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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 822 845
Total operating costs -508 -499 -504
Operating profit 483 266 326
EPS Adj 0,36 0,26 0,31
EPS adj growth (%) 57,6 -29,2 22,1
BVPS 3,13 3,38 3,7
NAVPS 3,13 3,38 3,7
DPS 0 0 0,16
ROE (%) 18,5 8,3 9,3
RONAV (%) 12,6 7,9 8,9
C/I (%) 56,3 61,6 60,5
Loan losses (%) 0,59 0,56 0,16
CET1 ratio (%) 17,6 20,7 21,3
P/E Adj (x) 8,5 11 9
P/BV (x) 0,99 0,84 0,77
P/NAV (x) 0,99 0,84 0,77
Dividend yield (%) 0 0 5,8
DKKm 2019 2020e 2021e
Net interest income 510 484 482
Net commission income 329 312 324
Trading income 214 23 36
Insurance income 0 0 0
Other operating income 2 3 4
Total income 1055 822 845
Personnel costs -285 -291 -291
Other operating costs -223 -208 -213
Total operating costs -508 -499 -504
Profit before loan losses 547 323 341
Loan losses -64 -57 -15
Investment portfolio 0 0 0
Other items 0 0 0
Operating profit 483 266 326
Tax -5 -24 -33
Other items after tax 0 0 0
Net profit 478 243 294
Tax rate (%) -1 -8,9 -10
EPS 0,53 0,27 0,33
Net Profit Adj 326 231 282
EPS Adj 0,36 0,26 0,31
Key balance sheet data 2019 0 0
Net lending 10221 9669 9863
Goodwill and intangibles 0 0 0
Total assets 22192 20805 20999
Shareholders equity 2801 3032 3313
Net asset value 2801 3032 3313
Capital adequacy 2019 0 0
Tier 1 Capital, excl.hybrids 2514 2732 2866
Tier 1 Capital, reported 2669 2887 3021
Capital base 3016 3234 3369
Risk exposure amount (BIS II) 14316 13188 13452
Asset quality 2019 0 0
Problem loans, gross 5241 5629 5797
Provisions for problem loans -2398 -2435 -2447
Problem loans, net 2843 3194 3350
Key figures N/A N/A N/A
Profitability 2019 2020 2021
Net interest margin (%) 2,4 2,3 2,3
ROE (%) 18,5 8,3 9,3
RONAV (%) 12,6 7,9 8,9
ROREA (%) 3,3 1,8 2,2
Cost efficiency 2019 0 0
Cost / income Core (%) 56,3 61,6 60,5
Costs / assets Core (%) 2,34 2,32 2,41
Financial position 2019 0 0
Net lending / deposits (%) 78,4 80 81,6
REA / assets (%) 64,5 63,4 64,1
Common equity tier 1 ratio (%) 17,6 20,7 21,3
Tier 1 ratio, reported (%) 18,6 21,9 22,5
Capital adequacy (%) 21,1 24,5 25
Equity ratio Core (%) 11,3 13,1 13,7
Asset quality 2019 0 0
Problem loans, gross / lending (%) 28,6 30,4 30,5
Problem loans, net / lending (%) 27,8 33 34
Provision ratio (%) 45,8 43,3 42,2
Loan losses, net / lending (%) 0,6 0,6 0,2

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 Jan 2020
Nykredit Realkredit A/S 14.0 % 14.0 % 31 Dec 2019
Maj Invest 1.0 % 1.0 % 31 Mar 2020
Novo Holdings A/S 0.9 % 0.9 % 26 Feb 2019
Dimensional Fund Advisors 0.5 % 0.5 % 30 Apr 2020
PFA Pension A/S 0.5 % 0.5 % 31 Dec 2019
Mandarine Gestion 0.1 % 0.1 % 31 Dec 2019
Danske Invest (DK) 0.1 % 0.1 % 31 Mar 2020
Handelsbanken Fonder 0.1 % 0.1 % 30 Apr 2020
Source: Holdings by Modular Finance AB