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Vestjysk Bank

Vestjysk Bank

Danish regional bank

Vestjysk is the 9th largest bank in Denmark, with a market share of ~2%. Its core market is west-, mid- and eastern Jutland with 660 employees in 29 branches in Jutland. Arbejdernes Landsbank owns 72.7% of the stock, with the remainder held by ~51,000 shareholders. The exposure is tilted towards agriculture, but this has been steadily reduced to 11% of lending and guarantees, from 17% in 2017. The loan book split is 52% to private customers and 48% to business customers, with a targeted 60-65% business customers and 35-40% private customers.

As a means to obtain a more diversified loan book Vestjysk is targeting an increase in business customers that are not in the agricultural sector or alternatively are high-quality customers. This is a beneficial path combined with the current positive outlook for corporate lending. Solid earnings in recent years have made the first dividends since 2007 possible in 2022 following the expiration of the 12-month ban after Arbejdernes Landsbank became majority shareholder.

Regulatory risk and credit risk are the biggest risks in Vestjysk. Even though Vestjysk is well-capitalised the expected increased requirements in the coming years will have an effect. Regarding credit risk the biggest risk is still found in pig and dairy farming even though the exposure to these has been lowered to ~9% of total lending. As current conditions for milk producers are attractive apart from the cost increases, the biggest risk is found in pig farming which is not only affected by higher costs but also by volatile settlement prices, African swine fever and uncertainty in export markets.

DKKm 2021 2022e 2023e
Total Income 2015 1470 1645
Total operating costs -1100 -910 -918
Operating profit 955 617 707
EPS Adj 1,01 0,5 0,42
EPS adj growth (%) 195,4 -50 -17,3
BVPS 4,12 4,62 4,78
NAVPS 4,04 4,54 4,7
DPS 0 0,26 0,2
ROE (%) 28,9 11,8 9,1
RONAV (%) 26,5 11,7 9
C/I (%) 60,2 62,7 56,3
Loan losses (%) -0,12 -0,35 0,11
CET1 ratio (%) 18,4 16,2 16,6
P/E Adj (x) 3,4 6,6 8
P/BV (x) 0,83 0,72 0,7
P/NAV (x) 0,85 0,74 0,71
Dividend yield (%) 0 7,8 6
DKKm 2021 2022e 2023e
Net interest income 807 795 843
Net commission income 601 695 716
Trading income 121 -45 61
Insurance income 0 0 0
Other operating income 486 25 26
Total income 2015 1470 1645
Personnel costs -553 -515 -519
Other operating costs -547 -395 -399
Total operating costs -1100 -910 -918
Profit before loan losses 915 560 727
Loan losses 20 59,1 -20
Investment portfolio 0 0 0
Other items 20 -2 0
Operating profit 955 617 707
Tax 126 20 -178
Other items after tax 0 0 0
Net profit 1081 637 529
Tax rate (%) 13,2 3,3 -25,2
EPS 1,11 0,52 0,43
Net Profit Adj 764 620 513
EPS Adj 1,01 0,5 0,42
Key balance sheet data 2021 0 0
Net lending 16778 17871 18550
Goodwill and intangibles 104 98 98
Total assets 43310 42376 43055
Shareholders equity 5084 5699 5891
Net asset value 4980 5601 5793
Capital adequacy 2021 0 0
Tier 1 Capital, excl.hybrids 4313 3967 4233
Tier 1 Capital, reported 4613 4267 4534
Capital base 5211 4866 5132
Risk exposure amount (BIS II) 23450 24533 25465
Asset quality 2021 0 0
Problem loans, gross 5583 5750 5865
Provisions for problem loans -2383 -2295 -2445
Problem loans, net 3200 3455 3420
Key figures N/A N/A N/A
Profitability 2021 2022 2023
Net interest margin (%) 2,4 1,9 2
ROE (%) 28,9 11,8 9,1
RONAV (%) 26,5 11,7 9
ROREA (%) 5,9 2,7 2,1
Cost efficiency 2021 0 0
Cost / income Core (%) 60,2 62,7 56,3
Costs / assets Core (%) 2,76 2,12 2,15
Financial position 2021 0 0
Net lending / deposits (%) 64,5 71,2 73,1
REA / assets (%) 54,1 57,9 59,1
Common equity tier 1 ratio (%) 18,4 16,2 16,6
Tier 1 ratio, reported (%) 19,7 17,4 17,8
Capital adequacy (%) 22,2 19,8 20,2
Equity ratio Core (%) 10 9,4 9,8
Asset quality 2019 0 0
Problem loans, gross / lending (%) 21,8 21,2 21,1
Problem loans, net / lending (%) 19,1 19,3 18,4
Provision ratio (%) 42,7 39,9 41,7
Loan losses, net / lending (%) -0,1 -0,4 0,1

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Main shareholders - Vestjysk Bank

Main shareholders Share capital % Voting shares % Verified
A/S Arbejdernes Landsbank 72.7 % 72.7 % 31 Dec 2021
Lærernes Pension 1.3 % 1.3 % 31 Dec 2021
Novo Holdings A/S 0.9 % 0.9 % 26 Feb 2019
Maj Invest 0.5 % 0.5 % 30 Jun 2022
PFA Pension A/S 0.4 % 0.4 % 31 Dec 2021
Handelsbanken Fonder 0.2 % 0.2 % 31 Jul 2022
Danske Invest 0.2 % 0.2 % 30 Jun 2022
Claus E. Petersen 0.0 % 0.0 % 14 Jan 2021
Bolette Van Ingen Bro 0.0 % 0.0 % 31 Dec 2021
Vestjysk Bank A/S 0.0 % 0.0 % 31 Mar 2021
Source: Holdings by Modular Finance AB