Føroya Banki: Soft Q4 2024 result but significant capital distribution - Nordea

Q4 profit before loan losses came in at DKK 46m, DKK 8m (6%) below our estimate. This was mainly due to net interest income being DKK 7m below our estimate, driven by margin pressures and muted lending growth in Greenland, as well as higher funding costs during the quarter. Net insurance income was similarly DKK 2m (13%) below our estimate, as a result of increased claims. Net fee and commission income was roughly in line with our estimate, while costs were DKK 3m higher than our estimate. However, both operating and net profit landed in line with our estimates due to loan loss reversals of DKK 11m. We had expected DKK 0m. As expected, Føroya Banki proposed a total dividend payout of DKK 350m to compensate for the amount the bank withheld last year amid uncertainty concerning the impact on REA from Faroese and Greenlandic real estate exposures. The bank confirmed a continuance of its targeted payout ratio of 70%. Finally, the CET1 ratio was 23.8%, slightly below our estimate of 24.2%. The 2025 net profit guidance of DKK 210-240m was reiterated. We estimate DKK 218m.