Company Announcement for the First Nine Months of 2022

Company Announcement for the First Nine Months of 2022

Kamilla Hammerich Skytte, CEO, feedback on the monetary outcomes:

“The result for the first nine months of 2022 is solid in a turbulent period, characterised by stable administration margin income but also by a decline in income from investment portfolios. Markedly higher interest rates, rising inflation driven by high energy prices affected developments in the third quarter, in which, among other things, we saw a decline in housing market activity with a slight impact on prices. The average loan-to-value for customers is down to 46%, which is the lowest level in decades. Generally speaking, our customers are well equipped to handle financial headwinds. Our focus is directed towards helping our customers during this period of increased uncertainty, through bringing clarity to their financing options.

We expect lending activity to continue to decrease in the coming period as a result of the uncertainty in the market. Buyers and sellers are still transitioning to changed market dynamics, with declining house prices being the most likely scenario for the coming quarters.”

Mortgage Market
Growth in the Danish economy has slowed this 12 months, each as a response to the surge in exercise final 12 months and in the wake of an ever extra unsure financial local weather. Historically excessive inflation has eroded buying energy amongst each corporations and shoppers, and hovering shopper costs have additionally sparked a pointy rise in rates of interest in monetary markets. In phrases of Danish mortgage charges, September introduced a 30-year mortgage with a hard and fast fee of 5% and 6% in the starting of October, up from 1.5% at the starting of the 12 months. We haven’t seen as vital an increase in mortgage charges in such a brief area of time for a few years, and this goes for each brief and lengthy charges. Rising rates of interest are additionally serving to to place a damper on financial exercise.

Unsurprisingly, the housing market has been hit by the erosion of buying energy and rising rates of interest. Activity has dropped off significantly throughout the 12 months, the provide of housing is rising, sellers are giving larger reductions, and we have now additionally now begun to see an actual fall in promoting costs. For now, nevertheless, it’s value remembering that owners in Realkredit Danmark, with a mean loan-to-value at 44%, are in a very good place to take care of the substantial headwinds which at the moment are buffeting the housing market and appear like persevering with to take action for a while.

First Nine Months of 2022
The Realkredit Danmark Group recorded a internet revenue of DKK 2,617 million in the first 9 months of 2022, in opposition to DKK 2,786 million in the identical interval of 2021. The revenue was affected by greater earnings regarding lending exercise, decrease earnings from funding portfolios, greater prices and decrease mortgage impairment expenses. The influence of the decrease common loan-to-value was a lower in administration margin by DKK 73 million.

Expenses elevated DKK 124 million, primarily as a result of a DKK 48 million provision for Realkredit Danmark’s half of the debt assortment legacy remediation and DKK 69 million from termination of Danske Bank’s VAT group. Loan impairment expenses decreased by DKK 84 million in spite of expenses associated to Realkredit Danmark’s share of debt assortment write-offs at DKK 174 million in third quarter. The whole allowance account at 30 September 2022 amounted to DKK 2,888 million, in opposition to DKK 2,971 million at 31 December 2021. The post-model adjustment of DKK 0.7 billion booked in Q1 2020 for COVID-19 associated losses has been rolled again and absolutely repurposed into post-model changes associated to Global Tension, vitality disaster and inflation has been booked to cowl the influence from elevated financial uncertainty.

The steeply rising mortgage charges has fuelled remortgaging exercise throughout 2022, and our clients have decreased nominal excellent debt by DKK 5.4 billion in the first 9 months of 2022. Mortgage lending at nominal worth decreased by 1% however measured at honest worth, the lower was 13%. The latter attributable to decrease bond costs as a result of the rising rate of interest ranges. Gross lending amounted to DKK 121 billion, in opposition to DKK 110 billion in the first 9 months of 2021.

In the first 9 months of 2022, Realkredit Danmark maintained its deal with inexperienced bond initiatives. Customer responses are nonetheless very optimistic, and at 30 September 2022, whole inexperienced lending amounted to DKK 21 billion.

Realkredit Danmark expects internet revenue for 2022 to be considerably decrease than internet revenue for 2021.

The firm announcement for the first 9 months of 2022 has not been ready in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and extra Danish disclosure necessities for interim stories of issuers of listed bonds.

• Realkredit Danmark Company Announcement 27 October 2022