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BankNordik

BankNordik

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Faroe-based Northatlantic bank

BankNordik is headquartered in the Faroe Islands. It holds between 40% and 50% of the market. The bank also has a small (but fast growing) operation in Greenland. It operates its own non-life insurance company in the Faroe Islands. BankNordik’s dividend policy is to pay out 50% of net profits while it targets a CET1 ratio of 20%.

BankNordik is focusing on optimising its operations through investments in digitalisation and automation to lower costs. While there are smaller growth opportunities in the Faroese banking sector, BankNordik is aiming to grow in Greenland by taking market share from Grønlandsbanken. Lending in Greenland has grown at a 16.3% CAGR since 2018, leaving BankNordik with ~20% of the market and indicating further growth opportunities.

Regulatory risks as well as credit risk are the biggest risks in the BankNordik investment case. New regulations such as Basel IV, MREL and IFRS 9 will be implemented over the coming years. Margin pressure is a risk to profitability as well.

Financials

DKKm 2021 2022e 2023e
Total Income 666 441 454
Total operating costs -424 -237 -239
Operating profit 336 226 233
EPS Adj 27,15 18,74 20,27
EPS adj growth (%) 61,5 -31 8,1
BVPS 213,5 195,3 210,84
NAVPS 213,22 195,02 210,54
DPS 40,2 9,59 10,13
ROE (%) 13,2 9,5 10,3
RONAV (%) 12,5 9,2 10,1
C/I (%) 64,6 56 52,4
Loan losses (%) -1,11 -0,43 -0,12
CET1 ratio (%) 23,8 23,9 21,7
P/E Adj (x) 4,4 6,8 6,3
P/BV (x) 0,56 0,66 0,61
P/NAV (x) 0,56 0,66 0,61
Dividend yield (%) 33,6 7,5 7,9
DKKm 2021 2022e 2023e
Net interest income 269 272 282
Net commission income 83 86 97
Trading income 0 0 0
Insurance income 34 50 48
Other operating income 281 34 27
Total income 666 441 454
Personnel costs -424 -237 -239
Other operating costs 0 0 0
Total operating costs -424 -237 -239
Profit before loan losses 242 204 215
Loan losses 84,52 33,5 10
Investment portfolio -2 -12 8
Other items 12 0 0
Operating profit 336 226 233
Tax -65 -43 -44
Other items after tax 13 0 0
Net profit 285 183 189
Tax rate (%) -19,3 -19,1 -19
EPS 28,89 19,38 20,93
Net Profit Adj 269 178 184
EPS Adj 27,15 18,74 20,27
Key balance sheet data 2021 0 0
Net lending 7624 7793 8023
Goodwill and intangibles 3 3 3
Total assets 11790 12841 13071
Shareholders equity 2036 1823 1839
Net asset value 2033 1820 1836
Capital adequacy 2021 0 0
Tier 1 Capital, excl.hybrids 1629 1705 1521
Tier 1 Capital, reported 1780 1860 1672
Capital base 1879 1959 1772
Risk exposure amount (BIS II) 6841 7139 7008
Asset quality 2021 0 0
Problem loans, gross 527 537 548
Provisions for problem loans -281 -275 -269
Problem loans, net 246 262 279
Key figures N/A N/A N/A
Profitability 2021 2022 2023
Net interest margin (%) 1,8 2,2 2,2
ROE (%) 13,2 9,5 10,3
RONAV (%) 12,5 9,2 10,1
ROREA (%) 3,4 2,6 2,7
Cost efficiency 2021 0 0
Cost / income Core (%) 64,6 56 52,4
Costs / assets Core (%) 2,92 1,92 1,85
Financial position 2021 0 0
Net lending / deposits (%) 96,5 87,6 89,5
REA / assets (%) 58 55,6 53,6
Common equity tier 1 ratio (%) 23,8 23,9 21,7
Tier 1 ratio, reported (%) 26 26,1 23,9
Capital adequacy (%) 27,5 27,4 25,3
Equity ratio Core (%) 13,8 13,3 11,6
Asset quality 2019 0 0
Problem loans, gross / lending (%) 6,3 6,3 6,2
Problem loans, net / lending (%) 3,2 3,4 3,5
Provision ratio (%) 53,3 51,2 49,2
Loan losses, net / lending (%) -1,1 -0,4 -0,1

Equity research

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Media

BankNordik - Company presentation with CFO Rune Nørregaard
BankNordik - Company presentation with CFO Rune Nørregaard

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Main shareholders - BankNordik

Main shareholders Share capital % Voting shares % Verified
The government of the Faroe Island 34.8 % 69.6 % 5 Jul 2021
Henrik Lind (Lind Invest) 15.0 % 15.0 % 25 Feb 2021
Protector Forsikring ASA 10.0 % 10.0 % 11 Apr 2022
Sp/F Framherji 5.0 % 5.0 % 25 Feb 2021
P/F Tjaldur 5.0 % 5.0 % 25 Feb 2021
Eika Kapitalforvaltning 2.0 % 2.0 % 31 Jul 2022
BIL Danmark 0.4 % 0.4 % 31 Oct 2020
P/F BankNordik 0.3 % 0.3 % 31 Dec 2020
Dimensional Fund Advisors 0.3 % 0.3 % 30 Jun 2022
Danske Invest 0.2 % 0.2 % 30 Jun 2022
Source: Holdings by Modular Finance AB