Satisfactory result During the first half of 2001 BRFkredit experienced an increase in lending activities. At the beginning of the year an unchanged or slightly declining activity was expected on the mortgage market. However the activity has been high, as a fall in the interest rate has made it attractive to convert debt. In addition several more top-up loans than expected have been granted. On this background the gross new lending rose from DKK 10.9 billion in the first half of 2000 to DKK 12.5 billion in the first six months of 2001. The rise in activities contributed to a higher net income of DKK 533 billion in first half of 2001 compared to DKK 513 billion in the same period last year. Despite this higher activity level costs only rose by DKK 3 million from first half 2000 to DKK 319 million in the same period of 2001 which equals a rise of less than 1%. The average number of employees was (converted to full time employees) 542 persons in the first half of 2001 compared to 600 in the same period of 2000. BRFkredit has a cautious policy with regard to depreciation on loans. The positive de- velopment in the Danish economy during the last couple of years has made it possible to carry-back previous provision from "Losses and write-offs on loans". DKK 20 million have been credited during the first half of 2001 compared to DKK 122 million in the same period of 2000. This development reflects that the economic situation for Danish property owners and companies is stable, but also that there is no basis for credit from the account for "losses and depreciation" to the same extent as previously. By the end of June 2001 the total provision for possible future losses was 0.4% of the loan portfolio. After several years of positive capital gains on securities the development changed and resulted in a negative capital gain of DKK 89 million in the first half of 2001 compared to a capital gain of DKK 33 million in the same period last year. Despite increase in income and unchanged costs changes in losses and write-offs plus loss on securities have led to a decrease in the result (before tax) to DKK 145 million in the first half of 2001, equal to a 4% annual return on the equity before tax. The result after tax was DKK 165 million in first half of 2001. With the result of first half 2001 BRFkredit has an equity of DKK 7.8 billion by the end of June 2001, and the total capital base equals DKK 8.4 billion. When calculating the solvency ratio the profit from the first six months is not included, and BRFkredit's solvency ratio was thus 12.8% mid 2001, which exceeds the statutory requirement by DKK 3.2 billion. Calculated on the core capital alone (Tier 1) the solvency ratio was 11.4% mid 2001. Positive development in the loan portfolio The positive development in BRFkredit’s portfolio continued during first half of 2001. The portfolio thus rose from the end of 2000 by DKK 2.8 billion to DKK 125.8 billion. Mortgages to the Private segment rose by 1.6 billion DKK, to the Commercial sector mortgages rose by DKK 1.0 billion, and an increase of DKK 0.2 billion was registered for the subsidised sector. Stable market shares During the first half of 2001 BRFkredit has maintained the strengthened market position from the last couple of years - see chart below. In relation to the net new lending the market share is the highest since 1994. |
 |
| 1999 | 2000 | 1st half 2001 |
Gross new lending1 | 8.8 | 10.3 | 10.2 |
| New lending2 | 9.6 | 10.4 | 10.8 |
| Net new lending3 | 6.3 | 10.2 | 11.4 |
| Net lending4 | 1.9 | 8.1 | 7.9 |
Please note that unlike previous statistics the above now also covers DLR (Dansk Landbrugs Reallånefond).
| 1) | Gross new lending is the mortgage deed principal converted to cash value, i.e. all loan types enter with the market value of the mortgage deed principal on the time of the transaction. |
| 2) | New lending is calculated as gross new lending with deduction of converted debt in the same institution. |
| 3) | Net new lending are calculated as gross new lending with deduction of converted debt plus extraordinary redemption. |
| 4) | Net lending calculated as net new lending with deduction of ordinary payments. |
| Compared to 2000 the share of the new lending in the private segment is unchanged 9.4% compared to the same period last year, while the market share of the net new lending has risen from 7.3% to 8.1%. On BRFkredit's focus areas in the commercial segment - rental housing plus office and business buildings - the market share of the new lending has increased from 19.9% in 2000 to 25.6% in first half of 2001, while the market share net new lending has increased from 23.2% to 29.4%. With regard to subsidised housing the new lending fell from the high level last year of 21.7% to 15.7% during the first six months of 2001, while the market share of net new lending has fallen from 21.4% to 18% in first half of 2001. Euro denominated loans In the beginning of January 2001 BRFkredit launched variable-interest loans in Euro. However, BRFkredit only recommends customers with income in Euro to raise Euro-loans. Without revenues in Euro there is a certain currency exchange risk in connection with loans in Euro. Bond issue BRFkredit issued during the first half of 2001 bonds for a total of DKK 13.9 billion. Approximately 40% relate to variable-interest loans. There has been a continued large turnover during the first half of 2001 in BRFkredit's largest bond series. Of a total turnover of DKK 210 billion in the series 7% 2032 BRFkredit obtained a share of 13%, while the share was 23% in 6% 2029, where the total turnover was DKK 140 billion in the first half of 2001. Rating On July 9th 2001 Moody's Investors Service assigned BRFkredit bonds an Aa2 long term rating. In the evaluation Moody's emphasised that a large number of BRFkredit’s loans are issued to housing purposes. The rating covers approx. 80% of BRFkredit’s bonds in circulation – including all open series. Says The Chairman of the Board Mr. Oluf Engell: "The interim result 2001 is satisfactory with increased net income and unchanged costs. It is important to notice that BRFkredit has kept its market share and has at the same time had an increase in the portfolio both in regard to mortgages to the Private and the Commercial segment despite tough competition. With a solvency ratio of 12.8% compared to the regulatory requirement of 8% and a rating of Aa2 BRFkredit is well prepared to take up the future challenges." Improved results in BRFbank BRFbank supports BRFkredit in its efforts to offer products that are supplementary to mortgage loans both regarding building of new properties and in connection with re-mortgage of existing loans. BRFbank’s interim result 2001 before tax was a surplus of DKK 13.5 million compared to DKK 3.5 million in the same period last year. Return on equity before tax is 3.7% in the first half of 2001 compared to 1.0% in the first six months of 2000. After tax the result was a profit of DKK 9.4 million for the first half of 2001. At the end of June 2001 BRFbank’s balance was DKK 3.7 billion and the equity was DKK 367 million. The solvency ratio for BRFbank was at the end of June 2001 11.6% compared to 14.8% by the end of 2000. Expectations for 2001 Compared to 2000 BRFkredit expects unchanged activities in the market during the rest of 2001. With an interest level and rate of exchange on shares as per June 30th 2001 BRFkredit expects a result before tax for 2001 of DKK 250-275 million. |
| Oluf Engell Chairmand of the Board of Directors | Sven A. Blomberg CEO |
Further information concerning the half year accounts 2001 from:
- Sven A. Blomberg, CEO on phone +45/4526 2500,
- Carsten Tirsbæk Madsen, CFO, on phone +45/4526 2871 (mobile 4025 8874) or
- Jens Christian Nielsen, Chief Economist on phone +45/4526 2872 (mobile 2019 9238).
NB: Should quiries arise please note the Danish version of the interim report 2001 is prevailing.
| Key Figures for BRFkredit a/s | |
| Profit and loss account and Balance Sheet incl. notes |