Kamilla Hammerich Skytte, CEO, comments on the financial results:
“Realkredit Danmark recorded satisfactory financial results for 2023. A higher topline, lower costs and loan impairment reversals contributed to a significantly higher result than in 2022. Realkredit Danmark’s loan portfolio increased DKK 4 billion to DKK 806 billion at end-2023, even though lending activity was subdued due to higher interest rates, inflationary pressure and high energy prices, especially in the beginning of the year. The higher level of interest rates opened up for a range of remortgaging opportunities, enabling our customers to reduce their outstanding debt by DKK 6.6 billion in 2023. We were pleased to see that, despite more difficult financial conditions, homeowners were generally able to absorb the higher loan costs. We recorded net loan impairment reversals and low arrears and have so far recorded only a very modest increase in the number of forced sales, which remains at a low level. Credit quality remained strong, with an average LTV ratio at end-2023 of 53%, against 48% at end-2022.
In the coming years, Realkredit Danmark aims to consolidate its market position. We constantly strive to improve the customer experience and journey. For our personal customers, we lowered our administration margin on interest-only mortgages in 2023 and changed our pricing structure to create increased financial security for our customers. We entered into a collaboration with Tryg that enables our customers to take out loan insurance for their home loans. On our website, rd.dk, we have developed new tools that make it easier to get information about interest rates and remortgaging opportunities.
At Realkredit Danmark and Danske Bank, the transition towards a sustainable future is an integral key element of our advisory services and ongoing business development. We have taken the first steps towards differentiating the terms and conditions we offer our customers on the basis of the energy efficiency of a property and the customer’s ESG profile.”
The report is available at rd.dk. Highlights are shown below:
- In 2023, Realkredit Danmark’s net profit was DKK 4,394 million, against
DKK 3,626 million the year before. The increase in net profit for 2023 was attributable primarily to income from higher interest rate levels and lower loan impairment charges.
- Income rose significantly driven by the higher interest rate levels. The administration margin decreased due to lower margins. Fee income fell due to lower lending activity, especially in the beginning of the year.
- Expenses amounted to DKK 1,055 million in 2023, against DKK 1,105 million in 2022. The decrease was mainly due to a one-off in 2022 of DKK 48 million for Realkredit Danmark’s part of debt collection remediation.
- Credit quality remained solid and loan impairment charges amounted to an income of DKK 114 million in 2023, against an expense of DKK 212 million in 2022. 2022 was affected by charges related to Realkredit Danmark’s share of debt collection write-offs of DKK 174 million.
- Customers continued to remortgage to a higher interest rate, thus reducing their nominal outstanding debt by DKK 6.6 billion. However, even with a fall in lending activity and reduced outstanding debt, Realkredit Danmark’s total loan portfolio increased about DKK 4 billion nominally from DKK 802 billion to DKK 806 billion.
- Corporate segments are showing increasing interest in how to mitigate the climate impact of their property portfolio. To cater for our customers’ needs, we trained our advisers, started to build new solutions and entered into partnership agreements with partners outside the financial industry during 2023. Further, demand for green bond mortgage finance continued, and at 31 December 2023, total green lending amounted to DKK 27.1 billion.
- Personal customers are offered a lower establishment fee on mortgage loans at a discount for energy renovation or if they buy or own a property with a strong EPC. However, customer demand dampened during 2023, with the decrease in energy prices making it less attractive to do renovations.
- In 2023, the Systemic Risk Council recommended that a systemic buffer of 7% be introduced for exposures to property companies. As a result, Realkredit Danmark will face increasing capital buffer requirements in 2024, although the exact impact is uncertain. The Board of Directors is therefore recommending that no dividend be paid for 2023 in order to ensure the best possible capital structure later in 2024 when final calibration of the buffer requirement has been clarified.
- Realkredit Danmark expects net profit in 2024 to be somewhat below net profit in 2023, primarily due to normalised impairment levels.
Read Annual Report 2023 (pdf)
Read Annual Report 2023 (zip)
Contact: Kamilla Hammerich Skytte, CEO, tel. +45 45 13 20 82