Sparekassen Kronjylland reported H2 2020 profit before loan losses of DKK 183m, which was DKK 11m (7%) ahead of our estimate. This was mainly led by better-than-expected market value adjustments and lower costs, while net fee income was slightly below our estimate. The key positive in the report was loan losses of only DKK ~6m, which was DKK 69m (93%) below our forecast. The underlying asset quality hence remains solid and at the end of 2020 the bank had a management buffer of DKK 279m in loan loss provisions related to the COVID-19 pandemic. This corresponds to ~1.7% of the total lending book, which is among the highest in the sector.
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