Føroya Banki (FOBANK) Q4 2024 earnings summary

Executive summary

• Net profit for 2024 reached DKK 310m, with a return on equity (RoE) of 15.8%, reflecting satisfactory core operations and strong business volumes.

• Business volumes increased by 6.5%, driven by growth in lending, mortgage credit, assets under management, and especially deposit volumes in both the Faroe Islands and Greenland.

• The group maintained a strong capital and liquidity position, with a CET1 ratio of 23.8% and LCR of 337.4%.

• The Board proposes a total dividend payment of DKK 350m, including 70% of net profit and capital optimization.

Financial highlights

• Operating income was DKK 519m, down slightly from DKK 528m in 2023; net interest income decreased to DKK 347m from DKK 360m year-over-year.

• Operating costs rose by 5.5% to DKK 273m, mainly due to staff salary adjustments, higher IT costs, and marketing expenses related to rebranding.

• Net impairment charges were a net reversal of DKK 1m, marking the eighth consecutive year of reversals.

• Investment portfolio earnings were strong at DKK 136m, up from DKK 109m in 2023.

• Cost/income ratio was 52.7%, and RoE after tax was 15.8%, both within set targets.

Outlook and guidance

• Net profit for 2025 is guided at DKK 210–240m, with RoE expected between 10.4–11.9%.

• Lending and mortgage volumes are expected to grow, especially in Greenland, but net interest income is projected to decrease slightly as rates fall.

• Operating costs are expected to rise marginally, and impairment levels are forecast at around 0.30% of the lending portfolio.

• The outlook is subject to uncertainties, including loan impairments, market value adjustments, and macroeconomic developments.