BankNordik: Q2 beat on credit quality, NII and insurance - ABG

Net profit in Q2 13% above ABGSCe driven by...
...loan loss reversals, NII, insurance and other operating income
We lift 2023e adjusted EPS by 6%


Beat on all items except commission income

BankNordik reported strong Q2 numbers with pre-tax profit of DKK 87m (14% vs. ABGSCe at DKK 77m). The PTP was primarily driven by NII of DKK 86m (4% vs. ABGSCe at DKK 83m) and loan impairment reversals of DKK 7m (vs ABGSCe at DKK -3m). The NII beat was primarily driven by NIM improvements due to the higher interest rate environment and lending growth q-o-q. Loan reversals were DKK 7m despite a DKK 10m increase in management provisions. Management highlighted that it expects to keep impairments below the industry average going forward. A q-o-q improvement was noticeable in insurance income (DKK 19m, 30% vs. ABGSCe at DKK 15m), which equals a combined ratio of 76% (113% in Q1'23 and 83% in Q2'22), as they overprovided in Q1. Fees were lower than expected at DKK 19m (-14% vs. ABGSCe at DKK 22m). Costs came in at DKK 64m (2% vs. ABGSCe at DKK 63m). Lastly, BankNordik managed to grow its lending portfolio in Faroe Islands by 4% q-o-q while its deposit base declined (-0.9%), compared to the Greenland of +1.8% and -4.2%, respectively.

Länk till analysen i sin helhet: https://cr.abgsc.com/foretag/banknordik/Equity-research/2023/8/banknordik---q2-beat-on-credit-quality-nii-and-insurance/