2018 was another year of progress for BankNordik as we continued to transform
our Group into a customer-centric and efficient business creating enduring value
for its stakeholders.
Strong financial results Bank
Nordik successfully delivered strong financial results in 2018. We continued expanding our business volumes and customer activity remained high, but pressure on net interest income persisted due to compressed interest margins. On the expenditure side, we managed to keep costs in check and improve the Group’s cost structure. Impairment charges were reversed in the amount of DKK 111m and one-off gains netted out to DKK 72m. As a result, BankNordik recorded net profit of DKK 262m (DKK 27.1 per share outstanding) and delivered a return on equity of 13.8% in 2018. These results paved the way for a considerable return on capital to our shareholders. In addition to buying back shares for a transactional value of DKK 15m in 2018, a dividend of DKK 70m (DKK 7 per share) will be proposed at the upcoming AGM.
Building a customer-centric bank
Over the past year, we maintained our focus on improving the customer experience and strengthening our customer relationships. Our ongoing efforts to redesign the digital user interface form part of this process. The first step was taken in April, when we launched our new website. The next step, expected to be accomplished by 2020, is to fully integrate online banking, mobile banking and the Group’s website into one single platform from which our customers can manage their finances with ease. These investments will render us capable of staying ahead of our customers’ evolving digital needs. Despite an ongoing change in consumer behaviour towards digital services, our experience tells us that building personal relationships remains a vital element in earning our customers’ trust and loyalty for the long term. In 2018, we engaged more closely with the peripheral part of our customer base - customers with low volumes or little banking activity - by reaching out to over 10,000 customers to establish more personalised relations and assert confidence that BankNordik is a viable and worthy financial partner for the future. We believe these activities have contributed to recent improvements in satisfaction rates as discussed in greater detail in the management review section.
Operational efficiency and automation
The ongoing transformation of BankNordik necessitates that processes are streamlined and technology is put to use to enhance efficiency. In February, we carried out another round of centralisation by transferring administrative tasks from customer service to back-office operations to leverage the specialist skills of our people. Similarly, in September, we centralised all our investment services activities in the Faroe Islands to create a single strong unit capable of serving our clients across markets in a more financially sound manner. Another significant element in our efforts to drive efficiency is the use of technology. Through our cutting-edge data warehouse, we have gathered and organised a significant amount of data in recent years. This has laid the groundwork for the Group to start automating tasks through the use of statistics and robotics technology. A series of tasks are already being executed automatically on a daily basis, and we expect to further advance this agenda in the upcoming year.
Awaiting final MREL outcome
Due to our designation as a SIFI-bank in the Faroe Islands, the MREL add-on is yet to be announced. The add-on will be phased in gradually in 2020-2025 and expected to be covered by issuing Tier 3 capital. In the meantime, we will continue strengthening the Group’s capital position: our year-end total capital ratio was 19.8%, up from 19.7% in 2017.
The year ahead
In 2019, we will continue to drive efficiency and deepen customer relationships. Technology will be applied to drive automation and improve digital capabilities, while rigorous cost discipline and process streamlining remain focal points in driving efficiency. At the same time, our hard-working team members at BankNordik stand well prepared to further expand the Group’s collective capabilities and unite as a team to deliver superior customer experiences across the North Atlantic region. We look forward to another exciting year ahead.
