Realkredit Danmark: Net profit of DKK 1,783 million for the first half of 2020

Realkredit Danmark: Net profit of DKK 1,783 million for the first half of 2020

Realkredit Danmark today published its interim report for the first half of 2020.

Carsten Nøddebo, CEO, comments on the financial results:

“From one day to the next, the corona crisis turned the Danish economy upside down. Together with the rest of the group, we are strongly committed to helping and supporting customers who are financially impacted by the corona crisis, and we have taken several initiatives to support our customers, for example, by granting larger credit facilities.

In the second quarter, we reversed impairments in an amount of DKK 235 million as, despite the considerable uncertainty, we believe that the Danish economy will recover next year. Nonetheless, total impairments for the first half of the year were substantially higher than impairments in the first half of last year, and this was the main reason for the decline in net profit.

At the same time, we have been pleased to see keen interest in green bonds among customers and investors during this turbulent period, and we reached an important milestone, as Realkredit Danmark’s green bonds became the first in Denmark to be assigned a liquidity classification that matches that of conventional mortgage bonds.”

The report is available at rd.dk. Highlights are shown below:

• The Realkredit Danmark Group recorded a net profit of DKK 1,783 million in the first half of 2020, against DKK 2,035 million in the first half of 2019. The profit was affected by higher impairments.
   
• Impairments amounted to DKK 470 million in the first half of 2020, against DKK 287 million in the first half of 2019. The second quarter saw a reversal of DKK 235 million. The increase in the first half of 2020 was driven mainly by the use of updated macroeconomic scenarios in the models used to calculate impairments. Despite the corona crisis, underlying credit quality remained strong with low delinquencies and robust collateral.

• With interest rates being at an all-time low, the remortgaging activity recorded in 2019 continued into 2020. After a decent level in the first quarter of 2020, remortgaging activity fell when the corona crisis set in, and this resulted in lower remortgaging activity in the second quarter of 2020. Overall, Realkredit Danmark remortgaged loans for DKK 47 billion in the first half of 2020.
   
• Fixed-rate loans are currently the preferred loan type among home owners in Denmark. This resulted in a small drop in administration margin income. For 2020 as a whole, we expect that fixed-rate mortgages will account for more than 50% of mortgage loans for owner-occupied dwellings and holiday homes.
   
• Realkredit Danmark was the first among Danish mortgage credit institutions to offer green bonds, and to date, RD Cibor6® Green loans with a total value of DKK 4.6 billion have been disbursed. The bonds are issued to fund loans to large business customers for properties with documentation of energy efficiency. We now also offer green bonds to finance commercial property in Sweden, and in the near future, we will also be able to offer green loans in Norway.
   
• Realkredit Danmark expects net profit for 2020 to be somewhat lower than net profit for 2019.

Carsten Nøddebo, CEO, tel. +45 45 13 20 82.

• Realkredit Danmark press release 17 July 2020
• Realkredit Danmark Interim Report First Half 2020