Sydbank A/S is proposing a "record-high dividend" for 2017 and is launching a new share buyback program after posting a year-over-year increase in annual profit.
The Danish lender reported full-year 2017 group profit of 1.53 billion kroner, compared to 1.47 billion kroner earned in 2016. EPS for the year was 22.4 kroner, compared to the year-ago 20.9 kroner.
The bank said its 2017 results benefited from a reversal of impairment of loans and advances of 45 million kroner, compared to an impairment charge of 98 million kroner a year ago, as well as a "very satisfactory" investment portfolio earnings.
CEO Karen Frøsig said Sydbank's net interest income continues to be under pressure due to the negative interest rate environment, combined with fierce competition in the sector. The group's net interest income for 2017 came in at 2.00 billion kroner, down from the year-ago 2.39 billion kroner.
The group booked net interest and fee income of 3.86 billion kroner for 2017, compared to 4.00 billion kroner in 2016.
For fourth quarter 2017, group profit came in at 327 million kroner, down from 444 million kroner in the year-ago period.
Core income for the period totaled 1.04 billion kroner, compared to 1.07 billion kroner a year earlier. Trading income fell year over year to 36 million kroner from 49 million kroner.
Impairment charges for loans and advances represented an income of 13 million kroner, compared to an income of 27 million kroner in the fourth quarter of 2016.
Sydbank's common equity Tier 1 capital ratio stood at 17.3% at the end of 2017, compared to 16.1% at 2016-end.
The bank's board of directors proposed a dividend of 11.31 kroner per share for 2017, representing 50% of the group's profit after tax and an increase from the 2016 dividend of 10.46 kroner. It also announced a new share buyback program of 500 million kroner for 2018, to be initiated Feb. 21 and completed by Dec. 31. Sydbank has picked Danske Bank to manage the transaction.
Looking forward, the lender said it expects a profit after tax of between 1.20 billion kroner and 1.40 billion kroner in 2018, subject to macroeconomic environment and other factors. Impairment charges for 2018 are forecast to be at a low level, but uncertainty surrounding price developments in the agricultural sector could impact it, Sydbank noted.
As of Feb. 19, US$1 was equivalent to 6.01 Danish kroner.