KommuneKredit announces Interim Report 2022

Summary

▪ Profit before tax and value adjustments amounted to DKK 65 million, while comprehensive income for the 1st half of 2022 was DKK 468 million against DKK 233 million in the 1st half of 2021. The change is mainly due to value adjustments of DKK 535 million against DKK 190 million in the 1st half of 2021.

▪ At DKK 187 million, net interest income was in line with expectations.

▪ Net lending increased by DKK 3 billion, while total lending dropped DKK 15 billion to approximately DKK 180 billion due to negative fair value adjustments of DKK 19 billion as a result of rising interest rates.

▪ Common Equity Tier 1 (CET1) capital, corresponding to equity, increased to DKK 9,243 million from DKK 8,775 million at the end of 2021.

KommuneKredit has today 9 September 2022 announced the interim report for the first half of 2022.

KommuneKredit generated a profit before value adjustments and tax of DKK 65 million for the first half of 2022, which was just under DKK 30 million less than expected at the beginning of the year. Net interest income came to DKK 187 million, while administrative expenses amounted to DKK 119 million. The administrative expenses were DKK 37 million more than expected, which was mainly attributable to a provision for additional payroll tax, see note 4.1 in the Annual Report 2021. Including value adjustments of DKK 535 million, comprehensive income for the first half of the year was DKK 468 million.

In accordance with KommuneKredit’s articles of association, the association may not pay dividends, which is why net profit is transferred to equity. KommuneKredit had an equity ratio of 3.8 pct. at 30 June 2022, against 3.5 pct. at 31 December 2021.

Expanding district heating

KommuneKredit has financed a very large part of district heating in Denmark. But in recent years Danish regulations have been amended, which may lead to increased competition in some areas and thus prevent KommuneKredit from providing financing. There are, however, new EU regulations that make granting state aid to these essential investments possible, and on that basis, we expect to continue to provide loans for all types of energy-efficient district heating projects.

“We at KommuneKredit will strive to ensure that district heating companies across the country can fund their major green investments at the lowest possible cost - also in the future.” - Jens Lundager, CEO

Outlook for 2022

We still expect net interest income for 2022 of DKK 350 million and net lending of DKK 4,500 million. Reflecting the provision for additional payroll tax, administrative expenses are now expected at DKK 200 million, compared with the previous forecast of DKK 165 million. Barring any value adjustments, we expect a pre-tax profit of DKK 150 million. Value adjustments for the first half of 2022 amounted to DKK 535 million.