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Vestjysk Bank

Vestjysk Bank

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Danish regional bank

Vestjysk bank has a market share in Denmark of ~1% with lending exposure concentrated in Jutland while the branch network stretches from the west coast over the middle of Jutland to the east. The bank has ~370 employees. Exposure is tilted towards agriculture but this has now been reduced to 15% of lending and guarantees.

A significant drop in loan loss provisions due to improved agri conditions has boosted net profits for Vestjysk in recent years, and if this continues Vestjysk could return to announcing dividends for 2021. Vestjysk was recapitalised by a group of investors in 2017 while EU restrictions were removed in April 2019: we believe Vestjysk is now open for sector consolidation.

Regulatory risks and credit risk are the biggest risks in the Vestjysk investment case. New regulations such as Basel IV, MREL and IFRS 9 will be implemented over the coming years. As cattle farming and pig farming represents ~12% of Vestjysk’s total lending exposure, the future development in dairy prices and pig prices also present a high risk for the bank.

Financials

DKKm 2019 2020e 2021e
Total Income 1055 864 858
Total operating costs -508 -501 -506
Operating profit 483 350 338
EPS Adj 0,36 0,35 0,33
EPS adj growth (%) 57,6 -5 -5,8
BVPS 3,13 3,47 3,8
NAVPS 3,13 3,47 3,8
DPS 0 0 0,17
ROE (%) 18,5 10,9 9,3
RONAV (%) 12,6 10,5 9
C/I (%) 56,3 58,7 59,8
Loan losses (%) 0,59 0,14 0,15
CET1 ratio (%) 17,6 21,1 21,7
P/E Adj (x) 8,5 8,2 8,7
P/BV (x) 0,99 0,81 0,74
P/NAV (x) 0,99 0,81 0,74
Dividend yield (%) 0 0 6
N/A N/A N/A
DKKm 2019 2020e 2021e
Net interest income 510 488 495
Net commission income 329 315 323
Trading income 214 60 36
Insurance income 0 0 0
Other operating income 2 1 4
Total income 1055 864 858
Personnel costs -285 -299 -299
Other operating costs -223 -202 -207
Total operating costs -508 -501 -506
Profit before loan losses 547 364 353
Loan losses -64 -14 -15
Investment portfolio 0 0 0
Other items 0 0 0
Operating profit 483 350 338
Tax -5 -28 -34
Other items after tax 0 0 0
Net profit 478 322 304
Tax rate (%) -1 -8 -10
EPS 0,53 0,36 0,34
Net Profit Adj 326 310 292
EPS Adj 0,36 0,35 0,33
Key balance sheet data 2019 0 0
Net lending 10221 9781 9976
Goodwill and intangibles 0 0 0
Total assets 22192 22405 22601
Shareholders equity 2801 3110 3402
Net asset value 2801 3110 3402
Capital adequacy 2019 0 0
Tier 1 Capital, excl.hybrids 2514 2810 2950
Tier 1 Capital, reported 2669 2965 3105
Capital base 3016 3313 3453
Risk exposure amount (BIS II) 14316 13342 13609
Asset quality 2019 0 0
Problem loans, gross 5241 4548 4685
Provisions for problem loans -2398 -2265 -2276
Problem loans, net 2843 2283 2409
Key figures N/A N/A N/A
Profitability 2019 2020 2021
Net interest margin (%) 2,4 2,2 2,2
ROE (%) 18,5 10,9 9,3
RONAV (%) 12,6 10,5 9
ROREA (%) 3,3 2,3 2,3
Cost efficiency 2019 0 0
Cost / income Core (%) 56,3 58,7 59,8
Costs / assets Core (%) 2,34 2,25 2,25
Financial position 2019 0 0
Net lending / deposits (%) 78,4 75,4 76,9
REA / assets (%) 64,5 59,6 60,2
Common equity tier 1 ratio (%) 17,6 21,1 21,7
Tier 1 ratio, reported (%) 18,6 22,2 22,8
Capital adequacy (%) 21,1 24,8 25,4
Equity ratio Core (%) 11,3 12,5 13,1
Asset quality 2019 0 0
Problem loans, gross / lending (%) 28,6 27,4 27,4
Problem loans, net / lending (%) 27,8 23,3 24,1
Provision ratio (%) 45,8 49,8 48,6
Loan losses, net / lending (%) 0,6 0,1 0,2
N/A N/A N/A

Equity research

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Main shareholders - Vestjysk Bank

Main shareholders Share capital % Voting shares % Verified
A/S Arbejdernes Landsbank 32.4 % 32.4 % 31 Dec 2019
AP Pension 19.7 % 19.7 % 31 Mar 2020
Nykredit Realkredit A/S 14.0 % 14.0 % 31 Dec 2019
Lærernes Pension 4.6 % 4.6 % 30 Jun 2020
Novo Holdings A/S 0.9 % 0.9 % 26 Feb 2019
Maj Invest 0.8 % 0.8 % 30 Sep 2020
PFA Pension A/S 0.5 % 0.5 % 30 Jun 2020
Dimensional Fund Advisors 0.5 % 0.5 % 30 Sep 2020
Handelsbanken Fonder 0.1 % 0.1 % 31 Oct 2020
Danske Invest (DK) 0.1 % 0.1 % 30 Sep 2020
Source: Holdings by Modular Finance AB