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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 848 849
Total operating costs -508 -499 -504
Operating profit 483 305 330
EPS Adj 0,36 0,3 0,32
EPS adj growth (%) 57,6 -18,2 6,8
BVPS 3,13 3,42 3,74
NAVPS 3,13 3,42 3,74
DPS 0 0 0,17
ROE (%) 18,5 9,5 9,2
RONAV (%) 12,6 9,1 8,9
C/I (%) 56,3 59,7 60,2
Loan losses (%) 0,59 0,43 0,16
CET1 ratio (%) 17,6 21,5 22,1
P/E Adj (x) 8,5 9,3 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 510 493 487
Net commission income 329 312 321
Trading income 214 41 36
Insurance income 0 0 0
Other operating income 2 2 4
Total income 1055 848 849
Personnel costs -285 -297 -297
Other operating costs -223 -202 -207
Total operating costs -508 -499 -504
Profit before loan losses 547 349 345
Loan losses -64 -44 -15
Investment portfolio 0 0 0
Other items 0 0 0
Operating profit 483 305 330
Tax -5 -26 -33
Other items after tax 0 0 0
Net profit 478 279 297
Tax rate (%) -1 -8,6 -10
EPS 0,53 0,31 0,33
Net Profit Adj 326 267 285
EPS Adj 0,36 0,3 0,32
Key balance sheet data 2019 0 0
Net lending 10221 9554 9745
Goodwill and intangibles 0 0 0
Total assets 22192 21918 22109
Shareholders equity 2801 3068 3353
Net asset value 2801 3068 3353
Capital adequacy 2019 0 0
Tier 1 Capital, excl.hybrids 2514 2780 2916
Tier 1 Capital, reported 2669 2935 3071
Capital base 3016 3282 3419
Risk exposure amount (BIS II) 14316 12908 13166
Asset quality 2019 0 0
Problem loans, gross 5241 4840 4985
Provisions for problem loans -2398 -2300 -2312
Problem loans, net 2843 2540 2674
Key figures N/A N/A N/A
Profitability 2019 2020 2021
Net interest margin (%) 2,4 2,2 2,2
ROE (%) 18,5 9,5 9,2
RONAV (%) 12,6 9,1 8,9
ROREA (%) 3,3 2 2,3
Cost efficiency 2019 0 0
Cost / income Core (%) 56,3 59,7 60,2
Costs / assets Core (%) 2,34 2,26 2,29
Financial position 2019 0 0
Net lending / deposits (%) 78,4 75,3 76,8
REA / assets (%) 64,5 58,9 59,6
Common equity tier 1 ratio (%) 17,6 21,5 22,1
Tier 1 ratio, reported (%) 18,6 22,7 23,3
Capital adequacy (%) 21,1 25,4 26
Equity ratio Core (%) 11,3 12,7 13,2
Asset quality 2019 0 0
Problem loans, gross / lending (%) 28,6 28,6 28,6
Problem loans, net / lending (%) 27,8 26,6 27,4
Provision ratio (%) 45,8 47,5 46,4
Loan losses, net / lending (%) 0,6 0,4 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
Maj Invest 1.0 % 1.0 % 31 Jul 2020
Novo Holdings A/S 0.9 % 0.9 % 26 Feb 2019
PFA Pension A/S 0.5 % 0.5 % 30 Jun 2020
Dimensional Fund Advisors 0.5 % 0.5 % 31 Jul 2020
Danske Invest (DK) 0.1 % 0.1 % 31 Jul 2020
Mandarine Gestion 0.1 % 0.1 % 30 Apr 2020
Source: Holdings by Modular Finance AB