KommuneKredit announces Annual Report 2019

SUMMARY

▪ Lending and leasing increased by DKK 8 billion to DKK 185 billion.
▪ Net interest income amounted to DKK 496 million in 2019 against DKK 441 million in 2018, which was in line withexpectations at the half year 2019.
▪ Pre-tax profit amounted to DKK 596 million partly due to positive value adjustments of DKK 227 million.
▪ Comprehensive income for the year amounted to DKK 441 million against DKK 405 million in 2018.
▪ Common Equity Tier 1 (CET1) capital equivalent to equity increased to DKK 8,179 million from DKK 7,736 million atthe end of 2018.
▪ The equity ratio increased to 3.5% at the end of 2019 from 3.4% at the end of 2018.

The Board of Directors of KommuneKredit has today, 19 March 2019, approved the Annual Report for 2019.

KommuneKredit experienced a satisfactory financial performance in 2019. Lending and leasing increased by DKK 8 billion to DKK 185 billion. This means that the association meets nearly all municipal and regional financing requirements within the parameters of the Danish regulation on public sector tasks performed by municipalities and regions and the EU state aid rules.

The net interest income was DKK 496 million in 2019 and expenses amounted to DKK 126 million, which corresponds to 0.05% of assets. Positive value adjustments of DKK 227 million lead to a pre-tax profit of DKK 596 million and a net profit for the year of DKK 448 million.

In accordance with KommuneKredit’s articles of association, the association may not pay dividends, which is why net profit is transferred to equity. KommuneKredit’s equity ratio was 3.5% at the end of 2019 against 3.4% in 2018.

In connection with the announcement of the annual report Chairman of the Board Lars Krarup states: "KommuneKredit issues bonds on behalf of municipalities and regions, and we lend the money to local government investments at the lowest possible costs – on equal terms across the country. We do not need to generate a profit.”

He continues: "When local green transition initiatives are implemented in various parts of the country, and substantial long-term investments are made, they may with advantage be financed at the lowest possible costs through KommuneKredit. There are opportunities within the current regulations, e.g. climate adjustment, public transport, energy efficiency initiatives in public buildings and sustainable supply facilities. I believe that the regulation can be adjusted, allowing us to underpin the Government’s climate goals and the need for climate adaptation to an even greater extent.”

CEO Jens Lundager adds: "The current situation surrounding COVID-19 has an impact on the capital markets but is not expected to influence our ability to meet the needs of our customers. Should the markets shut down completely, our total liquidity resources ensure that lending may continue unaffected for a very long time. All KommuneKredit’s tasks can be carried out regardless of where the employees are located.”

GUIDANCE FOR 2020
KommuneKredit holds a strong market position and has a low risk tolerance. Therefore, we expect a stable development in 2020 where we maintain an equity ratio above 3%. At the same time, we expect net lending of approximately DKK 2 billion and a net interest income of approximately DKK 400 million.

We have initiated an ambitious transformation that will bring KommuneKredit’s processes and systems up-to-date. In the light of this, we expect the administrative expenses to increase to DKK 150 million.