Net profit of DKK 2,693 million for the first nine months of 2020
Realkredit Danmark today published its interim report for the first nine months of 2020.
Carsten Nøddebo, CEO, comments on the financial results:
“The housing market has held up well during the corona crisis and lending rose at Realkredit Danmark in the third quarter. However, net profit for the first nine months of the year was lower than for the same period in 2019, mainly because of an increase in loan impairments.
In September this year, we launched the fixed-rate FlexLife® loan, which was very well received by homeowners and investors. At the end of September, we had entered into agreements with customers for this loan type for a total of one billion kroner, and demand for the loan has continued into the fourth quarter. This matches the trend we saw in 2017 when we launched the variable-rate FlexLife® loan, for which the loan volume currently exceeds DKK 39 billion.
In addition to the possibility of an interest-only period of 30 years, the FlexLife® loan offers increased flexibility as there is an option of adjusting payments throughout the term of the loan. We expect the FlexLife® loan over time to become the preferred loan type for homeowners who have already repaid part of their mortgage.”
Highlights are shown below:
The Realkredit Danmark Group recorded a net profit of DKK 2,693 million in the first nine months of 2020, against DKK 3,233 million in the first nine months of 2019. The profit was affected by higher loan impairment charges.
Impairments amounted to DKK 552 million in the first nine months of 2020, against DKK 294 million in the first nine months of 2019. In the third quarter of 2020, impairments amounted to DKK 82 million. In the first nine months of 2020, impairments were affected by an adjustment of DKK 450 million to reflect the continued uncertainty as to the macroeconomic effects of the corona crisis. Despite the corona crisis, underlying credit quality remained solid with low delinquencies and robust collateral.
Together with the rest of the Danske Bank Group, we are strongly committed to helping and supporting customers who are financially impacted by the corona crisis.
With interest rates being at an all-time low, the remortgaging activity recorded in 2019 continued into 2020, albeit at a lower level. After a decent level in the first quarter of 2020, remortgaging activity fell when the corona crisis set in, and this resulted in lower remortgaging activity in the second and third quarters of 2020. Overall, Realkredit Danmark remortgaged loans for DKK 63 billion in the first nine months of 2020.
Fixed-rate loans have again become the preferred loan type among homeowners in Denmark. As customers are also increasingly choosing to pay instalments, this resulted in a small drop in administration margin income.
Realkredit Danmark was the first among Danish mortgage credit institutions to offer green bonds to support the green transition. To date, we have disbursed loans with a total value of DKK 5.9 billion. We now also offer green bonds to finance property in Sweden, and we plan to be able in the future to also offer green loans in Norway. The bonds are issued to finance purchases by large business customers of properties with documentation of energy efficiency.
Realkredit Danmark expects net profit for 2020 to be somewhat lower than net profit for 2019.
Read interim report for the first nine months of 2020
Contact: Carsten Nøddebo, CEO, tel. +45 45 13 20 82