Jyske H1 results boosted by BRFkredit merger

Aug 21st, 2014

Jyske Bank Group reported Dkr2.8bn (Eu376m) of pre-tax profit for the second half of 2014 on Tuesday, its largest profit ever, although the figures are the first since the merger with BRFkredit in April, which contributed nearly Dkr2.4bn in one-off income to the result.

Anders Dam. Jyske Bank.The H1 2014 figures are the first financial results for the enlarged Jyske Bank Group following the merger with BRFkredit on 30 April, which turned the group into the fourth largest fully integrated banking and mortgage services group in Denmark.

“The predominant event in the first half of 2014 was the merger with BRFkredit, due to which the Jyske Bank Group gained a new position in the market place,” said Anders Dam, chief executive and managing director of Jyske Bank (pictured). “The merger is based on expectations of growth in business volume and cost synergies. In the first half of 2014, both Jyske Bank and BRFkredit have independently and together won market shares in an otherwise weakening market.

“As announced in June, the process of cost reductions has begun, and at the end of the first half of the year, the merger is progressing according to plan.”

The pre-tax profit of Dkr2.8bn for the first half of the year falls short of expectations of Dkr3bn that Jyske had communicated in late May, with management attributing the shortfall to falling interest rates in June.

The net income for the second quarter amounted to Dkr2.4bn, which missed consensus expectations, according to analysts (Bloomberg: Dkr2.56bn). One noted that Jyske’s stock fell 3% on Tuesday, “but not more than that”.

“The most important thing about the results is that it is the first quarter to include BRF,” he said. “The whole quarter is marked by the merger. Every P&L line is up in the air, but there is nothing to be concerned about. It’s not the quarter to focus on in terms of drawing conclusions about the possible future.”

According to Jyske, the BRFkredit group affects the enlarged group’s income statement for May and June, with the balance sheet of BRFkredit fully consolidated with that of the Jyske Bank Group at the end of June.

Jyske’s balance sheet has nearly doubled compared with the end of December, and its loan book has grown from Dkr131bn to Dkr344bn, nearly entirely due to the start and growth of mortgage lending. After no mortgage loans were on Jyske’s book at the end of 2013 it reported some Dkr209bn as at the end of the first half of the year.

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