DJS has a market share of well below 1% in Denmark with lending exposure concentrated in the middle part of Jutland. The bank has 19 branches, ~350 employees and 97,000 customers. Exposure is tilted towards agriculture (16%) but DJS is seeking to reduce its exposure to agriculture as well as to real estate (to below 10%). DJS has introduced an intention of a 25% dividend pay-out at some point in the future depending on its capital accumulation.
Den Jyske Sparekasse (DJS) was recapitalised by a group of investors in 2018 ahead of the November IPO, giving the bank better capacity to handle its challenged agri exposure. A high earnings shield implies upside if conditions in the agri sector should improve, while a high interest-rate sensitivity implies upside if interest rates should at some point begin to rise.
Credit risk is the biggest risk for DJS, which has an exposure to cattle farming and pig farming of ~12% of loans and guarantees. The bank is sensitive to a drop in milk and pork prices. New regulations such as MREL and Basel IV remain a risk for DJS. Furthermore, the bank's capital plans do not allow for high lending growth in the short term.
