to the Supervisory Diamond requirements.
With its deposit surplus, the bank continues to have a robust foundation in terms of liquidity.
Operational risks
Operational risks are the risk of direct or indirect losses caused by inadequate or erroneous internal processes, human error, system defects or losses due to external events. Operational risks also comprise business and reputation risks.
The capital adequacy rules require the bank to quantify and recognise an amount for operational risks when determining solvency.
The bank applies the basic indicator approach, which involves quantification of an amount based on a calculation of the average net income in the past three financial years. The quantified amount is added to the risk-weighted assets to cover the bank’s operational risks.
Operational risks are managed across the organisation by means of a system of comprehensive business procedures and control measures that was developed with a view to ensuring an optimal process environment. An effort is made to minimise operational risks, for instance by separating execution and control.
Management’s review
An area which is important for the assessment of the bank’s operational risks is IT. The bank’s IT department and the management regularly review IT security, including the IT contingency plans in place. In this
connection, requirements and levels of accessibility and stability are determined for the IT systems and data used by the bank. The requirements defined apply to the bank’s internal IT department and the bank’s external IT supplier, Bankdata, which the bank co-owns with a number of other banks.
Supervisory diamond
The Danish Financial Supervisory Authority sets out a number of special risk areas with defined threshold values that should generally be observed by banks.
As is shown below, the bank maintains a good margin to the defined threshold values, but the bank has a property segment exposure of 23%. One-third of the exposure concerns loans to the social housing sector where the risk scenario is significantly lower than for general property financing because of the special financing model that applies to social housing.
Total large exposures < 125% of the
capital base. Growth in loans and advances < 20% a year
Nørresundby Bank 44% Nørresundby Bank 5%
Property exposure < 25% of loans
and advances Funding ratio < 1.0
Nørresundby Bank 23% Nørresundby Bank 0.65
Excess liquidity cover > 50%
Nørresundby Bank 212%
CSR and statutory accounting of social responsibility
The bank’s report on corporate social responsibility (CSR) is available on http://alm.nrsbank.dk/media/samfundsansvar_2013.pdf (in Danish).
Corporate governance and statutory accounting of corporate governance
The bank’s report on corporate governance is available on
http://alm.nrsbank.dk/media/virksomhedsledelse_2013.pdf (in Danish).
Income statement
2013 2012
Note (DKK 1.000) (DKK 1.000)
2 Interest income 334.389 371.728
3 Interest expense 60.783 77.172
Net interest income 273.606 294.556
Dividends from shares, etc. 9.668 2.148
4 Fee and commission income 155.257 140.469
Fees and commissions paid 15.517 12.978
Net interest and fee income 423.014 424.195
5 Market value adjustments 22.418 31.637
Other operating income 3.336 3.826
6 Staff costs and administrative expenses 246.458 256.555
7 Deprec., amort. and impairment of intang. and tangible assets 6.446 5.753
Other operating costs 15.305 11.237
26 Impairm. losses on loans, advances and other receivables, etc. 59.633 88.193
Profit before tax 120.926 97.920
8 Tax 31.607 24.446
Net profit for the year 89.319 73.474
Statement of total comprehensive income: Statement of total comprehensive income:
Net profit for the year 89.319 73.474
Value adjustment of owner-occupied property 1.802 -2.839
55 71
Provisions for pension benefits -381 -433
Other comprehensive income after tax 1.476 -3.201
Comprehensive income for the year 90.795 70.273
Net profit for the year 89.319 73.474
Proposed dividend 23.000 9.200
Allocated to shareholders' equity 66.319 64.274
Total amount allocated 89.319 73.474
Distribution of net profit
Tax concerning value adjustment of owner-occupied property, incl. effect due to a changed tax rate
Income statement
Balance sheet
Balance sheet
31.12.2013 31.12.2012
Note (DKK 1.000) (DKK 1.000)
ASSETS
Cash on hand and demand deposits with central banks 84.774 128.845
9 Receivables from credit institutions and central banks 135.627 236.033
10 Loans, advances and other receivables at amortised cost 5.513.713 5.268.881
11 Bonds at fair value 2.051.134 2.260.936
12 Shares, etc. 265.672 263.472
13 Assets related to pooled schemes 927.959 912.059
14 Intangible assets 1.864 578
15 Land and buildings, total 179.450 191.173
distributed between:
Investment property 49.200 52.654
Owner-occupied property 130.250 138.519
16 Other tangible assets 3.488 5.748
21 Deferred tax assets 1.752 572
Other assets 80.994 76.844
Prepayments 6.714 7.248
Balance sheet
Balance sheet
31.12.2013 31.12.2012
Note (DKK 1.000) (DKK 1.000)
EQUITY AND LIABILITIES
Payables
17 Payables to credit inst. and centr. banks 526.395 543.612
18 Deposits and other payables 6.146.611 6.334.204
Deposits in pooled schemes 934.976 933.369
19 Issued bonds at amortised cost 6.142 6.142
Actual tax liabilities 1.752 10.059
Other liabilities 180.636 160.814
Deferred income 1.652 1.438
Total payables 7.798.164 7.989.638
Provisions
20 Provisions for pension benefits and similar obligations 7.883 7.412
Provisions for losses on guarantees 2.690 4.595
Other provisions 11.581 8.193 Total provisions 22.154 20.200 Equity Equity 22 Share capital 46.000 46.000 Revaluation reserve 21.396 20.910 Retained earnings 1.342.427 1.266.441 Proposed dividend 23.000 9.200 Total equity 1.432.823 1.342.551
Total equity and liabilities 9.253.141 9.352.389
Changes in equity
Changes in equity
31.12.2013 31.12.2012
(DKK 1.000) (DKK 1.000)
Share capital:
Opening share capital 46.000 46.000
Capital injection or reduction 0 0
Closing share capital 46.000 46.000
Revaluation reserve:
Opening revaluation reserve 20.910 23.678
Other comprehensive income:
Value adjustment of owner-occupied property 431 -2.839
55 71
Closing revaluation reserve 21.396 20.910
Retained earnings:
Opening retained earnings 1.266.441 1.202.762
Net profit for the year 66.319 64.274
Dividend received on treasury shares 275 272
Purchase and sale of treasury shares 8.402 -434
Other comprehensive income:
Tax concerning value adjustment of owner-occupied property, incl. effect due to a changed tax rate
Other comprehensive income:
Value adjustm. of owner-occ. property, realised revaluation reserve 1.371 0
Provisions for pension benefits -381 -433
Closing retained earnings 1.342.427 1.266.441
Proposed dividend:
Opening proposed dividend 9.200 9.200
Dividends paid -9.200 -9.200
Distribution of net profit, proposed devidend 23.000 9.200
Closing proposed dividend 23.000 9.200
Closing shareholders' equity 1.432.823 1.342.551
Statement of total comprehensive income:
Profit for the year after tax 89.319 73.474
Value adjustment of owner-occupied property 1.802 -2.839
55 71
Provisions for pension benefits -381 -433
Other comprehensive income after tax 1.476 -3.201
Total comprehensive income 90.795 70.273
Tax concerning value adjustment of owner-occupied property, incl. effect due to a changed tax rate
Solvency statement and capital requirement
Solvency statement and capital requirement
31.12.2013 31.12.2012
(DKK 1.000) (DKK 1.000)
Shareholders' equity 1.432.823 1.342.551
Attributable to revaluation reserves -21.396 -20.910
Core capital 1.411.427 1.321.641
Less proposed dividend -23.000 -9.200
Less deferred tax asset -1.752 -572
Less intangible assets -1.864 -578
Less treasury shares as security for loans and advances -19.965 -14.256
Half the sum of investments > 10% -11.348 -12.008
Core capital after deduction 1.353.498 1.285.027
Revaluation reserves included 21.396 20.910
Capital base before deductions 1.374.894 1.305.937
Half the sum of investments > 10% -11.348 -12.008
Capital base after deduction 1.363.546 1.293.929
573.483 584.551
Capital base requirements pursuant to Section 124(2)(I) of the Danish Financial Business Act (8% of total weighted items)
Risk-weighted items with credit, counterparty and delivery risks 5.800.446 5.643.518
Risk-weighted items with market risk 566.628 857.010
Risk-weighted items with operational risk 825.034 825.866
Groups of impairment losses under the standardised approach -23.565 -19.501
Total risk-weighted items 7.168.543 7.306.893
Core capital ratio 18,9 17,6
Capital adequacy ratio 19,0 17,7
Stated in accordance with the Danish FSA's Executive Order on capital adequacy.
The bank applies the standardised approach for credit and market risks and the basic indicator approach for operational risks.
