Vestjysk Bank’s Annual Report 2020 - Seite 2

Our ambition is to be the strongest local bank in Denmark.

Future synergies from the merger are expected to amount to DKK 150 million annually. Non-recurring costs in relation to the merger are expected to total DKK 200 million. 

Special circumstances affecting the Bank during the period, including impact so far of the coronavirus crisis
In 2020, the Bank was particularly impacted by the coronavirus crisis, which took hold in March 2020 and continued throughout 2020 and into 2021.

Despite the coronavirus crisis, the Bank has so far been able to maintain operations, and the level of customer activity has been high.

The Bank’s advisers have been in regular contact with business customers to ascertain what the Bank can do to help them through the coronavirus crisis and to advise them in regard to the rescue packages provided by the Danish government and parliament. So far, the crisis has not had any major direct impact on the Bank’s loans or individual impairment losses.

Vestjysk Bank has made a range of facilities available to retail customers in the form of loan repayment holidays, temporary overdraft facilities and increased credit facilities to support customers directly hit by the lockdown. So far, these measures have also had a limited impact on the Bank.

The sector distribution of the Bank’s lending has proved advantageous during the crisis. Most of the Bank’s lending is in sectors that have not been particularly badly affected by the coronavirus crisis. The hotel, restaurant, transport and retail sectors are the hardest hit, and these sectors only account for 10% of the Bank’s total lending.

Vestjysk Bank’s two main sectors, agriculture and real estate, have so far been relatively unaffected by the coronavirus crisis. The pandemic has devastated the mink industry, however, bringing an end to mink farming in Denmark. From an overall financial perspective, the Danish government’s compensation package for mink farmers is considered adequate, and the package had a positive effect on the Bank’s impairment losses relating to this industry in 2020. The Bank’s exposure to the mink industry is 0.7% of total gross lending, or DKK 112 million.

In the real estate sector, the bank are so far seeing an effect on commercial leases, where agreements have been made to defer rent payments as a result of the coronavirus crisis. Depending on the duration and depth of the crisis, this effect could widen. Private residential rentals have not been significantly affected at this point, and this is not expected to change significantly.