Grønlandsbanken A/S
CVR no. 80050410
Notification to Nasdaq OMX Copenhagen
1/2023
Annual Report
2022
The Annual Report has been prepared in a
Danish and an English version. In case of
discrepancy between the Danish-Language
original text and the English-Language
translation the Danish text shall prevail.
Annual Report
2022
1
Management’s Review 2
Annual Report in Headlines 2
Greenland’s Society and Economy 5
About the BANK of Greenland in Brief 22
Summary of Financial Highlights 23
Management´s Review for 2022 24
Management Statement 36
Audit Statement 37
Internal auditor´s statement 41
Statement of Income 43
Statement of Comprehensive Income 44
Balance Sheet 45
Statement of Changes in Equity 46
Cash Flow Statement 47
Overview of Notes 49
Notes to the Annual Report, including Accounting policies
applied 50
Information about the BANK of Greenland 88
Financial Calendar and Stock Exchange Notifications 89
Contents
Annual Report
2022
Management’s Review
2
Annual Report in Headlines
A year of market turmoil and a significant increase
in business volume
Geopolitical uncertainty, supply chain challenges, and increasing
inflation and interest rates affected the global economy in 2022,
but Greenland’s economy continues to be robust. The financial
markets’ performance and Greenland’s robustness are both
reflected in the Bank’s Annual Report for 2022. In 2022, the
Bank made significant progress in virtually all business areas,
while impairment write-downs were low, although negative
value adjustment of the Bank’s bond portfolio reduced the
Bank’s profit.
The BANK of Greenland achieved a profit before tax of DKK
109.1 million in 2022, compared to DKK 158.9 million in 2021.
The result is within the revised guidance from October 2022 of
a profit of between DKK 90 and 120 million.
Core operations at an improved level
The Bank’s core operations improved from DKK 149.2 million
in 2021 to DKK 153.0 million in 2022.
After declining in 2021, lending grew significantly in 2022.
Lending increased by DKK 570 million to a record-high level of
DKK 4,354 million at the end of 2022. The increase in lending is
a result of the Bank’s favourable market position, Greenland’s
continued sound economic performance and, in particular, the
business community’s great propensity to invest in 2022.
In 2022, net interest income increased by DKK 9.1 million to
DKK 243.2 million. This modest increase reflects, among other
things, that a significant part of the increase in lending took
place in the last part of 2022. The last part of 2022 therefore
also shows a clear improvement in net interest.
The sustained high construction activity and home sales meant
that the Bank’s guarantee volume increased in 2022. At the end
of 2022, guarantees amounted to DKK 1,934 million, compared
to DKK 1,781 million in 2021.
Money-market interest rates changed from negative to positive
in 2022. This improved the return on the Bank’s surplus
liquidity, and the Bank has re-introduced positive deposit
interest rates for the Bank’s customers.
Fee and commission income increased in 2022, compared to
the previous year. Key drivers of this increase included the
expanding volume of guarantees, as well as the investment area.
Costs also rose in 2022. The increase can be attributed
primarily to staff expenses. As a consequence of a changed
principle for the calculation of holiday pay obligations, staff
0.0%
5.0%
10.0%
15.0%
20.0%
0
50
100
150
200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Profit before tax Return on opening equity after dividend and before tax
Annual Report
2022
Management’s Review
3
expenses increased by a one-off amount of DKK 5.2 million.
The Bank has a by and large unchanged number of full-time
employees, but the pay increases under collective agreements
also increased staff expenses in 2022.
Limited losses and write-downs
Write-downs and provisions amounted to a modest DKK 4.5
million in 2022, compared to DKK 1.5 million in 2021. The
overall level of write-downs is still relatively low, but does
reflect an increased and significant management reserve now
amounting to around DKK 42 million, including amounts for
derived cyclical effects, rising inflation and increasing interest
rates. Society and customers have thereby once again
demonstrated considerable economic robustness, despite the
uncertainty in the world around us.
Capital losses
The Bank’s liquidity is placed in the money market, in bonds
and, to a certain extent, in sector shares. The increasing interest
rates and general market turmoil resulted in higher capital
losses on the Bank’s bonds. However, the Bank’s sector shares
and the currency area continued to make a positive
contribution. In 2022, value adjustments resulted in a capital
loss of DKK 39.4 million, compared to a capital gain of DKK
11.2 million in 2021.
Growth in the Bank
The Bank experienced significant growth in 2022. Lending
increased by 15%, reaching the highest level in the Bank’s
history, while the investment and pension area also expanded.
Based on ongoing private and public investments, the Bank
expects continued growth in 2023, but at a lower level than in
2022.
Balance sheet, capital and dividend
The BANK of Greenland’s capital-intensive activities, and
lending and guarantees in particular, expanded significantly in
2022, requiring continued focus on the Bank’s capital.
As an SIFI-designated banking institution since 2017, this means
that the Bank’s management continuously assesses the capital
structure. In this respect, consideration of the authorities’
expectations of the current and future optimum capitalisation
of a banking institution is a significant aspect. There is also a
need to have sufficient capital to take part in credit granting in
Greenland.
In 2022, the Bank therefore continued to issue both Tier 2 and
Tier 3 capital.
The capital base is still assessed to be robust. On this basis,
dividend of DKK 20 per share, equivalent to 36% of the profit
for the year, is therefore proposed, after which the Bank has a
solvency ratio of 23.6, compared to 24.4 in 2021. The solvency
requirement amounts to 11.1%, compared to 10.7% in 2021.
Outlook for 2023
Greenland continues to avoid being affected by rising inflation,
and even though inflation may rise in 2023, we still expect
favourable development in the banking business. Together with
the return to positive interest rates, the Bank expects improved
core operations in 2023.
Uncertainty in the capital markets will affect the Bank’s value
adjustments. We nonetheless expect losses and write-downs to
remain at a low level, and derived risks related to inflation, rising
interest rates and cyclical uncertainty in 2023 are assessed to
be covered by the current level of impairment write-downs.
The Bank expects a profit before tax of DKK 130-170 million
for 2023. This expectation corresponds to the notification in
the stock exchange announcement of 15 December 2022.
Nuuk, 1 March 2023
Martin Birkmose Kviesgaard, Managing Director
Annual Report
2022
Management’s Review
4
Annual Report
2022
Management’s Review
5
Greenland’s Society and Economy
Globally, 2022 was a year characterised by economic
uncertainty. The year was affected by the aftermath of Covid-
19, Russia’s invasion of Ukraine, increasing food and commodity
prices and rising interest rates. Despite these negative global
trends, Greenland’s economy is still taking a positive course.
Provisional data shows that Greenland experienced substantial
GDP growth, relatively low inflation and continued low
unemployment. Furthermore, the export value of fish and
shellfish was higher in 2022 than in the preceding years.
Tourism also rebounded in 2022, and is now at a higher level
than before Covid-19. Greenland's economic and commercial
development in 2022 was thus generally positive. Nonetheless,
the BANK of Greenland finds that the development in public
finances, among other things reflecting major structural
challenges, gives grounds for concern. Ensuring a sustainable
long-term fiscal policy therefore requires major comprehensive
reform initiatives and business development to be firmly on the
agenda, so that Greenland can continue to handle potential
cyclical shocks and increasing global uncertainty.
In this year’s Annual Report, we consider these topics as three
overarching themes. The first theme concerns the overall
economic development, and the second theme deals with
business trends and potential, while the last theme considers
the structural challenges which Greenland faces.
Overall economic development
Economic growth
Despite the global economic situation, Greenland’s economy
remains strong. Provisional data shows that GDP grew by 1.2%
in 2021, despite the Covid-19 pandemic, reflecting high activity
and low unemployment. In 2022, Greenland’s economic
upswing continued. The BANK of Greenland therefore expects
higher economic growth in 2022 than in 2021.
As in 2021, economic progress was driven especially by an
easing of fiscal policy, with significant building and construction
investments in particular, as confirmed by the level of activity
around the airports in Nuuk and Ilulissat. There is also
construction of schools and childcare institutions in Nuuk,
together with residential construction projects that are
particularly evident in Nuuk and Ilulissat.
Provisional data for 2022 also indicates that the year’s fisheries
exports are helping to drive economic progress. Fisheries
exports have returned to a high level after declining export
values in 2020 and 2021. This is due in particular to higher
price levels for fish and shellfish. In addition, the tourism sector
has expanded to a higher level than both the previous year and
prior to the Covid-19 pandemic. The negative effects of rising
energy prices and considerably higher interest rates thus do not
yet appear to have affected economic activity significantly.
Greenland's Economic Council’s cyclical assessment from
September estimates GDP growth at 1.6% in 2022. Based on
economic activity in the last two quarters of 2022, the BANK
of Greenland assesses that GDP increased by between 1.5%
and 2% in 2022. In 2023, the higher price and interest rate
levels, as well as the expected rising energy prices from the last
part of 2023, will have a negative impact on consumption and
investments. Falling oil prices in the last part of 2022 are
positive and a high level of construction activity at the start of
2023 supports low unemployment. The BANK of Greenland
therefore expects GDP growth to continue in 2023, although
at a slightly lower level than in 2022, see Figure 1.
Figure 1
Economic development
Real GDP growth
Not e: 2016-2018 are final figures, while 2019-2020 are provisional figures. 2021* is
based on Greenland's Economic Council’s preliminary economic assessment. 2022-
2023** is based on the BANK of Greenland’s estimate. The figure shows real GDP
growth, compiled in 2010 prices.
Sources: Statistics Greenland and Greenland's Economic Council.
It is important to emphasise that the positive economic
development is not uniform across the country. The growth is
driven by Nuuk and the larger northern Greenland towns,
which is also reflected in their historically low unemployment
rate. There is higher unemployment in southern Greenland and
Tasiilaq, which contributes to considerable pressure as more
people move to Nuuk, with increasing demand for housing and
welfare services such as education, childcare institutions and
healthcare. Positive economic growth can only be achieved if a
number of critical conditions are in place. This includes handling
the lack of manpower and the substantial imbalance between
housing demand and supply in Nuuk in particular, as well as
access to welfare services for children, adults and the elderly.
4.7%
0.1%
0.6%
2.3%
0.4%
1.2%
1.6%
1.0%
2016 2017 2018 2019 2020 2021* 2022** 2023**
Annual Report
2022
Management’
s Review
6
Price trends
Major global conflicts and uncertainty brought significant price
increases, particularly for energy, food and materials, to large
parts of the world in 2022. For example, inflation was just
below 9% in both Denmark and the Faroe Islands in 2022, see
Figure 2. This trend was reflected throughout the EU, where
inflation exceeded 11% in November 2022.
1
Despite these
global price increases, Greenland’s inflation remained relatively
low. Consumer prices in Q3 2022 were only 2% higher than at
the same point in 2021.
The relatively limited increase in inflation in Greenland so far is
partly due to price hedging agreements for, among other things,
energy supplies. While the global supply crisis exerted pressure
on global prices, Greenland benefited from hydroelectric
power as an energy source. Polaroil, which has an obligation to
supply oil and diesel products to Greenland, furthermore has a
fixed price agreement for oil. This fixed price agreement is valid
for the period from 2021 to 2023 and therefore currently
serves as a buffer against price increases for oil products, so
that consumer prices are affected to a lesser extent. If the
global situation is unchanged when the fixed price agreement
expires at the end of 2023, this is expected to have a significant
impact on consumer prices in Greenland, even though the
current oil price has fallen significantly from its peak in the
summer of 2022.
1
Eurostat, PRC_HICP_MANR.
An expectation of increasing import prices will affect the level
of economic activity, since higher consumer prices entail lower
purchasing power.
Increasing inflation also resulted in the central banks raising
interest rates significantly. Rising interest rates have an impact
on the purchasing power and propensity to invest of both
private consumers and businesses. The BANK of Greenland
assesses that this can be expected to have a knock-on effect on
activity in the retail sector and the construction industry, for
example.
Housing market
Greenland's housing market has experienced steady growth for
several years. From 2015 to 2022, housing prices in Nuuk
increased by around 31% in current prices, which is at the level
of the average development in Denmark up to 2021, but
significantly below housing price trends in Copenhagen or
Thorshavn, for example. The demand for housing has generally
been high in recent years, particularly in Nuuk and Ilulissat.
Development has been driven by urbanisation, resulting in
migration towards Nuuk, which has led to a high demand for
housing that cannot be sufficiently met by the current housing
supply. It has been sought to rectify the imbalance between
supply and demand by constructing more residential buildings,
but housing prices have nonetheless shown stable increases
The development stagnated in 2022, however. This may,
among other things, reflect the rising interest rates, but
fluctuations from year to year are also affected by a changing
Figure 2
Development in inflation
Index (2015=100)
Not e:
Development in the consumer price index from 2015 to 2022, with 2015 as index 100. The figure is calculated at six-monthly intervals. Q1 is the first quarter and
Q3 is the third qua rter.
Sources :
Statistics Greenland, Statistics Denmark and Statistics Faroe Islands.
Annual Report
2022
Management’s Review
7
supply of newly built flats. In terms of the average sales price
per home purchased, this has not increased significantly in
recent years. Buyers have thus increasingly purchased smaller
homes, (such as newly built homes) and actually purchased
homes according to what the individual household can afford.
This means that the price increase does not have as great an
impact on the individual household’s available income as the
increase in the price per square metre would otherwise
indicate. In view of a higher level of interest rates at the start of
2023 and expected rising energy prices in the longer term,
downward pressure on housing prices can be expected.
Homeowners in Greenland are less affected by the
development in interest rates, however, as mortgage-credit
loans in Greenland are only available at fixed interest rates with
instalment payments.
Figure 3
Development in housing prices
Housing prices in Nuuk, Denmark, Copenhagen and Thorshavn,
index (2015=100)
Not e:
2015=100. Price trends in Nuuk (Greenland), Denmark and Copenhagen are
compiled in DKK per m2 for detached and terrace houses, as well as owner-occupied
flats, while for Thorshavn (the Faroe Islands) and Nuuk (Greenland) the prices are
compiled on the basis of sales prices. The prices are adjusted by the consumer price
index. Data for Denma rk is based on Q4, except for 2022, which is based on Q3.
Data for the Faroe Islands is only until 2021 due to missing data.
Sources: Finance Denmark, BANK of Greenland and Statistics Faroe Islands.
The high demand for housing in Nuuk is also of great
significance to the average number of days on market. Days on
market were below two months in 2018 and 2019 and around
a quarter of the Danish days on market for the same period.
According to real estate agents in Nuuk, days on market have
increased slightly since then, and in 2022 it took an average of
85 days to sell a home in Nuuk, which must still be considered
to be a short time. As described, the expectation is that we
have not yet seen the full impact of the increasing inflation and
interest rates, as well as the expected rising energy prices. We
are therefore likely to see an increased impact on the housing
market in the coming years. Migration to Nuuk and the larger
towns has the opposite effect, however, by supporting the
housing market in these areas.
Figure 4
Development in average days on market
Average days on market in Nuuk and Denmark, days
Not e:
Days on market denotes the average number of days a detached or terraced house,
or owner-occupied flat, has been offered for sale before it is removed from the
market. For Greenland, only sold homes are included, while the Danish figures also
include homes that are not sold. Days on market are calculated on the basis of the
date of sale/delisting.
Sources: The BANK of Greenland and Finance Denmark.
OI balance – Development in government budgets
Even though 2021 was a year with reasonable economic
performance, with GDP growth and low unemployment, there
was a significant deficit on the OI (operations and investment)
balance – around twice the deficit budgeted by Naalakkersuisut
in the 2021 Finance Act, see Table 1.
This contradicts last year’s expectations of a smaller deficit than
budgeted. This expectation was based on Greenland
weathering the crisis better than feared. The actual deficit in
2021 is due, among other things, to public expenditure on
support packages, emergency aviation and the health service. In
addition, significant resources were allocated for the building
and construction activities for airports, incineration plants and
hydroelectric power plants, which are partly financed by the
Treasury. At the same time, growth in public sector
employment led to higher salary expenditure.
An OI balance below budget is not necessarily negative, since
this depends on the reason for the downward adjustment. If,
for example, it is due to profitable investments with a positive
present value, the Budget Act is complied with and the
80
100
120
140
160
180
2015 2016 2017 2018 2019 2020 2021 2022
Nuuk, price per m2
Nuuk, sales price
Danmark, price per m2
Tórshavn, sales price
København, price per m2
0
50
100
150
200
250
2018 2019 2020 2021 2022
Nuuk Denmark
Annual Report
2022
Management’s Review
8
economy is otherwise sound, this may be deemed to be
appropriate.
For 2022, a small surplus is expected, cf. the Finance Act for
2022. Based on the favourable economic development in 2022,
it can be expected that the Treasury performed well during the
year. For the coming years, the Finance Act Agreement budgets
for a substantial four-year surplus of almost DKK 173 million,
without a single deficit year in the 2023-2026 period. This is
supported by the fact that income from the fisheries industry is
currently likely to increase due to rising fish prices and falling oil
prices, and that the block grant is adjusted in line with price
trends in Denmark and will thereby be higher than usual.
The increase in public construction activities is also reflected in
Greenland's debt level. In 2021, the gross interest-bearing debt
of the Greenland Government, municipalities and publicly-
owned companies amounted to just over 27% of GDP.
In view of the high level of construction activity, the debt will
increase in the coming years.
2
This increase does not reflect the
Greenland Government’s debt, which is budgeted to diminish
and actually disappear up to 2025, but an increasing gross debt
for the municipalities and publicly-owned limited liability
companies. There is still considerable residential construction
activity, while Naalakkersuisut is also undertaking major
2
Finance Bill for 2023 and GDP estimate from Greenland’s Economic Council,
“Greenland’s Economy – Autumn 2022”.
3
Finance Bill for 2023.
investments in Greenland’s infrastructure, including the airports
in Nuuk, Ilulissat and Qaqortoq. Some elements of the
construction activity are intended to settle the maintenance
backlog that has accumulated for homes, infrastructure, ports
and energy supply.
3
It must be emphasised that the debt level in Greenland has
been at a very low level for quite some time, and even though
it is higher this year, it is still well below the European average.
An increase in the interest-bearing debt will, all other things
being equal, scale up the risk exposure. This may be
economically viable, however, depending on whether the debt
is used for profitable investments. Investing in Greenland's
homes, infrastructure and supply systems is positive, if the
investments are profitable, but since the construction activities
will be financed by establishing debt, this should take place with
due consideration of both the increased risk exposure and the
alternative investment opportunities. To ensure that a
responsible fiscal policy is implemented, it was adopted by law
in 2021
4
that the total appropriations for operations, grants
and investment in the municipalities’ and the Greenland
Government’s annual budgets/finance acts, including budget
forecast years, may not exceed real growth of 1% over one
year and 2% over four years. This management instrument will
ensure control of growth in public expenditure and will
therefore in the longer term support the gradual reduction of
the economic sustainability problem.
As described, the current global economic uncertainty may
reduce the propensity to invest in the construction industry.
4
Inatsisartut (Greenland Parliament) Act no. 13 of 1 December 2021, Section 2(2)
para (2).
Table
1
The Greenland Government’s OI balance
2018
2019
2020
2021 2022
2023
2024
2025 2018-
2021
2022-
2025
2023-
2026
Budgeted
OI balance, Finance Act
+11.2
+7.2
+49.6
-76.2 +7.6
+6.1
+11.8
+62.6 +92.3
-11.8
+172.8
Actual
OI result
+132.7
+142.0
-134.8
-150.0
-135.2
Difference
+121.5
+134.8
-184.4
-73.8
-123.4
Not e:
A minus indicates a deficit. The figures for 2018-2021 are actual figures, while the figures for 2022-2023 are those adopted for the year. The figures for 2024-
2026
are budget estimates. The total calculated for 2019-2022 is subject to the assumption that the actual result for 2021 is as adopted.
Source:
Finance Acts for 2018, 2019, 2020, 2021, 2022 and 2023 and the Finance Bill for 2023.
Annual Report
2022
Management’s Review
9
The current prioritisation of public investments to support the
reduction of the maintenance backlog can potentially sustain
continued activity in the construction industry. However, this
must take due account of the current economic upswing, with
low unemployment, and that the investments should not
further increase inflation.
Figure 5
Gross public interest-bearing debt in Greenland,
Denmark and the EU in 2021
Per cent of GDP
Not e:
Greenland I denotes the gross debt of the Greenland Government as a ratio of GDP.
Greenland II denotes the gross debt of the Greenland Government, municipalities
and government-owned limited liability companies as a ratio of GDP.
Sources: The Greenland Government’s Finance Bill for 2023, Statistics Greenland and
Eurostat.
Business conditions
Since the 1950s, Greenland's business structure has to a great
extent been driven by the fishing industry. Today Greenland
has an efficient and modern ocean-going fishing fleet.
Greenland's fishing industry dominates the country's business
structure to such an extent that the business structure can be
described as one-stringed.
5
The success of the fishing industry is
therefore extremely important for Greenland’s economy. Yet
potential opportunities also exist within other industries such as
tourism, extraction of mineral resources and energy
production. Diversification of the business structure to include
these sectors, for example, would be desirable, as this would
contribute to increased resilience in the economy.
Fisheries
Greenland’s fisheries exports achieved constant growth for
many years, but in 2020 the industry saw a decline in the
export value of fish and shellfish, among other things due to
falling prices as a consequence of the pandemic’s closure of
hotels and restaurants around the world. Price levels continued
to drop in 2021, when the export value of fish and shellfish
5
Bianco (2019), ”Ender Grønlands økonom og erhvervsudvikling i fisk” (Will
Greenland's economy and business development stay with fish).
decreased by a further 2%. Looking at the provisional data for
2022, this development has now been reversed and the export
value of fish and shellfish increased significantly in 2022, see
Figure 6.
The positive development is primarily due to higher fish prices
during 2022, thereby matching the international increase in
food prices. In Q3 2022, prawn prices were 20% higher,
Greenland halibut prices were 24% higher and cod prices were
no less than 58% higher than at the same time in 2021.
Based on price increases and the associated higher export value
in 2022, it is assessed that the export value will increase by
around 16% in 2022 compared to 2021. This means that the
year’s export value of fish and shellfish will exceed the 2019
level by almost 10%. The continued high international food
prices indicate that the export value of fish and shellfish will also
be high in 2023. However, the changed fishing quotas could
potentially mean that the export value in 2023 will be slightly
lower than in 2022, see Figure 6.
Figure 6
Annual value of exports of fish and shellfish
DKK million
Prawn
Greenland
halibut
Cod
Mackerel
Capelin
Other
fish
species
Note: 2022* are estimates, where mack erel, capelin and other fish species are projected
based on data for the first 9 months, due to data availability. The projections are
calculated on the basis of seasonal trends from the previous years’ catches at fish
type level. 2023** are projections, where prices are on average assumed to be
identical to 2022, while volumes are assumed to change equivalently to quota
changes. The quotas not yet adopted, including for inshore Greenland halibut fishing
in East Greenland and deep-sea cod fishing in West Greenland, are assumed to be
unchanged from 2022. The prices are not adjusted in relation to the consumer price
index and a re therefore nominal/current prices.
87.9%
36.6%
27.4%
0.5%
EU Denmark Greenland I Greenland II
5,068
4,862
4,783
5,560
5,457
2019 2020 2021 2022* 2023**
Annual Report
2022
Management’s Review
10
Sources: Statistics Greenland, Naalakkersuisut
and own estimates.
In addition to the block grant, around one third of the
Greenland Government’s other revenue comes from fisheries.
The rising export prices may partly offset the impact of the
increasing import prices, as the terms of trade (ratio between
export and import values) improve. This is a very favourable
situation for Greenland’s economy.
6
The increasing fish and shellfish prices have been significant in
terms of mitigating the consequences of the rising fuel prices,
which have particularly affected large vessels, as these are not
protected by the service contract for oil products. The industry
was also affected by supply-chain challenges and the general
price increases for materials, which are among other things
reflected in rising packaging prices. If the current uncertainty in
the global economy continues in the coming years, this might
have the consequence of less stable fish and shellfish consumer
markets. However, the current scenario of falling oil prices is
positive for the industry and supports a positive assessment of
the economic outlook for 2023 for the industry and the
Treasury, and measured in GDP terms.
The development of Greenland’s fisheries should take great
account of biological, social and economic sustainability. A
substantial element of fisheries adheres to the biological advice
from the Greenland Institute of Natural Resources. For some
species, however, the quotas are still higher than recommended
by the Institute. A decision not to adhere to the biological
6
See "Greenland’s Economy – Autumn 2021", Greenland's Economic Council.
recommendation may reflect local socioeconomic factors. This
is a short-term strategy, however, as pressure from fisheries
exceeding the recommended level may reduce the catch
potential going forward. To ensure that fisheries can continue
to make a major contribution to Greenland's economy, it is
therefore vital that fisheries adhere to the biological advice.
There are also differences in terms of the social and economic
sustainability of fisheries. There is great fluctuation in income
distribution across the industry. Some fishermen thus earn a
very good living, while others do not fare so well. This reflects
the fact that quotas are distributed on too many quota shares
and licences, so that fishing is not profitable for the individual
fisherman. Pursuant to the Fisheries Commission’s report from
2021, it is therefore important to implement fisheries reforms
to support that, going forward, Greenland's fishing industry is
biologically, socially and economically sustainable for society.
Reform initiatives in this area may have negative consequences
for the individual family in the short term, but from a long-term
societal perspective this will be the right path towards a fishing
industry that is ready for the future.
Tourism and aviation
In recent years, the tourism industry has been severely affected
by the Covid-19 pandemic. However, preliminary figures for
the first nine months of 2022 clearly show that the tourism
industry is back on track. Compared to 2021, the number of
foreign-visitor overnight stays increased by no less than 128%,
see Figure 7. Comparison of the number of foreign-visitor
overnight stays in 2022 with the level in 2019 (before the
Figure
7
Development in number of overnight hotel stays
Number of overnight hotel stays, accumulated annually
Number of foreign
-visitor overnight stays
Number of
domestic-visitor overnight stays
The figure shows the number of foreign-visitor and domestic-visitor/Greenlandic overnight hotel stays for 2019 to 2022. The number of overnight hotel stays is accumulated for each
year. This means that the last month represents the total annual number. For 2022, the first nine months are included due to data availability.
0
50,000
100,000
150,000
200,000
January
February
March
April
May
June
July
August
September
October
November
December
2019 2020 2021 2022
0
50,000
100,000
150,000
200,000
January
February
March
April
May
June
July
August
September
October
November
December
2019 2020 2021 2022
Annual Report
2022
Management’s Review
11
Covid-19 pandemic) also shows an impressive increase of 31%.
This very positive development proves that Greenland is
becoming an even more attractive destination for foreign
tourists.
The same trend applies to air traffic. In the first ten months of
2022, there were close to three times as many foreign airline
passengers flying from Greenland compared to the same
period in 2021, see Figure 8. Compared to 2019 (before the
Covid-19 pandemic), there is also a small increase of just over
7% in the number of foreign airline passengers.
The significant increase in the number of overnight hotel stays,
compared to a smaller increase in air travel, may reflect that
foreign visitors stay longer in Greenland. This is positive, since
the tourists will presumably also spend more in Greenland.
However, some of the increase in foreign-visitor overnight stays
may reflect a demand related to migrant labour.
In 2020 and 2021, cruise tourism was interrupted by the
Covid-19 pandemic, but in 2022, this form of tourism began to
flourish once again. According to Visit Greenland’s list of visiting
cruise vessels, there were 425 port calls in 2022. In 2019, the
number of calls was 395. This increase in cruise tourism has led
to some debate concerning such topics as the value creation
associated with cruise tourism. One concern is that cruise
tourists spend less than other tourists. This concern is also
supported by a study of the impact of the cruise industry on
Svalbard's local community.
7
This survey shows that cruise
7
Cruise Study Svalbard (2019).
tourists from conventional cruise vessels generate less
economic benefit than visitors from expedition cruises.
The increases in overnight hotel stays, air traffic and cruise ships
in 2022 must be viewed in the light of the global uncertainty,
including increasing inflation and consequently declining
purchasing power. As inflation is expected to remain relatively
high in 2023, this could affect the tourism industry in the long
term, with the risk of a new decline in this activity. However,
the first figures for 2023 indicate that the number of flight
bookings is significantly higher than in 2019.
By the end of 2024, the airports in both Nuuk and Ilulissat are
expected to be completed. Among other things, the new
airports will have larger terminals and longer starting and
landing runways, so that international aircraft will be able to
land directly in Nuuk and Ilulissat. Airports alone cannot
generate growth in tourism, however, and full utilisation of the
increased capacity will probably only be achieved gradually, and
will also require investment in initiatives to support tourism.
These measures and investments should reflect greater
awareness that development must be sustainable in climate,
social and economic terms.
To release the full potential of tourism, a number of areas must
be developed. They include hotel capacity, where occupancy
has been particularly high during the high season. In addition,
there is the challenge of a lack of manpower. This applies
particularly to the service industries, where skilled manpower
such as chefs and waiters is a scarce resource. Investment in
Figure
8
Development in the number of airline
passengers
Number of airline passengers, accumulated annually
Number of foreign airline passengers
Number of Greenlandic airline passengers
The figure shows the number of foreign and Greenlandic departing airline passengers for 2019 to 2022. Foreign refers to all countries that are not Greenland. The number of
departing flight passengers is accumulated for each year. This means that the last month represents the total annual number.
availability.
Source: Statistics Greenland.
0
20,000
40,000
60,000
80,000
January
February
March
April
May
June
July
August
September
October
November
December
2019 2020 2021 2022
0
10,000
20,000
30,000
40,000
January
February
March
April
May
June
July
August
September
October
November
December
2019 2020 2021 2022
Annual Report
2022
Management’s Review
12
more attractions of high quality will also be necessary to ensure
the continued growth of the tourism industry. Many local
tourism operators in Greenland are currently finding it
challenging to establish stable local tourist services, based on
local guides, despite high activity and demand. Finally, a potential
barrier may be the availability of the housing, welfare benefits,
etc. required by employees who support tourism. The
aforementioned barriers must be addressed if tourism is to
continue to increase and thereby contribute to economic
growth.
In the BANK of Greenland’s view the investment in airports
and in developing tourism and other industries, in addition to
the new infrastructure, is both economically attractive and
necessary. On the other hand, it is also obvious that progress
will not be made by itself or as a “big bang” in the autumn of
2024, when the airports are completed. This development will
take place continuously over a number of years, but on the
other hand, it is already well underway. The development of
new attractions and experiences, besides investments in
maritime tourism and a number of new hotels, show that the
private business sector is well underway with investments that
can already be seen or which will be realised in the coming
years, before and after the new airports are opened.
On the other hand, there is still a lot to be clarified in order to
realise the full potential. In particular, a competitive price
structure for flights to Greenland must be established. This is a
matter of urgency, since it is an opportunity for Naalakersuisut
to have a decisive influence on whether the new airports will
provide the basis for successful development of the tourism
industry, or whether the price structure will impede growth
before it has really started. Clarification is therefore essential for
all parties, including those who are to invest, finance or work in
the industry.
Mineral extraction and mining
For several hundred years, Greenland’s underground has been
explored and subject to extraction of e.g. precious metals, and
particularly cryolite for aluminium production brought many
years of prosperity. Today, however, there is only one active
mine left after the ruby mine near Aappaluttoq announced its
closure at any rate throughout 2023. However, several projects
are in various development phases, and a few only lack the
required financing to be settled.
If investors can be persuaded to invest in Greenland’s
underground, this would be a welcome business opportunity.
For potential investors, however, this requires an expectation
8
See “Study on Arctic Mining in Greenland” Ministry of Economic Affairs and
Employment of Finland (2020).
of profitability, which none of the last many years’ mineral
extraction projects have proved able to deliver.
8
One area of particular interest is rare earth metals. Rare earth
metals are a necessary production resource for the green
transition, among other things. For an electric car, for example,
around five kilos of rare earth metals are needed. These earth
metals are not rare in themselves, but it is only rarely that they
can be extracted profitably. Today, China accounts for 80% of
extraction, and therefore in practice has a monopoly position.
Extraction of rare earth metals is an expensive, difficult and
time-consuming practice in which to build up expertise and
capacity. Yet as demand increases as a consequence of greater
pressure on the green transition, in the coming years more
companies may see the potential of investing in the exploration
and extraction of rare earth metals. Naalakkersuisut is aware of
these mining opportunities, and therefore in February 2020
introduced a new minerals strategy to make geoscience data
more accessible to potential investors.
Potentially, the industry will contribute positively to Greenland’s
economy and also put Greenland on the world map of
suppliers for the green transition. The picture of the potential
in Greenland remains unchanged, however, as does the history
of a number of projects that were not realised or were
stopped, and always with losses for investors as a result.
Nonetheless, there are still opportunities to achieve a minerals-
based economy, but whether Greenland is actually creating an
attractive framework to realise this potential is rather more
uncertain. The industry is international and the framework must
be competitive internationally, as well as being transparent and
predictable.
Annual Report
2022
Management’s Re
view
13
Hydroelectric power
Greenland, like many other countries, is moving away from
fossil fuels. This makes demands of other energy sources to
supply energy to businesses and households. Hydroelectric
power plants currently supply six towns and are by far the
largest renewable energy source in Greenland. Hydroelectric
power is a sustainable energy source that provides some of the
same benefits as typically apply to fossil fuels. Hydroelectric
power ensures high supply security, in contrast to wind
turbines and solar panels. Hydroelectric power utilises the
energy generated by falling or flowing water. This makes
hydroelectric power a stable supply source, with the energy in
water reservoirs serving as a natural energy bank, which also
contributes to the security of supply.
9
This is confirmed by the development since 2003. While
hydroelectric power accounted for only 6% of total energy
consumption in 2003, in 2021 it accounted for 16%, see Figure
9, left. On considering the energy sector alone, this pattern
becomes even clearer. In 2003, hydroelectric power accounted
for 24% of energy consumption in the energy sector, while the
level was no less than 54% in 2021. Within electricity
generation, this is even more striking, with hydroelectric
power’s share growing from around 60% in 2003 to 80% in
2021.
10
However, 82% of Greenland’s total energy consumption is still
covered by fossil fuels. This is primarily due to the large
9
See “Annual Accounts 2021”, Nukissiorfiit.
10
Nukissiorfiit and Statistics Greenland.
proportion of fossil fuel energy used for transport purposes,
but is also partly due to the lack of opportunities or incentives
to switch energy type.
The level of tax on fossil fuels is relatively low, and the
additional green price of changing energy type is therefore
relatively high.
Investment plans for expansion of the plant in Buksefjorden and
the establishment of a hydroelectric power station in
Qasigiannguit have been adopted, and more than DKK 3 billion
will be invested in these hydroelectric power stations.
11
Hydroelectric power can also be used to produce hydrogen,
which can subsequently be used to produce ammonia or
methanol, for example. This technology is called power-to-x
and has the advantage that the energy can be stored and
transported. This technology is expected to play an important
role in achieving carbon neutrality by 2050. Using hydroelectric
power for power-to-x has also attracted interest from several
foreign investors. Next year, Naalakkersuisut is expected to
launch a tendering process for investment in hydroelectric
power opportunities in Tasersiaq and Tarsartuup Tasersua,
which can potentially expand capacity by 800 MV, which is
almost nine times the current level. This will require major
foreign investment, as it is estimated that the projects will cost
more than DKK 20 billion, making them the largest ever
construction project in Greenland. It is therefore necessary and
11
See "Greenland’s Economy – Autumn 2021", Greenland's Economic Council.
Figure
9
Development in energy consumption by energy source
Energy consumption in terajoules (TJ)
Total energy consumption
Energy consumption in the energy sector
development in the distribution of actual energy consumption from 2003 to 2021. Energy consumption is presented in terajoules
20 1 1 i s due t o energy consu mpti on f or oi l expl ora t i on in t hose two yea rs .
land.
0
2,000
4,000
6,000
8,000
10,000
12,000
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Fossil fuels Waste heat Hydroelectric power
0
1,000
2,000
3,000
4,000
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
Fossil fuels Waste heat Hydroelectric power
Annual Report
2022
Management’s Review
14
positive that a tendering process concerning the right of
establishment has been launched.
Viewed from the BANK of Greenland’s perspective, however,
there is a lack of a number of less complex initiatives to
promote the green transition and ensure that Greenland
actually contributes to reducing climate impact and
consumption of resources. As the BANK of Greenland
emphasised in its 2021 Annual Report, Greenland makes
significantly less use of green taxes than the other Nordic
countries. It is also difficult to identify structural measures that
can help ensure more energy-optimised and sustainable
construction in Greenland.
Structural challenges
Greenland faces a number of major structural challenges. There
is a significant housing and infrastructure maintenance backlog,
the labour market lacks qualified manpower, the level of
education is low and has been so for a long time, and there is
great inequality, while the ageing of the population is expected
to exert great pressure on public expenditure. Fluctuations in
the fishing industry have major consequences for public
revenue, as the diversification of economic activity is relatively
limited. The extent of these structural issues requires a clear
political prioritisation of major and widely accepted initiatives
and reforms. This is vital if Greenland is to have a sustainable
economy and sustainable social development going forward.
Maintenance backlog
A considerable maintenance backlog has been built up in the
areas of housing, energy, utility supply, ports and airports. It is
estimated that there is a current reinvestment requirement of
almost DKK 8 billion. (2 billion for housing, 270 million for port
installations, 2.4 billion for the utilities sector, 800 million for the
healthcare sector and 1 billion for the airport area, and 1.1
billion for institutions and housing for senior citizens).
12
The reinvestment requirement for the Greenland
Government’s rental housing stock alone is increasing by DKK
0.3 billion per year, and some housing needs renovation so
urgently that it will soon become uninhabitable. This is because
the rent that is charged does not fully cover the housing
associations’ actual expenses, which should otherwise be the
case under Section 28 of the Rent Regulation. Extraordinary
amounts have therefore been allocated for this purpose,
although the funds allocated by no means meet the
requirement. In addition, DKK 25.2 million is allocated annually
12
See the 2023 Finance Bill, “Greenland’s Economy – Autumn 2022”, Greenland's
Economic Council, and “Status på boligmassen på øldreområdet, 2020” (Status of
housing stock in the elderly sector 2020), Department of Social Affairs, Family and
Justice.
under the Finance Act for reinvestment in port and quay
installations, which is only sufficient to cover the investment
that is absolutely necessary. It is therefore vital to take further
measures to address this, before the maintenance burden
becomes insurmountable.
It is positive that the parties to the 2023 Finance Act have
focused on the need to provide more funds for renovation and
ongoing maintenance of the asset portfolio. However, the
challenge is that a growing need for funding of public services
will require increased public revenue.
As previously mentioned, the public-sector economy is
currently strong, with low debt and an OI surplus, disregarding
the Covid years. In view of the maintenance backlog challenges
described above, the positive OI figures conceal that Greenland
and the Treasury are managing by “borrowing from the future”.
Failing to maintain Greenland’s assets makes it possible to
increase consumption in the short term, but the challenges will
not disappear and concrete measures will become more and
more necessary. Naalakersuisut is taking steps in the right
direction, but the BANK of Greenland would like to encourage
even more action, such as implementing reforms in the housing,
pension and tax areas, while also creating the growth in the
private sector that is necessary to ensure economic
sustainability.
Labour market
The economic recovery in recent years has reduced
unemployment to a historically low level, which is clearly
reflected in the development in the number of registered job
seekers, see Figure 10. This applies particularly to Nuuk and the
larger northern Greenland towns.
13
This is positive, as it
indicates that more people have found employment. It also
means that public tax revenue will increase, while the bill for
public benefits will be lower. Yet this also presents the
challenge that close to full utilisation of production capacity
entails a growing unfulfilled need for new manpower across the
different sectors. The intense excess demand for manpower
means that many workplaces face high employee turnover
rates and pressure on wages.
The lack of qualified manpower is particularly evident in the
professions requiring skilled manpower. This increases the
demand for foreign manpower to fill this gap in the labour
market.
13
See “The Greenlandic Economy 2022”, Danmarks Nationalbank.
Annual Report
2022
Management’s Review
15
Figure 10
Development in the number of job seekers
Number of registered job seekers
Not e:
Monthly figures for the number of registered job seekers. The number is calculated
on the basis of the entire population.
Source: Statistics Greenland.
The demographic development will significantly increase public
expenditure in the coming years. This makes it problematic that
there is a demand for labour that exceeds supply, which is a
significant challenge and barrier to future economic
development.
Even though the number of domestic job seekers is low, this
does not mean that the entire working population is employed.
This is because the unemployment rate reflects the proportion
of unemployed in the actual workforce. But since a relatively
large proportion of a country’s population may be outside the
workforce, a country can have low unemployment even though
a relatively small proportion of the population is employed. For
example, the workforce as a ratio of Greenland's population
decreased slightly from 2019 to 2020, which may have
contributed to the declining number of registered job seekers,
see Figure 11.
Expanding the workforce can increase the labour supply. The
Faroe Islands are a particularly good example of this. Their
workforce comprises over 90% of the population of working
age. By comparison, in 2020 Greenland’s workforce accounted
for around 73% of the population of working age. This was
considerably below the rate for the Faroe Islands, but only
slightly lower than the Danish level of 78%, see Figure 11. If
Greenland’s workforce had accounted for the same proportion
of the population as in Denmark, the labour supply would have
been almost 7% higher, equivalent to an increase in the
workforce by almost 2,000 people. With a workforce
percentage at the same level as in the Faroe Islands,
Greenland’s labour supply would be no less than 23% higher,
equivalent to a workforce increase of almost 6,500 people.
Both scenarios would thus have significant positive
consequences for the shortage of manpower in Greenland, and
thereby also for the economy.
Figure 11
Workforce as a ratio of the population
Workforce as a ratio of the population of working age
Not e:
The figure shows the workforce (unemployed and employed in total) as a percentage
of the population in Greenland, Denmark and the Faroe Islands, respectively. Due to
data limitations, the ratios are compiled for marginally different population groups
for the three countries (populations: 16-66 year-olds in Denmark, 15-64 year-olds in
the Faroe Islands and 18-65 year-olds in Greenland). Reservation is therefore made
for compa ra bi li t y.
Sources: Statistics Denmark, Statistics Greenland and Statistics Faroe Islands.
Considering unemployment more closely, it is clear that
unemployment is unevenly distributed across education levels.
For the share of the population educated beyond lower
secondary school, unemployment is very low and below the
level of structural unemployment that is considered to be
normal. This has been the case for many years. Meanwhile,
unemployment was close to 10% in 2020 for the share of the
population with lower secondary school as the highest
education level achieved, see Figure 12. This pattern confirms
that the shortage of manpower primarily concerns qualified
manpower. A higher-educated population would be able to
alleviate some of this shortage of manpower, which would also
increase employment. This employment could also be expected
to be at better rates of pay, making a further positive
contribution to public revenue.
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
2017 2018 2019 2020 2021 2022
40%
50%
60%
70%
80%
90%
100%
2015 2016 2017 2018 2019 2020
Greenland Denmark Faroe Islands
Annual Report
2022
Management’s Review
16
Figure 12
Unemployment by level of education
Unemployment rate calculated for each of the four education levels
Lower
secondary
school
Upper
secondary
school
Vocational
education
Higher
education
Not e:
The columns show the level of unemployment for each of the four education levels in
Greenland in 2016-2020.
Source: Statistics Greenland.
Education
The high unemployment rate for the share of the population
with a lower level of education is partly related to the fact that
only a relatively small proportion of Greenland’s population
have educational qualifications beyond lower secondary school.
Even though an improvement can be seen, 50% had only
achieved lower secondary education in 2021, see Figure 13.
From an international perspective, this is very low. There are
several reasons for the low level of education. Firstly, many
people live far away from an educational institution, which
applies to upper secondary education, and particularly to higher
education. This distance in itself can therefore be a major
barrier, contributing to inequality between towns and
settlements. In addition, lower secondary schools are not
efficient enough. Pupils are not encouraged to learn more and
therefore end up with grade averages and skills that are not
good enough for them to continue their education. The
language transition from Greenlandic to Danish in connection
with higher education can also present a barrier. Many young
people therefore end up without any educational qualifications
14
“Uddannelse – nøglen til Grønlands fremtid" (Education – the key to Greenland's
future), Lennert & Demant-Poort 2021.
after lower secondary school.
14
Figure 13
Development in level of education
Distribution of education
Lower secondary
school
Upper secondary
school
Higher
education
Not e:
The columns show the distribution of education on the populations between the ages
of 25 and 64 in Greenland, the EU and Denmark for 2002, 2012 and 2021.
Sources: Statistics Greenland, Eurostat and Statistics Denmark.
Despite these challenges, the level of education has improved
over the last 20 years, but not at a satisfactory pace, see Figure
13.
The reason for this development is that the new younger
generation is better educated than the older generation, see
Figure 14. The source of concern is that the education level of
the younger generations has not shown any significant
improvement during the last 20 years. People aged between 25
and 29 have the same level of education as in 2002, and the
group aged between 30 and 34 has only improved marginally
since 2012. The level of education in Greenland thus does not
seem to be on the right track in terms of catching up with the
international level. Forecasts therefore also show that by 2040,
almost 42% of Greenland's population will still only have
completed lower secondary education.
14
11.7%
11.0%
9.4%
8.4%
8.8%
2.4% 2.4%
2.2%
1.9%
1.7%
3.3%
3.3%
2.8%
2.5%
2.7%
0.5% 0.5% 0.4% 0.4% 0.5%
2016 2017 2018 2019 2020
67%
58%
50%
19%
22%
18%
34%
26%
21%
23%
28%
33%
52%
43%
40%
47%
48%
46%
11%
14%
17%
30%
35%
42%
19%
26%
33%
2002 2012 2021 2002 2012 2021 2002 2012 2021
Greenland Denmark EU
Annual Report
2022
Management’s Review
17
To ensure that more progress is made, educational reforms will
be required to address some of the issues affecting Greenland’s
education system.
As the supply of education in Greenland is limited, especially
when it comes to higher education, many young people seek
education abroad. More than one in four people apply for
higher education abroad. This is not a problem in itself, but it
creates the challenge that many young people choose to
remain abroad after completing their education. Statistics show
that, in the year after graduation, only 43% had returned to
Greenland, and three years later that figure had only increased
to 57%.
If more of these well-educated people can be persuaded to
return to Greenland, this will strengthen the foundations for
Greenland’s society.
Demographic issues
The population will age considerably in the coming years. As
Figure 15 shows, the proportion of the population aged over
60 has doubled over the last 30 years. By 2022, almost 14% of
the population will be aged over 60. This development is
15
See "Greenland’s Economy – Autumn 2022", Greenland's Economic Council.
positive and clearly shows that the standard of living has
improved. Yet it also makes demands, since an ageing
population requires more public services, resulting in higher
public expenditure. In 2022, public expenditure accounted for
around 56% of GDP, while forecasts predict that this level will
already exceed 60% by 2030.
15
14
f education
Lower secondary
school
Upper secondary school
Higher education
The columns show the distribution of education for age intervals in Greenland for 2002, 2012 and 2021.
51%
57%
51%
52%
45%
44%
64%
43%
42%
70%
49%
41%
73%
64%
46%
82%
72%
64%
39%
35%
36%
35%
37%
37%
26%
38%
38%
20%
36%
38%
16%
24%
37%
9%
16%
23%
10%
8%
13% 13%
18% 20%
10%
19%
20%
11%
16%
21%
11% 13%
17%
9%
12% 14%
2002 2012 2021 2002 2012 2021 2002 2012 2021 2002 2012 2021 2002 2012 2021 2002 2012 2021
25-29 years 30-34 years 35-39 years 40-44 years 45-54 years 55-64 years
Annual Report
2022
Management’s Review
18
Figure 15
Development in proportion of population aged over 60
Proportion of population aged over 60
Not e:
Proport i on of t he popul a ti on a g ed over 6 0 f rom 1 99 0 t o 2 0 2 2.
Source: Statistics Greenland.
As the population ages, the population of working age
decreases. One reason is declining fertility. In addition to the
increased provider burden in society, greater requirements are
made of the public sector’s role. This challenge is by no means
unique to Greenland, but on the contrary, a structural challenge
that can be seen in most parts of the world. Nevertheless,
action is required. This emphasises the need for the
sustainability and growth plan to ensure a balance between
satisfactory quality and financing. Without action, there will be a
financing shortfall in 2035 of around DKK 1 billion annually
(2020 level).
16
With fewer breadwinners for each elderly person, this makes
great demands of reforms to ensure sustainable fiscal
development. It is positive that this is mentioned in the 2023
Finance Act Agreement, where there is focus on maintaining
welfare in society through education and labour market policies
that can ensure more manpower for the different sectors.
17
One reform that could strengthen long-term fiscal-policy
sustainability is indexation of the retirement age, so that it is
linked to life expectancy. Greenland's Economic Council
calculates that such a model would strengthen sustainability by
1.7% of GDP, as a significant contribution to resolving the
sustainability issue.
18
16
See "Greenland’s Economy – Autumn 2021", Greenland's Economic Council.
17
Finance Act Agreement for 2023.
Inequality
Over many years, social inequality in Greenland’s society has
increased. This is a significant economic development challenge,
as a substantial inequality gap can lead to division of society into
different classes without equal opportunities.
One indicator of inequality, often used comparatively, is the
Gini coefficient. The Gini coefficient is 0 if a country has full
economic equality, while it is 100 if a single person earns the
country’s entire income. The lower the Gini coefficient, the less
inequality. For Greenland, the Gini coefficient has generally
been increasing since 2002, which indicates a widening gap
between rich and poor in society. In 2021, however, inequality
declined slightly compared to the previous years and is now at
its lowest level since 2009.
19
Comparison of the Gini coefficient in Greenland with other
comparable countries makes it clear that social inequality in
Greenland is relatively high, see Figure 16. Naalakkersuisut is
also focused on this inequality in the work towards a
forthcoming tax reform. Specifically, Naalakkersuisut proposes
that a cohesive tax reform can reduce inequality by making the
tax system more progressive. The taxation of low-paid citizens
will thereby be eased, while the taxation of the highly-paid and
of capital assets will be increased.
In this year’s Finance Bill, Naalakkersuisut proposes to reduce
the extent of the tax subsidy to – or expand the tax base for –
highly-paid employees. Naalakkersuisut would thus like a tax
system with greater redistribution of income. The advantage of
a tax reform of this nature is, of course, the reduced inequality
expected as a result. This can have a number of both social and
economic benefits. Yet it will also require the high-tax-paying
element of the population to experience how their tax
payments are used to finance a satisfactory level of public
services. If this is not the case, Greenland might become a
relatively less attractive place to live for the highly educated
people, with the risk that more highly educated people, and
thereby those who pay the most in tax to society, choose to
leave. It would also be less relevant for businesses to operate in
the country. At worst case, this could lead to outsourcing of
businesses and high-value workplaces.
18
See "Greenland’s Economy – Autumn 2021", Greenland's Economic Council.
19
Statistics Greenland, INDIU101.
13.87%
0%
2%
4%
6%
8%
10%
12%
14%
16%
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
Annual Report
2022
Management’s Review
19
Figure 16
Gini coefficients in selected countries
Gini index for relevant comparable countries
Not e:
2021 figures: USA, Greenland and Denmark, 2020 figures: England, Sweden, Norway
and Faroe Islands, 2019 figures: Germany and France, 2017 figures: Iceland.
Sources: Statistics Greenland, Statistics Denmark and Eurostat.
Despite the negative consequences of a tax reform, it is clear
that inequality is a structural problem. This becomes even more
apparent on examining the proportion of the population living
in relative poverty. Relative poverty is defined as a person who
has less than half of the median level of income in the country,
taking due account of family size and structure. In Greenland,
more than every ninth citizen over the age of 14 lives in relative
poverty. This is a very high proportion. For comparison, less
than every 25th citizen lives in relative poverty in Denmark. In
addition, the proportion in Greenland is growing, see Figure 17.
Even though the figures do not include the value of the barter
economy, an increasing share of the population is lagging
behind, despite the expanding economy, low unemployment
and commercial success.
20
Finance Bill for 2023.
Figure 17
Inequality in Greenland compared to Denmark
Proportion of the population living in relative poverty
Not e: The proport i on of t he popula t i on a g ed over 1 4 whos e i ncome i s bel ow 5 0% of the
median of the equivalised disposable income. Equivalised disposable income is an
income measure that corrects income on the basis of number of family members, i.e.
the scale economies that may arise from more adults and the expenses associated
with having children.
Sources: Statistics Greenland and Statistics Denmark.
Together with differences in education levels, a significant
reason for the great inequality is probably the major difference
between towns and settlements in Greenland. In 2021, the
average annual equivalised disposable income, adjusted for
household structure, was DKK 202,300 in towns, while it was
only DKK 146,780 in settlements.
It is clear that Greenland’s economic progress does not benefit
everyone. This is not just a political issue, but also an economic
barrier to growth. The reason is that social inequality often
persists for generations, so that a large proportion of the
population are already behind at birth, particularly in view of
lower secondary school’s relatively low ability to encourage
pupils to learn more. If we do not succeed in reducing
inequality now, we can expect to see a similar inequality
pattern repeated in coming generations.
It is therefore positive that Naalakkersuisut has increased focus
on vulnerable children and young people.
20
Specifically, two
major action plans are underway. “A good start in life”, is aimed
at children under 6 years of age, and “A good childhood”
targets children aged between 6 and 18 years. In addition to
the clear social value, the measures are also expected to
contribute to a stronger economic situation.
37.5
35.5
34.0
30.3
29.6
29.2
27.6
26.3
25.0
21.1
USA
Uk
Greenland
Denmark
Germany
France
Sweden
Norway
Iceland
Faroe
Islands
12%
4%
0%
2%
4%
6%
8%
10%
12%
14%
2015 2016 2017 2018 2019 2020 2021
Greenland Denmark
Annual Report
2022
Management’s Review
20
Concerning public finance trends
Overall, 2022 was a good year for Greenland's economy.
There is economic growth and low unemployment. This is due
to progress in various industries, but also to an expansionary
fiscal policy with several major capital investments. This capital
expenditure has financed housing, infrastructure and energy
supply. The construction activities are financed partly by
interest-bearing debt. If the fiscal-policy investments are
profitable, the investments will produce a surplus. The debt-to-
GDP ratio increases, however, which undermines the resilience
of the economy. Overall, the BANK of Greenland considers
several of these construction projects to be appropriate and
necessary, but even with profitable investments, returns should
be weighed against the increased economic uncertainty.
The maintenance backlog is only one of several structural
issues. The population is ageing, and all other things being equal,
this will increase public expenditure on both welfare and health.
This development makes great demands of public revenue. A
tax reform is therefore currently being developed. The tax
reform will reduce inequality and increase the incentive to
work. A reform of the tax system will be beneficial, as certain
non-earned income is either not taxed or taxed at a low rate,
while earned income is taxed relatively high in some segments.
However, it can be expected that a tax reform would not only
resolve the concerning development in public finances. It will be
vital, for instance, that we succeed in ensuring that more
members of the younger generation gain educational
qualifications. The figures clearly show that qualified manpower
is in highest demand. If this demand can be better met to a
wider extent, the tax base will be expanded. This will require
reforms of the primary and lower secondary school system, to
raise academic standards and ensure that more pupils are
qualified for higher education.
Another means of enhancing the sustainability of the long term
fiscal policy is indexation of retirement age. Today, the
retirement age is not linked to life expectancy. If a reform is
introduced that maintains the expected number of years as an
old-age pensioner at the current level, sustainability can be
expected to be strengthened by 1.7% of GDP. This would be
the largest and most important contribution to resolving the
sustainability issue, as it would reduce public expenditure while
increasing public revenue.
21
Greenland's revenue base is extremely dependent on revenue
from fish and shellfish exports. This imbalance makes the
economy vulnerable to factors that can affect either prices or
21
See "Greenland’s Economy – Autumn 2022", Greenland's Economic Council.
volumes. Diversification to other industries will be necessary to
protect the resilience of the economy. This makes it important
to develop the private business sector, and that new types of
private business are promoted, including that there is a clear
tourism strategy for Greenland. This would realise the potential
boom in tourism, but this must be with due focus on
sustainability and the local community. At the same time,
utilisation of Greenland's resources, as both mineral extraction
and sustainable energy production, is a business opportunity
that must continue to be promoted and investigated in the
coming years. If we succeed in this, it will be beneficial to the
economy, the climate and our international standing and
reputation, and not least for the population of Greenland.
Annual Report
2022
Management’s Review
21
Annual Report
2022
Management’s Review
22
About the BANK of Greenland in Brief
The BANK of Greenland was established in 1967 by a group of
Danish banks. The founding general meeting was held on 26
May 1967 at Danske Bankers Fællesrepræsentation’s premises
in Copenhagen. This marked the birth of the first bank in
Greenland. The Bank opened on 1 July 1967.
Nine months before, Bikuben (restructured in 1985 as Nuna
Bank) established a branch in Nuuk. In 1997, the BANK of
Greenland and Nuna Bank merged.
The BANK of Greenland’s mission
“The BANK of Greenland creates value through advisory
services and other services in the financial area for all citizens of
Greenland. We support society by promoting financial
understanding, cooperating with educational institutions and the
business community, and supporting sustainable local initiatives
and development.” The Bank’s mission should thus be viewed in
a broader perspective whereby the BANK of Greenland can be
seen as the Bank for all of Greenland. This imposes an
enhanced responsibility to participate positively and actively in
society’s development and to help to create opportunities in
Greenland, while also ensuring sound financial activities. The
BANK of Greenland is highly aware of this vital role.
The BANK of Greenland's values
The BANK of Greenland’s values are firmly anchored in the
Bank and its employees. The values are
Commitment, Decency,
Customer-oriented and Development-oriented. These values
serve as a guide for how we act and wish to be seen within
and outside the Bank.
The BANK of Greenland's strategy, vision and
objectives
“Strategy 2024” supports the vision and objective to be
“Greenland’s best company – for the benefit of Greenland”.
The strategy determines the Bank’s key development areas for
the coming years, as well as setting out an overall action plan.
The Bank seeks to involve all employees in supporting the Bank
in achieving the specific goal of being “Greenland’s best
company – for the benefit of Greenland”.
The BANK of Greenland hereby wishes to ensure the
continued favourable development of the Bank through a
balanced focus on the four main areas:
Greenland’s best customer experience, best at
employee development, best at business
development, and we create growth in Greenland.
On an annual basis, the main areas are included in objectives
which are continuously adjusted to the long-term strategy and
vision for 2024. The BANK of Greenland will thereby ensure
that we continue to give value to society and are the preferred
bank for customers, shareholders and employees, and that we
thereby fulfil the vision to be “Greenland’s best company – for
the benefit of Greenland”.
The Bank’s vision for 2024
Greenland’s best company – for the benefit of Greenland.
Figure 18
The Bank’s vision for 2024 – Greenland’s best company – for the
benefit of Greenland
Annual Report
2022
Management’s Review
23
Summary of Financial Highlights
2022
2021
2020
2019
2018
SELECTED OPERATING ITEMS:
Net interest and fee income
351,485 338,933
326,513
323,507
316,647
Value adjustments
-39,356 11,219
136
9,585
-1,546
Other operating income
6,588 6,185
5,369
5,722
5,385
Staff and administration expenses
195,056 186,385
178,734
170,895
160,457
Depreciation and impairment of tangible assets
7,320 7,014
6,948
6,672
6,765
Other operating expenses
2,706 2,497
2,610
2,788
2,011
Write
-downs on loans and receivables, etc. 4,523 1,537
12,828
7,959
10,938
Profit before tax
109,112
158,904
130,898
150,500
140,315
Tax
10,361 26,072
34,671
20,582
27,423
Profit for the year
98,751
132,832
96,227
129,918
112,892
SELECTED BALANCE SHEET ITEMS:
Lending
4,353,585 3,783,681
4,006,248
3,758,736
3,472,174
Deposits
5,942,479 5,363,871
5,847,772
5,687,451
4,899,044
Equity
1,318,592 1,267,911
1,176,917
1,077,676
999,159
Total
assets 7,949,566 7,226,988
7,438,325
7,089,915
6,164,536
Contingent liabilities
1,934,125 1,781,465
1,621,831
1,479,537
1,277,604
KEY FIGURES FOR THE BANK (IN PER CENT)
Return on opening equity before tax and dividend
9.0 13.9
12.1
15.6
15.6
Return on opening equity after tax and dividend
8.1 11.6
8.9
13.5
12.0
Capital ratio
23.6 24.4
23.5
23.4
22.7
Individual solvency requirement
11.1 10.7
11.2
11.9
10.3
KEY RATIOS PER SHARE IN DKK
Profit for the
year per share, before tax 60.6 88.2
72.7
83.6
78.0
Profit for the year per share, after tax
54.9 73.8
53.5
72.2
62.7
Net book value per share
733 704
654
599
555
Dividend per share
20 40
25
0
30
Closing share price
590 598
590
545
546
Definition of key figures for the Bank
The period’s return on equity before tax and after dividend
Profit before tax as a ratio of equity less the taxable value of dividend.
The period’s return on equity after tax and after dividend
Profit after tax as a r
atio of equity less the taxable value of dividend.
Annual Report
2022
Management’s Review
24
Management´s Review for 2022
Principal activity
The BANK of Greenland’s principal activity is to offer financial
services to private customers, business customers and public
institutions in Greenland. The Bank wishes to offer a wide
range of products that is adapted to Greenland’s society and
customers’ requirements, combined with professional advisory
services.
Statement of income
Net interest income increased by TDKK 9,103 from 2021. The
start of 2021 was affected by a higher level of lending than at
the start of 2022. Furthermore, in recent years the Bank has
seen a change of mix in the lending structure in favour of loans
at lower margins. This had a negative impact on lending rates in
2022. Interest rate increases in the money markets in the
second half-year improved the return on the Bank’s surplus
liquidity.
Dividend on the Bank's shareholdings amounts to TDKK 1,822,
compared to TDKK 913 in 2021.
Fee and commission income increased by TDKK 2,002 from
2021 to 2022. The increased guarantee volume and higher
investment activity during the year affected this item particularly
positively. On the other hand, payment settlement, which is
behaviour-related, developed negatively. Net interest and fee
income increased by a total of TDKK 12,552 to TDKK 351,485.
Other operating income, primarily external rental income from
the Bank's residential properties, amounted to TDKK 6,588,
compared to TDKK 6,185 in 2021.
Staff and administration expenses increased by TDKK 8,671 to
TDKK 195,056. Staff expenses are affected by a change in the
principle for the calculation of the accounted holiday pay
obligation. The one-off effect of this change amounted to
TDKK 5,221 in 2022. In addition, staff expenses rose as a
consequence of pay increases under collective agreements,
while the number of full-time employees remained by and large
unchanged from 2021. Administration expenses were at an
unchanged level of TDKK 89,837. The unchanged level reflects
an increase in BEC costs and a decrease in transaction costs
related to payment settlement.
Depreciation of property and fixtures and fittings was at the
2021 level, amounting to TDKK 7,320, compared to TDKK
7,014 in 2021.
Other operating expenses increased by TDKK 209 to TDKK
2,706. Other operating expenses primarily concern operation
and maintenance of bank buildings, as well as contributions to
guarantee and settlement assets.
The profit before value adjustments and write-downs is
thereby above the 2021 level, and amounts to TDKK 152,991,
compared to TDKK 149,222 in 2021.
Selected Highlights and Key Figures (not audited)
DKK 1,000
4.kvt.
3.kvt.
2.kvt.
1.kvt.
4.kvt. 3.kvt. 2.kvt.
1.kvt.
2022
2022
2022
2022
2021
2021
2021
2021
Net interest and fee income
96,307
87,370
82,061
85,747
89,871
80,914
82,053
86,095
Costs, depreciation and amortisation
59,254
48,059
48,572
49,197 51,145 46,436 49,048
49,269
Other operating income
2,025
1,514
1,414
1,635
2,244
1,762
1,040
1,139
Profit before value adjustments and write-downs
39,078
40,825
34,903
38,185
40,970
36,242
34,045
37,965
Value adjustments
6,316
-20,477
-14,528
-10,667 3,503 2,601 1,988
3,127
Write-downs on loans, etc.
1,483
928
1,394
718
-33
-761
1,409
922
Profit before tax
43,911
19,420
18,981
26,800
44,506
39,604
34,624
40,170
Considering Q4 2022 in isolation, net interest and fee income
amounted to TDKK 96,307, compared to TDKK 89,871 for the
same period of 2021. The development in Q4 is primarily due
to increasing lending volumes, but also to the rising level of
interest rates. Total costs are at a higher level than the same
period of the previous year, amounting to TDKK 59,254,
compared to TDKK 51,145 in Q4 2021. Taking the
aforementioned holiday pay adjustment into account, the
increase amounts to TDKK 2,888. Among other things, the
increase reflects that the Bank held several staff events in Q4,
Annual Report
2022
Management’s Review
25
which was not possible in 2021. Moreover, additional staff
expenses of a one-off nature were incurred in Q4 2022, which
was not the case in 2021. Write-downs and provisions are
TDKK 1,483 higher than for the same period last year, which is
due to the fact that the management supplement is still at a
high level. The profit before tax for Q4 is thereby TKK 43,911,
compared to TDKK 44,506 for Q4 2021.
For the overall year, value adjustment of securities and
currencies resulted in a loss of TDKK 39,356, compared to a
gain of TDKK 11,219 in 2021. The Bank’s holdings of sector
shares and foreign exchange yielded a positive return, while
interest rate increases and general market turmoil resulted in a
capital loss of DKK 49.5 million on the Bank’s bond portfolio in
2022.
Impairment of loans, etc. amounted to TDKK 4,523 in 2022,
which is TDKK 2,986 higher than in 2021. This is still a modest
overall level. The uncertain geopolitical situation presented
problems for the supply of goods, as well as increasing inflation
and consequentially rising interest rates. In the Bank’s individual
impairment models, economic uncertainty increased in 2022. In
addition to the Bank’s individual write-downs, a management
supplement totalling DKK 41.8 million is allocated, which
addresses, among other things, industry and creditworthiness
risks, but in particular also risks associated with rising inflation
and interest rates, and economic uncertainty.
The year’s total write-downs were still at a modest level in
2022, amounting to 0.1% of the Bank’s loans and guarantees.
Write-downs and provisions on the Bank's loans and
guarantees thereby reflect the continued strong credit standing
of the Bank's customers in Greenland.
The profit before tax is TDKK 109,112, compared to TDKK
158,904 in 2021. The profit for the year is thereby at the
October 2022 guidance level of DKK 90 to 120 million. The
profit before tax gives a return on equity of 8.4%.
Tax is calculated at 25% of the profit before tax, adjusted for
non-tax-liable income and non-deductible expenses. The profit
after tax is TDKK 98,751 for 2022, with a return on equity of
7.6%.
Balance sheet and equity
The BANK of Greenland's balance sheet at year-end 2022
totalled TDKK 7,949,566, with an increase of TDKK 722,578
from 2021. Deposits increased in Q4 2022, amounting to
TDKK 5,942,479 at the end of 2022. Compared to 2021, this is
an increase of TDKK 578,608. Deposits primarily increased in
the public sector customer segment in 2022. The Bank’s
deposits are mainly held on demand.
Lending increased by 15.1% or TDKK 569,904 in 2022, to
TDKK 4,353,585. At the start of 2022, the Bank expected
lending to increase in 2022, but the growth is higher than first
assumed. At the same time, the Bank’s guarantees increased by
TDKK 152,660 to TDKK 1,934,125. In particular, the Bank’s
guarantees for mortgage lending losses and work guarantees
increased in 2022.
Total loans and guarantees thereby increased by TDKK
722,564 in total, to TDKK 6,287,710.
Development in business volume.
DKK million
Land and buildings increased by TDKK 37,078 to TDKK
284,370 in 2022. Due to increasing staff numbers, the Bank
acquired additional staff accommodation in 2022. In addition,
the Bank’s property portfolio was revalued by a total of TDKK
32,431 in 2022. In 2022, the Bank obtained external estate
agent assessments of a broad selection of the Bank’s properties
to support the assessment of the valuation.
Despite negative returns, the pension area expressed as assets
in pool schemes increased by 9.4% in 2022, to TDKK 394,576.
In accordance with the capital plan, in 2022 the Bank made an
additional Senior-Non-Preferred bond issue of TDKK 25,000.
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
2018 2019 2020 2021 2022
Deposits Lending Guarantees
Annual Report
2022
Management’s Review
26
The Bank also issued supplementary capital of TDKK 25,000 in
2022.
Equity amounts to TDKK 1,318,592, compared to TDKK
1,267,911 at the end of 2021. Share capital amounts to TDKK
180,000. The Bank does not have hybrid loan capital. The
capital ratio is 23.6, compared to 24.4 in 2021.
Uncertainty of recognition and measurement
The main uncertainties concerning recognition and
measurement are related to write-downs on loans, provisions
on guarantees, the valuation of financial instruments, and
properties. The management assesses that the uncertainty
concerning the presentation of the accounts for 2022 is at a
responsible level and is unchanged from the previous year.
Compliance and anti-money laundering
The Bank had its most recent ordinary inspection visit by the
Danish FSA in 2019, with a concluding report on 12 March
2020. The mandatory orders received after the inspection are
described on the Bank’s website under the following link (in
Danish only):
https://www.banken.gl/media/julpif1r/2020-03-12_redegoerelse-
til-hjside_dk.pdf.
The Bank has established a separate department to handle anti-
money laundering and measures to prevent the financing of
terrorism. The department is among other things responsible
for control of new customer registrations, alarm processing and
reporting to the Money Laundering Secretariat on behalf of the
Bank. In addition, the department undertakes the annual
reporting to the Board of Directors concerning the Bank’s
money laundering risks.
A separate compliance function has also been established. The
compliance function is responsible for independent reporting to
the Executive Management and the Board of Directors. The
compliance function is responsible for assessment and control
of compliance with applicable legislation, industry standards and
internal regulations. In addition, it advises on how compliance
risks can be reduced.
Financial risks
The BANK of Greenland is exposed to various financial risks,
which are managed at different levels of the organisation. The
Bank’s financial risks consist of:
Credit risk: Risk of loss as a consequence of debtors’ or
counterparties’ default on actual payment obligations.
Market risk: Risk of loss as a consequence of fluctuation in the
fair value of financial instruments and derivative financial
instruments, due to changes in market prices. The BANK of
Greenland classifies three types of risk within the market risk
area: interest rate risk, foreign exchange risk and share risk.
Liquidity risk: Risk of loss as a consequence of the financing
costs increasing disproportionately, the risk that the Bank is
prevented from maintaining the adopted business model as a
consequence of a lack of financing/funding, or ultimately, the
risk that the Bank cannot fulfil agreed payment commitments
when they fall due, as a consequence of the lack of
financing/funding.
Operational risk: The risk that the Bank in full or in part incurs
financial losses as a consequence of inadequate or deficient
internal procedures, or human errors, IT systems, etc.
Capital requirement
The BANK of Greenland must by law have a capital base that
supports the risk profile. The BANK of Greenland compiles the
credit and market risk according to the standard method and
the operational risk according to the basic indicator method.
The Bank assesses that there is no need for more advanced
methods to be used. Concerning risk management, reference is
made to Note 2.
MREL requirement
The requirement concerning own funds and eligible liabilities
must be viewed as an element of the recovery and resolution
of banks. This entails that banks which are subject to this
requirement must maintain a ratio of capital instruments and
debt obligations that, in a resolution situation, can be written
down or converted before simple claims.
On 4 October 2021, an MREL requirement was determined
for the BANK of Greenland at 30.4% of the Bank’s risk-
weighted assets at the end of 2020. The MREL requirement is
being phased in during the period from 2022 to 2027. This
means that in the course of the coming years, the Bank must
fulfil the requirement by issuing capital instruments and through
consolidation of equity capital.
In continuation of the established MREL requirement, the Bank
made two further issues in 2022, with a view to targeted
coverage of the MREL requirement. Issues of DKK 25 million
Senior Non-Preferred and DKK 25 million subordinated debt
were made.
Annual Report
2022
Management’s Review
27
Capital requirement
2022
2021
Pillar I
8.00%
8.00%
Pillar II
3.10%
2.70%
Solvency requirement
11.1%
10.7%
SIFI buffer requirement
1.50%
1.50%
Capital reserve buffer
requirement
2.50%
2.50%
Capital requirement
15.1%
14.7%
MREL requirement (phased in
linearly as from 1 January 2022)
2.53%
0.00%
Total capital
requirement 17.6%
14.7%
Capital base, cf. Note 24
1,300,270
1,201,358
SNP issue
74,563
49,642
MREL capital base
1,374,833
1,251,000
MREL capital ratio
25.00%
25.50%
Surplus capital cover
7.4%
10.8%
The MREL requirement is being phased in as from 1 January
2022 on a linear basis over six years. This entails that the Bank
must fulfil an MREL requirement of 2.53% in 2022. From 1
January 2023, the Bank must fulfil an MREL requirement of
4.9%.
Sound capital base
In accordance with the Danish Financial Activities Act, the
Board of Directors and the Executive Management must
ensure that the BANK of Greenland has an adequate capital
base. The capital adequacy requirement is the capital which,
according to the management’s assessment, as a minimum is
needed to cover all risks.
The BANK of Greenland was designated as an SIFI institution in
April 2017. Based on the requirements concerning own funds
and eligible liabilities determined in 2021, the Board of
Directors expects that the total capital reserves must be
increased during the coming years. The aim of the Board of
Directors is that there must be sufficient capital for growth in
the Bank’s business activities, just as there must be sufficient
capital to cover ongoing fluctuations in the risks assumed by the
Bank.
The Bank’s Board of Directors has adopted a capital objective
with a CET1 target of 24%. The BANK of Greenland’s core
capital ratio was 23.2 at the end of 2022, and the capital ratio
was 23.6. The Bank experienced significant growth in 2022,
which also meant that the Bank’s risk-weighted assets increased
substantially, cf. Note 25. In the coming year, the Bank expects
more subdued growth and higher earnings, so that the core
capital ratio is also expected to be closer to the target.
Based on the aforementioned, the Bank’s Board of Directors
makes the recommendation to the Annual General Meeting
that dividend of DKK 20 per share be paid for 2022, equivalent
to 36% of the profit after tax.
As at 31 December 2022, the Bank’s individual solvency
requirement was compiled at 11.1%.The BANK of Greenland
thereby has surplus capital cover before the buffer
requirements of 12.5%. After deductions for the capital reserve
buffer requirement of 2.5% and the SIFI buffer requirement of
1.5%, the surplus cover is 8.5%.
The individual solvency requirement is compiled on the basis of
the Order on the calculation of risk exposures, capital base and
solvency requirements, as well as the Danish FSA’s guideline in
this respect. On the basis of the calculated capital requirement,
the Bank has compiled surplus cover at TDKK 673,283, which
comprises the difference between the capital requirement
(solvency requirement) and the actual capital (capital ratio). The
management assesses that the capital is adequate to cover the
risk related to the Bank’s activities.
Annu
al Report 2022
Management’s Review
28
The BANK of Greenland meets the requirements in full, so that
the annual financial statements are presented on a going-
concern basis.
Reference is made to the BANK of Greenland’s website for a
description and amplification of the method of calculation of
the capital and solvency requirement for 2022. Reference is
also made to the Bank’s risk management report for 2022 at
https://www.banken.gl/en/investor/public-disclosure/
The report
has not been audited.
The BANK of Greenland's calculated capital and solvency requirement according to the 8+ model
2022
2021
Capital
requirement
Solvency
requirement
Capital
requirement
Solvency
requirement
Pillar I requirement
440,087 8.0%
393,339
8.0%
Credit risk
119,785
2.2%
98,663
2.0%
Market risk
21,077
0.4%
21,910
0.4%
Operational risk
16,302 0.3%
10,117
0.2%
Other risk
15,323
0.2%
4,046
0.1%
Capital and solvency requirement
612,574
11.1%
528,075
10.7%
Liquidity
The BANK of Greenland has a comfortable deposit surplus and
the Bank’s funding is based on deposits and capital issues.
The official measure of liquidity is the Liquidity Coverage Ratio
(LCR), which is a minimum requirement of the ratio between
current assets and liabilities, to ensure a satisfactory liquidity
ratio. LCR must be at least 100%.
At the end of 2022, the Bank had an LCR of 220.5% and
thereby fulfilled the LCR requirement.
DKK 1,000
2022
2021
Liquidity buffer LCR
2,450,912
2,419,360
Outflow, net
1,111,490
1,013,914
LCR
220.5%
238.6%
Annual Report 2022
Management’s Review
29
The Supervisory Diamond
The BANK of Greenland has considered the benchmarks set
out in the Danish FSA’s Supervisory Diamond for banks. The
Supervisory Diamond states five benchmarks for banking
activities which the Bank aims to fulfil. At the end of 2022, the
BANK of Greenland lies within all of the threshold values in the
Supervisory Diamond.
As presented in the table below, the sum of the Bank’s 20
largest exposures is compiled at 167.3%, which is satisfactorily
below the Danish FSA’s threshold of 175%. It must be noted
that approximately 45 percentage points concern exposures to
publicly-owned enterprises.
In accordance with the table below, the property exposure
amounts to 22.9%. This exposure is subject to considerable
subordinate public financing. In addition, some of the exposure
is based on lease contracts with the state, the Government of
Greenland or municipalities. The Bank assesses that both of
these factors contribute to stabilising the overall sector
exposure.
Investor relations
The BANK of Greenland seeks to ensure transparency
concerning the Bank and there is good communication and
dialogue with the Bank’s shareholders and other stakeholders.
This takes place, for example, by providing information to
Nasdaq OMX Copenhagen, where the Bank is listed. The
purpose of publishing information is to:
• Comply with applicable disclosure obligations and current
stock-exchange ethical regulations.
• Ensure openness concerning the Bank.
• Ensure good and positive dialogue with the Bank’s
stakeholders.
• Increase awareness of the BANK of Greenland in investor
circles in Greenland and abroad.
• Give investors structured, continuous and planned
information which fulfils the investors’ information
requirements when investment decisions are taken.
• Increase the liquidity of the BANK of Greenland share.
The objective will result in rapid, accurate information
concerning both price-relevant and other matters relating to
the Bank.
The BANK of Greenland publishes information that may be of
relevance to its share price as company notifications via
Notified - Nasdaq OMX and on the Bank’s website under
“Investor” https://banken.gl/en/about-us/investor/
. The content
of the notifications includes quarterly, interim and annual
reports, including management reviews, general meetings and
other news. All company notifications are drawn up in Danish
and English on publication. Furthermore, information is made
available in Danish, Greenlandic and English on our website:
https://banken.gl/en/about-us/investor/.
When investor presentations are held, the material is
subsequently published on the BANK of Greenland’s website,
so that it is generally available.
The Executive Management is responsible for informing
investors and other stakeholders, by agreement with the Board
of Directors. In special cases, the Executive Management may
authorise senior staff members to notify investors and other
stakeholders.
The price of the BANK of Greenland's shares decreased to a
price of 590 at the end of 2022 from the end of 2021, when
the price was 598. The BANK of Greenland recommends to
Sum of large exposures
(maximum 175% of actual core capital)
The BANK of Greenland 167.3 %
Growth in lending
(less than 20 % per annum)
The BANK of Greenland 15.1 %
Liquidity benchmark
(greater than 100 %)
The BANK of Greenland 222.4 %
Property exposure
(less than 25% of total loans and guarantees)
The BANK of Greenland 22.9 %
Stable funding
(loans/working capital less bonds with a remaining maturity of less than 1 year) Limit value: less than 1
The BANK of Greenland 0.6
Annual Report 2022
Management’s Review
30
the Annual General Meeting that the dividend payment for
2022 is DKK 20 per share, or a total of DKK 36 million. It
should be noted that in Greenland dividend is tax deductible
for the dividend-paying company.
Shareholders
The BANK of Greenland’s overall financial objective is to
achieve a competitive return for the shareholders.
At 31 December 2022, the BANK of Greenland had 2,723
shareholders registered by name, which is slightly fewer than at
31 December 2021, when the number of shareholders
registered by name was 2,789. Shareholders registered by
name account for approximately 90% of the share capital. In
accordance with Section 28a of the Danish Companies Act, six
shareholders have notified shareholdings in excess of 5%, see
Note 24.
Dividend policy
The BANK of Greenland’s objective is to continue to distribute
dividend to its shareholders, according to the expected
development in the Bank’s operations and balance sheet, tax
optimisation and regulatory solvency requirements. The
dividend payment for 2022 recommended to the Annual
General Meeting is DKK 20 per share, which should be viewed
in conjunction with the description given under Capital. The
capital ratio is 23.6 and the core capital ratio is 23.2.
Historic pay-out ratio
Not e: Under Greenland’s tax legislation, distributed dividend is fully tax-deductible.
Events occurring after the close of the financial year
As from the balance sheet date and up to today’s date no
events have occurred to change the assessment of the Annual
Report.
Outlook for 2023
It is expected that Greenland saw positive economic growth in
both 2021 and 2022. Despite price increases and rising interest
rates, the BANK of Greenland also expects economic growth
in Greenland in 2023, as described in the “Greenland's Society
and Economy” section of this report.
On this basis, lending is expected to develop positively towards
the end of the year, but with significantly lower growth than in
2022. Deposits are expected to be at the end-2022 level.
The Bank will be affected negatively if inflation and cyclical
trends are exacerbated or amplified to any significant degree.
Total core income is expected to increase in 2023, for which
the primary reasons are the increased lending volume, interest
rate trends, and the development in the Bank's investment and
pension products.
Total expenses including depreciation and amortisation are
expected to be higher than in 2022. A few increases are
expected in the staff area. Administration expenses are also
expected to increase, primarily in the IT area and for
supplementary staff training.
The Bank assesses that the quality of the loan portfolio is
satisfactory. Write-downs on loans are therefore still expected
to be at a low, but normalised, level.
On the basis of the current level of interest rates, gains must be
expected on the Bank’s listed securities. Capital gains are also
expected from the currency area and sector shares.
On this basis, a profit before tax at the level of DKK 130-170
million is expected, compared to DKK 109.1 million in 2022.
The result is in accordance with the stock exchange
announcement of 15 December 2022.
Customers
The BANK of Greenland has strong focus on customer
satisfaction, which is measured by an annual customer
satisfaction survey. On this basis, measures are being initiated in
areas where customers believe that the Bank can do better.
The general picture is of a continued high customer satisfaction
level.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pay-out ratio (before tax)
Pay-out ratio (after tax)
Annual Report 2022
Management’s Review
31
Greenland’s best customer experience is a key element of the
Bank’s strategy, and through ongoing feedback from customers
immediately after each customer meeting, we ensure that we
can constantly work to improve the customers’ experience of
the Bank. Our customers’ constructive feedback is important to
us and is welcomed with great appreciation. We know that
customers are also pleased that they are consulted. We use
NPS (Net Promoter Score) for these surveys.
The BANK of Greenland wishes to be seen as the BANK for
All of Greenland and it is therefore extremely positive that
customers to a great extent assess our presence in coastal
areas to make a positive difference for the individual local area.
The Bank is a professional, trusted business partner to
commercial enterprises throughout Greenland. To a great
extent, this cooperation is based on close relations between
business advisers, specialists and business enterprises. This
provides good insights into the enterprise’s business model and
requirements, which, together with the Bank’s local knowledge
and insight into conditions in society, gives opportunities for
relevant valuable business advisory services. The Business
Department cooperates with other financial partners to ensure
customers’ access to the best solutions and opportunities that
depend on cooperation with other partners, such as insurance
companies and mortgage credit institutes. With its role as a
power centre, the Bank wishes to create growth throughout
Greenland.
Private customers are offered a simple and flexible product
range, which is used to provide individual solutions to the
customer’s needs. Due to the Bank’s high market share, the
Bank often has entire families as a customer, and the Bank
therefore always seeks to provide comprehensive advice for
the benefit of the customer and the family. Ongoing contact
with the customer is crucial to ensuring a good customer
relationship, and the Bank strives to be available for
communication on the digital platforms that the customer
demands. Digital solutions are generally gaining ground among
the Bank’s private customers. In 2022, the Bank had the major
task of supporting and ensuring the transition to MitID for the
Bank’s customers. The vast majority of the Bank’s customers
switched to MitID during 2022.
The Bank and society
The day-to-day business with the Bank’s customers in the
course of the year gave income totalling DKK 314 million,
compared to DKK 355 million in 2021. The income is the sum
of net interest and fee income, other operating income and
value adjustments, after deduction of write-downs on loans.
The Greenland Government and the municipalities receive
corporate tax, dividend tax and tax on staff remuneration.
Employees receive salary and pension contributions, etc., after
deduction of PAYE tax. The purchases made by the Bank from
Danish suppliers are mainly IT services from BEC and Nets.
The BANK of Greenland makes a significant contribution to
society as tax payments in the last three years amounting to
around DKK 80 million on average per year.
DKK million
Employees
Our employees represent the Bank towards the general public,
and it is our employees who create and maintain close
relationships with our customers on a day-to-day basis.
The BANK of Greenland has strong focus on competence
development via trainee programmes, trainee courses,
supplementary training, leadership development and “on the
job training”.
The BANK of Greenland considers it important to ensure the
recruitment of staff with financial qualifications and currently
has five financial trainees who will complete their programme in
August 2024. Physically, four are located at the head office and
one in Aasiaat.
Besides the traineeships, the Bank has very successfully offered
internships and created trainee positions for young people with
a commercial college background as business economists, or in
0
10
20
30
40
50
60
70
80
90
100
2020 2021 2022
Annual Report 2022
Management’s Review
32
administration or finance. In 2022, three commercial college
graduates took up trainee positions at the Bank: two at the
head office and one in Maniitsoq. In addition, the Bank has
seven financial assistants who will continue their training in the
financial economist programme, with completion expected by
mid-2025.
In 2022, it was possible to fill 97.3% of the positions in the
Bank.
The total number of employees was 140 at the end of 2022.
The average age is just over 45 and the average length of
service is 9 years and 3 months. 97 women and 43 men are
employed. Of the total number of employees, 101 have
financial or extended higher educational qualifications.
Business partners
The BANK of Greenland is a full-service bank in Greenland. Via
cooperation agreements with the best operators within
financial IT systems, mortgage credit, insurance, payment
settlement, pensions and investment, the Bank wishes to
continuously offer a broad, flexible and competitive range of
products.
The BANK of Greenland is part of the Danish and international
payment infrastructure. In accordance with a service contract
with the Greenland Government, the Bank contributes to
ensuring that the service level for payment settlement required
by the Greenland Government is established at the locations in
Greenland where there is no commercial background for the
establishment of bank branches.
Corporate Social Responsibility Policy (CSR)
“The basis for the BANK of Greenland's CSR activities is to create
value for both society and the company. Via the Bank's commercial
activities and CSR initiatives, we will support sustainable
development in Greenland and contribute to Greenland achieving
the new Global Sustainable Development Goals, for the benefit of
society and of the BANK of Greenland.
A key aspect is to live up to our fundamental social responsibility as
Greenland's largest bank and the Bank for All of Greenland, by
ensuring balance between development, growth and stability in
Greenland's society.
Focus area: Financial understanding
On the basis of our stakeholders' requirements and expectations,
and the Bank's strategic goals, we have chosen an overall focus
area for our CSR initiatives, which is to create financial
understanding.
Creating financial understanding for the individual customer,
company or citizen opens up new opportunities and gives insights in
order to make the best choices. This is the fundamental principle for
our advisory services. Where possible and relevant, we will enter into
partnerships with the public sector, and other companies,
organisations and associations with the same interests.
To support our efforts to achieve financial understanding, we will
work to expand the availability of our advisory services and financing
of loans outside our primary market area, including by making our
know-how available in order to create financial understanding.
Involvement of employees
We wish to involve our employees on a broad basis in our efforts to
create financial understanding and we support other CSR-related
projects by making it possible for employees to work on CSR
projects during working hours, within a defined framework.
Our obligations
As a signatory to the UN Global Compact, the BANK of Greenland
has endorsed ten principles for responsible business conduct, with
focus on human rights, labour rights, environment and anti-
corruption. We will actively manage our obligation to respect the
ten principles, including our obligation to handle human rights in
accordance with the UN Guiding Principles on Business and Human
Rights, and in particular in relation to our customers, employees and
Greenland's society.
What we expect of others
We expect our employees, partners, suppliers and other business
contacts to comply with the legislation in force at any time, to
respect the internationally recognised principles for the UN Global
Compact, and to show through their actions that they expect others
to apply the same standard. If these principles are not respected,
we will seek through dialogue to find the necessary solutions, but
reserve the option to terminate our cooperation.
Dialogue and access
To ensure that the Bank fulfils our objectives, we will continuously
measure our activities and report on them in our annual report and
on our website, in order to ensure that our stakeholders have access
to information on the Bank's CSR activities. We also have a number
of procedures to ensure that we receive continuous input from our
stakeholders that can influence our actions and initiatives.”
CSR on a day-to-day basis
The aforementioned are extracts from the BANK of
Greenland’s CSR policy. Pursuant to this, a new strategy and
action plan for the coming years’ activities have been drawn up.
The overall responsibility for the bank’s CSR work lies with the
managing director.
Annual Report 2022
Management’s Review
33
ESG
The BANK of Greenland considers it important to support the
green transformation locally, nationally and globally. For several
years the Bank has worked with green initiatives and more
sustainable utilisation of resources. The Bank’s initiatives are
based on the UN Sustainable Development Goals and the Bank
works actively with the recommendations from the Forum for
Sustainable Finance. As from the annual CSR Report for 2021
the Bank has added reporting of key ESG figures. ESG
comprises various information concerning environmental, social
and governance factors.
The BANK of Greenland's Statutory Corporate Social
Responsibility Report, cf. Section 135 of the Order on the
financial reporting of credit institutions and investment service
companies, etc., is available on the Bank's website:
https://www.banken.gl/en/investor/social-responsibility/
Corporate governance – and statutory corporate
governance statement
The BANK of Greenland’s objective is to adhere to the
recommendations at all times and to the greatest possible
extent. The Corporate Governance Statement can be found on
the Bank’s website:http://www.banken.gl/corporate/
Data ethics
The BANK of Greenland has adopted a Data Ethics Policy. This
policy presents the framework for the BANK of Greenland’s
data ethics principles and conduct.
A report on the Data Ethics Policy can be found on the Bank’s
website: https://www.banken.gl/en/investor/data-ethics
Policy and target level for the under-represented
gender
The BANK of Greenland's "Policy and target level for the
under-represented gender" is adjusted continuously. At the end
of 2022, the gender distribution of the members of the Board
of Directors of the BANK of Greenland elected by the Annual
General Meeting comprised 33% women and 67% men. The
Board of Directors’ objective is for the ratio of the under-
represented gender to be at least 33%. The target level for the
under-represented gender is thereby fulfilled.
At other management levels, the Bank’s overall objective is to
achieve and maintain an appropriate equal distribution of men
and women in its management. Irrespective of gender, the
BANK of Greenland’s employees must enjoy equal
opportunities for career development and management
positions. At the end of 2022, managers reporting to the CEO
comprised 17% women and 83% men. For the rest of the
management team, the distribution at the end of 2022 was
53% women and 47% men. The Bank’s objective is for the
distribution of male and female managers to be maintained at
between 40% and 60% at all times.
Board of Directors and Executive Management
Details must be given of the management positions in other
business enterprises held by the members of the Bank’s Board
of Directors and Executive Management. Reference is made to
Note 36.
Evaluation of the Board of Directors
The Board of Directors of the BANK of Greenland undertakes
an annual evaluation of the Board. This takes place every third
year with the external assistance of the Danish Financial
Sector’s Education Centre or other external providers of this
service. This evaluation is the basis for an assessment of several
matters concerning the Board of Directors: the Board
members’ competences, working method, cooperation
internally and with the Executive Management, the Chairman’s
planning of meetings, and the quality of the material provided
to the Board of Directors. The latest evaluation was prepared
internally by the BANK of Greenland in September 2022. The
evaluation of the Board of Directors was at a high level, and it
was concluded that the Board has a good overall combination
of competences in relation to the Bank’s business model.
Training in new areas for the Board of Directors was organised
in 2023, in order to keep the Board updated.
Authorisation of the Board of Directors concerning
trading in own shares
In accordance with an Annual General Meeting decision of 25
March 2020, up to 1 March 2024 the Board of Directors is
authorised to allow the Bank to acquire own shares for a
nominal value of up to 10% of the share capital, at the listed
price on the date of acquisition, with upward or downward
variation of 10%.
Audit Committee
The Audit Committee consists of the full Board of Directors,
and it has therefore been found most appropriate to maintain
the same structure as in the Board of Directors, so that the
Chair of the Board of Directors is also the Chair of the Audit
Committee.
The tasks of the Audit Committee are to:
• Monitor the presentation of accounts process;
• Monitor the effective functioning of the Bank’s internal
control system, internal auditing and risk systems;
• Monitor the statutory audit of the Annual Report; and
Annual Report 2022
Management’s Review
34
• Monitor and control the independence of the auditor, and
in particular the provision of further services to the Bank.
In this respect, the Bank’s control environment for the
calculation of the significant accounting estimates is reviewed
and assessed. The committee meets immediately prior to the
meetings of the Board of Directors.
The mandate of the Audit Committee is presented here:
https://www.banken.gl/en/about-us/board-of-directors/the-
audit-committee-and-risk-committee/
Risk Committee
The Risk Committee consists of the full Board of Directors, and
it has therefore been found most appropriate to maintain the
same structure as in the Board of Directors, so that the Chair
of the Board of Directors is also the Chair of the Risk
Committee.
The tasks of the Risk Committee are to:
• Advise on the Bank’s overall current and future risk profile
and strategy;
• Assist with ensuring that the Board of Directors’ risk
strategy is implemented correctly in the organisation;
• Assess whether the Bank’s range of financial products and
services is in accordance with the business model and risk
profile;
• Assess whether the incentives in the Bank’s remuneration
structure take account of the Bank’s risks, capital and
liquidity; and
• Assess the Bank’s insurance cover of risks.
The mandate of the Risk Committee is presented here:
https://www.banken.gl/en/about-us/board-of-directors/the-
audit-committee-and-risk-committee/
Remuneration Committee
The Remuneration Committee consists of the Chair and Vice
Chair of the Board of Directors and one member of the Board
of Directors elected by the employees.
The Remuneration Committee determines the Remuneration
Policy, which is approved by the Annual General Meeting.
In 2022, the Remuneration Committee was among other things
engaged in the following:
• Control of bonus paid in accordance with the
Remuneration Policy.
• Determination of the Remuneration Policy
• Preparation of a Remuneration Report
• Assessment of the remuneration of the Board of Directors
and Executive Management, and the criteria for this
• General assessment of remuneration and the criteria for
this, including remuneration as a competition parameter.
The Bank of Greenland has prepared a Remuneration Report.
The report is available on the Bank’s website:
https://www.banken.gl/en/about-us/board-of-
directors/remuneration-committee/
The mandate of the Remuneration Committee and the
Remuneration Policy are presented here:
https://www.banken.gl/en/about-us/board-of-
directors/remuneration-committee/
Nomination Committee
The Nomination Committee consists of the Chair and Vice
Chair of the Board of Directors.
In 2022, the Nomination Committee was among other things
engaged in the following:
• Description of competence requirements for the Executive
Management and Board of Directors.
• Nomination of candidates for election to the Board of
Directors.
• Evaluation of the Board of Directors and composition of
the Board of Directors based on the competence
requirements.
• Determination of a diversity policy.
• Determination of a policy for the under-represented
gender and a target level for this.
The Committee assesses that the composition of the Board of
Directors reflects the objective of the diversity policy.
The mandate of the Nomination Committee is presented here:
https://www.banken.gl/en/about-us/board-of-
directors/nomination-committee/
The number of meetings in 2022 and attendance of the
meetings of the Board of Directors and all four committees can
be seen here:
https://www.banken.gl/en/about-us/board-of-
directors/
General meeting
The Board of Directors is authorised to make the changes and
additions to the Articles of Association that are required by
public authorities pursuant to the current legislation in force at
any time. In addition, the BANK of Greenland’s Articles of
Association may be amended by a decision of the general
meeting if the proposal is adopted by at least 2/3 of both the
Annual Report 2022
Management’s Review
35
votes cast and the share capital with voting rights represented
at the general meeting.
The members of the Board of Directors are elected by the
general meeting, with the exception of the members who are
elected in accordance with the statutory regulations concerning
the representation of employees on the Board of Directors.
The members of the Board of Directors elected by the general
meeting comprise at least five and at most ten members. Each
year, the three members of the Board of Directors elected by
the general meeting who have served longest, calculated from
the last election of the members concerned, will resign. If
several members have served equally long, their resignation will
be decided by drawing lots. The resigning members may be re-
elected.
Significant agreements that will be amended or will
expire on a change of control of the company
At the end of 2022, the BANK of Greenland had the following
agreements that are assessed to be significant and that would
be amended or would expire on a change of control of the
Bank in conjunction with e.g. a merger.
• Data processing agreement with BEC Financial Technologies
(BEC)
• Cooperation agreement with DLR Kredit A/S
BEC
It is specified in BEC’s Articles of Association that membership
of BEC can be subject to five years’ notice of termination, by
either BEC or the BANK of Greenland, to the end of a financial
year. If membership expires by other means related to the
BANK of Greenland, the Bank will pay a withdrawal fee to
BEC, as specified in the Articles of Association. If a bank is
subject to a merger, and ceases to be a separate bank,
membership of BEC will expire without notice, but with the
opportunity for a transition scheme.
DLR Kredit
As a shareholder of DLR Kredit and in view of the Bank’s
membership of the Association of Local Banks, the BANK of
Greenland has entered into a cooperation agreement with DLR
concerning the intermediation of mortgage-credit loans to the
Bank’s customers. The cooperation agreement is irrevocable
for as long as the BANK of Greenland is a shareholder of DLR
Kredit. If the BANK of Greenland divests or deposits its
shareholding, the Bank will automatically be deemed to have
withdrawn from the cooperation agreement with effect from
the end of the calendar year in which the shareholding was
divested/deposited. The cooperation agreement may be
terminated by DLR Kredit, if this is adopted by DLR’s Board of
Directors, subject to three months’ notice to the end of a
calendar year.
Annual Report 2022
Management Statement
36
The Board of Directors and Executive Management have today
considered and approved the Annual Report for the financial
year from 1 January to 31 December 2022 for
GrønlandsBANKEN, aktieselskab.
The Annual Report is presented in accordance with the Danish
Financial Activities Act. The Annual Report is furthermore
prepared in accordance with Danish disclosure requirements
for listed financial companies.
It is our opinion that the Annual Financial Statements give a
true and fair view of the Bank’s assets, liabilities and financial
position as at 31 December 2022, and of the result of the
Bank’s activities and cash flows for the financial year from 1
January to 31 December 2022. It is furthermore our opinion
that in all significant respects the Annual Report has been
prepared in accordance with the ESEF Regulation.
It is our opinion that the Management’s Review gives a true and
fair review of the development in the Bank’s activities and
financial affairs, as well as a description of the significant risks
and uncertainties to which the Bank is subject. The Annual
Report is submitted for approval by the Annual General
Meeting.
Nuuk, 1 March 2023
Executive Management
Martin Birkmose Kviesgaard
Board of Directors
Gunnar í Liða
Kristian Frederik Lennert
Maliina Bitsch Abelsen
Chair
Vice Chair
Malene Meilfart Christensen
Lars Holst
Yvonne Jane Poulsen Kyed
Niels Peter Fleischer Rex
Peter Angutinguaq Wistoft
Ellen Dalsgaard Zdravkovic
Annual Report 2022
Audit Statement
37
The independent auditor's report
To the shareholders of GrønlandsBANKEN A/S
Opinion
We have audited the annual financial statements of
GrønlandsBANKEN A/S for the financial year from 1 January to
31 December 2022, which comprise the statement of income
and the statement of comprehensive income, the balance sheet,
and the statement of changes in equity and notes, including the
accounting policies applied and the cash flow statement. The
annual financial statements are prepared in accordance with the
Danish Financial Activities Act and additional Danish disclosure
requirements for listed financial companies.
It is our opinion that the annual financial statements give a true
and fair view of the Bank’s assets, liabilities and financial position
as at 31 December 2022, and of the result of the Bank’s
activities for the financial year from 1 January to 31 December
2022, in accordance with the Danish Financial Activities Act and
additional Danish disclosure requirements for listed financial
companies.
Our opinion is consistent with our audit report to the audit
committee and Board of Directors.
Basis for opinion
We conducted our audit in accordance with international
auditing standards and additional requirements under Danish
auditing legislation. Our responsibility according to these
standards and requirements is described further in “Auditor’s
responsibility for the audit of the annual financial statements”.
We are independent of the Bank in accordance with the
International Ethics Standards Board for Accountants’
International Code of Ethics for Professional Accountants (the
IESBA Code) and the additional ethical requirements applying in
Denmark, just as we have fulfilled our other ethical obligations
in accordance with these requirements and the IESBA Code. It
is our view that the audit evidence obtained is an adequate and
appropriate basis for our opinion.
To the best of our knowledge, no prohibited non-auditing
services as described in Article 5(1) of Regulation (EU) no.
537/2014 have been performed.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the annual
financial statements for the financial year from 1 January - 31
December 2022. These matters were addressed in the context
of our audit of the annual financial statements as a whole, and
in forming an opinion thereon, and we do not provide a
separate opinion on these matters.
Annual Report 2022
Audit Statement
38
Statement concerning the Management's Review
The Management is responsible for the Management’s Review.
Our opinion concerning the annual financial statements does
not include the Management’s Review, and we do not express
any opinion concerning the Management’s Review.
In connection with our audit of the annual financial statements
our responsibility is to read the Management’s Review and to
consider whether the Management’s Review has significant
inconsistencies with the annual financial statements or the
knowledge we have obtained from the audit, or otherwise
appears to contain material misstatements.
It is also our responsibility to consider whether the
Management’s Review includes the information required in
accordance with the Financial Activities Act.
On this basis it is our view that the information in the
Management’s Review is in accordance with the annual financial
statements and has been prepared in accordance with the
requirements of the Financial Activities Act. We have not found
any material misstatements in the Management’s Review.
Write-downs on loans and provisions for losses on
guarantees, etc.
The matter was considered as follows during the audit
Lending amounted to DKK 4,354 million and guarantees to
DKK 1,934 million at 31 December 2022 (lending
amounted to DKK 3,784 million and guarantees to DKK
1,781 million at 31 December 2021).
The determination of expected write-downs on loans and
provisions for losses on guarantees, etc. is subject to
considerable uncertainty and to a certain extent is based on
managerial estimates. As a consequence of the significance
of these estimates and the size of the loans and guarantees,
etc. of the Bank, the auditing of write-downs on loans and
provisions for losses on guarantees, etc. is a key audit
matter.
The principles for the compilation of write-downs on loans
and provisions for losses on guarantees, etc. are described
further in the accounting policies applied, and the
management has described the handling of credit risks and
the assessment of the impairment requirement for loans
and the need for provisions for losses on guarantees, etc. in
Notes 2 and 13 to the annual financial statements.
The aspects of loans and guarantees, etc. which entail the
greatest degree of estimation, and which therefore require
greater auditing attention, are:
• Identification of exposures that are credit-impaired.
• Parameters and managerial estimates in the calculation
model applied to determining the expected losses in
stages 1 and 2, including the classification thereof.
• Assessment of the consequences of events that are not
already taken into account, as managerial estimates
incorporated in the models, and as managerial additions.
On the basis of our risk assessment, the audit has included a
review of the Bank’s relevant procedures for write-downs
on loans and provisions for losses on guarantees, etc., the
testing of relevant controls, and the examination of
exposures on the basis of random sampling.
Our audit procedures included testing of relevant controls
concerning:
• Ongoing assessment of the credit risk
• Assessment and validation of input and assumptions
applied to the calculation of write-downs on loans and
the provisions for losses on guarantees in stages 1 and 2.
• Determination of managerial estimates in addition to the
model-based write-downs.
Our audit procedures also included:
• Review by random sampling of exposures to ensure
correct identification of the credit impairment of loans
and guarantees, etc.
• Obtaining and evaluating an audit declaration from the
Bank’s data centre that comprises an assessment of the
calculation model applied by the Bank to write-downs
on loans and provisions for losses on guarantees, etc.
• Challenging of the significant parameters in the
calculation model applied, with special focus on
objectivity and the data basis used.
• Challenging of managerial estimates, with special focus
on the management's consistency and objectivity.
• Challenging of managerial estimates incorporated in the
models, as well as managerial additions relating to the
consequences of events that are not already taken into
account.
Annual Report 2022
Audit Statement
39
The management's responsibility for the annual
financial statements
The management is responsible for the preparation of annual
financial statements that present a true and fair view, in
accordance with the Financial Activities Act and the additional
Danish disclosure requirements for listed financial companies.
The management is also responsible for the internal control
deemed necessary by the management in order to prepare
annual financial statements that are free of material
misstatement, whether this is due to fraud or error.
On the preparation of the annual financial statements, the
management is responsible for assessing the Bank’s ability to
continue as a going concern, for disclosing information
concerning continuation as a going concern, where relevant,
and for applying the going concern basis of accounting, unless
the management intends to either liquidate the Bank,
discontinue operations, or has no other realistic alternative to
this.
Auditor’s responsibility for the audit of the annual
financial statements
Our objective is to obtain reasonable assurance of whether the
financial statements as a whole are free from material
misstatement, whether this is due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with international
auditing standards and additional requirements under
Greenland’s auditing legislation will always detect a significant
material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of
the annual financial statements.
As part of an audit in accordance with international auditing
standards and additional requirements under Greenland’s
auditing legislation, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
• Identify and assess the risk of material misstatement of the
annual financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions,
misrepresentations, or the overriding of internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Bank’s
internal control.
• Evaluate the appropriateness of the accounting policies
applied by the management, as well as the reasonableness
of accounting estimates and related information prepared
by the management.
• Draw conclusions concerning the appropriateness of the
management’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or conditions
that may cast significant doubt on the Bank’s ability to
continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our
auditor’s report to the related disclosures in the annual
financial statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report.
However, future events or conditions may cause the Bank
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of
the annual financial statements, including the disclosures in
the Notes, and whether the annual financial statements
represent the underlying transactions and events in a
manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the
financial information for the Bank to express an opinion on
the annual financial statements. We are responsible for the
direction, supervision and performance of the audit of the
annual financial statements. We remain solely responsible
for our audit opinion.
We communicate with the top-level management regarding,
among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant
deficiencies in internal control that we identify during our audit.
We also provide the top-level management with a statement
that we have complied with relevant ethical requirements
regarding independence, and notify them of all relations and
other matters that might reasonably influence our
independence and, where relevant, related safeguards.
On the basis of the matters communicated to the top-level
management, we determine the matters of most significance to
the audit of the annual financial statements for the relevant
period and which are thereby key audit matters. We describe
these matters in our auditor’s report, unless disclosure of the
matter is prescribed by statutory or other regulation, or in the
Annual Report 2022
Audit Statement
40
very rare cases where we find that the matter is not to be
communicated in our auditor’s report because its negative
consequences might reasonably be expected to carry greater
weight than the advantages to the general public of such
disclosure.
Declaration concerning compliance with the ESEF
Regulation
As an element of the audit of the annual financial statements of
GrønlandsBANKEN A/S we have performed procedures in
order to express an opinion as to whether the Annual Report
for the 2022 financial year, with the file name ”80050410-
2022-12-31-da”, has been prepared in accordance with
European Commission Delegated Regulation (EU) 2019/815 on
the specification of a single electronic reporting format (the
ESEF Regulation), with requirements concerning the
preparation of an annual report in XHTML format.
The management is responsible for the preparation of an
annual report in compliance with the ESEF Regulation, including
the preparation of an annual report in XHTML format.
Based on the evidence obtained, it is our responsibility to
achieve a high degree of certainty that, in all material respects,
the annual report has been prepared in accordance with the
ESEF Regulation, and to express an opinion. The procedures
include control that the annual report is prepared in XHTML
format.
It is our opinion that, in all material respects, the Annual Report
for the 2022 financial year, with the file name ”80050410-
2022-12-31-da”, has been prepared in accordance with the
ESEF Regulation.
Copenhagen, 1 March 2023
Deloitte
Statsautoriseret Revisionspartnerselskab
CVR no. 33 96 35 56
Anders O. Gjelstrup
Jakob Lindberg
State
-Authorised Public Accountant
State
-Authorised Public Accountant
MNE no. 10777
MNE no. 40824
Annual Report 2022
Audit Statement
41
Internal auditor´s statement
To the shareholders of the BANK of Greenland
Audit statement
Opinion
We have audited the annual financial statements of
GrønlandsBANKEN, Aktieselskab for the financial year from 1
January to 31 December 2022, which comprise the statement
of income and statement of comprehensive income, balance
sheet, statement of changes in equity and statement of cash
flows and notes, including accounting policies applied. The
annual financial statements are prepared in accordance with the
Danish Financial Activities Act and additional Danish disclosure
requirements for listed financial companies.
It is our opinion that the annual financial statements for
GrønlandsBANKEN, Aktieselskab give a true and fair view of
the Bank’s assets, liabilities and financial position as at 31
December 2022, and of the result of the Bank’s activities and
cash flows for the financial year from 1 January to 31
December 2022, in accordance with the Danish Financial
Activities Act and additional Danish disclosure requirements for
listed financial enterprises.
Our opinion is consistent with our audit report to the audit
committee and Board of Directors.
The audit performed
Our audit was performed in accordance with the Danish
Financial Supervisory Authority’s Order on the auditing of
financial enterprises, etc. and financial Groups, international
auditing standards concerning the planning and execution of the
audit, and additional requirements under Danish auditing
legislation. This requires that we comply with ethical
requirements and that the audit was planned and performed in
order to achieve a high degree of assurance that the annual
financial statements are free of material misstatement.
The audit was planned and performed so as to assess the
procedures and internal control procedures, including the risk
management planned by the management, directed at the
presentation of accounts process and material business risks.
An audit includes performing the audit procedures to obtain
audit evidence of the amounts and information in the annual
financial statements. The audit procedures chosen depend on
the auditor’s assessment, including assessment of the risks of
material misstatement in the annual financial statements,
whether this is due to fraud or error. In the risk assessment,
the auditor considers the internal control procedures that are
relevant for the company’s preparation of annual financial
statements that give a true and fair view. The purpose is to
perform the audit procedures that are appropriate in the
circumstances. An audit also includes assessment of whether
the management’s choice of accounting policies is appropriate,
whether the management’s accounting estimates are
reasonable, and the overall presentation of the annual financial
statements.
Our audit included the material, risk-exposed areas and it is our
opinion that the audit evidence obtained is adequate and
appropriate to form a basis for our opinion.
Statement concerning the Management's Review
The Management is responsible for the Management’s Review.
Our opinion concerning the annual financial statements does
not include the Management’s Review, and we do not express
any opinion concerning the Management’s Review.
In connection with our audit of the annual financial statements
our responsibility is to read the Management’s Review and to
consider whether the Management’s Review has significant
inconsistencies with the annual financial statements or the
knowledge we have obtained from the audit, or otherwise
appears to contain material misstatements.
It is also our responsibility to consider whether the
Management’s Review includes the information required in
accordance with the Financial Activities Act.
On the basis of the work performed it is our view that the
Management’s Review has been prepared in accordance with
the requirements of the Financial Activities Act and that the
information in the Management’s Review is in accordance with
the annual financial statements. We have not found any
material misstatements in the Management’s Review.
Copenhagen, 1 March 2023
Christoffer Max Jensen
Audit Manager
Annual Report 2022
Statement of Income
42
Annual Report 2022
Statement of Income
43
Statement of Income
DKK 1,000
Notes
2022 2021
3
Interest income
227,093
223,790
4
Negative interest income
-1,824 -13,033
5
Interest expenses
3,040 1,019
6
Positive interest expenses
-20,995 -24,383
Net interest income
243,224 234,121
Share dividend, etc.
1,822 913
7
Fees and commission income
106,796 104,794
Fees paid and commission expenses
357 895
Net interest and fee income
351,485
338,933
8
Value adjustments
-39,356 11,219
Other operating income
6,588
6,185
9, 10
Staff and administration expenses
195,056 186,385
Depreciation and impairment of tangible assets
7,320 7,014
Other operating expenses
2,706 2,497
13
Write
-downs on loans and receivables, etc. 4,523 1,537
Profit before tax
109,112
158,904
11
Tax
10,361 26,072
Profit for the year
98,751 132,832
PROPOSED ALLOCATION OF PROFIT
Profit for the year
98,751 132,832
In total available for allocation
98,751 132,832
Proposed dividend
36,000 72,000
Retained profit
62,751 60,832
Total allocation
98,751 132,832
Annual Report 2022
Statement of Comprehensive Income
44
Statement of Comprehensive Income
DKK 1,000
2022
2021
Profit for the year
98,751
132,832
Other comprehensive income:
Value adjustment of properties
32,030
4,346
Value adjustment of defined-benefit severance/pension scheme
-93
-32
Tax on value adjustment of properties
-8,007
-1,152
Other comprehensive income after tax
23,930
3,162
Comprehensive income for the year
122,681
135,994
Annual Report 2022
Balance Sheet
45
Balance Sheet
(year-end)
DKK 1,000
Notes
2022
2021
Cash balance and demand deposits with central banks
1,396,401
1,434,027
12
Receivables from credit institutions and central banks
118,619
57,293
13
Loans and other receivables at amortised cost
4,353,585
3,783,681
14
Bonds at fair value
1,156,821
1,100,975
15
Shares, etc.
120,063
138,902
18
Assets connected to pool schemes
394,576
360,537
Land and buildings in total
284,370
247,292
16
- Domicile properties
284,370
247,292
17
Other tangible assets
6,007
6,652
Other assets
115,145
93,798
Accruals and deferred income
3,979
3,831
Total assets
7,949,566
7,226,988
19
Liabilities to credit institutions and central banks
22,598
13,145
20
Deposits and other liabilities
5,942,479
5,363,871
Deposits in pool schemes
394,576
360,537
21
Issued bonds at amortised cost
74,563
49,642
Current tax liabilities
18,861
22,615
Other liabilities
58,527
53,911
Prepayments and deferred expenses
7,535
7,499
Total debt
6,519,139
5,871,220
Provisions for pensions and similar obligations
2,097
1,705
22
Provisions for deferred tax
67,126
68,326
13
Provisions for losses on guarantees
8,036
7,673
Other provisions
5,047
5,351
13
Provisions for losses on non-utilised credit facilities
4,821
4,802
Total provisions
87,127
87,857
23
Subordinated debt
24,708
0
Total subordinated debt
24,708
0
Equity
24
Share capital
180,000
180,000
Revaluation reserves 61,651
37,628
Retained earnings
1,040,941
978,283
Proposed dividend
36,000
72,000
Total equity
1,318,592
1,267,911
Total liabilities
7,949,566
7,226,988
1
Accounting policies applied
2
Financial risks and policies
25
-36
Other Notes
Annual Report 2022
Statement of Changes in Equity
46
Statement of Changes in Equity
DKK 1,000
Share capital
Revaluation
reserves
Retained
earnings
Proposed
dividend, net
Total equity
Equity, 1 January 2021
180,000
34,749 917,168
45,000
1,176,917
Dividend paid
0
0
0
-45,000
-45,000
Other comprehensive income
0
2,879
283
0
3,162
Profit for the period
0
0 60,832
72,000
132,832
Equity, 31 December 2021
180,000
37,628
978,283
72,000
1,267,911
Equity, 1 January 2022
180,000
37,628 978,283
72,000
1,267,911
Dividend paid
0
0 0
-72,000
-72,000
Other comprehensive income
0
24,023 -93
0
23,930
Profit for the
year 0
0 62,751
36,000
98,751
Equity, 31 December 2022
180,000
61,651 1,040,941
36,000
1,318,592
Annual Report 2022
Cash Flow Statement
47
Cash Flow Statement
DKK 1,000
2022
2021
Profit for the year
98,751
132,832
Write-downs on loans
4,523
1,537
Depreciation and impairment of
tangible assets 7,320
7,014
Recognised profit on sale of tangible assets
-275
-727
Accruals and deferred expenses, net
-112
2,344
Profit for the year after adjustment for non
-cash operating items 110,207
143,000
Liabilities to credit
institutions and central banks 9,453
-3,895
Deposits
612,647
-344,953
Issued bonds
93
0
Lending
-574,427
221,030
Other working capital
-61,669
-162,020
Other liabilities
-7,968
-5,726
Change in working capital
-21,871
-295,564
CASH FLOWS
FROM OPERATING ACTIVITIES 88,336
-152,564
Sale of tangible assets
325
3,614
Purchase, etc. of tangible assets
-11,773
-22,993
CASH FLOWS FROM INVESTMENT ACTIVITIES
-11,448
-19,379
Dividend paid
-72,000
-45,000
Bond issue,
including amortisation effect 24,828
49,642
Subordinated debt issue, including amortisation effect
24,708
0
CASH FLOWS FROM FINANCING ACTIVITIES
-22,464
4,642
CHANGE IN CASH AND CASH EQUIVALENTS
54,424
-167,301
Cash and cash
equivalents, beginning of year 2,567,417
2,734,718
Cash and cash equivalents, end of year
2,621,841
2,567,417
Cash balance and demand deposits with central banks
1,396,401
1,434,027
Fully secured and liquid cash and cash equivalents in
credit institutions, cf. Note 12 118,619
57,293
Non
-mortgaged securities 1,106,821
1,076,097
Cash and cash equivalents, end of year
2,621,841
2,567,417
Annual Report 2022
Cash Flow Statement
48
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
49
1. Accounting policies applied 50
2. Financial risks and policies and targets for management of financial risks 56
3. Interest income 67
4. Negative interest income 67
5. Interest expenses 67
6. Positive interest expenses 67
7. Fees and commission income 67
8. Value adjustments 67
9. Staff and administration expenses 68
10. Audit fees 68
11. Tax on the profit for the year 68
12. Receivables from credit institutions and central banks 69
13. Lending 69
14. Bonds at fair value 71
15. Shares, etc. 71
16. Head office properties 72
17. Other tangible assets 72
18. Assets connected to pool schemes 72
19. Debt to credit institutions and central banks 72
20. Deposits and other liabilities 73
21. Issued bonds at amortised cost 73
22. Provisions for deferred tax 73
23. Subordinated debt 74
24. Share capital 74
25. Capital statement 74
26. Contingent liabilities 75
27. Legal cases 75
28. Currency exposure 75
29. Interest risk rate 75
30. Related parties 75
31. Derivative financial instruments 76
32. Fair value of financial instruments 78
33. Sensitivity calculations 80
34. Five-Year Financial Highlights and Key Figures 81
35. Definition of key ratios 82
36. Management posts 83
Overview of Notes
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
50
The Annual Financial Statements are presented in accordance
with the Danish Financial Activities Act, including the Order on
financial reports for credit institutions and investment service
companies, etc. The Annual Report is furthermore presented in
accordance with additional Danish disclosure requirements for
the annual reports of listed financial companies.
The Annual Report is presented in Danish kroner, rounded to
the nearest DKK 1,000.
The accounting policies applied are unchanged from the Annual
Report for 2021.
About recognition and measurement in general
Assets are recognised in the balance sheet when it is probable,
due to a previous event, that future economic benefits will
accrue to the Bank, and the value of the asset can be measured
reliably.
Liabilities are recognised in the balance sheet when the Bank,
due to a previous event, has a legal or actual obligation, and it is
probable that future economic benefits will divest from the
Bank, and the value of the liability can be measured reliably.
On first recognition, assets and liabilities are measured at fair
value. However, tangible assets are measured at cost price at
the time of first recognition. Measurement after first
recognition takes place as described for each accounting item
below.
On recognition and measurement, account is taken of
predictable risks and losses arising before the presentation of
the Annual Report, and which confirm or refute conditions
existing as of the balance sheet date.
Income is recognised in the statement of income as it is earned,
while costs are recognised at the amounts concerning the
financial year. However, increases in the value of head office
properties that do not match previous impairment are
recognised directly to the statement of comprehensive income.
Purchase and sale of financial instruments is recognised on the
trading date, and recognition ceases when the right to
receive/cede cash flows concerning the financial asset or liability
has expired, or has been assigned, and the Bank has in principle
transferred all risks and yields related to the property
ownership. The BANK of Greenland does not apply the rule
on reclassification of certain financial assets from fair value to
amortised cost.
Significant accounting estimates, assumptions and
uncertainties
The Annual Financial Statements are prepared on the basis of
certain special assumptions which entail the use of accounting
estimates. These estimates are made by the Bank’s
management in accordance with accounting policies, and on the
basis of historical experience, as well as assumptions which the
management considers to be responsible and realistic.
The assumptions may be incomplete, and unexpected future
events or circumstances may arise, just as other parties might
be able to make other estimates. The areas which entail a
higher degree of assessment or complexity, or areas where
assumptions and estimates are significant to the accounts, are
stated below.
On the preparation of the annual financial statements, the
management undertakes a number of accounting assessments
as the basis for the presentation, recognition and measurement
of the institution’s assets and liabilities. The Annual Financial
Statements are presented in accordance with the going
concern principle, based on current practice and interpretation
of the rules for Danish banking institutions. The key estimates
made by the management in conjunction with recognition and
measurement of these assets and liabilities, and the significant
estimation uncertainty related to the preparation of the Annual
Report for 2022, are:
• Write-downs for impairment of lending and provisions for
guarantees and credit undertakings are made in accordance
with the accounting policies, and are based on a number of
Accounting policies applied
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
51
assumptions. If these assumptions are changed, the
presentation of the accounts may be affected, and this may
be significant.
• Listed financial instruments may be priced in markets with
low turnover, whereby the use of stock exchange prices to
measure fair value may be subject to some uncertainty.
• Unlisted financial instruments may involve significant
estimates in connection with the measurement of fair value.
See Notes 15 and 31.
• For provisions, there are significant estimates related to the
determination of the future employee turnover rate, as well
as determining the interest obligation for tax-free savings
accounts.
• The measurement of the fair value of head office properties
is likewise subject to significant estimates and assessments,
including expectations of the properties’ future returns and
the rates of return fixed. The Bank’s principal property is
the head office property in Nuuk. A change in the
percentage yield of e.g. 0.5% would change the valuation by
DKK 8 million for this property. On the valuation of the
Bank’s head office property in Nuuk, different prices per
square metre are used in relation to market rent and
potential use.
In 2022, the Bank obtained external estate agent valuations for
a broad selection of the Bank’s properties, to support the
assessment of the valuation, which is the primary reason for the
revaluation of the property portfolio by a total of TDKK
32,431.
Determination of fair value
The fair value is the amount at which an asset can be traded or
a liability can be redeemed, in a trade under normal conditions
between qualified, willing and mutually independent parties.
The fair value of financial instruments for which there is an
active market is determined at the closing price on the balance
sheet date or, if not available, another published price that must
be assumed to be best equivalent.
For financial instruments for which there is no active market,
the fair value is determined with the help of generally
recognised valuation techniques, which are based on observable
current market data.
Hedge accounting
The Bank applies the special hedge accounting rules to avoid
the inconsistency which arises when certain financial assets or
financial liabilities (the hedged items) are measured at amortised
cost, while derivative financial instruments (the hedging
instruments) are measured at fair value.
When the criteria for the application of the hedge accounting
rules are fulfilled, the accounting value of the hedged assets and
liabilities is subject to adjustment via the statement of income
for changes in fair value concerning the hedged risks (fair value
hedging). Hedging is established by the Bank for lending at fixed
interest rates.
Derivative financial instruments
Derivative financial instruments are measured at fair value,
which in principle is based on listed market prices. With regard
to unlisted instruments, the fair value is compiled according to
generally recognised principles. Derivative financial instruments
are recognised under other assets, or other liabilities.
Changes in the fair value of derivative financial instruments
which are classified as and fulfil the conditions for hedging the
fair value of a recognised asset or liability, are recognised in the
statement of income together with changes in the value of the
hedged asset or liability. Other changes are recognised in the
statement of income as financial items.
Translation of foreign currencies
On first recognition, transactions in foreign currencies are
translated at the exchange rate on the transaction date.
Receivables, debt and other monetary items in foreign currency
which are not settled as of the balance sheet date, are
converted at the closing rate for the currency on the balance
sheet date. Exchange-rate differences arising between the rate
on the transaction date and the rate on the payment date, or
the rate on the balance sheet date, are recognised as value
adjustments in the statement of income.
Set-offs
The Bank sets off receivables and liabilities when the Bank has a
legal right to set off the recognised amounts and also has the
intention of net set-off or realisation of the asset and
redemption of the liability at the same time.
Agreement with the Ministry of Industry, Business
and Financial Affairs in Denmark
The BANK of Greenland has entered into an agreement with
the Ministry of Industry, Business and Financial Affairs in
Denmark on contributions to support financial stability in
Greenland. The contribution is divided into directly attributable
compensation contributions for the Bank’s MREL issuance
costs, and a basic amount.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
52
Compensation has been received for the Bank’s MREL issuance
costs for the element of the Bank’s issues that exceeds the
agreed average level to which a small bank in the Association of
Local Banks, Savings Banks and Cooperative Banks in Denmark
will be subject.
The compensation is presented as a set-off against subsidy-
entitled interest items, or negative interest income and interest
expenses, respectively.
Basic amounts received are not directly attributable to a single
cost element and are therefore recognised under other
operating income. Compensation is recognised in the statement
of income in the relevant period.
The Bank has no unfulfilled commitments at the balance sheet
date, or other contingent items related to the public
compensation.
Statement of income
Interest, fees and commission
Interest income and interest expenses are recognised in the
statement of income for the period which they concern.
Commission and fees which are an integrated element of the
effective interest rate on a loan are recognised as part of the
amortised cost and thereby as an integrated element of the
financial instrument (lending) under interest income.
The treatment of negative interest income and positive interest
expenses does not differ from the treatment of interest income
and interest expenses. Negative interest income and positive
interest expenses are presented on their respective separate
lines of the statement of income.
Commission and fees which are part of the ongoing servicing of
the loan are accrued over the term to maturity. Other fees are
recognised in the statement of income as of the transaction
date.
Interest on lending classified as stage 3 is calculated on the basis
of the net amount after write-downs. For other lending, the
interest rate is calculated on the basis of the contractual
outstanding amount. This entails that interest income from
loans that have been written down either in full or in part is
included under “Write-downs on loans and receivables, etc.”
with regard to the interest on the impaired element of the
loans.
Share dividend
Share dividend is recognised in the income statement when the
Bank is entitled to receive dividend. This will normally be when
the dividend has been adopted at the company’s general
meeting.
Value adjustments
Value adjustments comprise realised and unrealised value
adjustments of assets and liabilities measured at fair value.
Exchange rate adjustments and the effect of value adjustments
of hedge accounting are also included in the value adjustment.
Staff and administration expenses
Staff expenses comprise salaries and social security expenses,
pensions, staff accommodation, etc. Costs of services and
benefits to employees, including anniversary bonuses, are
recognised in step with the employees’ performance of the
work which entitles them to the services and benefits in
question. Costs of incentive programmes are recognised in the
statement of income in the financial year to which the cost can
be attributed.
Pension schemes
The Bank has established a defined-benefit severance/pension
scheme for the Bank’s managing director.
The Bank has established contribution-based pension schemes
with all employees. Under the contribution-based pension
schemes, fixed contributions are paid to an independent
pension institution, or to the Bank’s own pension product,
“Qimatut”. The Bank’s own pension product is not managed by
the Bank itself, but by the employee or in pool schemes
managed by an independent investment company.
Other operating income and operating expenses
Other operating income includes income of a secondary nature
in relation to the Bank’s activities, including external rent
income, and profit and loss on sale of the Bank’s properties.
Other operating expenses include expenses of a secondary
nature in relation to the Bank’s activities, including operation
and maintenance of the Bank’s head office properties, and
contributions to sector solutions.
Tax
Tax for the year, which consists of current tax and changes in
deferred tax, is recognised in the statement of income when it
relates to the result for the period, and in other comprehensive
income or directly to equity when it relates to items recognised
directly in other comprehensive income or directly to equity,
respectively.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
53
Current tax liabilities are recognised in the balance sheet,
compiled as the tax calculated on the taxable income for the
year.
On calculating the taxable income, Greenland allows tax
deduction.
Deferred tax is recognised on all temporary difference
between accounting values and taxable values of assets and
liabilities.
Balance sheet total
Cash balances and demand deposits at central
banks
Comprise cash balances and demand deposits at central banks
and are measured at fair value on first recognition, and
subsequently measured at amortised cost.
Receivables from and debt to credit institutions and
central banks
Comprises receivables from credit institutions and time
deposits with central banks. Debt to credit institutions and
central banks comprises debt to other credit institutions and
central banks. Receivables are measured at fair value. Debt is
measured at amortised cost.
Loans and other receivables at amortised cost
Financial instruments that, after first recognition, are recognised
on an ongoing basis at amortised cost must, however, on initial
recognition be measured at fair value with addition of the
transaction costs directly related to the acquisition or issue of
the financial instrument, and deduction of the fees and
commission received, which are an integral element of the
effective interest rate.
Loans are measured at amortised cost, which is usually
equivalent to nominal value less establishment fees, etc., and
write-downs to meet losses that have arisen, but have not yet
been realised.
Reference is also made to the descriptions in Note 2.
Bonds at fair value
Bonds which are traded in active markets are measured at fair
value. Fair value is calculated at the closing price for the market
in question on the balance sheet date. Redeemed bonds are
measured at present value.
If the market for one or several bonds is not liquid, or if there
is no publicly recognised price, the Bank determines the fair
value by using recognised valuation techniques. These
techniques include the use of equivalent recent transactions
between independent parties, and analyses of discounted cash
flows and other models based on observable market data.
Shares, etc.
Shares are measured at fair value. The fair value of shares
traded in active markets is compiled at the closing price on the
balance sheet date.
The fair value of unlisted and non-liquid shares is based on the
available information concerning trades and similar, or
alternative capital value calculations. Non-liquid and unlisted
capital investments for which it is not assessed to be possible to
calculate a reliable fair value are measured at cost.
Assets and deposits in pool schemes
All pool assets and deposits are recognised at fair value in
separate balance sheet items. Pool schemes are managed by an
external partner. The Bank’s own return on pool activities is
carried under fee and commission income.
Head office properties
All of the Bank’s properties are defined as head office
properties, including staff accommodation. Staff
accommodation is assessed to be necessary, to ensure the
recruitment of new staff.
Properties are measured according to first recognition at re-
assessed value. Initial recognition is at cost price. Re-assessment
is made sufficiently frequently to avoid significant differences
from fair value.
Every second year (most recently in 2022), an independent
assessment is obtained of the market value of the Bank’s head
office property in Nuuk. Every three years (most recently in
2022), an independent assessment is obtained of the market
value of a large proportion of the Bank’s staff accommodation.
The fair value of other head office properties is reassessed
annually on the basis of calculated capital values for the
expected future cash flows.
Increases in head office properties’ reassessed value are
recognised in revaluation reserves under equity. Any decrease
in value is recognised in the statement of income, except in the
case of reversal of revaluations in previous years.
Straight-line depreciation over 25 years is applied to bank
buildings, and over 50 years to staff accommodation.
The head office property and newer bank buildings and staff
accommodation are written down to scrap value.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
54
Other tangible assets
Machinery and fixtures and fittings are measured at cost less
accumulated depreciation. Depreciation is made on a straight-
line basis over the assets’ expected lifetime, but maximum five
years.
Other assets
Other assets are other assets not included under other asset
items. The item includes the Bank’s capital contribution to BEC,
and the positive market value of derivative financial instruments
and income that do not fall due for payment until after the end
of the financial year, including interest receivable. With the
exception of derivative financial instruments that have a positive
value as of the balance sheet date, and which are measured at
fair value, the accounting item is measured at cost on first
recognition, and thereafter at amortised cost.
Prepayments and deferred expenses
Accruals and deferred income recognised under assets
comprise defrayed costs concerning subsequent financial years.
Prepayments and deferred income are measured at cost.
Deposits and other liabilities
Financial instruments that, after first recognition, are recognised
on an ongoing basis at amortised cost must, however, on initial
recognition be measured at fair value with addition of the
transaction costs directly related to the acquisition or issue of
the financial instrument, and deduction of the fees and
commission received, which are an integral element of the
effective interest rate.
Deposits and other liabilities comprise deposits with
counterparties that are not credit institutions or central banks.
Deposits and other liabilities are measured at fair value on first
recognition, and are subsequently measured at amortised cost.
Issued bonds at amortised cost
Issued bonds are measured at amortised cost.
Other liabilities
Other liabilities are other liabilities not included under other
liability items. The item includes the negative market value of
derivative financial instruments and expenses that do not fall
due for payment until after the end of the financial year,
including interest payable. With the exception of derivative
financial instruments that have a negative value as of the
balance sheet date, and which are measured at fair value, the
accounting item is measured at cost on first recognition, and
thereafter at amortised cost.
Prepayments and deferred expenses
Prepayments and deferred expenses recognised under liabilities
comprise income received prior to the balance sheet date, but
which concerns a subsequent accounting period, including
accrued interest and commission. Prepayments and deferred
income are measured at cost.
Subordinated debt
Subordinated debt is measured at amortised cost.
Provisions
Obligations and guarantees which are uncertain in terms of size
or time of settlement are recognised as provisions when it is
probable that the obligation will lead to a claim on the Bank’s
financial resources, and the obligation can be measured reliably.
The obligation is calculated at the present value of the costs
that are necessary in order to redeem the obligation.
Obligations concerning staff which fall due more than 36
months after the period in which they are earned are
discounted.
Contingent liabilities
The item concerns ceded guarantees and undertakings,
irrevocable credit undertakings and similar obligations that are
not carried to the balance sheet. Guarantees are measured at
nominal value, with deduction of loss provisions. Provisions for
losses are recognised under “Write-downs on loans and
receivables, etc.” in the statement of income and under
“Provisions for losses on guarantees” in the balance sheet.
Dividend
Dividend is recognised as a liability at the time of its adoption
by the Annual General Meeting. The proposed dividend for the
financial year is shown as a separate item in relation to equity.
Cash flow statement
The cash flow statement is presented according to the indirect
method and shows cash flows concerning operations,
investments and financing, and the Bank’s liquid assets at the
beginning and end of the year.
Cash flows concerning operating activities are compiled as the
operating result adjusted for non-cash operating items, change
in working capital and corporate tax paid. Cash flows
concerning investment activities comprise payments concerning
purchase and sale of companies, activities and the purchase,
development, improvement and sale, etc. of intangible and
tangible fixed assets. Cash flows concerning financing activities
comprise changes in the size or structure of the company’s
share capital, subordinate capital contributions and related
costs, purchase of own shares, and payment of dividend.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
55
Liquid assets comprise cash balances and demand deposits with
central banks and receivables from credit institutions with an
original duration of up to three months, as well as
uncollateralised securities which can be immediately converted
to cash funds.
Financial highlights and key figures
Financial highlights and key figures are presented in accordance
with the definitions and guidelines of the Danish Financial
Supervisory Authority.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
56
General
In accordance with Section 16 of the Order on the
management and control of banks, etc. the BANK of Greenland
must designate a risk officer who is responsible for risk
management at the Bank.
The Board of Directors of the BANK of Greenland have
assessed that the Bank’s size, simple structure and
uncomplicated activities do not justify a separate risk
management function. The risk management function is
anchored in the Executive Management.
The BANK of Greenland is exposed to various types of risk.
The objective of the Bank’s risk management policies is to
minimise the losses which may arise as a consequence of e.g.
unforeseen development in the financial markets. The Bank
works with a balanced risk profile, both in credit terms and on
the financial markets. The Bank solely uses derivative financial
instruments (derivatives) to cover risks on customer
transactions, or to reduce the Bank’s interest rate risk.
The BANK of Greenland continuously develops its tools for the
identification and management of the risks which affect the
Bank on a day-to-day basis. The Board of Directors determines
the overall framework and principles for risk and capital
management, and receives ongoing reports on the
development in risks and use of the allocated risk framework.
The day-to-day risk management is undertaken by the Credit
Department, with independent control by the Accounting
Department.
Credit risks
The most significant risks at the BANK of Greenland concern
credit risks. The Bank’s risk management policies are therefore
arranged in order to ensure that transactions with customers
and credit institutions always lie within the framework adopted
by the Board of Directors, and the expected level of security.
Policies have furthermore been adopted to limit the exposure
in relation to any credit institution with which the Bank has
activities.
Credit granting
The Bank’s Board of Directors has set a framework to ensure
that the Bank’s lending takes place to customers that, in view of
their solvency, earnings and liquidity, are able to fulfil their
obligations to the Bank. It is sought to maintain credit quality at
a high level, to ensure a stable basis for the future development,
and it is sought to achieve a balance between assumed risks and
the return achieved by the Bank.
Credit granting is based on responsible risk taking and risk
diversification, whereby risk exposure is matched to the
borrower’s circumstances.
Among other things:
• As a general rule, loans, etc. are only granted to customers
that are full customers of the Bank;
• As a general rule, loans, etc. to business customers are only
granted to customers with business activities in Greenland;
Financial risks and policies and targets for management of financial risks
DKK 1,000
2022
2021
Maximum credit exposure
Cash balances and demand deposits at central banks
1,396,401
1,434,027
Receivables from credit institutions and central banks
118,619
57,293
Loans and other receivables at amortised cost
4,353,585
3,783,681
Bonds at
fair value 1,156,821
1,100,975
Shares, etc.
120,063
138,902
Other assets, including derivative financial instruments
115,145
93,798
Off
-balance-sheet items
Guarantees
1,934,125
1,781,465
Drawn facilities
2,490,902
2,022,428
Exposure specification
Lending, cf. Note 13
4,353,585
3,783,681
Guarantees, cf. Note 25
1,934,125
1,781,465
Write
-downs and provisions on guarantees, cf. Note 13 188,045
182,042
Other adjustments
-26,767
-31,993
Gross exposure, cf. below
6,448,988
5,715,195
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
57
• As a general rule, loans, etc. to private customers are only
granted to customers resident in Greenland, or to
customers formerly resident in Greenland; and
• Loans, etc. to both private and business customers are
solely to customers with satisfactory creditworthiness.
Credit granting to customers with OIK (objective indication
of credit deterioration) or material indications of weakness
will only take place in exceptional cases. The BANK of
Greenland is, however, aware of its size and importance to
the local area and contributes to a minor extent to the new
establishment of small business enterprises with a
somewhat higher risk profile, and also supports existing
customers where it is assessed that the financial challenges
are of a temporary nature.
• Some financing, such as financing of activities abroad, project
financing and financing of investment products, is subject to
tighter monitoring, and may only be granted by the Bank’s
managing director or deputy managing director.
Risk diversification
The BANK of Greenland wishes to diversify its credit risk
between lending to private customers and lending to business
customers. The exposure to business customers may thus not
exceed 60% of the total exposure.
Risk diversification to industries with a reasonable spread across
sectors is also required. Lending to individual sectors exceeding
15% is thus not preferred, with the exception of “Real estate"
and "Completion of construction projects”, to which the overall
exposure may amount to up to 25%.
Standard terms
Business customers: Exposures can typically be terminated
without notice by the Bank. The customer is normally required
to provide the Bank with financial information on an ongoing
basis.
Private customers: The typical term of notice from the Bank is
two months. Financial information is normally required for new
loans, and changes to existing loans.
Figure 1
Lending and guarantee debtors by sectors
The geographical spread of the Bank’s lending and guarantees in
Greenland is distributed on the five main municipal towns
(primary), smaller towns (secondary), settlements and villages
(tertiary) and abroad (other), cf. Figure 3. According to the
Bank’s business model, lending and guarantees outside
2
0.0%
0.1%
0.4%
0.6%
2.3%
3.1%
8.4%
8.5%
9.1%
22.9%
2.3 Energy supply
2.7 Information and communication
2.2 Industry and extraction of minerals
2.8 Financing and insurance
2.10 Other business
2.1 Agriculture, hunting and forestry, and fishing
2.5 Trade
2.4 Building and construction i total
2.6 Transport, hotels and restaurants in total
2.9 Purchase and sale of real estate in total
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
58
Greenland are maximised at 10% of total lending and
guarantees.
Figure 3
Geographical spread of lending and guarantees
Authorisation procedures
Credits, loans and guarantees are authorised at various levels in
the Bank, depending on the exposures’ size, risk and type. On
financing a number of separate activities and on authorisation
for customers subject to value adjustment, the authorisation
procedure is stricter and, irrespective of size, authorisations can
only be made in the Bank’s central credit department, and in
some cases solely by the Bank’s managing director or deputy
managing director. Large exposures are authorised by the
Bank’s Board of Directors.
Monitoring
Management and monitoring of credit granting and compliance
with the Bank’s credit policy take place on a centralised basis in
the Bank’s credit department.
The Bank’s credit policy is complied with via review of the
authorisations at credit department level and higher, and via
random sample controls in the individual departments.
Collateral security
The BANK of Greenland wishes to have adequate collateral
security for its credit granting.
For financing, the collateral security primarily consists of:
• Mortgages on private residential properties, primarily in
Greenland;
• Mortgages on commercial properties for own use;
• Mortgages on rental properties (residential and
commercial);
• Mortgages on movable property, cars, boats, snow
scooters, operating equipment, etc.;
• Mortgages on fishing vessels;
• Mortgages on fishing rights;
• Mortgages on easily negotiable securities;
• Surety pledges;
• Assignments; and
• Mortgages on shares in the companies to which credit has
been granted
As a general rule, the valuation of the collateral security is based
on fair value.
• Mortgages on private residential properties located in the
towns in which the Bank has branches are estimated at 75%
of fair value.
• Mortgages on commercial properties located in the towns
in which the Bank has branches are estimated at 60% of fair
value;
• In the case of large property exposures, mortgages on
rental properties are assessed on the basis of rental
conditions, yield requirements, location, maintenance
standard, etc. The mortgage value is set at 60-75% of fair
value.
• Mortgages on properties outside the towns in which the
Bank has branches are not subject to valuation as collateral;
• Mortgages on movable property are generally assessed at
between 60 and 75% of fair value;
• Mortgages on fishing vessels are assessed at maximum 60%
of fair value;
• Mortgages on fishing rights are assessed at maximum 60%
of fair value;
• Mortgages on negotiable securities are assessed at between
50 and 90% of the official market value.
• Surety pledges from public authorities are subject to
valuation as collateral at nominal value; and
• Other security is not subject to valuation as collateral.
The “haircuts” made for the individual collateral are assessed to
be sufficient to cover the costs of acquisition and realisation of
the individual security.
There is no public property valuation in Greenland, and the
assessed valuations are therefore based on the Bank’s current
experience of market values for the trades completed.
89%
4%
3%
4%
Primary Secondary Tertiary Abroad
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
59
The BANK of Greenland is involved in 70-80% of all property
transactions in Greenland and therefore has a large body of
experience on which to base this assessment.
The Bank continuously assesses whether there have been
changes in the quality of security and other conditions as a
consequence of impairment or changes in practice concerning
collateral security. There have been no changes during the year
in the practice for the valuation of security, or the practice for
handling security.
Write-down of loans and other receivables and
provisions for guarantees and loan undertakings.
The calculation of the expected credit loss depends on
whether there has been a significant increase in the credit risk
since initial recognition. The calculation of write-downs adheres
to a model with three stages:
• Stage1 concerns assets for which there has been no
significant increase in credit risk. In this stage, the write-
downs equivalent to the expected 12-month credit loss are
calculated.
• Stage 2 concerns assets for which there has been a
significant increase in credit risk. In this stage, the write-
downs equivalent to the expected credit loss in the asset’s
lifetime are calculated.
• Stage 3 concerns credit-impaired assets. In this stage, the
write-downs are calculated on the basis of an individual
assessment of the credit loss in the asset’s lifetime.
During the accounting period there were no changes in
significant assumptions and assessment methods applied to the
compilation in connection with the transition to the changed
impairment rules on 1 January 2018.
Write-downs on loans and receivables are carried to an
adjustment account that is set off under lending, and provisions
for guarantees and non-utilised credit undertakings are
recognised as a liability. In the statement of income, write-
downs and provisions on guarantees and credit undertakings
are recognised collectively as write-downs on loans.
Division into stages
The division into stages is based on the BANK of Greenland’s
rating models in the form of PD models developed by BEC and
internal credit management. The following principles are the
basis for the division into stages 2 and 3.
Significant increase in credit risk (Stage 2)
Lending and other receivables are categorised according to
whether the probability of default (PD) within 12 months on
initial recognition is either under 1.0%, or 1.0% and above.
On assessment of the development in credit risk, it is assumed
that there has been a significant increase in the credit risk in
relation to the date of initial recognition when:
Under 1%
The probability of default (PD) during the remaining maturity
increases by 100%, and 12-month PD increases by 0.5
percentage point when PD on initial recognition was below 1%.
1% and higher
The probability of default (PD) during the remaining term to
maturity increases by 100% or the 12-month PD increases by
2.0 percentage points when PD on initial recognition was
above 1%. In addition, the credit risk is assessed to have
increased considerably if the borrower has been in arrears for
more than 30 days, without any special circumstances allowing
this to be disregarded.
If the relevant 12 months’ PD exceeds 5%, the exposure will
move to stage 2.
Financial assets for which a significant increase in the credit risk
has occurred are, however, placed in the weak part of stage 2
in the following situations:
An increase in PD for the expected remaining term to maturity
of 100%, or an increase in 12 months’ PD of 0.5% point, when
12 months’ PD on initial recognition was below 1% and the
current 12 months’ PD is 5% or higher. An increase in PD for
the expected remaining term to maturity of 100%, or an
increase in 12 months’ PD of 2.0% points, when 12 months’
PD on initial recognition was above 1% and the current 12
months’ PD is 5% or higher.
The financial asset has been overdrawn for more than 30 days
and the current 12-month PD is 5% or higher.
Credit-impaired assets (Stage 3)
Lending and other receivables measured at amortised cost, and
guarantees and credit undertakings, may be credit-impaired if
one or several or the following events have occurred:
• The borrower is in considerable financial difficulties.
• The borrower is in breach of contract, for example due to
failure to fulfil payment obligations for repayments and
interest.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
60
• When the Bank or other lenders grant the borrower an
easement of terms that would not have been considered if
the borrower was not in financial difficulties.
• When it is probable that the borrower will file for
bankruptcy or be subject to other financial restructuring.
• Lapse of an asset.
Furthermore, the loan is at the latest assessed to be credit-
impaired if the borrower has been in arrears for more than 90
days.
Significant lending is assessed individually for any indication of
credit impairment at each closure of the accounts. The Bank
makes an individual loss risk statement for exposures in stage 3,
where the risk mitigating collateral value amounts to more than
DKK 100,000, while other exposures are modelled. When
calculating stage 3 write-downs, the Bank does not use
payment series, so that write-downs are subject to prudent
assessment.
Definition of default
The determination of when a borrower has defaulted on its
obligations is decisive to the compilation of the expected credit
loss. The Bank considers a borrower to have defaulted on its
obligations if
• the borrower is in more than 90 days’ arrears for significant
elements of their obligations.
• It is unlikely that the borrower can repay the obligations in
full.
The assessment of whether a borrower is in arrears concerns
both overdrafts exceeding the fixed lines and failure to pay
either instalments or interest. The assessment of whether it is
unlikely that a borrower can fulfil its payment obligations is
based on both qualitative and quantitative indicators. A
qualitative indicator for business loans might be, for example,
whether there is any breach of covenants. Quantitative
indicators might, for example, be an assessment of whether a
borrower can fulfil its obligations for other loans, or is in
arrears for other loans.
Depreciation and write-downs
Write-downs in stages 1 and 2:
Calculation of the expected credit loss in stages 1 and 2 is
based on a write-down model. The write-down model is based
on the probability of default (PD), expected credit exposure at
default (EAD) and expected share of loss given default (LGD).
The model incorporates historical observations for the
individual inputs and also forward-looking information, including
macroeconomic conditions.
Determination of input to the write-down model
Input to the write-down model is based on the historical
information developed by the Bank’s data centre using statistic
models.
The probability of default (PD) is determined on the basis of
observed defaults over a period of time, reflecting an economic
cycle, after which the observed defaults are converted to an
estimated probability applying to a specific time (12-month
PD). Lifetime PD is compiled on the basis of 12-month PD
according to mathematical models and projections of 12-month
PD. This is based on expectations of the future and the
development in the loans.
The determination of credit exposure at default (EAD) is based
on the expected change in the exposure after the balance
sheet date, including the payment of interest and instalments,
and further drawing on the credit undertaking. Bankens EDB
Central’s determination of EAD is based on historical
information concerning expected changes in exposures during
the loans’ lifetime within the individual loan’s limits. Account is
thereby taken of the redemption profile, early redemptions and
changes in the use of credit facilities.
The expected loss given default (LGD) is estimated on the basis
of the difference between the contractual cash flows and the
cash flows which the Bank expects to receive after default,
including cash flows on realisation of security. The
determination of LGD is based on the expected collateral
values less costs of sales, as well as cash flows that a borrower
might pay in addition to collateral. Account is also taken of any
price reduction if the collateral is to be realised within a shorter
period. The expected cash flows are discounted at present
value. The present value is calculated for fixed-interest-rate
loans and receivables based on the originally-fixed effective
interest rate. For variable-interest-rate loans and receivables,
the current effective interest rate on the loan or receivable is
used.
Forward-looking macroeconomic scenarios
Forward-looking information is included in the calculation of
expected losses in the form of macroeconomic prognoses and
projections. The Bank uses a model that is developed and
maintained by LOPI – the Association of Local Banks, Savings
Banks and Cooperative Banks in Denmark.
The model is based on the determination of historical relations
between write-downs within a number of sectors and
industries, and a number of explanatory macroeconomic
variables. These relations are then subject to estimates of the
macroeconomic variables, based on prognoses from consistent
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
61
sources such as the Economic Council, Danmarks Nationalbank,
et al. whereby the prognoses generally extend two years ahead,
and include such variables as the increase in public
consumption, increase in GDP, interest, etc. The prognoses are
based on Danish figures. The Danish forecasts are currently
perceived to be applicable to conditions in Greenland, which is,
however, subject to some uncertainty – see also the section on
managerial estimates.
The expected write-downs are thereby calculated for up to
two years ahead within the individual sectors and industries,
while for maturities beyond two years linear interpolation is
made between the write-down ratio for year 2 and the write-
down ratio in year 10, where in model-related terms a “long-
term equilibrium” is assumed to occur, compiled as a structural
level from the prognoses. Maturities beyond ten years are in
model-related terms assigned the same write-down ratio as the
long-term equilibrium in year 10. Finally, the calculated write-
down ratios are transformed into adjustment factors that
correct the data centre’s estimates in the individual sectors and
industries. The institution makes adjustments to these, based on
own expectations of the future, and according to the
composition of the loans.
Managerial estimates
Both IFRS 9 and the Danish Executive Order on Financial
Statements state that the future outlook must be included in
the calculation of total write-downs. On each balance sheet
date the Bank therefore assesses the need for adjustments to
the expected credit losses, calculated on the basis of the
models applied in stages 1 and 2. This takes place on the basis
of the calculated write-downs, and reflects the management’s
assessment of a potentially greater risk on the Bank’s exposures
than is justified by the historical write-downs.
In both 2020 and 2021, the risk scenario was primarily linked
to the consequences of the Covid-19 pandemic and the
resulting uncertainties regarding the economic climate.
At the end of 2022, the managerial estimate is based primarily
on uncertainties concerning the model calculations, risk
assessment at sector level and differences between the
macroeconomic scenarios in Greenland and Denmark.
As a consequence of inflation, interest rate increases and
cyclical uncertainty, the BANK of Greenland has made a risk
assessment at industry level, where a general change in
creditworthiness at portfolio level, and the derived increased
impairment write-downs, are estimated. On this basis, the Bank
has allocated a managerial estimate of DKK 41.8 million,
compared to a supplement of DKK 38.4 million in 2021. This
also includes a method risk supplement.
Write-downs in stage 3:
Write-downs on credit-impaired loans are compiled as the
expected loss based on a number of possible outcomes for the
borrower’s situation and the Bank’s credit handling. The
expected loss is calculated by weighting together the calculated
loss related to each scenario, based on the probability of the
scenario occurring. For each scenario, the write-down is
compiled on the basis of the difference between the accounting
value before write-down and the present value of the expected
future payments on the loan.
For the calculation of current value, fixed-interest-rate loans
and receivables are subject to the effective interest rate
originally determined. For variable-interest-rate loans and
receivables, the current effective interest rate on the loan or
receivable is used.
The general rule is that the write-down comprises the
exposure, less calculated security.
Write-offs
Financial assets are written off in full or in part if there is no
longer any reasonable expectation that the outstanding amount
will be paid. On write-off, the asset will cease to be carried to
the balance sheet in full or in part.
The time at which there is no longer assessed to be any
reasonable expectation that outstanding amounts will be paid
in, is based on the concrete circumstances of the individual
borrower. This might be a lack of earnings, equity, etc.
Before write-off is made, the borrower will have been subject
to an extended collection process, with attempts to achieve
voluntary payment arrangements, realisation of assets, etc.
After write-off has taken place, the debt collection process will
continue. In the case of companies, typically until the borrower
has completed bankruptcy proceedings, composition with
creditors, etc. For private individuals, continued attempts are
made to establish voluntary payment schemes and possible legal
collection.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
62
Exposure and write-downs by sector
Gross
exposure
Ratio of
total
gross
exposure
Total
write-downs
Ratio of
total
write-downs
DKK 1,000
DKK 1,000
2022
Public
500,230 8
1,157
1
Business:
Agriculture and fisheries
200,690 3
6,484
4
Industry and extraction of minerals
25,860 0
1,253
1
Energy supply
1,610 0
324
0
Construction and civil engineering
550,646 9
32,758
17
Trade
544,901 8
15,708
8
Transport, restaurants and hotels
586,635 9
13,848
7
Information and communication
6,719 0
558
0
Financing and insurance
37,392 1
253
0
Real estate
1,476,718 23
27,351
14
Other business
147,725 2
17,267
9
Business in total
3,578,896 55
115,804
60
Private
2,369,862 37
75,905
39
In total
6,448,988
100
192,866
100
Gross
exposure
Ratio of
total
gross
exposure
Total
write-downs
Ratio of
total
write-downs
DKK 1,000
DKK 1,000
2021
Public
355,524 6
1,915
1
Business:
Agriculture and fisheries
181,997 3
5,628
3
Industry and extraction of minerals
15,874 0
1,472
1
Energy supply
500 0
266
0
Construction and civil engineering
479,672 8
29,685
16
Trade
378,224 7
12,002
7
Transport, restaurants and hotels
542,656 10
20,509
11
Information and communication
11,518 0
308
0
Financing and insurance
39,768 1
479
0
Real estate
1,310,079 23
17,533
9
Other business
126,285 2
19,976
11
Business in total
3,086,573 54
107,858
58
Private
2,273,098
40
77,070
41
In total
5,715,195 100
186,843
100
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
63
Credit exposure distributed on classification, creditworthiness and stages
Classification
The Bank of Greenland
Classification
Danish
Financial
Supervisory
Authority
Stage 1
TDKK
Stage 2
TDKK
Stage 2SVAG
TDKK
Stage 3
TDKK
In total
TDKK
Rating 1
– 3
3/2A
3,601,621
66,939 0
60
3,668,620
Rating 4
– 8
2B
1,638,259
435,055 278,494
132
2,351,940
Rating 9
– 10
2C
0
0 223,120
0
223,120
Rating 11
1
0
789 3,896
200,623
205,308
In total
5,239,880
502,783 505,510
200,815
6,448,988
Classification BANK of Greenland
• Ratings 1-3 correspond to the Danish FSA’s creditworthiness scale 3/2A – Customers with undoubtedly good creditworthiness
and customers with normal creditworthiness.
• Ratings 4-8 correspond to the Danish FSA’s creditworthiness scale 2B – Customers that do not fulfil the criteria in 1-3, but
which on the other hand do not have significant signs of weakness. The debt servicing ability is good, although the key financial
indicators may be weak.
• Ratings 9-10 Customers with significant signs of weakness, but without OIK occurring. The customer’s debt servicing ability is
less satisfactory and the customer is economically vulnerable/has weak key indicators.
• Rating 11 Customers with OIK. Customers with and without loss risk compilation (write-down). The debt servicing ability is
poor or non-existent, and there is an increased risk of losses.
Credit exposure to industries broken down by stages:
Stage 1
TDKK
Stage 2
TDKK
Stage
2SVAG TDKK
Stage 3
TDKK
In total
TDKK
Public
496,782
3,448
0
0
500,230
Business:
Agriculture and fisheries
168,019
12,969
11,250
8,452
200,690
Industry and extraction of
minerals
18,867
3,206
2,870
916
25,859
Energy supply
478
735
0
397
1,610
Construction and civil
engineering
396,548
59,440
59,150
35,508
550,646
Trade
448,897
27,965
55,741
12,298
544,901
Transport, restaurants and hotels
457,812
44,405
79,833
4,585
586,635
Information and communication
4,497
1,488
702
32
6,719
Financing and insurance
36,790
603
0
0
37,393
Real estate
1,195,158
122,632
157,182
1,746
1,476,718
Other business
82,833
11,414
17,532
35,946
147,725
Business in total
2,809,899
284,857
384,260
99,880
3,578,896
Private
1,933,199
214,478
121,250
100,935
2,369,862
In total
5,239,880
502,783
505,510
200,815
6,448,988
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
64
Reason for value adjustment of exposures in stage 3
Credit exposures
before write-
downs
Write-downs
Accounting value
Collateral
security
Maximum credit
risk
2022
Bankruptcy
198
198
0
0
0
Collection
19,645
15,599
4,046
3,631
415
Financial difficulties
180,972
76,452
104,520
88,115
16,405
In total
200,815
92,249
108,566
91,746
16,820
2021
Bankruptcy
268
268
0
0
0
Collection
20,609
15,665
4,944
3,918
1,026
Financial difficulties
141,393
74,029
67,364
51,300
16,064
In total
162,270
89,962
72,308
55,218
17,090
Credit quality of exposures in general
Arrears or overdrafts > DKK 1,000
In DKK 1,000
2022
2021
0
-30 days 794
1,284
31
-60 days 408
743
61
-90 days 210
203
> 90 days
475
229
In total
1,887
2,459
The BANK of Greenland applies a rating model that divides borrowers into 11 categories. The division is according to criteria such
as the borrower’s earnings, assets, account behaviour, etc. The 11 categories are then assigned to the Danish FSA’s
creditworthiness scale.
-downs distributed by creditworthiness
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Exposures' OIK recognised
in balance sheet (FT-1)
Exposures with significant
signs of weakness (FT-2c)
Exposures with slightly
diminished
creditworthiness (FT-2b)
Exposures with normal
creditworthiness (FT-2a)
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
65
The BANK of Greenland has no “non-impaired loans or
guarantees” for which the loan terms have been eased as a
consequence of a borrower’s financial difficulties.
Market risk
The BANK of Greenland’s market risk is managed by fixed
limits for a large number of risk measurements. Monitoring of
market risk and of compliance with the adopted framework is
undertaken on a daily basis by the Bank’s Markets Department.
The Executive Management receives reports on a daily basis if
risks are close to limits. The Board of Directors receives
reports on the development in market risks on a monthly basis.
The reports include the month-end value and are prepared by
the Bank’s Accounting Department. The Accounting
Department also prepares reports on a random day of the
month, which are reported to the Executive Management.
Interest rate risk
The Board of Directors’ guidelines for the Executive
Management include a maximum interest rate risk for the Bank.
The Bank’s objective is to hold the interest rate risk below 3%.
The interest rate risk is calculated in accordance with the
Danish Financial Supervisory Authority’s guidelines.
The Bank has set a minor limit of DKK 50 million for
uncovered lending at fixed interest rates. Besides this, all of the
Bank’s lending at fixed interest rates is covered.
The BANK of Greenland has outsourced the portfolio
management of the Bank’s bond holdings to an external
portfolio manager. The portfolio manager is subject to the
aforementioned risk framework and works on the basis of a
duration of 1.25-1.75 years. The Bank has entered into interest
rate swaps for a total of DKK 10 million to partly cover the
interest rate risk on the Bank's bond holdings. Reference is
made to Notes 29 and 31.
Share risk
The Board of Directors’ guidelines for the Executive
Management include a maximum shareholding (excluding sector
shares) for the risk which the Bank may assume. The Bank
currently does not hold listed shares. Reference is made to
Note 15.
Currency risk
The BANK of Greenland has adopted guidelines for the
currencies in which exposure is permitted, and the maximum
exposure for each currency. All significant currency exposures
are covered. The Bank had no significant currency exposures at
the end of 2022. Reference is made to Note 28 for further
information on currency risks.
Liquidity risk
The BANK of Greenland’s liquidity reserves are managed by
maintaining sufficient liquid funds, ultra-liquid securities (levels 1
and 2), and the ability to close market positions. The liquid
reserves are determined on the basis of an objective to ensure
stable liquid reserves. The Bank seeks to have a constant LCR
ratio at the level of 175-225. LCR for the BANK of Greenland
is calculated at 220.5% as at the end of 2022. Reference is also
made to key figures for LCR, as well as the key figures for
lending as a ratio of deposits in Note 34.
Operational risk
In order to reduce losses due to operational risks, the Bank has
drawn up policies and written procedures. The Bank’s policy is
to continuously limit the operational risks, of which the
following are examples. The Bank’s procedures are reviewed
and reassessed at least once every other year, unless there are
changes in a procedure due to e.g. legislative changes,
procedural changes, internal rules, etc. Operational events that
have, or could have, resulted in a loss of a certain size, are
registered and, at least once a year, the Board of Directors
receives a report on operational events. Significant individual
events are also reported.
By ensuring a clear division of organisational responsibility, with
the necessary and adequate separation of functions, the
operational risks can be limited.
The BANK of Greenland considers dependence on key
employees to be a focus area. Written procedures have been
drawn up in order to minimise dependence on individuals.
There is continuous focus on reducing dependence on
individual persons in key roles in the Bank, and the Bank
continuously assesses the outsourcing of operating areas that
are not important to the Bank’s competitiveness. The Bank also
has great focus on continuously improving the internal and
external recruitment basis. The BANK of Greenland wishes to
have a strong control environment and has therefore also
drawn up a number of standards for how control is to take
place.
The BANK of Greenland has drawn up policies and emergency
plans for physical disasters and IT outages. IT outages may
disrupt operations. In the case of a geographically limited
outage in the branch network, the other branches will be able
to continue operations. For any outage at the head office,
emergency plans and contingency measures have been drawn
up, and it will be possible to establish temporary operations
within a short time from a back-up centre (Centre II)
established in external premises. Customer-oriented temporary
operations can be established within one day.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
66
The Bank’s IT operations take place at Bankernes EDB Central
(BEC). The Bank closely follows the instructions and
recommendations received, just as the Bank does not
undertake independent development of IT systems.
The BANK of Greenland has entered into cooperation on
internal auditing with Arbejdernes Landsbank A/S and the Bank
has also appointed a legal staff member as compliance officer.
This will help to ensure that the Bank complies with both
external and internal requirements at all times.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
67
3. Interest income
Receivables from credit institutions and central banks
1,150
0
Lending and other receivables
218,531
220,044
Bonds
7,412
3,746
Total interest income
227,093
223,790
4. Negative interest income
Receivables from credit institutions and central banks
-1,074
-11,008
Foreign exchange, interest rate, equity, commodity and other contracts, as well as derivative
financial
instruments -750
-2,025
Total negative interest
-1,824
-13,033
5. Interest expenses
Credit institutions and central banks
0
6
Deposits and other liabilities
3,040
988
Issued bonds
0
25
Total interest expenses
3,040
1,019
6. Positive interest expenses
Credit institutions and central banks
-11
0
Deposits and other liabilities
-20,984
-24,383
Total positive interest expenses
-20,995
-24,383
7. Fees and commission income
Securities and securities accounts
8,629
6,359
Payment settlement
38,042
39,654
Loan transaction fees
5,589
5,817
Guarantee commission
32,228
30,718
Other fees and commission
22,308
22,246
Total fee and commission income
106,796
104,794
8. Value adjustments
Lending at fair value
-7,577
-6,670
Bonds
-49,488
-6,473
Shares
4,486
12,922
Currency
5,473
4,519
Foreign exchange, interest rate, equities, commodities and other contracts, as well as
derivative financial instruments
7,750
6,921
Assets connected to pool schemes
-46,125
40,126
Deposits in pool schemes
46,125
-40,126
Total value adjustments
-39,356
11,219
Notes 3-8
The Bank has not distributed net interest and fee income and value adjustment on areas of activity and geographical markets. It is
assessed that there are no significant deviations between the Bank’s activities and geographical areas, and no segment data is
therefore disclosed.
DKK 1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
68
DKK 1,000
2022
2021
9. Staff and administration expenses
Staff expenses
Salaries 91,485
83,188
Other staff expenses 2,271
2,302
Pensions 10,979
10,535
Social security expenses 484
535
In total
105,219
96,560
Other administration expenses
89,837
89,825
The average number of employees in the financial year, converted to full
-time employees 137.4
137.7
Of which salaries and remuneration to the Board of Directors and the Executive Management
5,788
5,583
Five other employees (2019: four employees) whose activities have a significant influence on
the Bank’s risk profile:
Contractual remuneration, including free car and other benefits
5,449
4,982
Pension
675
621
10. Audit fees
Statutory audit of the annual financial statements
677
650
Other declarations with assurance
114
87
Tax advisory services
21
20
Other services
30
0
Total fees to the auditors elected by the Annual General Meeting, who perform
the statutory audit
842
757
Non
-auditing services are provided by Deloitte, Statsautoriseret Revisionspartnerselskab and
comprise fees for mandatory declarations and general tax advisory.
11. Tax on the profit for the year
Tax on the profit for the year is calculated as follows:
Current tax
19,569
23,026
Deferred tax
-9,760
7,145
Change in
deferred tax as a consequence of a change in the corporate tax supplement -528
-4,099
Adjustment to deferred tax prior year
1,080
0
In total
10,361
26,072
Tax on the profit for the year is broken down as follows:
Calculated 26.5% tax on the profit for the year
28,915
42,109
Change in deferred tax as a consequence of a change in the corporate tax supplement
-528
-4,099
Adjustment to deferred tax prior year
1,080
0
Other adjustments
-26
-13
Tax value of
dividend deduction -19,080
-11,925
In total
10,361
26,072
Effective tax rate
9.5%
16.4%
Corporate tax paid in 2021 amounts to TDKK 22,804
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
69
DKK 1,000
2022
2021
12. Receivables from credit institutions and central banks
On demand 60,619
51,864
Up to and including 3 months
0
5,429
Over 3 months and up to and including 1 year
40,000
0
Over 1 year and up to and including 5 years
18,000
0
In total
118,619
57,293
Receivables from credit institutions 118,619
57,293
In total
118,619
57,293
13. Lending
Write-downs on loans, guarantees and non-utilised credit facilities
New write
-downs concerning new facilities during the year 20,471
29,455
Reversal of
write-downs concerning redeemed facilities -17,415
-25,917
Net write
-downs during the year as a consequence of changes in the credit risk 3,146
-723
Losses without preceding write
-downs 593
647
Received for claims previously written off
-2,272
-1,925
Recognised in the statement of income
4,523
1,537
Lending at amortised cost
4,353,585
3,783,681
Total lending by remaining term to maturity:
On demand
1,273,564
868,437
Up to and including 3 months
150,106
173,599
Over 3 months and up to and including 1 year
589,010
611,889
Over 1 year and up to and including 5 years
1,317,266
1,286,814
Over 5 years
1,023,639
842,942
In total
4,353,585
3,783,681
DKK 1,000
Stage 1
Stage 2
Stage 3
Total
Fejl! Henvisningskilde ikke fundet. LendingFejl! Henvisningskilde ikke fundet.
- continued
Write-downs on loans
31.12.2022
Start of the period
21,314
67,951
85,104 174,369
New write
-downs concerning new facilities during the year 4,545
9,913
4,518 18,976
Reversal of write
-downs concerning redeemed facilities -1,757
-3,774
-11,039 -16,570
Change in
write-downs at the beginning of the year –
transfer to stage 1
17,776
-14,283
-3,493 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-1,072
6,416
-5,344 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
-54
-4,530
4,584 0
Net write
-downs as a consequence of changes in the credit risk -11,926
3,013
12,326 3,413
Previously written down, now finally lost
-3,445 -3,445
Interest on written
-down facilities
3,266 3,266
Write-downs in total
28,826
64,706
86,477
180,009
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
70
DKK 1,000
Stage 1
Stage 2
Stage 3
Total
Write-downs on guarantees
31.12.2022
Start of the period
744
2,071
4,858 7,673
New write
-downs concerning new facilities during the year 507
547
252 1,306
Reversal of write
-downs concerning redeemed facilities -2
-36
-179 -217
Change in write
-downs at the beginning of the year –
transfer to stage 1
1,505
-1,370
-135 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-68
1,036
-968 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
-3
-86
89 0
Net write
-downs as a consequence of changes in the credit risk -1,444
-1,137
1,855 -726
Write
-downs in total 1,239
1,025
5,772
8,036
Write-downs on non-utilised drawing rights
31.12.2022
Start of the period
1,203
1,037
2,561 4,801
New write
-downs concerning new facilities during the year 25
80
84 189
Reversal of write
-downs concerning redeemed facilities -231
-166
-231 -628
Change in write
-downs at the beginning of the year –
transfer to stage 1
557
-555
-2 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-41
724
-683 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
-1
0
1 0
Net write
-downs as a consequence of changes in the credit risk -1,014
-573
2,046 459
Write
-downs in total 498
547
3,776
4,821
Write-downs on loans
31.12.2021
Start of the period
14,202
71,617
86,174 171,993
New write
-downs concerning new facilities during the year 5,424
13,766
7,459 26,649
Reversal of
write-downs concerning redeemed facilities -3,079
-11,891
-8,562 -23,532
Change in write
-downs at the beginning of the year – 19,607
-11,812
-7,795 0
transfer to stage 1
Change in write
-downs at the beginning of the year – -1,397
2,581
-1,184 0
transfer to stage 2
Change in write
-downs at the beginning of the year – -59
-1,148
1,207 0
transfer to stage 3
Net write
-downs as a consequence of changes in the credit risk -13,384
4,838
10,957 2,411
Previously written down, now finally lost
0
0
-6,975 -6,975
Interest on written
-down facilities 0
0
3,823 3,823
Write
-downs in total 21,314
67,951
85,104
174,369
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
71
Write-downs on guarantees
31.12.2021
Start of the period
554
655
8,681 9,890
New write
-downs concerning new facilities during the year 342
677
865 1,884
Reversal of write
-downs concerning redeemed facilities -5
-4
-125 -134
Change in write
-downs at the beginning of the year – 534
-188
-346 0
transfer to stage 1
Change in write
-downs at the beginning of the year – -17
4,051
-4,034 0
transfer to stage 2
Change in write
-downs at the beginning of the year – -2
-3
5 0
transfer to stage 3
Net write
-downs as a consequence of changes in the credit risk -662
-3,117
-188 -3,967
Write-downs in total
744
2,071
4,858
7,673
Write-downs on non-utilised drawing rights
31.12.2021
Start of the period
746
239
4,312 5,297
New write
-downs concerning new facilities during the year 769
151
2 922
Reversal of write
-downs concerning redeemed facilities -273
-48
-1,930 -2,251
Change in write
-downs at the beginning of the year – 159
-107
-52 0
transfer to stage 1
Change in write
-downs at the beginning of the year – -35
58
-23 0
transfer to stage 2
Change in write
-downs at the beginning of the year – 0
0
0 0
transfer to stage 3
Net write
-downs as a consequence of changes in the credit risk -163
744
252 833
Write
-downs in total 1,203
1,037
2,561
4,801
DKK 1,000
2022
2021
14. Bonds at fair value
Mortgage
-credit bonds 1,156,821
1,100,975
In total
1,156,821
1,100,975
Of which nominal TDKK 50,000 deposited as security for debt to Danmarks Nationalbank
15. Shares, etc.
Shares/unit trust certificates listed on
Nasdaq OMX Copenhagen
0
25,123
Unlisted shares included at fair value
120,063
113,779
Reassessed value, year-end
120,063
138,902
DKK 1,000
Stage 1
Stage 2
Stage 3
Total
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
72
16. Head office properties
Reassessed value,
beginning of year 247,292
229,650
Additions during the year, including improvements
9,703
20,533
Disposals during the year
0
-2,771
Write
-offs -5,056
-4,885
Value changes recognised in other comprehensive income
32,030
4,346
Value
changes recognised in the statement of income 401
419
Reassessed value, year
-end 284,370
247,292
There is no public property valuation in Greenland.
In 2022, to support the assessment of the valuation, an independent expert assessment of the
market value of the Bank's domicile property and multiple staff accomodation in Nuuk was
obtained. The total change in value amounts to TDKK 32,431.
No expert ass
essment was obtained for the assessment of the Bank's other domicile
properties.
17. Other tangible assets
Cost, beginning of year
56,637
54,578
Additions during the year, including improvements
2,070
2,460
Disposals during the year
-27,306
-401
Cost, year
-end 31,401
56,637
Depreciation and write
-downs, beginning of year 49,985
47,722
Depreciation for the year
2,664
2,548
Reversal of depreciation concerning disposals
-27,255
-285
Depreciation and
write-downs, year-end 25,394
49,985
Accounting value, year
-end 6,007
6,652
Of disposals TDKK 26,850 are outphased assets.
18. Assets connected to pool schemes
Investment associations
394,308
359,866
Non
-invested funds 268
671
In total
394,576
360,537
19. Debt to credit institutions and central banks
On demand
22,598
13,145
In total
22,598
13,145
Debt to central banks
19,475
13,145
Debt to credit institutions
3,123
0
In total
22,598
13,145
DKK 1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
73
20. Deposits and other liabilities
On demand
5,241,972
4,826,448
Over 3 months and up to and including 1 year
266,021
127,916
Over 1 year and up to and including 5 years
18,000
0
Over 5 years
416,486
409,507
In total
5,942,479
5,363,871
On demand
5,241,972
4,826,448
On terms of notice
442,216
294,802
Special deposit conditions
258,291
242,621
In total
5,942,479
5,363,871
21. Issued bonds at amortised cost
Bond issue
74,563
49,642
In total
74,563
49,642
Distribution in remaining duration
Over 1 year and up to and including 5 years
74,563
49,642
In total
74,563
49,642
Loan raised as Senior Non
-Preferred, nominally 50,000
50,000
The loan was raised as Senior Non
-Preferred on 27 October 2021 and falls due for full
redemption on 27 October 2026. The Bank has the option of early redemption as from 27
October 2025.
Loan raised as Senior Non
-Preferred, nominally 25,000
The loan was raised as Senior Non
-Preferred on 2 September 2022 and falls due for full
redemption on 2 September 2027. The Bank has the option of early redemption as from 2
September 2026.
22. Provisions for deferred tax
The year’s changes in deferred tax can be summarised as follows:
Deferred tax, beginning of year
68,326
64,128
The year’s deferred tax recognised in the statement of income for the year
-9,760
7,145
Adjustment of deferred tax concernin
g equity items 8,008
1,152
Adjustment to deferred tax prior year
1,080
0
Change in deferred tax as a consequence of a change in the corporate tax supplement
-528
-4,099
In total
67,126
68,326
Deferred tax concerns:
Head
office properties 57,614
49,693
Operating equipment
512
633
Proposed dividend for the financial year
9,000
18,000
In total
67,126
68,326
DKK
1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
74
23. Subordinated debt
Capital certificate as below
24,708
0
In total
24,708
0
Subordinated debt included in the capital base according to CRR
24,708 0
Loan raised as subordinated debt, nominally
25,000
Interest rate, fixed rate
6.197%
The loan was raised on 2 September 2022 and falls due for full redemption on 2
September
2032. The Bank has the option of early redemption as from 2 September 2027.
24. Share capital
The Bank’s share capital consists of 1,800,000 shares of DKK 100. The shares are paid-up in full. The shares are not
divided into classes, and no shares entail special rights. There have been no changes in the share capital in recent years.
Own shares
Number of own shares
0
0
The following hold more than 5% of the Bank’s share capital:
NALIK Ventures A/S
Nuuk
15.26%
NunaFonden
Nuuk
13.98%
AP Pension Livsforsikringsaktieselskab
Copenhagen
12.87%
BETRI P/F
Thorshavn
9.88%
LB Forsikring
Copenhagen
6.33%
Kim B. Pedersen
Snevre
5.00%
25. Capital statement
Credit risk
4,619,420
4,070,758
CVA risk
13,892
1,720
Market risk
238,978
204,615
Operational risk
628,793
639,644
Total risk exposure
5,501,083
4,916,737
Equity
1,318,592
1,267,911
Proposed dividend, accounting effect
-27,000
-52,920
Framework for ratio of own shares
-10,620
-10,764
Deductions for prudent valuation
-1,568
-1,490
Deductions for Non
-Performing Exposures -3,842
-1,379
Actual core capital
1,275,562
1,201,358
Supplementary capital
24,708
0
Capital base
1,300,270
1,201,358
Actual core capital ratio
23.2
24.4
Capital ratio
23.6
24.4
Statutory requirement of actual core capital ratio (excluding capital
reserve buffer) 4.5
4.5
Statutory capital ratio requirements
8.0
8.0
DKK 1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
75
26. Contingent liabilities
Mortgage finance guarantees
989,198
942,401
Registration and remortgaging guarantees
300,180
306,503
Other guarantees
644,747
532,561
In total
1,934,125
1,781,465
The Bank is a member of BEC (BEC Financial Technologies a.m.b.a.). On any withdrawal the Bank will be obliged to pay
a withdrawal fee to BEC equivalent to the preceding five years’ IT costs amounting to TDKK 289,617 t.kr. (2021: TDKK
259,876).
Like the rest of the Danish banking sector, the Bank is obliged to pay in contributions to the Settlement and Guarantee
Capital scheme.
27. Legal cases
The Bank is regularly a party in lawsuits and the outcome of these would not affect the Bank’s financial position.
28. Currency exposure
Assets in foreign currency, in total
47,633
41,737
Liabilities in foreign currency, in total
41,874
32,540
Exchange
-rate indicator 1 5,759
9,799
Exchange
-rate indicator 1 as a ratio of core capital 0.4
0.8
Exchange
-rate indicator 2 113
83
29. Interest risk rate
The Bank solely has fixed
-interest-rate assets in Danish kroner.
Interest rate risk for debt instruments, etc.
15,030
14,511
30. Related parties
Related parties comprise the Bank’s Board of Directors and Executive Management, and their
related parties. The BANK of Greenland has no related parties with a controlling influence.
The size of loans to, and mortgages, surety or guarantees and r
elated pledges, for members of
the Bank’s Executive Management and Board of Directors
Executive management
100
100
Board of Directors, including members elected by the employees
5,867
4,391
Pledges:
Executive
Management 0
0
Board of Directors, including members elected by the employees
2,906
2,192
Significant terms:
Exposures with members of the Bank’s Board of Directors are entered into on normal
business terms.
Exposures with staff representatives on the Bank’s Board of Directors are entered into on
personnel terms. For members of the Board of Directors elected at the Bank’s Annual General
Meeting, there are no engagements with settled rates.
The Board of Directors’ and Executive Management’s holdings of shares in GrønlandsBANKEN
A/S compiled in accordance with the insider rules (number).
Board of Directors
- Kristian Frederik Lennert 10
10
Board of Directors
- Yvonne Jane Poulsen Kyed 10
10
Board of Directors
- Peter Angutinnguaq Wistoft 81
81
Executive
Management - Martin Birkmose Kviesgaard 1,455
1,455
DKK 1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
76
31. Derivative financial instruments
Loans at fixed interest rates covered with
interest swaps
The BANK of Greenland uses derivatives to hedge the interest rate risk on fixed
-interest assets
and liabilities which are measured at amortised cost. On the fulfilment of certain criteria, the
hedging is treated as hedging of fair
value in the accounts. The interest rate risk on the hedged
assets and liabilities is recognised at fair value as a value adjustment of the hedged items. If the
criteria for hedging are no longer fulfilled, the accumulated value adjustment of the hedged it
em
is amortised over the remaining term to maturity.
Lending
Amortised/nominal value
79,642
92,488
Accounting value
79,577
105,741
Covered with interest rate swap
Synthetic principal/nominal value
66,048
80,631
Accounting value
5,902
1,675
Lending at fixed interest rates without cover
Amortised/nominal value
16,132
19,487
Accounting value
16,217
21,719
In addition, the BANK of Greenland has entered into an interest rate swap totalling DKK 10
million, for partial cover of the interest rate risk on the Bank’s bond portfolio.
Nominal value
Positive
market value
Negative
market value
Net
market value
2022
Interest rate contracts
Swaps
76,049 6,002 -116 5,886
Forwards/Futures, purchase
-6,869
-93
-93
Forwards/Futures, sale
6,869 90
90
In total
76,049 6,092 -209 5,883
Share contracts
Spot, purchase
4
4
-1
3
Spot, sale
4 1 -4 -3
In total
8 5 -5 0
In total
76,057 6,097 -214 5,883
2021
Currency contracts
Spot
602
0
0
0
Interest rate contracts
Swaps
90,631 262 -2,468 -2,206
Share contracts
Spot, purchase
3
10
-3
7
Spot, sale
3 3 -10 -7
In total
6 13 -13 0
In total
91,239
275
-2,481
-2,206
DKK 1,000
2022
2021
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
77
Derivative financial instruments - continued
Term structure by remaining term to maturity
Up to and including 3 months
Over 3 months
Up to and including 1 year
Nominal
value
Net
market value
Nominal
value
Net
market value
2022
Interest rate contracts
Swaps
93
0
16,333
18
Forwards/Futures, purchase
-6,869
-93
0
0
Forwards/Futures, sale
6,869
90
0
0
In total
93
-3
16,333
18
Share contracts
Spot, purchase
4 3
0
0
Spot, sale
4 -3
0
0
In total
8 0
0
0
In total
101 -3
16,333
18
Over 1 year
Up to and including 5 years Over 5 years
Nominal
value
Net
market value
Nominal
value
Net
market value
Interest rate contracts, swaps
36,282 1,521
23,341
4,347
In total
36,282
1,521
23,341
4,347
Up to and including 3 months
Over 3 months
Up to and including 1 year
Nominal
value
Net
market value
Nominal
value
Net
market value
2021
Interest rate contracts
Interest rate contracts, swaps
0 0
456
-12
Currency contracts
Currency contracts, spot
602 0
0
0
Share contracts
Spot, purchase
3 7
0
0
Spot, sale
3 -7
0
0
In total
6 0
0
0
In total
608
0
456
-12
Over 1 year
Up to and including 5 years
Over 5 years
Nominal
value
Net
market value
Nominal
value
Net
market value
Interest rate contracts, swaps
50,396 -1,286
39,779
-908
In total
50,396
-1,286
39,779
-908
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
78
Fair value is the amount at which a financial asset can be traded,
or the amount at which a financial liability can be redeemed,
between qualified, willing and independent parties. The fair
value may be the net book value, if the net book value is
calculated on the basis of underlying assets and liabilities
measured at fair value.
The following three levels of valuation categories can be used
to compile the fair value:
Level 1: Listed prices in an active market for the same type
of financial instruments, i.e. with no change in form
or structure.
Level 2: Listed prices in an active market for similar assets or
liabilities, or other valuation methods in which all
significant input is based on observable market data.
Level 3: Valuation methods whereby any significant input is
not based on observable market data.
Transfers are made between the categories if an instrument’s
classification on the balance sheet date differs from its
classification at the beginning of the financial year. However,
changes during the period do not reflect changes in the credit
risk.
For listed shares and bonds in levels 1 and 2, the fair value is set
according to the listed prices and market data on the balance
sheet date.
Shares in level 3 comprise sector shares in companies with
which there is cooperation on products, payment settlement
and
administration, and are measured at estimated fair value. The
estimated fair value is based primarily on the prices at which
the capital interests could be traded in accordance with the
shareholder agreements, if they were divested at the balance
sheet date. Determining these shares’ fair value is subject to
uncertainty. For other unlisted shares for which observable
input is not immediately available, the valuation is based on
estimates which include information from the companies’
accounts.
For loans, the write-downs are assessed to correspond to the
changes in credit quality. Differences from fair values are
assessed to be fees and commission received which do not fall
due for payment until after the end of the financial year, and
for fixed-interest-rate loans with the addition of the interest-
rate-level dependent value adjustment, which is calculated by
comparing the current market interest rate with the nominal
interest rates for the loans.
The fair value for receivables from credit institutions and
central banks is determined according to the same method as
for loans, although the Bank has not currently made any write-
downs for receivables from credit institutions and central banks.
For variable-interest-rate financial liabilities such as deposits and
debt to credit institutions measured at amortised cost, the
difference from fair values is assessed to be interest payable
that does not fall due for payment until after the end of the
financial year.
For fixed-interest-rate financial liabilities such as deposits and
debt to credit institutions measured at amortised cost, the
difference from fair value is assessed to be interest payable that
does not fall due for payment until after the end of the financial
year, and the interest-rate-level dependent value adjustment.
Fair value of financial instruments
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
79
DKK 1,000
Listed
prices
Level 1
Observable
prices
Level 2
Non-
observable
prices
Level 3
In total
2022
FINANCIAL ASSETS
Bonds
1,156,821 0
0
1,156,821
Shares
0 0
120,063
120,063
Head office properties
0 0
284,370
284,370
Positive market value of derivative financial instruments
0 6,097
0
6,097
In total
1,156,821 6,097
404,433
1,567,351
FINANCIAL LIABILITIES:
Negative market value of derivative financial instruments
0 215
0
215
In total
0 215
0
215
DKK 1,000
Listed
prices
Level 1
Observable
prices
Level 2
Non-
observable
prices
Level 3
In total
2021
FINANCIAL ASSETS
Bonds
1,100,975 0
0
1,100,975
Shares
25,123 0
113,779
138,902
Head office properties
0 0
247,292
247,292
Positive market value of derivative financial instruments
0 275
0
276
In total
1,126,098 275
361,071
1,487,445
FINANCIAL LIABILITIES:
Negative market value of derivative financial instruments
0 2,481
0
2,482
In total
0
2,481
0
2,482
DKK 1,000
2022 2021
2022
2021
Financial
instruments recognised at amortised cost: Amort. cost. Fair value
Amort. cost.
Fair value
Receivables from credit institutions and central banks
118,619 118,616
57,293
57,225
Lending and other receivables
4,353,585 4,386,436
3,783,681
3,810,803
Liabilities to credit institutions and central banks
22,598 22,598
13,145
13,145
Deposits and other liabilities
5,942,479 5,941,824
5,363,871
5,363,183
Derivative financial instruments:
Interest rate swaps
(net) 0 5,886
0
-2,206
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
80
With regard to the Bank’s monitoring of market risks and
calculation of the adequate capital base, a number of sensitivity
calculations are performed, which include the following market
risk variables:
Interest rate risk:
The sensitivity calculation in relation to the Bank’s interest rate
risk is based on the interest rate risk key ratio that is reported
to the Danish FSA. This key ratio shows the effect on the core
capital after deductions on a change in interest rates of 1%
point, equivalent to 100 basis points. The calculation shows that
if the average interest rate on 31 December 2022 had been
100 basis points higher, all other things being equal, the profit
for the year before tax would be TDKK 15,030 lower (2021:
TDKK 14,511 lower), primarily as a consequence of a negative
fair value adjustment of the Bank’s holdings of fixed-interest-
rate bonds.
Currency risk:
The sensitivity calculation in relation to the Bank’s currency risk
is based on the currency indicator 1 key ratio that is reported
to the Danish FSA. Currency indicator 1 expresses a simplified
measure of the extent of the Bank’s positions in foreign
currency, and is calculated as the largest of the sum of all of the
short currency positions and the sum of all of the long currency
positions. If the Bank, on 31 December 2022, had experienced
a loss on currency positions of 2.5% of currency indicator 1, all
other things being equal, the profit before tax would be TDKK
144 lower (2021: TDKK 245 lower), primarily as a
consequence of exchange rate adjustment of the Bank’s
currency holdings.
Share risk:
If the value of the bank’s shareholdings on 31 December 2022
had been 10% lower, all other things being equal, the profit for
the year before tax would be TDKK 12,006 lower (2021:
TDKK 13,890 lower), as a consequence of a negative fair value
adjustment of the share portfolio.
Property risk:
If the value of the Bank’s properties on 31 December 2022 had
been 10% lower, the negative value adjustment of properties,
all other things being equal, would be TDKK 28,437 before tax
(2021: TDKK 24,729 lower).
Sensitivity calculations
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
81
34. Five-Year Financial Highlights and Key Figures
2022
2021
2020
2019
2018
Net interest and fee income
351,485
338,933
326,513
323,507 316,647
Value adjustments
-39,356
11,219
136
9,585 -1,546
Other operating income
6,588
6,185
5,369
5,722 5,385
Staff and administration expenses
195,056
186,385
178,734
170,895 160,457
Depreciation and impairment of tangible assets
7,320
7,014
6,948
6,672 6,765
Other operating expenses
2,706
2,497
2,610
2,788 2,011
Write
-downs on loans and receivables, etc. 4,523
1,537
12,828
7,959 10,938
Profit before tax
109,112
158,904
130,898
150,500
140,315
Tax
10,361
26,072
34,671
20,582 27,423
Profit for the year
98,751
132,832
96,227
129,918
112,892
SELECTED BALANCE SHEET ITEMS
Lending
4,353,585
3,783,681
4,006,248
3,758,736 3,472,174
Deposits
5,942,479
5,363,871
5,847,772
5,687,451 4,899,044
Equity
1,318,592
1,267,911
1,176,917
1,077,676 999,159
Total assets
7,949,566
7,226,988
7,438,325
7,089,915 6,164,536
Contingent liabilities
1,934,125
1,781,465
1,621,831
1,479,537 1,277,604
OFFICIAL KEY FIGURES:
Solvency ratio
23.6
24.4
23.5
23.4 22.7
Core capital ratio
23.2
24.4
23.5
23.4 22.7
Return on equity before tax
8.4
13.0
11.6
14.5 14.3
Return on
equity after tax 7.6
10.9
8.5
12.5 11.5
Rate of return
1.2
1.8
1.3
1.8 1.8
Income per cost krone
1.5
1.8
1.7
1.8 1.8
Interest rate risk
1.2
1.2
1.1
2.1 2.0
Foreign exchange position
0.5
0.8
0.6
0.9 0.5
Lending plus write
-downs as a ratio of deposits 71.5
69.1
68.8
67.2 73.1
Lending as a ratio of equity
3.3
3.0
3.4
3.5 3.5
Growth in lending during the year
15.1
-5.6
6.6
8.3 5.0
Liquidity Coverage Ratio
220.5
238.6
241.0
238.8 282.1
Sum of large exposures
167.3
156.7
162.6
163.5 160.4
Ratio of receivables at reduced interest rates
0.4
0.5
0.8
0.8 0.9
Write
-down ratio for the year 0.1
0.0
0.2
0.1 0.2
Accumulated write
-down ratio 3.0
3.2
3.2
3.3 3.5
Profit for the year per share
54.9
73.8
53.5
72.2 62.7
Net book value per share
732.6
704.0
653.8
599.0 555.0
Dividend per share
20.0
40.0
25.0
0.0 30.0
Listed price/profit for the year per share (PE)
10.8
8.1
11.0
7.6 8.7
Stock exchange quotation/net book value per share
0.8
0.8
0.9
0.9 1.0
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
82
Solvency ratio
Capital base as a percentage of risk exposure.
Core capital ratio
Core capital after percentage deduction of risk exposure.
Return on equity before tax
Profit before tax as a ratio of average equity. Average equity is
calculated as a simple average of equity at the beginning and
end of the year.
Return on equity after tax
Profit after tax as a ratio of average equity. Average equity is
calculated as a simple average of equity at the beginning and
end of the year.
Rate of return
Profit for the year as a ratio of total assets.
Income per cost krone
Net interest and fee income, value adjustments and other
operating income as a percentage of personnel and
administration expenses, depreciation and write-down of
intangible and tangible assets, other operating expenses and
write-downs on loans and receivables.
Interest rate risk
Interest rate risk as a percentage of core capital after
deductions.
Currency position (currency indicator 1)
Currency indicator 1 is defined by the Danish FSA and
expresses the risk of losses on positions in foreign currency due
to fluctuating exchange rates. On an overall basis, the risk is
calculated as the larger amount of positions in currencies in
which the Bank has a net receivable, or positions in which the
Bank has net debt.
Lending as a ratio of deposits
Lending + write-downs as a ratio of deposits.
Lending as a ratio of equity
Lending/equity.
Growth in lending during the year
Percentage growth in lending from the beginning to the end of
the year.
Liquidity coverage ratio
Liquidity buffer/payment obligations within 30 days.
Sum of large exposures
Sum of large exposures as a ratio of the capital base.
Ratio of receivables at reduced interest rates
Receivables at reduced interest rates as a ratio of lending +
guarantees + write-downs.
Write-down ratio for the year
Write-downs for the year as a ratio of lending + guarantees +
write-downs.
Accumulated write-down ratio
Total write-downs as a ratio of lending + guarantees + write-
downs.
Profit for the year per share
Profit for the year after tax/average number of shares. Average
number of shares is calculated as the weighted average at the
beginning and end of the year.
Net book value per share
Equity/number of shares, excluding own shares.
Dividend per share
Proposed dividend/number of shares.
Listed price as a ratio of the profit for the year per share
Listed price/profit for the year per share.
Stock exchange quotation as a ratio of net book value
Stock exchange quotation/net book value per share.
Definition of key ratios
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
83
In accordance with Section 132 a of the Accounting Order, the
Annual Report must include details of the managerial posts held
by listed banks’ Board of Directors and Executive Management
members in business enterprises.
In accordance with Section 80(8) of the Danish Financial
Activities Act, at least once a year the Bank must publish details
of the offices which the Board of Directors has approved for
persons who in accordance with statutory provisions or
Articles of Association are appointed by the Board of
Directors, cf. Section 80(1) of the Act. More information is
available at www.banken.gl
Concerning the members of the Board of Directors and
Executive Management of the BANK of Greenland, the
following had been disclosed at the time of the publication of
the Annual Report:
Former CEO Gunnar í Liða
Born on 13 April 1960 (male)
Joined the Board of Directors on 6 April 2005. Last re-elected
in 2021. Current term expires in 2023.
Does not comply with the Committee on Corporate
Governance’s definition of independence.
Chairman of the Audit Committee, Chairman of the Risk
Committee, Chairman of the Nomination Committee and
Chairman of the Remuneration Committee.
Member of the Boards of Directors of:
• Gist and Vist P/F (Chairman)
Chairman of the Nomination Committee of:
• Bakkafrost P/F
Gunnar í Liða holds an MSc(Econ), supplemented with a
management qualification from Wharton Business School, and
was employed in the Faroese financial sector from 1988 to
2010 – until the end of 2010 as Director of the Faroe Islands’
largest insurance company, when he resigned from this
position. Gunnar í Liða also has substantial Board experience
from Faroese companies, including financial activities, and a
special insight into North Atlantic economic affairs and
financing.
Director Kristian Frederik Lennert
INUPLAN A/S
Born on 30 November 1956 (male)
Joined the Board of Directors on 8 April 2003. Last re-elected
in 2022. Current term expires in 2024.
Does not comply with the Committee on Corporate
Governance’s definition of independence.
Member of the Audit Committee, member of the Risk
Committee, member of the Nomination Committee and
member of the Remuneration Committee.
Member of the Boards of Directors of:
• INUPLAN A/S (Chairman)
Director of:
• Ejendomsselskabet Issortarfik ApS
• Attavik-Udlejning
Kristian Frederik Lennert holds an MSc in structural engineering
and has been employed by INUPLAN A/S since 1984, and in
2002-2019 as managing director of the company. Kristian
Lennert also has experience from membership of the Boards of
Directors of Greenlandic companies and during his career has
gained insights into Greenland’s economic and social conditions,
especially in the building and construction area.
Management posts
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
84
Programme head Maliina Bitsch Abelsen
Unicef Greenland
Born on 7 February 1976 (female)
Joined the Board of Directors on 20 March 2018. Last re-
elected in 2022. Current term expires in 2024.
Complies with the Committee on Corporate Governance’s
definition of independence
Member of the Audit Committee and member of the Risk
Committee
Owner of
• Pikiala
Co-owner of:
• Yogarta I/S
Member of the Boards of Directors of:
• Royal Greenland A/S (Chair)
Maliina Abelsen holds an MSc in social sciences and a Masters in
Policy and Applied Social Research. In 2016-2019, she was
CCO/Commercial Director of Air Greenland with
responsibility for, among other things, commercial
development, sales and marketing. From 2014 to 2016, Maliina
Abelsen was Director of the 2016 Arctic Winter Games. From
2015 to 2017 Maliina Abelsen was Vice Chair of the Board of
Directors of TELE Greenland A/S. Maliina Abelsen was a
member of Inatsisartut (the Greenland Parliament) from 2009
to 2014 and held posts in Naalakkersuisut (the Greenland
Government), most recently as Naalakkersuisoq (Minister) for
Finance from 2011 to 2013. Maliina Abelsen has previously
worked at the UN Human Rights Commission in Geneva and
the Foreign Affairs Directorate in Nuuk.
Branch Director Malene Meilfart Christensen
GrønlandsBANKEN A/S
Born on 9 August 1979 (female)
Joined the Board of Directors on 27 March 2019. Current
term expires in 2023.
Member of the Audit Committee and member of the Risk
Committee
Former Executive Vice President Lars Holst
Born on 15 February 1952 (male)
Joined the Board of Directors on 25 March 2015. Last re-
elected in 2021. Current term expires in 2023.
Complies with the Committee on Corporate Governance’s
definition of independence.
Member of the Audit Committee and member of the Risk
Committee
As former EVP at Nykredit and as a member of the Audit and
Risk Committee for a number of years, Lars Holst has
accounting and auditing experience, so that the Board considers
him to be an independent member of the of the Audit
Committee with accounting qualifications.
Member of the Boards of Directors of:
• Vestjysk Bank A/S
• Arbejdernes Landsbank A/S
• Arbejdernes Landsbanks Fond
• AG Gruppen A/S
• AG Construction A/S
• AG Development A/S
• AG Invest A/S
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
85
Lars Holst holds a degree in management accounting and an
Executive MBA and has completed management programmes
at Stanford University and IMD Business School. Lars Holst held
positions at Nykredit from 1987 to 2014, and from 1995 until
his retirement in 2014 served as Credit Director. Besides a
number of Board positions in Danish financial enterprises and
property companies, Lars Holst has also been a member of the
mortgage-credit sector’s Greenland Committee (2004-2014),
and the Danish Bankers Association’s Credit Committee (2010-
2014) and Vækstfonden (2015-2022).
Deputy manager Yvonne Jane Poulsen Kyed
GrønlandsBANKEN A/S
Born on 29 January 1970 (female)
Joined the Board of Directors on 23 March 2011. Last re-
elected in 2019. Current term expires in 2023.
Member of the Audit Committee, member of the Risk
Committee and member of the Remuneration Committee
Communication and Marketing Manager
Niels Peter Fleischer Rex
GrønlandsBANKEN A/S
Born on 2 October 1981 (male)
Joined the Board of Directors on 27 March 2019. Current
term expires in 2023.
Member of the Audit Committee and member of the Risk
Committee
Member of the Boards of Directors of:
• Elite Sport Greenland
• NuQI – Greenland’s Dance Centre (chair)
• Nuuk International Free School (NIF)
Finance and Administration Manager
Peter Angutinguaq Wistoft
Born on 8 April 1964 (male)
Joined the Board of Directors on 27 March 2019. Last re-
elected in 2022. Current term expires in 2024.
Complies with the Committee on Corporate Governance’s
definition of independence.
Member of the Audit Committee and member of the Risk
Committee
Member of the Boards of Directors of:
• Usisaat ApS
As a state-authorised public accountant with many years’
experience from the auditing sector, Peter Wistoft has
considerable accounting and auditing experience, so that the
Board considers him to be an independent member of the
Audit Committee with accounting and auditing qualifications.
Peter Wistoft is Head of Finance and Administration of Trinity
Hotel og Konference Center A/S, and former CEO of Kalaallit
Airports Holding A/S. He is a state-authorised public
accountant and a former partner in firm of accountants and
consultants Deloitte. Peter Wistoft also holds strategic
management qualifications from INSEAD.
Peter Wistoft has served as auditor and adviser to large
companies within retail trade, energy supply, telecom and
postal activities, construction and housing administration, and
public administration – including the Government of Greenland.
Peter Wistoft has extensive experience within crisis
management, restructuring, mergers, demergers, prospectuses
and IPOs, etc. and has deep insight into accounting and special
legislation concerning Greenland. Peter Wistoft has also
instructed boards of directors, primarily within corporate
governance.
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
86
CEO Ellen Dalsgaard Zdravkovic
Nærpension forsikringsformidling A/S
Born on 5 July 1972 (female)
Joined the Board of Directors on 24 March 2021. Current
term expires in 2023.
Complies with the Committee on Corporate Governance’s
definition of independence.
Member of the Audit Committee and member of the Risk
Committee
Ellen Dalsgaard Zdravkovic is CEO of Nærpension, a subsidiary
100% owned by AP Pension, which intermediates pension and
insurance solutions to 30+ Danish local banks.
Her professional experience includes positions at the Danish
Ministry of Finance, as manager of the Qvartz consultancy, and
at ATP for many years, as a consultant, department manager
and most recently as vice president.
Ellen Dalsgaard Zdravkovic holds an MSc in Political Science
from the University of Copenhagen. In 2021, Ellen Dalsgaard
Zdravkovic completed a board of directors programme within
insurance and pensions at Copenhagen Business School, and
has also taken a number of MBA subjects at Rutgers University,
as well as a management programme at London Business
School.
Ellen Dalsgaard Zdravkovic has extensive experience with
transformations, innovation and digitalisation of complex
processes with many transactions, compliance and sustainable
transition.
Managing Director Martin Birkmose Kviesgaard
GrønlandsBANKEN A/S
Born on 23 May 1966 (male)
Joined the Executive Management on 1 March 2006.
Member of the Boards of Directors of:
• BEC Financial Technologies a.m.b.a.
• Fugleværnsfonden
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
87
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
88
The BANK of Greenland
Imaneq 33
Postbox 1033
3900 Nuuk
Greenland
AS reg. no. 39.070
CVR no. 80050410
Domicile municipality: Sermersooq
Tel. no.: +299 70 12 34
Fax no.: +299 34 77 20
www.banken.gl
banken@banken.gl
Board of Directors
Former CEO Gunnar í Liða, Chair
Director Kristian Frederik Lennert, Vice Chair
Programme head Maliina Bitsch Abelsen
Branch Director Malene Meilfart Christensen*)
Former Executive Vice President Lars Holst
Deputy Manager Yvonne Jane Poulsen Kyed*)
Communication and Marketing Manager Niels Peter Fleischer
Rex*)
Finance and Administration Manager Peter Angutinguaq
Wistoft
CEO Ellen Dalsgaard Zdravkovic
*) Elected by the employees
Executive Management
Managing Director Martin Birkmose Kviesgaard
Audit Committee
Comprises the full Board of Directors.
Risk Committee
Comprises the full Board of Directors.
Remuneration Committee
Comprises the Chair and Vice Chair of the Board of Directors
and one member of the Board of Directors elected by the
employees.
Nomination Committee
The Nomination Committee comprises the Chair and Vice
Chair of the Board of Directors.
Audit
Deloitte
Statsautoriseret Revisionspartnerselskab
Weidekampsgade 6, DK-2300 Copenhagen
Annual Report 2022
Notes to the Annual Report, including Accounting policies applied
89
Financial Calendar for 2023
Annual Report 2022
1 March
Annual General Meeting in Nuuk
28 March
Interim report, First Quarter 2023
9 May
Interim report, First Half 2023
16 August
Interim Report, First Nine Months 2023
1 November
Notifications to the stock exchange in 2022
19 January
Upward
adjustment of expectations for 2021 and announcement of expectations for 2022
2 March
Annual Report 2021
2 March
Notice convening the 2022 Annual General Meeting
15 March
Flagging of Annual General Meeting powers of attorney to the Board of
Directors
17 March
Flagging of Annual General Meeting powers of attorney to the Board of Directors
22 March
Flagging of Annual General Meeting powers of attorney to the Board of Directors
24 March
Flagging of Annual General Meeting powers of
attorney to the Board of Directors
29 March
Minutes of the 2022 Annual General Meeting
29 March
Articles of Association
10 May
Quarterly Report, Q1 2022
17 August
Interim Report, First Half 2022
22 August
Examination of the possibility of issuing T
ier 2 capital and Senior Non-Preferred
25 August
The BANK of Greenland issues DKK 25 million Senior
-Non-Preferred
25 August
Financial Calendar 2023
26 August
The BANK of Greenland issues DKK 25 million in Tier 2 capital
19 October
Downward
adjustment of expectations for 2022
2 November
Quarterly Report, Q3 2022
15 December
Outlook for 2023
Calendar and Stock
xchange Notifications