10 February 2022

2021 Highlights

Vestjysk Bank realised a very satisfactory profit after tax of DKK 1,080 million in 2021.

As mentioned in the 2021 interim reports, the performance was strongly affected by non-recurring income and costs in connection with the merger with Den Jyske Sparekasse in January 2021. Adjusted for non-recurring items in that respect, the profit after tax amounted to DKK 725 million.

The merger with Den Jyske Sparekasse proceeded according to plan. The expected synergies are being realised and non-recurring costs in connection with the merger are lower than estimated. We consider the merger process to have been completed.

Alongside the merger process, Vestjysk Bank’s efforts to develop the business focus have produced satisfactory results. In addition to its focus on servicing both retail and business customers in local branches, the Bank is giving more attention to its niche areas (healthcare, renewable energy, tourism, fisheries and agriculture), most recently by establishing a Fisheries Centre in Thyborøn. 

The profit for the year was not directly affected by the coronavirus pandemic. The profit was impacted by the impairment provision for economic uncertainty caused by the pandemic. The growing uncertainty regarding African Swine Fever (ASF) also caused the Bank to increase its impairment provision at 31 December 2021. Since 30 September 2021, the Bank has increased its impairment provision by DKK 67 million from DKK 258 million to DKK 325 million, corresponding to 1.9% of net loans, in response to the economic uncertainty. The impairment provision covers economic uncertainties related to rising animal feeding and energy prices for the Bank's business customers, and particularly piglet producers, the risk of further ASF outbreak, the risk of bottleneck problems in the Danish labour market and, not least, the uncertainty surrounding the coronavirus pandemic.

In connection with the Bank's budget and forecast updates in Q4 2021, the deferred tax asset was increased by additional tax income of DKK 113 million. Combined with the DKK 82 million tax income in connection with the merger, tax income for 2021 totalled DKK 195 million.

The highlights below were calculated after adjustment for non-recurring items resulting from the merger with Den Jyske Sparekasse. Comparative figures have been stated at 31 December 2020 and have not been adjusted for Den Jyske Sparekasse.

• Profit after tax of DKK 725 million (31 December 2020: DKK 303 million).
• Return on equity of 14.7% p.a. after tax (31 December 2020: 9.8%).
• Core income of DKK 1,538 million (31 December 2020: DKK 887 million).
• Cost ratio of 60.8% (31 December 2020: 59.8%)
• Core earnings before impairment allowances of DKK 614 million (31 December 2020: DKK 357 million).
• Net reversals of impairment of loans and receivables, etc. of DKK 20 million (31 December 2020: net impairment of DKK 29 million).
• Common equity tier 1 capital ratio of 16.7% (31 December 2020: 20.9%).

Follow-up on outlook for 2021 and Vestjysk Bank’s outlook for 2022

In connection with the annual report for 2020, the Bank guided a profit after tax in the range of DKK 500-550 million for 2021, adjusted for non-recurring items resulting from the merger with Den Jyske Sparekasse. The Bank also announced expectations for overall profit after tax including non-recurring items of about DKK 800-900 million.

The Bank has subsequently upgraded the guidance three times – on 9 August 2021, 12 October 2021 and 13 January 2022. In the most recent upgrade, the forecast profit after tax excluding non-recurring items relating to the merger with Den Jyske Sparekasse was DKK 725 million, while the Bank’s expectations for the overall profit after tax including non-recurring items was DKK 1,080 million.

The reported profit for 2021 was in accordance with the Bank’s forecast. Vestjysk Bank guides a profit before tax in 2022 of around DKK 600-650 million. Vestjysk Bank’s profit guidance for 2022 is subject to uncertainty.

The uncertainty mainly relates to the Bank’s agricultural exposures. Particularly, uncertainties related to rising animal feeding and energy prices and the risk of ASF (African Swine Fever) spreading in Denmark and the declining pork settlement prices could have a significant adverse impact on the Bank’s impairment losses.

Enquiries
Please address any enquiries regarding the present announcement to Jan Ulsø Madsen, CEO, at tel. (+45) 96 63 21 04.

Vestjysk Bank A/S

Kim Duus                                         Jan Ulsø Madsen
Chairman                                         CEO



Vestjysk Bank A/S
Industrivej Syd 13C
7400 Herning
Tel. (+45) 96 63 20 00

CVR no. 34 63 13 28

www.vestjyskbank.dk