TIDMSYDB 
 
   Company Announcement No 29/2019 
 
   28 August 2019 
 
   Sydbank's Interim Report -- First Half 2019 
 
   1H 2019 was characterised by solid credit quality and a new drop in 
interest rates which has caused historically high remortgaging activity 
 
   We are living in a time of great change -- also when it comes to the 
economy. Uncertainty has grown and is spilling over into the interest 
rate environment, which has deteriorated even further. As a consequence 
we will introduce negative interest rates as regards retail customers' 
demand deposits in excess of DKK 7.5m. 
 
   The deposit surplus as regards retail customers has continued its march 
upwards. The deposit surplus can be deposited with the Danish central 
bank at an interest rate of minus 0.65% or be invested in bonds, which 
also have a negative interest rate -- even long-term bonds. This has had 
a significant impact on the Bank's income. The negative interest rate 
environment is expected to continue for several years. 
 
   Therefore we will introduce a limit of DKK 7.5m on retail customers' 
demand deposits carrying an interest rate of 0%. The interest rate on 
deposits in excess of DKK 7.5m is subject to individual agreement with 
the Bank. In the absence of an agreement the interest rate will be minus 
0.6% p.a. 
 
   Sydbank is working to build a stronger bank, which has already sparked a 
number of initiatives with a positive result. However the terms of 
running a bank are changing, including: 
 
 
   -- A continued drop in interest margins due to the competitive environment 
 
   -- A worsened negative interest rate environment which must be expected for 
      a many years 
 
   -- Additional costs due to regulation, including costs for compliance and 
      the issue of NEP capital 
 
   -- Low demand for loans. 
 
 
   As a result of these changes it is more important than ever to ensure 
efficient banking operations, including a strong focus on the 
development and implementation of automated processes as well as on the 
profitability of products and areas. In addition to compliance and IT 
security the Bank gives high priority to process automation. The 
objective is to ensure Sydbank a favourable position in the future 
financial industry. 
 
   CEO Karen Frøsig comments on Sydbank's 1H result: 
 
 
   -- In these times of considerable economic uncertainty an important task is 
      to improve the ability of customers and Sydbank to withstand financial 
      blows. Therefore we are pleased that customers' finances improved also in 
      this quarter and that we can reverse impairment charges for the ninth 
      consecutive quarter and that we can see a further improvement in total 
      credit intermediation. 
 
 
   Karen Frøsig elaborates: 
 
 
   -- It is clear to us that our strategy, "A stronger bank", is moving Sydbank 
      in the right direction and we are determined to remain on course. We 
      still aim to strengthen the Bank's customer relationships, processes, 
      reputation and results and we continue to focus sharply on costs. 
 
 
   1H 2019 -- highlights 
 
 
   -- Profit of DKK 389m equals a return on equity of 7.0% p.a. after tax. 
 
   -- Total income of DKK 1,941m is 9% lower than total income in 1H 2018. 
 
   -- Impairment charges for loans and advances represent an income of DKK 34m 
      compared with an income of DKK 57m in the same period in 2018. 
 
   -- Total credit intermediation has increased by DKK 0.7bn, equal to 0.5% 
      compared to year-end 2018. 
 
   -- A share buyback of DKK 250m was commenced on 2 May 2019. 
 
   -- Predominantly due to the announced share buyback programme, the Common 
      Equity Tier 1 capital ratio has declined by 0.7 percentage points 
      compared to year-end 2018 and constitutes 16.6% excluding profit for the 
      period. When including 50% of profit for the period, the Common Equity 
      Tier 1 capital ratio stands at 17.0%. 
 
 
   Outlook for 2019 
 
 
   -- Limited growth is projected for the Danish economy in 2019. 
 
   -- Total income is expected to be lower than the income generated in 2018. 
 
   -- Costs (core earnings) are projected to rise slightly in 2019. 
 
   -- Impairment charges for 2019 are forecast to be at a low level. 
 
   -- Non-recurring costs are expected to represent around DKK 75m. 
 
   -- Profit after tax is expected to be in the range of DKK 800-1,100m. Profit 
      after tax is expected to be in the lower part of the range. 
 
   -- The outlook is subject to uncertainty and depends among other things on 
      financial market developments and macroeconomic factors. 
 
   Additional information 
 
   Jørn Adam Møller, CFO, tel +45 74 37 24 00 
 
   Louise Degn-Hansen, Head of Communications, tel +45 61 20 48 04 
 
   Karen Frøsig, CEO, Bjarne Larsen, Deputy Group Chief Executive, and 
Jørn Adam Møller, CFO, will present the Interim Report today 
at 10.00 (CET) at a teleconference. The teleconference will be held in 
Danish and may be attended via 
https://www.globenewswire.com/Tracker?data=IjghVOIRqlAi_2qJFIK87xWrkS8AaSqsUHeA_wVJbkPZyHDqjr_pkgp36n15CrLEr2pkUMIwbPFeRN2fzub-4meFktAp7T4_-MOVuCSQ5qnCzQMNHWqRECR2KfCTWXU7izHjluXShgCPAZPWGcs4LsbVy5vMzpowaW8GWNZIIldER4NEMC0vsmTUttCmd835COMmyrklRVbZv-OK4JseUg== 
https://www.sydbank.com/about/investor-relations/annual-report 
 
   Attendees are invited to call +45 35 44 55 77. Please quote the 
following code: 301290491# 
 
   Attachments 
 
 
   -- FM 29 UK 
      https://ml-eu.globenewswire.com/Resource/Download/d5976a41-f907-491f-8dc1-05fd9b418bf5 
 
 
   -- Interim Report - First Half 2019 
      https://ml-eu.globenewswire.com/Resource/Download/6f83525a-7c6c-44ea-9d23-6988ae9c8847 
 
 
 
 
 
 
 

(END) Dow Jones Newswires

August 28, 2019 02:26 ET (06:26 GMT)