Solid start to the year driven by good customer activity, continued cost focus and strong credit quality Net profit of DKK 3.1 billion for the first quarter of 2021 - Seite 2

Together with strong liquidity buffers, this means that we continue to be well-equipped to help our customers through the economic uncertainty. The recovery of economic activity in Denmark as well as the other Nordic countries during the second half of the year is likely to support customer activity and credit demand and as such also be supportive for our income streams in the second half of the year, even though we expect an increase in the number of bankruptcies.

Delivering on both income and cost
In general, our diversified and resilient business model continued to prove valuable in the current lending and interest rate environment, ensuring a positive development in our income, which was up 17%. Moreover, solid customer activity resulted in an increase in lending of 3%. As costs also decreased 2%, our profitability strengthened and our return on equity improved from -3.8% in the first quarter of 2020 to 7.5% in the first quarter of this year.

Net interest income was positively impacted by the lending growth in the Nordic countries and deposit repricing effective from January 2021, although the positive effect was offset, among other things, by bank lending to personal customers continuing to decline as customers switched to mortgage loans, the repayment of bank loans accelerating in the first quarter and lower credit demand from business customers.

Net fee and trading income held up well in the first quarter on the back of strong customer activity in the capital markets, constructive conditions in the financial markets and good traction in asset management. Among many successful transactions executed during the quarter, we supported Tryg in their DKK 37 billion rights issue – the largest ever ECM capital raising transaction in the Nordic countries.

As intended in our 2023 plan, we made large investments in our transformation and a stabilisation of our underlying cost development during 2020, while in the first quarter of 2021, we continued to see the results of our strict focus on cost control as evidenced by the downward trend in total costs, and the execution of planned cost initiatives continues.

The execution of our Better Bank plan proceeded according to plan in the first quarter, and our new organisation is now in place, in which the Better Bank initiatives are an even more integral part of the business.

“We have seen our business deliver good growth in many of our Nordic markets in the first quarter on the back of solid customer activity. While net interest income was impacted by margin pressure, our capital markets platform also ensured a positive development in both fee and trading income. With commercial momentum, cost measures having a tangible effect and strong credit quality, we are well positioned to deliver on our financial targets for the year,” says Stephan Engels, CFO.