Annual Report 2006 [PDF] - Jyske Bank

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SUMMARY 4 JYSKE BANK ANNUAL REPORT 2006 the method for the calculation of credit loss expenses, etc. In accordance with the Danish Financial Supervisory Authority’s letter of information to the Danish financial sector dated 6 December 2006, the Bank has revised the estimated useful life of tangible and intangible assets. In 2006, the return on the Jyske Bank share amounted to 29.4%. Over the past 10 years, the annual return has averaged 25.8%. The net result per share was DKK 35.02 compared with DKK 26.70 in 2005. At year-end 2006, the capitalisation was DKK 24.9bn, the highest in the history of the Bank. In 2006, Jyske Bank welcomed almost 6,000 new shareholders (net), the total at year-end 2006 being more than 245,000. At year-end 2006, the Group shareholder’s funds amounted to DKK 9.6bn, and the capital base to DKK 12.6bn. The solvency ratio is 11.3% of which Tier 1 is 9.7%. The core capital ratio excl. hybrid tier 1 capital is 8.2%. In accordance with its message to the Copenhagen Stock Exchange dated 4 December 2006, the Supervisory Board proposed that the nominal share capital be reduced by DKK 42,5m, or 4.25 million shares, from DKK 620m to DKK 577.5m. The Supervisory Board proposes a reduction of the share capital by a nominal amount of DKK 10.0m, or 1.0 million shares, to DKK 567.5m and a further reduction of the share capital by a nominal amount of DKK 7.5m, or 0.75 million shares, to DKK 560m. At year-end 2006, the economic capital was calculated as DKK 5.8bn against DKK 5.2bn at year-end 2005. The increase compared with last year is primarily the result of rising advances stated as expected exposure at default. The increase in advances for the full year exceeds the increase in the level of credit risk due to increased collateral and higher average credit quality. The increase in operational risk is partly explained by the increase in business volume. The level of market risk also increased in 2006. The trend in risk categories during 2006 has led to an increase in the concentration of credit risk and the overall diversification effect amounted to 23%. A new branch financial statement based on the principles of RAROC was introduced in the first quarter of 2006. The Bank now applies RAROC-based methodology when assessing individual transactions as well as results at branch, division and unit level throughout the Danish branch network. Given the opportunity in September 2006, the Bank applied for ”advanced bank” status under the new Capital Requirements Directive (Basel II). Management expects the Danish Financial Supervisory Authority to return with a reply to the Bank’s application before year-end 2007. The outlook for 2007 is stable and the Bank has made a good start to the new year. Consequently, the result for 2007 is also expected to be favourable. Core earnings exclusive of credit loss expenses are expected to be in line with, or over, the level for 2006, based on an assumption that present earning streams are maintained. Based on the Bank’s anticipated increase in risk-weighted assets, and its long-term targets with regard to capital and solvency, opening shareholders’ funds 2007 are expected to exceed closing shareholder‘s funds at year-end 2007.
The Jyske Bank share THE JYSKE BANK SHARE In 2006, the return on the Jyske Bank share amounted to 29.4%. At year-end 2006, the price was DKK 401, corresponding to a market value of DKK 24.9bn against DKK 19.5bn at year-end 2005. The net result per share was DKK 35.02 for 2006 compared with DKK 26.70 in 2005. At year-end 2006, the book value per share was DKK 169, and price/book value 2.38. Trend in market prices Index 100 = 28.12.2001 500 400 300 200 100 0 2001 2002 2003 2004 2005 2006 Jyske Bank Banks, etc. OMXC20 Over the past 10 years, the average annual return on the Jyske Bank share has been 25.8%, compared with an average yield on 10-year Danish government bonds of -1.0% in 2006 and 7.2% over the past 10 years. 10 years current return % p.a. 30 25 20 15 10 5 0 2002 2003 2004 2005 2006 Jyske Bank 10-year government bonds At year-end 2006, the share capital amounted to DKK 620m and comprised 62 million shares at a face value of DKK 10 (one class of shares). All shares are listed on the Copenhagen Stock Exchange and are freely negotiable. A single shareholder, however, is not allowed to acquire 10% or more of the share capital without the prior consent of the Bank, cf. Art. 3 of Bank’s Articles of Association. Each share represents one vote. No shareholder shall cast more than 4,000 votes on his own behalf. According to Art. 4 of the Bank’s Articles of Association, the Supervisory Board shall be authorised to increase the share capital by DKK 1,000m. Subject to a resolution passed at the Annual General Meeting, the Bank’s Supervisory Board shall be authorised to acquire Jyske Bank shares not exceeding 1/10 of the share capital. At the Annual General Meeting, the Supervisory Board will propose a dividend percentage of 0 for 2006 as has been the case in previous years. JYSKE BANK ANNUAL REPORT 2006 5
Page 1: Annual Report 2006
Page 4 and 5: 5 YEAR SUMMARY SUMMARY OF PROFIT AN
Page 8 and 9: THE JYSKE BANK SHARE 6 JYSKE BANK A
Page 10 and 11: RESULT AND OUTLOOK Result and outlo
Page 12 and 13: RESULT AND OUTLOOK Breakdown of fun
Page 14 and 15: RESULT AND OUTLOOK Number of employ
Page 16 and 17: RESULT AND OUTLOOK Totalkredit 14 J
Page 18 and 19: RISK AND CAPITAL MANAGEMENT 16 JYSK
Page 20 and 21: RISK AND CAPITAL MANAGEMENT Credit
Page 22 and 23: RISK AND CAPITAL MANAGEMENT Loan im
Page 24 and 25: RISK AND CAPITAL MANAGEMENT Credit
Page 28 and 29: RISK AND CAPITAL MANAGEMENT Write-d
Page 30 and 31: RISK AND CAPITAL MANAGEMENT Market
Page 32 and 33: RISK AND CAPITAL MANAGEMENT Currenc
Page 36 and 37: MANAGEMENT REPORT MANAGEMENT REPORT
Page 38 and 39: AUDITORS’ REPORT INDEPENDENT AUDI
Page 40 and 41: ACCOUNTING POLICIES Accounting poli
Page 42 and 43: ACCOUNTING POLICIES which are expec
Page 44 and 45: ACCOUNTING POLICIES Financial instr
Page 46 and 47: ACCOUNTING POLICIES A reserve accor
Page 48 and 49: PROFIT AND LOSS ACCOUNT 2006 Note T
Page 50 and 51: STATEMENT OF CHANGES IN SHAREHOLDER
Page 52 and 53: CASH FLOW STATEMENT Note The Jyske
Page 54 and 55: NOTES TO THE PROFIT AND LOSS ACCOUN
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NOTES TO THE PROFIT AND LOSS ACCOUN
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NOTES TO THE BALANCE SHEET Note (DK
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NOTES TO THE BALANCE SHEET Note The
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NOTES TO CREDIT RISKS Notes to Cred
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NOTES TO CREDIT RISKS 38 Security b
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NOTES TO MARKET RISKS Notes to Mark
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NOTES TO MARKET RISKS Note (DKKm) J
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NOTES TO MARKET RISKS Stock-market
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NOTES TO DERIVATIVE FINANCIAL INSTR
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NOTES TO OTHERS Note (DKK 1,000) 49
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NOTES TO OTHERS Note The Jyske Bank
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NOTES TO OTHERS services in relatio
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5 YEAR SUMMARY OF JYSKE BANK A/S SU
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DIRECTORSHIPS Leif F. Larsen • Ch
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CONCEPTS, ETC. Scenario-based stres
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