Core Insights - Nykredit reported a satisfactory interim profit after tax of DKK 3,000 million for Q1 2025 and raised its full-year profit guidance to DKK 9.25-10.0 billion due to growth in core business areas, including net interest and fee income [3][4] - The company experienced an increase in mortgage and bank lending, resulting in expanded market positions [3] - Nykredit's investment portfolio income showed a positive trend despite market turbulence, and impairment charges remained low due to the financial robustness of customers [3] Financial Performance - Net interest income increased to DKK 3,039 million in Q1 2025 from DKK 3,011 million in Q1 2024, a change of DKK 28 million [4] - Net fee income rose to DKK 754 million in Q1 2025 from DKK 728 million in Q1 2024, an increase of DKK 26 million [4] - Wealth management income grew to DKK 713 million in Q1 2025 from DKK 668 million in Q1 2024, reflecting a DKK 45 million increase [4] - Total income decreased to DKK 5,434 million in Q1 2025 from DKK 6,012 million in Q1 2024, a decline of DKK 578 million [4] - Profit for the period fell to DKK 3,000 million in Q1 2025 from DKK 3,544 million in Q1 2024, a decrease of DKK 544 million [4] Lending and Market Position - Totalkredit's mortgage lending increased to DKK 921.8 billion at the end of March 2025 from DKK 879.7 billion at the end of March 2024 [3] - Nykredit Bank's lending after impairments rose to DKK 108.8 billion at the end of March 2025 from DKK 94.5 billion at the end of March 2024 [3] Strategic Developments - Nykredit launched a public tender offer to acquire Spar Nord Bank, aiming to create a strong, customer-owned alternative to the largest listed banks in Denmark [3] - The company raised the KundeKroner discount to 0.25% from 0.20% for new and existing customers, benefiting over 900,000 homeowners [3] Capital and Efficiency - Nykredit maintained a strong capital position with a Common Equity Tier 1 (CET1) capital ratio of 20.7% [6] - The cost/income ratio remained low at 30.8% in Q1 2025 [6]

Financial Data and Key Metrics Changes - The company achieved net income of $23.6 million, representing earnings per share of $0.83 and a return on assets (ROA) of 1.2% [5] - Net interest margin remained strong at 4.07%, marking ten consecutive quarters above 4% [14] - Total new loan fundings totaled $399 million in Q1, up 48% from the previous quarter and up 37% year-over-year [11] - Deposits increased by approximately $200 million or 12% annualized [11] Business Line Data and Key Metrics Changes - Loan growth was primarily driven by the commercial and industrial (C&I) portfolio, which saw a 7% annualized increase [10] - Service fee income represented 22.6% of total revenues, with a slight increase over the last quarter [5] - Consumer deposit service revenues decreased by 9% due to lower NSF activity [17] Market Data and Key Metrics Changes - The company noted strong loan growth in high-growth markets, particularly in the C&I sector [10] - The credit quality remained stable, with nonperforming loans as a percentage of total loans increasing to 1.21% [20] - The company experienced a decline in its commercial real estate portfolio, impacting overall loan growth [10] Company Strategy and Development Direction - The company aims to focus on relationship-based banking and is optimistic about growth opportunities in its markets [6][8] - There is a commitment to maintaining a strong capital position and sound credit risk management [9] - The company is open to opportunistic M&A but remains cautious about potential risks in the current market environment [22][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. economy, particularly in their operational regions [8] - There is an acknowledgment of macroeconomic uncertainties impacting consumer investment and spending [15] - The company expects mid-single-digit growth for both loans and deposits for the full year [13] Other Important Information - The provision expense for the first quarter was $3.8 million, resulting in an allowance for credit loss ratio of 1.42% [19] - The company anticipates net charge-offs for the full year to be in the high teens to low 20s range in basis points [21] - The tangible book value per share improved to $34.88, with a CET1 ratio of 13.26% [21] Q&A Session Summary Question: What are the drivers behind the lower expense guidance for 2025? - The lower expense guidance is linked to macroeconomic uncertainty and a slowdown in mortgage activity, impacting variable compensation [26][27] Question: How does the current environment impact thoughts around M&A? - The company remains opportunistic regarding M&A but is cautious about taking on risks that could jeopardize shareholder value [28][66] Question: Can you provide insights on loan growth and competition? - Loan growth remains strong, particularly in the C&I space, with competitive pricing and a robust pipeline for Q2 [36][39] Question: What is the outlook for deposit costs and growth in Southern California? - The company expects stable deposit costs but acknowledges competitive pressures; Southern California efforts have seen strong deposit growth [40][43] Question: Can you elaborate on the higher nonaccrual loan mentioned? - The nonaccrual loan was a $13 million credit with cross-border exposure in the manufacturing sector, contributing to the increase in nonperforming loans [70][71]

Financial Data and Key Metrics Changes - The company achieved net income of $23.6 million, representing earnings per share of $0.83 and a return on assets (ROA) of 1.2% [5] - The net interest margin was strong at 4.07%, maintaining above 4% for ten consecutive quarters [14] - Loans increased by 7% and deposits grew by 12% annualized at the end of the quarter [5][11] - The loan to deposit ratio improved to 94.3% from 95.6% at the end of the previous year [12] Business Line Data and Key Metrics Changes - Service fee income represented 22.6% of total revenues, showing slight growth over the last quarter [5] - The C&I portfolio drove loan growth, while the commercial real estate portfolio experienced a decline [10] - Total new loan fundings totaled $399 million, up 48% from the previous quarter and 37% from the same quarter last year [11] Market Data and Key Metrics Changes - The company noted strong growth in savings and money market accounts, with total annualized growth at 20% [12] - The credit quality remained stable, with nonperforming loans as a percentage of total loans increasing to 1.21% [21] Company Strategy and Development Direction - The company is focused on relationship-based banking and aims to deliver positive operating leverage in 2025 and beyond [5][19] - The management believes there is significant growth potential in their markets due to a small market share [10] - The company is considering opportunistic M&A activities, particularly in challenging market conditions [29][66] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. economy, particularly in their operational regions [9] - They acknowledged macroeconomic uncertainties but did not see pervasive issues in their loan portfolio [6][20] - The company expects mid-single-digit growth for both loans and deposits for the full year [13] Other Important Information - The provision expense for the first quarter was $3.8 million, resulting in an allowance for credit loss ratio of 1.42% [20] - The company’s tangible book value per share improved to $34.88, with a CET1 ratio of 13.26% [22] Q&A Session Summary Question: Can you elaborate on the lower expense guidance for 2025? - The lower expense guidance is linked to macroeconomic uncertainty and a slowdown in mortgage activity, impacting variable compensation [27][28] Question: How does the current environment affect M&A thoughts? - The company remains opportunistic regarding M&A, feeling confident in their capital levels and not wanting to risk shareholders with volatile assets [29][30] Question: Can you provide insights on loan growth and competition? - Loan growth remains strong, particularly in the C&I space, with competitive pricing and a robust pipeline [38][41] Question: What is the outlook for deposit costs and growth? - The company expects stable deposit costs but acknowledges competitive pressures; growth is driven by both corporate and consumer sides [42][45] Question: Can you clarify the impact of the MSR write-down on mortgage revenue? - The impact was primarily from the MSR net capitalization due to macro rate changes and CPR, with negligible effects from hedging [54] Question: What is the company's interest rate sensitivity? - The company is slightly asset sensitive but generally neutral regarding interest rate changes [68] Question: Can you provide more details on the nonaccrual loan mentioned? - The nonaccrual loan was a $13 million credit with cross-border exposure in the manufacturing sector, contributing to the increase in nonperforming loans [70][71]