Realkredit Danmark reports net profit of DKK 2,035 million for the first half of 2019
Realkredit Danmark today published its interim report for the first half of 2019.
Carsten Nøddebo, CEO, comments on the financial results:
“Net profit is down relative to the first half of last year, mainly because of an increase in impairments. The second quarter was characterised by very extensive remortgaging activity, with loans in an amount of roughly DKK 110 billion being remortgaged across all mortgage providers. This is the biggest volume since 2005, and it resulted in significant interest savings for our customers. It seems likely that interest rates will remain low in coming months and that the high level of remortgaging activity will continue. Customers are increasingly opting for loans with longer refinancing intervals and out of interest-only loans, and this trend is reflected in a small decline in our administration margin income.”
Highlights are shown below:
- The Realkredit Danmark Group recorded a net profit of DKK 2,035 million in the first half of 2019, against DKK 2,475 million in the first half of 2018. The profit was affected by higher impairments.
- Impairments amounted to an expense of DKK 287 million in the first half of 2019, against an income of DKK 191 million in the first half of 2018. The development was due to an update and specification of the statistical loss models used to calculate expected credit losses. The underlying credit quality remains strong with low delinquencies and good collateral.
- With interest rates falling to all time low levels, borrowers have remortgaged their loans at an activity level not seen since 2005. We expect the high remortgaging activity to continue in the months to come, as interest rates are projected to stay low. The effect on earnings at Realkredit Danmark has been modest.
- In the first half of 2019, borrower demand centred on fixed-rate loans, FlexLån® loans with 5-year refinancing intervals and FlexLife® loans, which resulted in a small decline in administration margin income.
- Administration margin income totalled DKK 3,057 million in the first half of 2019, down 2% from the same period in 2018, mainly as a result of lower average margins because an increasing number of customers opt out of interest-only loans and into loans with longer refinancing intervals.
- Realkredit Danmark has introduced green bonds that can be issued to fund loans for commercial property. The first loan offers were made in April 2019, and loans have been granted for DKK 580 million.
- Realkredit Danmark expects net profit for 2019 to be at a lower level than in 2018.
Read Interim report for the First Half of 2019
Contact: Carsten Nøddebo, CEO, tel. +45 45 13 20 82.