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Vestjysk Bank

Vestjysk Bank

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Danish regional bank

Vestjysk bank has a market share in Denmark of ~2% after the merger with Den Jyske Sparekasse. Lending exposure is concentrated in Jutland while the branch network stretches from the west coast over the middle of Jutland to the east and south. The bank has ~670 employees. Exposure is tilted towards agriculture but this has now been reduced to around 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 recapitalisedby a group of investors in 2017 while EU restrictions were removed in April 2019. In November 2020, Vestjysk merged with Den Jyske Sparekasse, leading to a large synergy potential in the bank.

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 2020 2021e 2022e
Total Income 887 1981 1542
Total operating costs -530 -1086 -876
Operating profit 328 846 622
EPS Adj 0,34 0,39 0,44
EPS adj growth (%) -6,5 14,6 12,4
BVPS 3,45 3,79 4,07
NAVPS 3,45 3,78 4,07
DPS 0 0,15 0,23
ROE (%) 10,3 16,8 11,5
RONAV (%) 10,3 10,6 11,2
C/I (%) 58,9 60,6 57,5
Loan losses (%) 0,28 0,3 0,27
CET1 ratio (%) 20,9 18,6 19,4
P/E Adj (x) 8,1 7,4 6,6
P/BV (x) 0,8 0,77 0,71
P/NAV (x) 0,8 0,77 0,71
Dividend yield (%) 0 5,3 7,8
N/A N/A N/A
DKKm 2020 2021e 2022e
Net interest income 486 847 865
Net commission income 326 583 601
Trading income 74 60 61
Insurance income 0 0 0
Other operating income 1 491 15
Total income 887 1981 1542
Personnel costs -307 -504 -499
Other operating costs -223 -582 -377
Total operating costs -530 -1086 -876
Profit before loan losses 357 896 667
Loan losses -29 -50 -45
Investment portfolio 0 0 0
Other items 0 0 0
Operating profit 328 846 622
Tax -25 -85 -62
Other items after tax 0 0 0
Net profit 303 761 560
Tax rate (%) -7,6 -10 -10
EPS 0,34 0,62 0,45
Net Profit Adj 305 481 541
EPS Adj 0,34 0,39 0,44
Key balance sheet data 2020 0 0
Net lending 9332 16689 17023
Goodwill and intangibles 0 5 5
Total assets 23105 39386 39719
Shareholders equity 3090 4671 5021
Net asset value 3090 4666 5016
Capital adequacy 2020 0 0
Tier 1 Capital, excl.hybrids 2782 4394 4655
Tier 1 Capital, reported 2937 4649 4910
Capital base 3281 5241 5502
Risk exposure amount (BIS II) 13303 23562 24033
Asset quality 2020 0 0
Problem loans, gross 4229 7298 7517
Provisions for problem loans -2149 -3198 -3214
Problem loans, net 2080 4100 4303
Key figures N/A N/A N/A
Profitability 2020 2021 2022
Net interest margin (%) 2,1 2,7 2,2
ROE (%) 10,3 16,8 11,5
RONAV (%) 10,3 10,6 11,2
ROREA (%) 2,2 4,1 2,4
Cost efficiency 2020 0 0
Cost / income Core (%) 58,9 60,6 57,5
Costs / assets Core (%) 2,28 2,88 2,21
Financial position 2020 0 0
Net lending / deposits (%) 69,6 69,1 70,5
REA / assets (%) 57,6 59,8 60,5
Common equity tier 1 ratio (%) 20,9 18,6 19,4
Tier 1 ratio, reported (%) 22,1 19,7 20,4
Capital adequacy (%) 24,7 22,2 22,9
Equity ratio Core (%) 12 11,2 11,7
Asset quality 2019 0 0
Problem loans, gross / lending (%) 27 26 26,1
Problem loans, net / lending (%) 22,3 24,6 25,3
Provision ratio (%) 50,8 43,8 42,8
Loan losses, net / lending (%) 0,3 0,3 0,3
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 Aug 2020
Nykredit Realkredit A/S 14.0 % 14.0 % 31 Dec 2019
Lærernes Pension 4.7 % 4.7 % 31 Dec 2020
Novo Holdings A/S 0.9 % 0.9 % 26 Feb 2019
Maj Invest 0.8 % 0.8 % 31 Jan 2021
PFA Pension A/S 0.5 % 0.5 % 31 Dec 2020
Dimensional Fund Advisors 0.4 % 0.4 % 31 Jan 2021
Danske Invest (DK) 0.1 % 0.1 % 31 Jan 2021
Handelsbanken Fonder 0.1 % 0.1 % 31 Jan 2021
Source: Holdings by Modular Finance AB