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currencies, higher provision for loan losses and lower interest income, partly
offset by dividend received and lower interest expenses from deposit accounts.
Return on equity was 16.4%, compared with 19.6% in the third quarter. The return
on assets was 2.7%, compared with 3.2% in the previous quarter.
The NFH Group’s profit after tax for 2020 amounted to NOK 1 887 million,
compared with NOK 1 981 million for the same period in 2019. The decrease in
profit is mainly due to higher provision for loan losses related to the
uncertain outlook of COVID-19, lower net commission income due to lower credit
card activity which were partly offset by increased interest income derived from
our diversified business model being present in all Nordic countries.
The common equity tier 1 ratio was 22.0% at year-end 2020 (24.8 % pre dividend),
compared to our internal target of 17.5%. As a result of the NFH Group’s solid
capital position, a dividend is proposed for the annual general meeting of NOK
6.00 per share, equivalent to 60.9% of the net profit attributable to
shareholders of 2020. NOK 5.00 per share will be paid as a cash dividend in May
2021, as well as proposing an authorization for the Board of Directors to
further pay NOK 1.00 per share in the fourth quarter, after a renewed assessment
of the development of COVID-19 and the consequences for the bank. The total
proposed dividend represents 29.6% of the profit attributable to shareholders
combined for 2019 and 2020 in total and is considered compliant with the
Norwegian FSA and the Ministry of Finance guidelines regarding cautious dividend
pay-out policy of max 30% of the combined net profit for 2019 and 2020. The
Board has according to the guidelines from the Ministry of Finance for all banks
initiated a dialogue with the Norwegian FSA to document the assessment for this
proposed distribution.
Gross loans to customers decreased NOK 1 968 million compared with an increase
of NOK 124 million in the previous quarter and totaled NOK 42 878 million.
Currency adjusted gross loan growth was NOK -847.3 million compared with NOK
-286.0 million in the previous quarter. Broken down by product the currency
adjusted, loan growth for instalment loans was NOK -333.7 million, compared with
NOK 54.1 million in the previous quarter. For credit cards NOK -513.7 million,
compared with NOK -340.1 million in the previous quarter. The negative growth in
instalment loans is mainly due to a small reduction in new sales combined with
higher repayment compared to the previous quarter, while the negative growth in
credit cards is mainly due to lower customer spending related to COVID-19.
The bank was compliant with the MREL requirement as of December 31, 2020. As a
result of the positive response from Norwegian FSA on our application to change
the group structure through a reversed parent-subsidiary merger, the issuances
of MREL eligible debt will be made from Bank Norwegian. The completion of the
merger will, subject to relevant approvals, be commenced during first half of
2021.
At the end of 2020 the NFH Group had a customer base of 1 751 500 customers,
which is up 35 000 compared to one year ago. The customer base consists of
1 264 300 credit card customers, 206 700 instalment loan customers and 280 500
deposit customers.
Going into the first quarter, the vaccination programs have started to combat
the COVID-19 pandemic affecting most of 2020. Despite the positive news on
vaccination ramp up, there is still uncertainty regarding the development of the
virus and mutated versions, and it is expected to be a subdued first half of
2021. Uncertainty remains of how rapid the recovery will be. However, the Nordic
countries have decided to prolong the governments’ supportive actions through
the first half of 2021 to reduce the negative impact for businesses and
individuals. Unemployment rates are still at elevated levels, but lower than
anticipated and the outlook is somewhat better also due to government support
schemes. The financial markets continue to develop positively during the fourth
quarter and at the start of 2021.
The NFH Group continues to show a healthy financial position with high
profitability, very strong capitalization and continues to have high levels of
liquid assets. Repeated reductions of deposit rates during second half of 2020
and beginning of 2021, is expected to give reduced liquidity and reduced
interest expense on deposits going forward into 2021. The NFH Group is
considered resilient and well equipped to withstand any further adverse effects
of negative macro environment going into the first quarter of 2021. During the
last quarter of 2020, the underwriting of credit as well as ordinary operations
have been maintained and this is expected to continue also into 2021. Fewer
customers are late with their payments in all four countries and the low levels
of loans sent to debt collection, continued during the last quarter and into the
first quarter.
The European expansion plan is on track and progressing according to our
ambitions to launch in the later part of 2021. Our current market position,
strong financials and our growth strategy continue to make the NFH Group well
positioned to leverage our leading position also in the future.
For further information, see Report for the fourth quarter 2020, Investor
Presentation for the fourth quarter 2020, Excel Factbook for the fourth quarter
2020 and Alternative Performance Measures for the fourth quarter 2020, which are
available at: Financial Reports 2020
For any questions please call:
CFO Klara Lise Aasen; phone : +47 47635583
Head of Treasury Mats Benserud; phone: +47 95891539
This information is subject to the disclosure requirements pursuant to Section
5-12 the Norwegian Securities Trading Act
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