Net profit of DKK 541 million for the first quarter of 2020
Realkredit Danmark today published its interim report for the first quarter of 2020.
Carsten Nøddebo, CEO, comments on the financial results:
“Following a satisfactory start to 2020 with good activity in the housing and property market, the corona crisis hit the Danish economy towards the end of the first quarter. As a result, loan impair-ments rose, and this had a negative effect on our result.
Our main focus right now is on providing help and advice to our customers so that they can cope with the situation in the best possible way. It is also, however, our assessment that, because of the continually low level of interest rates and generally robust household finances, the vast majority of our customers will be in a good position to handle the economic downturn”.
Highlights are shown below:
The Realkredit Danmark Group recorded a net profit of DKK 541 million for the first quarter of 2020, against DKK 1,037 million for the year-earlier period. The profit was affected by higher impairments.
Impairments amounted to an expense of DKK 705 million for the first quarter of 2020, against DKK 134 million for the first quarter of 2019. The development reflects Realkredit Danmark’s expectation that the Danish economy will go into recession in 2020 due to the corona crisis. This had a negative impact on impairments, which increased significantly due to changes in macroeconomic model assumptions, and of which a large part was recognised in the first quarter of the year. Despite the corona crisis, the underlying credit quality remains strong with low delinquencies and robust collateral.
With interest rates falling to all-time lows, the remortgaging activity recorded in 2019 has continued into 2020.
In the first quarter of 2020, borrower demand centred primarily on fixed-rate mortgages and FlexLån® with 5-year refinancing intervals, and customers are increasingly making repayments on their loans. This resulted in a small decline in administration margin income.
Administration margin income amounted to DKK 1,497 million in the first quarter of 2020 and was down 2% from the level in the first quarter of 2019, especially because of lower average margins as customers are increasingly opting out of interest-only loans and choosing loans with longer interest reset intervals.
Realkredit Danmark expects net profit for 2020 to be somewhat lower that in 2019.
Read interim report for first quarter of 2020
Contact: Carsten Nøddebo, CEO, tel. +45 45 13 20 77.