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Profit before taxes for the year rose by 12.6 percent, and the return on equity was 10.6 percent. However, most of the growth in the year's profit can be attributed to earnings in subsidiaries and only to a lesser extent to net interest income, price adjustments and lower loan impairment losses.
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Excluding earnings in subsidiaries, mortgage credit institutions’ income before taxes has risen relatively modestly (2.9 percent).
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Net interest income has grown by 1.3 percent. This was driven by increased income from administration margins.
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Fee and commission income decreased by 1.3 percent.
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Impairment losses on loans and advances etc. decreased by 27.7 percent. This was mainly due to reversals of previous year's impairments.
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Lending increased by 2.9 percent, which was supported by low bond yields and rising housing prices.
Generally, the Danish economy is doing well. Employment is high and housing prices are rising. This contributes to the improvement in mortgage credit institutions’ income and lending. More people are able to make their loan payments on time, leading to lower arrears. The reduced impairments also mean that mortgage credit institutions expect lower losses on their lending. The continued low interest rate level helps support the rising housing prices and the positive growth in lending, which is now seen in most of the country’s municipalities, cf. figure 1. The changes in housing prices range from -8 percent to 36 percent. Lending growth is between -4 and 10 percent.
Read the full report here: Market development in 2017 for mortgage credit institutions