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Danish banks update 2018 profit guidance after asset manager revaluation

Several Denmark-based lenders updated their pretax profit guidance for 2018 after asset manager BI Holding A/S, or BankInvest, revised its valuation principles.

Under the new principles, BI Holding, which is owned by a total of 39 banks, will value itself based on a 3.5x price-to-book multiple, compared to the previous valuation that was equivalent to book value. The move raises the company's capital base to 700 million Danish kroner from 200 million kroner, and delivers a fair value of 810 million kroner, BI Holding said.

As a result, Spar Nord Bank A/S, which owns about 15% of BI Holding, upgraded its guidance for 2018 core earnings before impairment to about 1.3 billion kroner from about 1.2 billion kroner, while the guidance on profit after tax was raised to around 1 billion kroner from around 0.9 billion kroner. The BI Holding revaluation will result in tax-exempt income for Spar Nord of about 75 million kroner to be recognized in the first-quarter financial statements under market value adjustments.

Sydbank A/S' ownership in BI Holding will rise by 41 million kroner in the first quarter, while the outlook for after-tax profit in 2018 was revised to between 1.34 billion kroner and 1.54 billion kroner.

Djurslands Bank A/S upped the range for its expected 2018 pretax profit to between 70 million kroner and 85 million kroner, while Jutlander Bank A/S said it expects 2018 pretax profit to be between 195 million kroner and 270 million kroner. Kreditbanken A/S said it expects 2018 pretax profit to be between 69 million Danish kroner and 79 million kroner, while Sparekassen Sjælland-Fyn A/S upgraded its 2018 pretax profit expectations to between 215 million kroner and 245 million kroner.

Salling Bank A/S revised the range of 2018 profit before tax to between 35 million kroner and 45 million kroner from between 25 million kroner and 35 million kroner.

Nordjyske Bank A/S increased its core earnings forecast to between 385 million kroner and 435 million kroner, and its pretax profit forecast to between 280 million kroner and 415 million kroner.

Ringkjøbing Landbobank A/S said it would book a revaluation gain of 51 million kroner in core earnings under the item "result for the portfolio," because the gain is a one-off that does not affect regular income from holdings of sector shares. The change will not affect its previous earnings guidance.

Faroe Islands-based P/F BankNordik will book a gain of 21 million kroner and it revised up its pretax profit guidance to between 165 million kroner and 215 million kroner from a previous range of 150 million kroner to 200 million kroner.

Spar Nord Bank A/SSydbank A/SAs of March 20, US$1 was equivalent to 6.08 Danish kroner.