Realkredit Danmark reports net profit of DKK 1,037 million for the first quarter of 2019
Realkredit Danmark today published its interim report for the first quarter of 2019.
Carsten Nøddebo, CEO, comments on the financial results:
“The result is down relative to that of last year – primarily because of an increase in impairment charges. That increase was due in particular to adjustments made to the models used for determining credit losses on retail customers. Underlying credit quality remains solid. In addition, the result reflects the fact that, in line with our recommendations, more home owners have opted for loans with longer refinancing intervals and loans with repayment of principal. This led to a small decline in administration margin income, but also contributes to financial confidence and robustness.”
Highlights are shown below:
- In the first quarter of 2019, the Realkredit Danmark Group recorded a net profit of DKK 1,037 million, against DKK 1,249 million in the first quarter of 2018. The decrease was due primarily to an increase in loan impairment charges. Remortgaging activity was lower than it was in the first quarter of 2018.
- Impairments totalled an expense of DKK 134 million in the first quarter of 2019, against an income of DKK 83 million in the same period of 2018. The higher impairments were due mainly 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 adequate col-lateral.
- In the first quarter of 2019, borrower demand centred on fixed-rate loans, FlexLån® loans with 5-year refinancing intervals and FlexLife® loans, which resulted in a small drop in administra-tion margin income.
- Administration margin income totalled DKK 1,535 million in the first quarter of 2019, down 2% from DKK 1,559 million 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 expects net profit for 2019 to be at the same level as net profit for 2018.
Green financing of properties
In the first quarter of 2019, Realkredit Danmark introduced green bonds. These bonds can be issued to fund loans to large business customers who seek financing of energy-efficient properties.
“We want to contribute to the transition to a green economy, and Realkredit Danmark is the first Danish mortgage credit institution to introduce green bonds that large business customers can use to finance energy-efficient properties”, says Carsten Nøddebo. “Our green bonds are very popular with both customers and investors.”
The first loan offers were made in April 2019.
Read Interim report for the first quarter of 2019
Contact: Carsten Nøddebo, CEO, tel. +45 45 13 20 82.