Vestjysk Bank’s Q1 2021 Quarterly Report

·6 min read

Nasdaq Copenhagen A/S

19 May 2021

Q1 2021 Highlights

Vestjysk Bank delivered a profit after tax of DKK 548 million for Q1 2021. The performance was significantly affected by non-recurring income and costs in connection with the merger with Den Jyske Sparekasse. Disregarding non-recurring income and costs the profit after tax equals DKK 95 million which is satisfactory.

Non-recurring income of DKK 477 million was recognised during the period as an preliminary estimat, representing a positive difference (badwill) between the purchase price of the investment in Den Jyske Sparekasse and the value of the acquired net assets. The calculated negative goodwill is considered taxable income, on which DKK 35 million is payable in tax. The continuing bank’s earnings capacity has increased, resulting in non-recurring tax income of DKK 82 million recognised as a deferred tax asset. Non-recurring costs in connection with the merger amounted to DKK 69 million for the period. Therefore the income for Q1 2021 is affected by net non-recurring income of DKK 453 million.

The profit from ordinary banking operations was positively affected by the continued high level of activity. Developments in the housing area were particularly positive with a large number of real estate trades in the retail segment.

Positive market value adjustments together with the synergies gradually achieved from the merger with Den Jyske Sparekasse all contributed to the positive development.

The Bank’s impairment allowances during the period were not affected to any significant extent by the coronavirus crisis, Brexit or the outbreak of African swine fever in Germany, but the Bank is keeping a close eye on developments, and management maintains the impairment provision for economic uncertainty at the level applied at 31 December 2020.

The highlights below were calculated after adjustment for non-recurring items resulting from the merger with Den Jyske Sparekasse.

  • Profit after tax of DKK 95 million.

  • Return on equity of 8.4% p.a. after tax.

  • Core income of DKK 364 million.

  • Market value adjustments of DKK 32 million.

  • Cost ratio of 65.5.

  • Core earnings before impairment allowances of DKK 126 million.

  • Impairment of loans and receivables, etc. of DKK 22 million, which equals an impairment ratio of 0,1 %.

  • The Bank’s capital requirements totalled 13.1%, consisting of an individual solvency need of 10.6% and a general capital conservation buffer of 2.5%.

  • The Bank’s total capital ratio was 21.1%. The excess cover was 8.0 percentage points, or DKK 1,850 million. Adjusted for the part of capital required to cover the 1.9 percentage point MREL add-on, the excess cover was 6.9 percentage points, or DKK 1,596 million.

Merger with Den Jyske Sparekasse
The merger with Den Jyske Sparekasse is proceeding according to plan and in line with our ambition to become the strongest local bank in Denmark.

The redundancies effected in January 2021 meant that the Bank is well under way to realising synergies in the total amount of DKK 150 million, which are expected to be fully phased in by 2022. At the end of January, the number of full-time employees was reduced by 75 compared with the headcount at 31 December 2020.

Non-recurring costs in connection with the merger were at the expected overall level.

The table below compares the business volume at 31 March 2021 with the business volume at 31 December 2020 calculated on a pro forma basis. The comparative figures at 31 December 2020 were derived in a simple calculation of the business volumes of Vestjysk Bank and Den Jyske Sparekasse at 31 December 2020.

Business volume

31 March 2021

31 December 2020



Net loans









Contingent liabilities



Custody services



Arranged mortgage loans



Business volume, including custody accounts and arranged mortgaged loans



The table shows that the Bank has succeeded in increasing the business volume following the merger, including loans to customers and arranged mortgage loans. This is a positive result in a lending market under pressure due to the government’s coronavirus pandemic relief packages.

Coronavirus crisis, Brexit and African swine fever (ASF)
The Bank’s financial statements for Q1 2021 were not significantly affected by the coronavirus crisis, Brexit or the ASF outbreak in Germany.

At 31 March 2021, the Bank’s total impairment provision in response to economic uncertainty amounted to DKK 289 million, corresponding to 2% of total lending. This provision based on a management estimate was in line with the DKK 310 million provision at 31 December 2020. Since 31 December 2020, the Bank has individualised part of the provision relating to uncertainty regarding settlement prices and portfolio values in the agricultural sector. As a result, the changes in the provision for economic uncertainty did not affect the profit for Q1 2021.

The Bank believes that the state of the economy remains subject to considerable risk, particularly in relation to the consequences of the phase-out and winding up of the government’s coronavirus relief programmes.

In the autumn of 2020, the agricultural sector experienced plunging prices of piglets, among other things. Generally, pig breeders have experienced price increases in 2021.

Dairy farmers also saw price increases throughout Q1 2021, the price of milk currently being at its highest since 2017.

Across the agricultural sector, settlement prices are now generally considered to be at a satisfactory level.

Part of the Bank’s loans to the fishing industry is affected by quota reductions, which are mainly due to the Brexit agreement with the United Kingdom. The framework conditions for large parts of the Danish fishing industry are currently pending a political agreement. The Bank’s risk in this respect is assessed to be covered by the impairment provision for economic uncertainty.

Of the Bank’s total loans and guarantees at 31 March 2020, 13% related to the agricultural sector and 3% related to the fishing industry.

Outlook for 2021
The Bank’s profit guidance for 2021 is subject to uncertainty, primarily linked to the Bank’s agricultural and fishing industry exposure and the economic consequences of the coronavirus crisis, including in particular the winding up of government relief programmes. Vestjysk Bank maintains its guidance of a profit after tax in the range of DKK 500-550 million for 2021, adjusted for non-recurring items resulting from the merger with Den Jyske Sparekasse. Guidance including non-recurring items and after tax is DKK 800-900 million.

Conference call

A conference call for analysts will be held on 19 May at 13:00 p.m. (Danish time) during which CEO Jan Ulsø Madsen will comment on the Q1 2021 Quarterly Report. Please use this link to register for and participate in the conference call:

Please address any enquiries regarding the present announcement to Jan Ulsø Madsen, CEO, at tel. (+45) 96 63 21 04.

Vestjysk Bank A/S

Kim Duus Jan Ulsø Madsen
Chairman CEO

Vestjysk Bank A/S
Torvet 4-5
7620 Lemvig
Tel. (+45) 96 63 20 00

CVR no. 34 63 13 28


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