The BANK of Greenland
CVR no. 80050410
Notification to Nasdaq OMX Copenhagen
2/2024
Annual Report
2023
Annual Report
2023
1
Management’s Review 2
Annual Report in Headlines 2
Greenland’s Society and Economy 5
About the BANK of Greenland in Brief 21
Summary of Financial Highlights 22
Management´s Review for 2023 23
Management Statement 35
Audit Statement 36
Statement of Income 41
Statement of Comprehensive Income 42
Balance Sheet 43
Statement of Changes in Equity 44
Cash Flow Statement 45
Overview of Notes 47
Notes to the Annual Report, including Accounting policies
applied 48
Board and Management 82
Information about the BANK of Greenland 86
Financial Calendar and Stock Exchange Notifications 87
Contents
Annual Report
2023
Management’s Review
2
Annual Report in Headlines
Growth in business volume and record result
2023 was a year characterised by rising interest rates and rising
inflation, yet Greenland's economy proved to be robust, with
sound growth expected in 2023. The financial markets' perfor-
mance and Greenland’s robustness are both reflected in the
Bank’s Annual Report for 2023. Growth in several of the Bank’s
significant business areas, a higher interest rate level, low write-
downs and positive value adjustments resulted in record earn-
ings for the Bank in 2023.
In 2023, the BANK of Greenland achieved a profit before tax
of DKK 244.6 million, compared to DKK 109.1 million in 2022.
The result is at the level of the revised guidance in January 2024
for a result at the level of DKK 244 million, but significantly
above the expectations at the start of the year of a result of
DKK 130–170 million.
Core operations at an improved level
The Bank’s core operations improved significantly from DKK
153.0 million in 2022 to DKK 218.7 million in 2023.
After record-high lending in 2022, lending grew further in 2023.
Lending increased by DKK 459 million to DKK 4,813 million at
the end of 2023, representing the highest level in the history of
the Bank. The increase in lending is a consequence of the Bank’s
favourable market position and Greenland's continued favoura-
ble economic performance and the business community's great
propensity to invest in 2023. In two years, lending has thus in-
creased by over DKK 1 billion. This testifies to the fact that
there has been good activity in the Greenlandic business com-
munity in particular, but also to the fact that the BANK of
Greenland supports the development of society to a considera-
ble extent and, not least, that we are competitively strong.
Net interest income increased by DKK 86.5 million or 36% to
DKK 329.7 million in 2023. The increase is significant and
among other things reflects that throughout 2023 lending has
been at a high level. At the same time, interest rate increases
have pushed up interest income from both bonds and lending.
Bonds and Money market interest rates also improved the re-
turn on the Bank’s surplus liquidity.
High conversion activity at the end of 2022 and slightly lower
activity in the private housing market in 2023 contributed to a
Management’s Review
DKK million
0,0%
5,0%
10,0%
15,0%
20,0%
0
50
100
150
200
250
300
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Profit before tax Return on opening equity after dividend and before tax
Annual Report
2023
Managem
ent’s Review
3
decrease in guarantees in 2023. At the end of 2023, guarantees
totalled DKK 1,774 million, compared to DKK 1,934 million in
2022.
Deposit interest rates also increased significantly in 2023, when
the Bank, like most other banks, offered new deposit products
with better returns for the Bank’s customers.
Fee and commission income decreased in 2023, compared to
the previous year. Key drivers of this decrease included the de-
clining guarantee volume and the insurance area.
Costs also rose in 2023. Staff expenses increased and the total
number of full-time employees increased by six, just as the pay
increase under collective agreements also caused this item to
increase. Administration expenses also increased in 2023. These
include an increase in BEC costs, and in the card area, as well as
further training for the Bank’s employees.
Limited losses and write-downs
Write-downs and provisions amounted to a modest DKK 14.2
million in 2023, compared to DKK 4.5 million in 2022. Despite
the increase, the total level of write-downs is still low and re-
flects a significant management reserve now amounting to ap-
proximately DKK 45.6 million, including amounts for the de-
rived economic effect of rising inflation and interest rates. The
economy and our customers have thereby once again demon-
strated considerable economic robustness.
Significant capital gain
The Bank’s liquidity is placed in the money market, in bonds
and, to a certain extent, in sector shares. The interest rate
trend has resulted in higher price gains on the Bank’s bond
holdings. However, the Bank’s sector shares and the currency
area also made a positive contribution. Value adjustments show
a gain of DKK 40.1 million in 2023, compared to a loss of DKK
39.4 million in 2022.
Growth in the Bank
The Bank again experienced significant growth in 2023. Lending
increased by 10.6%, reaching the highest level in the Bank’s his-
tory, while the pension area is also expanding. Based on ongo-
ing private and public investments, the Bank still expects contin-
ued growth in 2024, but at a lower level than in 2023.
Balance sheet, capital and dividend
The BANK of Greenland’s capital-intensive activities, and lend-
ing and guarantees in particular, grew in 2023, requiring contin-
ued 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’ ex-
pectations 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 Green-
land.
In view of the continued phasing in of the MREL requirement
the Bank has therefore continued to issue both Tier 2 and Tier
3 capital.
The capital base is still assessed to be robust. On this basis, divi-
dend of DKK 55 per share compared to DKK 20 per share in
2022 is proposed. The dividend is equivalent to 51% of the
profit for the year, after which the Bank has a solvency ratio of
26.0 compared to 23.6 in 2022. The solvency requirement is
unchanged at 11.1%.
Outlook for 2024
Greenland is affected by rising inflation, although not at the
same level as in other countries, and even though some in-
crease in inflation in 2024 is expected, we still expect favoura-
ble development in the banking business.
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 2024 are assessed to
be covered by the current level of impairment write-downs.
The Bank’s expected profit before tax for the year 2024 is
DKK 180-230 million. This expectation corresponds to the ad-
vice in the stock exchange announcement of 14 December
2023.
Nuuk, 27 February 2024
Martin Birkmose Kviesgaard, Managing Director
Annual Report
2023
Management’s Review
4
Annual Report
2023
Management’s Review
5
Greenland’s Society and Economy
During several years of global uncertainty, Greenland has suc-
cessfully maintained significant economic growth. This is primar-
ily due to high catch volumes sold at high prices in the fisheries
sector, and a sustained high level of investment in the construc-
tion and civil engineering sector. Overall, this has exerted pres-
sure on the labour market, which in real terms is utilised to full
capacity. There is also a considerable public maintenance back-
log, as well as significant growth opportunities in the expansion
and establishment of hydroelectric power stations and infra-
structure.
Even though Greenland is still enjoying high activity and low un-
employment, the current fiscal policy is unsustainable. This is
due, among other things, to an increasing dependency ratio,
growing demand for better public services and a lack of quali-
fied manpower.
With the “Sustainability and Growth Plan II”, published in No-
vember, steps are being taken towards socioeconomic sustaina-
bility. Specifically, increasing the level of education and expertise,
diversifying the economy, budgetary restrictions on public ex-
penditure and reforms of the tax, duty and pension system
must ensure that long-term expenditure does not exceed reve-
nue. Actual adoption and implementation of these steps can
prove difficult in practice, however.
In this year’s Annual Report, we consider these topics as four
overall themes. The first theme concerns the overall economic
development, the second theme deals with business trends and
potential, the third theme addresses the structural challenges
that Greenland faces, while the fourth and last theme concerns
whether Greenland is resilient towards the new challenges go-
ing forward.
Overall economic development
Economic growth
Despite the global crises in recent years, Greenland's economy
has once again shown its strength in the past year. Preliminary
figures indicate that GDP increased by 2.1% in 2022 and is ex-
pected to increase by 2% in 2023
Figure 1. The steadily ex-
panding economic activity is driven particularly by construction
and civil engineering activities, dominated by the Greenland
Government’s continued gross investments in airport construc-
tion in Nuuk, Ilulissat and Qaqortoq.
It will be natural to expect GDP to fluctuate, and perhaps even
decline, in the coming years, as a consequence of the major
construction and civil engineering activities in recent years – in-
cluding airport construction – which are now entering a final
phase. In addition, the general interest rate increases will have a
detrimental effect on investments, including in the housing sec-
tor, which may dampen economic growth in coming years.
On the other hand, there was continued activity in the housing
sector in 2023, and there is still a great need for investments in
housing, ports, infrastructure and utilities. The BANK of Green-
land assesses that growth at a rather lower level in 2024 than
in recent years must be expected, and perhaps with some brief
stagnation.
Figure 1
Economic development
Real GDP growth
Note: 2017-2019 are final figures, while 2020-2021 are provisional figures. 2022-2024*
are preliminary forecasts. The figure shows real GDP growth, compiled in 2010
prices.
Sources: Statistics Greenland and Greenland's Economic Council.
Growth continued in 2023, driven by fisheries exports, among
other things. This is due to both high catches and favourable
price development for part of the year, and in several seg-
ments. Growth in the medium term will depend to a great ex-
tent on the development in fisheries, and whether the activity
in the construction and civil engineering sector will continue.
The investments in the airports in Nuuk, Ilulissat and Qaqortoq
will be completed within the next few years, expected to be
followed by major hydroelectric power investments. Moreover,
the completion of the airports is expected to promote tour-
ism-generated growth.
In the longer term, Greenland’s continued economic progress
will depend to a great extent on the general structural condi-
tions. In this connection, the investments in airports will create
opportunities for greater diversification of the economy.
However, a more diversified economy is not enough to ensure
sustainable growth in the longer term. Greenland faces a num-
ber of challenges that exert pressure on public finances. Green-
land's population is ageing, the workforce is close to being fully
utilised, and there are also challenges in the area of children and
young people in particular. Without reforms, this would in time
0,1%
0,6%
2,8%
0,2%
1,3%
2,1%
2,0%
0,6%
2017 2018 2019 2020 2021 2022* 2023* 2024*
Annual Report
2023
Management’s Review
6
result in government expenditure exceeding Treasury revenue.
This would reduce the fiscal policy leeway and impede the pos-
sibility of dampening cyclical fluctuations and being able to fi-
nance profitable economic investments to ensure future
growth.
Debt accumulation
The Greenland Government had net assets of DKK 1.1 billion
in 2022. The gross debt of the Greenland Government, the
municipalities and government-owned companies, on the other
hand, totalled DKK 7.3 billion. This corresponds to 35.5% of
GDP, which is an increase of 8.1 percentage points compared
to 2021. This debt has increased in recent years as a result of
investments in airports in Nuuk, Ilulissat and Qaqortoq, among
other things. From an international perspective, this is still a very
low level of debt. In 2022, for example, gross debt in the EU
was 84% of GDP, see
Figure 2. Except for the year 2023, when
Naalakkersuisut (the Greenland Government) expects the debt
level to be reduced by DKK 373 million, the level can be ex-
pected to increase in the coming years. This is to a great extent
due to the expected borrowing for the hydroelectric power
station projects, which are expected to start up in 2025. Includ-
ing these, the 2024 debt level will increase and end at DKK 9.2
billion in 2026. Greenland will thereby increase its risk exposure
considerably within just a few years, as a consequence of this
increase in indebtedness. It should also be emphasised that the
planned debt accumulation does not correspond to the real in-
vestment requirement, as there is a maintenance backlog in
publicly owned housing and infrastructure. Investments of the
same magnitude as the current infrastructure investments will
1
Analysis no. 13, The Greenlandic Economy, Danmarks Nationalbank; Report on coun-
try planning 2023 – the necessary maintenance
be required to make up for this backlog.
1
The current debt
level cannot therefore be compared one-to-one with other
economies that have maintained their fixed assets on an ongo-
ing basis.
Increased indebtedness generally exposes Greenland to greater
risks. It is therefore crucial that borrowing only takes place to fi-
nance economically profitable investments. There must also be
balance in public finances. To ensure this, since 2021 the
Budget Act has stipulated that the Greenland Government’s OI
balance must be in balance, as a minimum, and that the total
appropriations for operations, subsidies and investment may
not exceed real growth of 1% over one year and 2% over four
years. In practice, this serves as a spending ceiling that controls
growth in public sector expenditure. As Table 1 shows, the Fi-
nance Act shows a considerable total surplus on the OI balance
of DKK 1,270.3 million for the 2024-2027 period.
Table
1
The Greenland Government’s OI balance
2019
2020
2021
2022 2023
2024
2025
2026 2027
2019-
2022
2024-
2027
+91.4
+172.6
+233.0 +211.2
+708.2
+7.2
+49.6
-76.2
+7.6 +6.1
+284.4
+317.1
+349.1 +319.7
-11.8
+1,270.3
+136.1
-134.8
-150.0
+113.2
114.5
+128.9
-184.4
-73.8
+105.4
123.4
Note: A minus indicates a deficit. The figures for 2019
-2022 are actual figures, while the figures for 2023-2024 are those adopted for the year. The figures for 2025-2027 are budget esti-
mates. The total calculated for 2019-2022 is subject to the assumption that the actual result for 2022 is as adopted.
Sources: Finance Acts for 2019, 2020, 2021,
2022, 2023 and 2024 and the Finance Bill for 2024.
Annual Report
2023
Management’s Review
7
Figure 2
Gross public interest-bearing debt in Greenland,
Denmark and the EU in 2022
Per cent of GDP
Note: 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 Act for 2023, Statistics Greenland and Euro-
stat.
The table also shows that the Treasury ended 2022 with a sur-
plus of DKK 113 million. This significantly exceeds the modest
surplus budgeted in the 2022 Finance Act. The significant devia-
tion is primarily due to the absence of the economic downturn
for which income taxes and duties were budgeted during the
Covid-19 pandemic. After two deficit years, the Treasury thus
showed a surplus, due to higher revenue than expected in
2022. Based on the economic activity in 2023, it is realistic to
expect even better Treasury accounts in 2023. The deviation in
2023 is again estimated to be due to increased income from
taxes and duties, including higher adjustment of the block grant
as a consequence of the high wage and price development in
Denmark.
2
It may be tempting to use the considerable budget surplus over
the next four-year period to increase public consumption.
However, Greenland’s current economic and structural chal-
lenges speak against certain types of investment. The current
economic upswing, for example, is already putting pressure on
the labour market. Using the economic leeway to ease fiscal
policy risks overheating the economy. This should be avoided
since, as a general rule, fiscal policy is a tool to be used to stabi-
lise the macroeconomy by dampening the effects of cyclical
fluctuations, rather than the opposite. At the same time,
Greenland's economy has a structurally unresolved sustainability
problem. Based on these arguments, the aim should be for the
new economic leeway to only be used to make new economi-
cally viable public investments that can address structural prob-
lems and/or mitigate negative effects of economic setbacks, and
2
Greenland's Economic Council’s report, second half of 2023.
that these investments are made gradually over a number of
years.
Price trends
After the past year’s interest rate hikes on a global level, the sig-
nificant inflation the world has experienced in recent years is
being braked. After the ECB and Danmarks Nationalbank raised
interest rates, Denmark's inflation rate of almost 9% in 2022
has been replaced by consumer prices in the third quarter of
2023 that are only 1.3% higher than last year. This is a general
trend across country borders. As
Figure 3 shows, in the first in-
stance Greenland has only been directly exposed to the infla-
tion crisis to a minor extent. In other countries, this crisis was
primarily driven by price increases for gas and oil products. This
is due to Greenland’s use of its energy supply from hydroelec-
tric power, as well as KNI’s fixed price agreement for oil, which
has shielded consumers from major energy price increases.
Figure 3
Development in inflation
Index (2015=100)
Note: Development in the consumer price index from 2015 to 2023, with 2015 as index
100. The figure is calculated at six-monthly intervals. Q3 is the third quarter.
Sources: Statistics Greenland, Statistics Denmark and Statistics Faroe Islands.
However, the future prospects for inflation and growth are
subject to uncertainty, among other things because the existing
price hedging agreement with KNI for oil and diesel products
expires at the end of 2023. However, the extent to which the
expected increase in energy prices will be reflected in inflation
for 2024 will depend on the specific content of a new fixed
price agreement. In addition, the general international inflation
trend will also be decisive for price developments in Greenland.
This is because a relatively large proportion of Greenland’s pri-
vate consumption is imported.
Based on the falling oil price and declining international inflation,
in their report for the first half of 2024, Greenland’s Economic
84,0%
30,1%
35,5%
0,3%
EU Denmark Greenland II Greenland I
90
100
110
120
130
2015,
Q3
2016,
Q3
2017,
Q3
2018,
Q3
2019,
Q3
2020,
Q3
2021,
Q3
2022,
Q3
2023,
Q3
Greenland Denmark Faroe Islands
Annual Report
2023
Management’s Review
8
Council estimates that inflation for the 2023-2024 period will
be around 7%. Together with inflation, the current shortage of
labour in both Greenland and the countries from which labour
is imported must be expected to exert some wage pressure in
Greenland. How real wages will develop in the coming years is
therefore uncertain.
In addition to the direct impact on consumer prices, higher oil
prices will also more indirectly raise the price level due to rising
costs, including in the retail sector. The BANK of Greenland
currently assesses that the risk of any such shift in inflation ex-
pectations is limited. One reason is that the ECB’s tight mone-
tary policy must be expected to firm up inflation expectations.
Housing market
In Nuuk's housing market, there has been stable growth in
prices per square metre over an extended period, see
Figure 4.
Over seven years, up to June 2023, prices thus rose by 36%,
calculated in current prices, in the face of rising interest rates,
which have dampened the housing market in Denmark, for ex-
ample, see
Figure 4. The BANK of Greenland assesses that
downward price pressure is as expected, as a consequence of
interest rate increases and expected energy price increases. On
the other hand, the sustained economic growth and the fact
that many people are moving to Nuuk have a positive effect.
Figure 4
Development in housing prices
Housing prices in Nuuk, Denmark, Copenhagen and Thorshavn,
index (2016=100)
Note: 2016=100. Price trends in Nuuk (Greenland), Denmark and Copenhagen are com-
piled in DKK per square metre for detached and terrace houses, as well as owner-
occupied flats, while for Thorshavn (the Faroe Islands) the prices are compiled on
the basis of sa les prices. The prices are not adjusted by the consumer price index
and therefore reflect the nominal development in housing prices. Data for the Faroe
Islands is only until 2022, due to missing data. Data for Nuuk in 2023 only includes
the first half-year.
Sources: Finance Denmark, BANK of Greenland and Statistics Faroe Islands.
The high demand for housing in Nuuk is also clearly apparent
from the average number of days on market. From 2018 to
2022, days on market in Nuuk were considerably lower than in
Denmark, see
Figure 5. From 2022 to 2023, however, the aver-
age days on market increased from 75 to 180. The average
days on market are subject to reservation, however, as many
homes are sold without involving a real estate agent, although
this does indicate some downward pressure on house prices.
In the BANK of Greenland's assessment, the housing market in
Nuuk and the largest towns in Greenland has been positively
affected by urbanisation and economic growth in these towns.
Outside the main municipal centres, it is difficult to assess the
housing market on the basis of a limited number of private
transactions. At the same time, homeowners in the towns of
Greenland are favoured by the fact that mortgage financing is
always at fixed interest rates and repayments, so that interest
rate fluctuations do not directly affect homeowners.
Figure 5
Development in average days on market
Average days on market in Nuuk and Denmark, days
Note: Days on market denotes the average number of days a detached or terraced house, or
owner-occupied flat, ha s 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.
Business conditions
For many decades, a large part of Greenland’s economy has
been tied to fisheries. In the private sector, this is the industry
that employs the most people. In addition, 98% of total goods
exports comprise fish and fish products. This is not a problem
for as long as fisheries are doing well. Conversely, this is a vul-
nerable situation as it affects the entire Greenlandic economy
and terms of trade, see above. It is therefore advantageous to
80
100
120
140
160
180
2016 2017 2018 2019 2020 2021 2022 2023
Nuuk, square metre price
Denmark, square metre price
Copenhagen, square metre price
Tórshavn, sales price
0
50
100
150
200
250
2018 2019 2020 2021 2022 2023
Nuuk Denmark
Annual Report
2023
Management’s Review
9
diversify the economy to include more industries – including
tourism and mining.
Fisheries
After a decline in the export value of fish and shellfish during
the coronavirus pandemic in 2020 and 2021, the industry came
back on a firm growth track in 2022. The value of exports in-
creased by almost 22% from 2021, to DKK 5.8 billion, see
Fig-
ure 6. This record-high level can be attributed to historically
high export prices and also large catch volumes. For example,
the average price per kilo for prawns and Greenland halibut in-
creased by 10% and 15%, respectively, during 2022. However,
there is no expectation of the same value added for fisheries in
2023, as the post-pandemic effect has died out. Based on pre-
liminary data, the BANK of Greenland estimates that the value
of exports will maintain its high level in 2023, but will fall by
DKK 236 million in 2024, due to declining quotas, see
Figure 6.
Since it is yet to be known precisely how the expected oil price
increases will affect coastal fishing, it is uncertain whether higher
oil costs could be outweighed by higher export prices for fish
products. Another risk factor for 2024 is the uncertainty in the
cod market, with declining world market prices in 2023.
To maintain a high export value in the longer term, fisheries
must be both efficient and sustainable. This is not the case,
however, for some areas of the industry, see the Fisheries
Commission’s report from 2021. The fishing quotas for inshore
Greenland halibut and cod are above the recommended sus-
tainable quantities. This may reflect that other socioeconomic
factors are taken into consideration. In the longer term, how-
ever, this is not a viable strategy, as excessive fisheries pressure
reduces fish stocks and thereby the future catch potential. It is
therefore necessary to adhere to the biological recommenda-
tions. Naalakkersuisut has taken the first steps with a proposal
for a new fisheries act, which is currently subject to consulta-
tion. With this legislative proposal, Naalakkersuisut presents a
framework for how fisheries can become more biologically sus-
tainable without undermining economic and social sustainability.
Naalakkersuisut points out that social considerations in particu-
lar mean that it is not possible to fully adhere to all of the Fish-
eries Commission’s recommendations.
3
The main challenge is that too many people are employed in
the fisheries industry to be able to maintain economically sus-
tainable fisheries. With a cap on catch volumes and the current
shortage of labour in other industries, it is important to investi-
gate the possibility of moving some of the workforce to other,
more prosperous, industries. This transition would alleviate the
3
Source: https://naalakkersuisut.gl/Hoeringer/2023/11/2911_fiskeri?sc_lang=da
manpower shortage in the other industries and increase
productivity in the fisheries sector.
One factor that will have an impact on fisheries in 2024 and
2025 is the reduction of the prawn quota. For 2024, the
Greenland Institute of Natural Resources has recommended
that prawn catches off West Greenland be reduced by 15,000
tonnes compared to 2023, which corresponds to just under
15%. In the course of further political consideration and in ac-
cordance with MSC certification, the reduction has been set at
7,500 tonnes. This will have socioeconomic implications in the
form of lower GDP and reduced Treasury revenue.
The Ministry of Finance and Taxation estimates that the reduc-
tion will cost the Treasury DKK 19.6 million.
4
Since there are a
number of unused prawn quotas from 2023 that can be trans-
ferred to 2024, however, it is expected that fisheries will be at
almost the same level as in 2023, so that the immediate nega-
tive economic effects will be deferred.
4
https://sermitsiaq.ag/node/247980
Annual Report
2023
Management’
s Review
10
Figure 6
Annual value of exports of fish and shellfish
DKK million
Prawn
Greenland
halibut
Cod
Mackerel
Capelin
Other
fish
species
Note: 2023* are estimates, where prawn, Greenland halibut and cod are projected on the
basis of data for the first 10 months of 2023, while mackerel, capelin and other
fish species are projected on the ba sis of the first three quarters' exports, due to
data availability. The projections are calculated on the basis of seasonal trends from
the previous years’ catches at fish type level. 2024** are projections, where prices
are on average assumed to be identical to 2023, while volumes are assumed to
change equivalently to quota changes. The prices are not adjusted in relation to the
consumer price index and a re therefore nominal/current prices.
Sources: Statistics Greenland, Naalakkersuisut
(the Government of Greenland)
and own
estimates.
Tourism and aviation
Fisheries were not the only industry to be severely affected by
the coronavirus pandemic. The same applied to tourism, alt-
hough this industry was already back on track in 2022. The
number of foreign-visitor overnight stays was no less than 32%
higher than before the pandemic (see
Figure 7), while the num-
ber of foreign airline passengers increased by 8% (see
Figure 8).
Similarly, the number of cruise tourists returned to the previous
level. This general boom in tourism in 2022 was not unique to
Greenland. Several countries saw a similar increase. From an
economic perspective, this is naturally positive. International
studies show, for example, that international adventure tourism
is expected to grow by 50% up to 2027.
5
It is particularly tour-
ists in this category who visit Greenland. Based on data up to
the third quarter of 2023, this indicates a sustained trend. The
uncertainty generated by the global crises in recent years does
5
https://www.technavio.com/report/adventure-tourism-market-industry-size-analysis
6
Report on business economic strategies with a special focus on sustainable fisheries,
tourism, energy and green transition, increased self-sufficiency and minerals.
not yet appear to have reduce the demand for travel to Green-
land.
Figure 7
Increase in foreign-visitor overnight hotel stays
Number of foreign-visitor overnight hotel stays, acc. annually
Not e: The figure shows the number of foreign-visitor overnight hotel stays for 2019 to
2023. Foreign refers to all countries that are not Greenland, i.e. including Denmark.
The number of overnight hotel stays is accumulated for each year. This means that
the last month represents the total annual number. For 2023, the first nine months
are included due to data availability.
Source: Statistics Greenland.
The major event in 2024 is that Nuuk Airport is expected to
be completed by November, while Ilulissat Airport is expected
to be completed in the course of 2025. This entails that inter-
national aircraft will be able to land as direct flights. Kalaallit Air-
ports (KAIR) expects the number of airline passengers to in-
crease by 9% annually up to 2029, emphasising that this growth
can to a high degree be attributed to the new airport structure,
whereby passengers can fly directly to Nuuk and Ilulissat.
6
However, the potential can only be realised if the other parts
of the tourism sector follow suit. Hotel capacity and the range
of experiences offered must therefore be expanded over a
number of years. According to Greenland Business Associa-
tion’s market analysis, hotels, restaurants and tourism, together
with the construction industry, are among the industries that
have faced the greatest challenges in recruiting manpower.
7
These challenges need to be resolved, to ensure sustained
growth in tourism and a more diversified business sector.
Tourism, together with the development of other industries,
can contribute to making Greenland's economy more sustaina-
ble. However, it is essential that tourism is also developed sus-
tainably from an environmental, social and cultural perspective.
7
Greenland Business Association, Market Analysis – December 2022 “Manpower
shortage”.
4.833
4.774
5.819
5.832
5.596
2020 2021 2022 2023* 2024**
0
50.000
100.000
150.000
200.000
2019 2020 2021 2022 2023
Annual Report
2023
Management’s Review
11
From a social perspective, tourism must, for example, not be
developed at the expense of the local population. Among other
things, this will require tourists to be distributed across the
country and not only centred around the new airports.
Other international tourist attractions have experienced how
excessive concentrations of tourists in a small geographical area
can have a detrimental effect.
Figure 8
Development in the number of airline passengers
Number of airline passengers, accumulated annually
Note: The figure shows the number of foreign departing airline passengers for 2019 to
202 3 . Foreign refers to a l l countri es t hat are not Greenland. The number of depart-
ing airline passengers is accumulated for each year. This means that the last month
represents the total annual number. For 2023, as from May nationality data has
not been compiled. The number of passengers from May up to and including Octo-
ber is therefore estimated according to the average proportion of foreign and Green-
landic passengers, respectively, in 2019 and 2022.
Source: Statistics Greenland.
This risk can be reduced by the more even geographical distri-
bution of tourists, as the growth is better diversified across
more geographical areas. This can increase local support for
tourism, but for this diversification to be successful, it is also
necessary to invest in tourism in places other than the major
destinations.
From an environmental and climate perspective, tourism must
not degrade nature. This reveals a paradox, however, as travel
to Greenland, whether by plane or cruise ship, weighs heavily in
the greenhouse gas accounts. Even though this cannot be re-
solved from one day to the next, various methods can be used
to mitigate the negative effects. Several countries and cities have
begun to charge a climate tax on air travel, so that the ticket
price more closely reflects the actual impact of travel on cli-
mate change. A similar tax could in principle be implemented in
Greenland. The tax proceeds could then be used for projects
aimed at protecting the climate. As travel to Greenland is al-
ready expensive, there is a risk that fewer tourists will visit
Greenland, however. Alternatively, climate compensation can
take the form of a tourism tax. The reasoning would be that
tourists pay less attention to prices once they are in the coun-
try, so that the number of tourists would not decrease as
much. How the tools can be used in Greenland will naturally
require a more in-depth analysis. Yet it is essential that politi-
cians consider the role tourism plays in relation to the climate
and seek to reduce tourism’s climate footprint, since in view of
the massive international focus on the climate crisis in recent
years, this has a major impact on consumers’ travel patterns. In
this way, the tourism sector can take both social and climate
responsibility. From the BANK of Greenland’s perspective, it is
essential that the development of tourism takes place with ac-
tive use of regulation in relation to sustainability. In a future
where hotels, attractions and destinations are expected to take
sustainability issues into account, there is both development po-
tential for Greenland and also a threat if these matters are not
addressed. A new hotel that will exist for several decades will
most likely be less attractive if, for example, it is not built and
operated according to an environmental standard that future
customers and investors expect. This gives a significant financial
incentive for the industry and the country to embrace the sus-
tainability agenda. Even though tourism is a logical opportunity
to develop Greenland's economy, it is still to a certain extent a
seasonal activity. The move towards a more multidisciplinary
economy can therefore be further facilitated by realising the
potential of other sectors.
Mineral extraction and mining
Mining activity remains low and currently employs less than 100
people. Yet several projects are either in the pre-licensing pro-
cess or the subsequent process where they have a licence, but
lack final funding.
For the projects that have been granted an exploitation licence,
the biggest barrier remains that it is difficult to attract investors
to Greenland. Even though the annual investments in mineral
exploration after the pandemic have been increasing, the pro-
jects must be profitable. Mineral extraction is highly dependent
on commodities prices, and the estimated need for the re-
source going forward. In this context, some of the potential lies
in the extraction of rare earth metals from Greenland’s subsoil.
These metals are used to produce powerful magnets that are
used as components in wind turbines and electric cars, among
other applications. However, extraction is expensive and diffi-
cult and requires the right skills and capacity. So even though
the rare earth metals are undoubtedly important in several in-
dustries, the costs associated with their extraction may be too
high for investors to see their extraction in Greenland as a
good investment opportunity. It is an important task to make
Greenland as attractive as possible by creating the best possible
framework conditions for mining operations. It will also be
0
20.000
40.000
60.000
80.000
2019 2020 2021 2022 2023
Annual Report
2023
Management’s Review
12
important to change investors’ perception that it is not profita-
ble to invest in Greenland’s underground. Key factors in this re-
gard are stability, attractiveness and predictability, including with
regard to legislation and the administrative practice affecting the
area.
Naalakkersuisut is aware of this opportunity and with the Min-
erals Strategy from 2020 already sought to improve the condi-
tions for investors. With the new Raw Materials Act, adopted
in the spring of 2023, Naalakkersuisut has sought to take an-
other step in this direction. Unlike the previous act the regula-
tion of the raw materials area is now divided into several sepa-
rate acts that specifically regulate the individual areas. This
should make the framework more transparent and predictable
by facilitating licence applications and their processing. The
work towards becoming a competitive raw materials economy
will require additional measures in the coming years.
Hydroelectric power
Energy from hydroelectric power stations is by far the largest
renewable energy source in Greenland, and the use of hydroe-
lectric power has been subject to extensive development.
However, fossil fuels still account for more than 80% of Green-
land's total energy consumption. This is primarily due to fossil
fuels in the transport sector, but also to a lack of incentive
structure and opportunities to switch energy sources. The
BANK of Greenland’s 2022 Annual Report made it clear that
Greenland uses green taxes to a significantly lesser extent than
the other Nordic countries. Green initiatives are essential if
Greenland is to succeed in reducing its climate impact and con-
sumption of resources.
Expansion of Greenland’s hydroelectric power capacity would
be able to replace some fossil-fuel based energy consumption.
It is positive that Buksefjorden is planned to be connected to a
transfer tunnel and another lake, which can increase the annual
energy production from the current maximum of 255 GWh to
potentially as much as 660 GWh. On the other hand, it is vital
that the individual projects are economically viable. If elements
of the expansion are not economically viable, Greenland’s eco-
nomic robustness will be undermined. This will be particularly
challenging in step with Greenland’s generally increased public
debt and after the significant rise in interest rates in 2022 and
2023.
In 2023, prequalification was initiated to find investors for the
establishment of hydroelectric power stations at Tasersiaq and
Tarsartuup Tasersua, which will be put out to tender in spring
2024. It is calculated that the hydroelectric power stations will
8
Sermitsiaq, https://sermitsiaq.ag/node/237184
have a capacity of 800 MW. This will require major foreign in-
vestment, as it is estimated that the projects will cost more
than DKK 20 billion, which will make them the largest ever con-
struction project in Greenland.
8
An investment of this magni-
tude requires a competitive, long-term framework. When both
hydroelectric power stations have been established, Greenland
will be an exporter of renewable energy. However, this export
potential is not without impediments. Exporting energy re-
quires that it can be transported. Unlike fossil fuels, this is a
complex and relatively new process. 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 without a significant
waste of energy. This technology is expected to play an im-
portant role in achieving carbon neutrality by 2050.
Structural challenges
Greenland is still facing major structural challenges. A steadily
declining number of people of working age must finance core
welfare in a society that not only has a maintenance backlog in
the housing and infrastructure areas, but is also characterised
by a labour market that lacks skilled manpower. This is in a sin-
gle-track economy that, in addition to the block grant, relies
heavily on how the fisheries industry is faring. There is thus still
a great need for reforms.
With the presentation of Sustainability and Growth Plan II in
autumn 2023, Naalakkersuisut is focused on the structural chal-
lenges. The plan aims to reduce public expenditure and diver-
sify the business structure to make it less vulnerable to external
factors. This will be achieved through a number of reform
tracks linked to increasing the level of education and skills, and
achieving sustainable growth and the transition to a multi-track
economy, future-proofing of the public sector and, finally, re-
forms of the tax system, welfare services, and the housing and
elderly care sector. This a comprehensive reform agenda.
Maintenance backlog
One of the structural challenges is that over many years, a con-
siderable maintenance backlog has been built up in housing,
ports, facilities, energy supply, educational institutions and the
healthcare system. The Finance Act in 2022 had a focus on this
backlog, which is estimated to amount to almost DKK 8 billion.
9
The parties agreed, among other things, to allocate more funds
to renovation and ongoing maintenance of the publicly owned
assets, and as of 1 February 2023, to increase the rent for mu-
nicipal rented housing to more closely reflect the actual costs
9
Report on country planning 2023 – the necessary maintenance.
Annual Report
2023
Management’s Review
13
associated with the renovation and maintenance of these prop-
erties.
Greenland's Economic Council assesses that these measures
have all been necessary, although they by no means cover the
actual need. In order to ensure sustainable public finances, the
continuous implementation of reforms is vitally necessary. The
alternative is that the backlog becomes large and unmanageable,
and impossible for future generations to eliminate. This would
also result in further indebtedness and a deterioration in the
government budget balance. As a consequence, the debt and
the government budget balance would give a far more accurate
picture of Greenland's economy.
Labour market
The boom in recent years is also reflected in the labour market.
Unemployment is still at a historically low level. In September,
for example, there were only 948 registered jobseekers, see
Figure 9. Unemployment has never been lower and the econ-
omy is close to full employment. This is favourable for public fi-
nances, as income tax revenues are high while costs for people
receiving public benefits are low. However, the challenge is that
it is difficult to develop the economy further when unemploy-
ment is so low, as the demand for labour exceeds supply. This
is not an unfamiliar problem – on the contrary. Greenland has
faced structural challenges in the labour market for several dec-
ades. This has normally been resolved by recruiting foreign
manpower. During the last five years, for example, around
1,000 people of working age have moved to Greenland, which
has increased the workforce by 3.5%. In 2023, there was a
change in the nature of this immigration, as the recruited man-
power is now more likely to be unskilled and to come from
Asia. This reflects that the countries normally recruited from,
including Denmark, also have high employment rates.
10
There is
thus keen competition to obtain the necessary manpower.
10
Finance Bill 2024
Figure 9
Development in the number of job seekers
Number of registered job seekers
Note: Monthly figures for the number of registered job seek ers. The number is calculated on
the basis of the entire population.
Sources: Statistics Greenland.
To avoid the economy’s growth opportunities being limited by
a shortage of labour, it is crucial that Greenland solves some of
the underlying structural problems. As
Figure 10 shows, Green-
land's workforce as a percentage of the population has been
relatively constant at just under 80% in recent years. This is
marginally higher than in e.g. Denmark, but with a shorter aver-
age life expectancy and fewer years of retirement, the ratio for
Greenland should also be higher. For example, in 2022, 92% of
the Faroese population of working age was part of the work-
force. If Greenland can increase its 78% from 2022 to the same
percentage share as the Faroe Islands, this alone would increase
the labour supply in Greenland by more than 4,500 people,
equivalent to an increase of 16%. Work should therefore con-
tinue to increase the ratio of the population included in the
workforce. This makes it positive that Sustainability and Growth
Plan II focuses on creating a more cohesive labour market. The
aim is to increase the supply, professionalism and mobility of
the workforce, which should move 10% away from public ben-
efits and early retirement allowance and into employment.
0
1.000
2.000
3.000
4.000
5.000
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
Jan
May
Sep
2017 2018 2019 2020 2021 2022 2023
Annual Report
2023
Management’s Review
14
Figure 10
Workforce as a ratio of the population
Workforce as a ratio of the population of working age
Note: 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: 16-64 year-olds in Denmark, 15-64 year-olds in
the Faroe Islands and 18-retirement age in Greenland). Reservation is therefore
made for comparability.
Sources: Statistics Denmark, Statistics Greenland and Statistics Faroe Islands.
However, increasing the supply of labour is not enough. A well-
functioning labour market requires employees’ skills to match
those required by employers. This is already a problem at this
stage. Companies have major difficulties in attracting qualified
manpower, especially those looking for skilled labour. This is
also evident from the unemployment figures compiled on the
basis of the jobseekers’ educational background. As
Figure 11
shows, unemployment among those who only have lower sec-
ondary school education remains consistently higher than
among those with a higher level of education.
In this way, the current economic situation clearly reveals how
the underlying mismatch and incentive problems that have
characterised Greenland’s labour market for decades can act as
an obstacle to economic growth. This has far-reaching conse-
quences. One example is the challenges faced by the healthcare
sector due to the the shortage of manpower. In the Health
Commission’s report from the spring, it was emphasised that
the healthcare system is under unprecedented pressure. This
pressure has only grown with the current labour market, mak-
ing it even more difficult to recruit and retain healthcare pro-
fessionals. If this is not resolved, it will be difficult going forward
to maintain a healthcare system that can provide the people of
Greenland with adequate healthcare.
11
OECD statistics.
Figure 11
Unemployment by level of education
Unemployment rate calculated for each of the four education levels
Lower second-
ary school
Upper
second-
ary school
Vocational
education
Higher educa-
tion
Note: The columns show the level of unemployment for each of the four education levels in
Greenland from 2016 to 2022.
Sources: Statistics Greenland.
This makes it positive that Sustainability and Growth Plan II pro-
poses a new education strategy aimed to boost lower second-
ary education, eliminate bottlenecks in the education system
and reduce the proportion of young people who do not start
upper secondary education. However, there is a need for a ma-
jor shift in the education trend. In view of the previous unsuc-
cessful attempts, there is a need for extensive, radical measures,
which makes it important that sufficient resources are allocated
to this task.
Education
Despite the low unemployment rate, there is a clear correla-
tion between unemployment and level of education in Green-
land. Yet this relationship is not unique to Greenland, as the
same correlation can be seen in both Denmark and the other
OECD countries.
11
This underpins the fact that if employment
is to be increased in the future, it will be crucial that Greenland
raises its general level of education. As long as a large propor-
tion of the population has only achieved lower secondary edu-
cation, the average unemployment rate will remain higher. This
is also apparent from
Figure 11, which shows that unemploy-
ment is significantly higher among those with lower secondary
education as their highest educational qualification.
Figure 12
shows that in 2022, 59% of the population had lower second-
ary education as their highest level of education. This is a clear
40%
50%
60%
70%
80%
90%
100%
2016 2017 2018 2019 2020 2021 2022
Greenland Denmark Faroe Islands
8,1%
7,1%
7,5%
6,2%
5,4%
1,9%
1,4% 1,4%
0,9%
0,9%
2,4%
2,1%
2,3%
1,8%
1,5%
0,4%
0,4%
0,4%
0,3%
0,4%
5,0%
4,3%
4,5%
3,7%
3,2%
2018 2019 2020 2021 2022
Average unemployment rate
Annual Report
2023
Management’s Review
15
improvement from the ratios of 72% and 65%, respectively, in
2002 and 2012. Projections show that the ratio will be reduced
to just below 42% by 2040.
12
Progress is thus being made, but
not quickly enough to actually support a robust economy in the
future.
13
Figure 12
Development in level of education
Distribution of education
Lower
secondary
school
Upper secondary
school
Higher
education
Note: 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 2022.
Sources: Statistics Greenland, Eurostat and Statistics Denmark.
On comparison of the education level with the education levels
in Denmark and the EU, it is particularly concerning that the
statistics do not indicate that Greenland is eliminating this back-
log. This would require the new young generation to be better
educated than previous generations. But this is not the case.
The new young generation’s level of education has been by and
large constant over the last 20 years. People aged 25-29 have
the same level of education as in 2002, and the level of educa-
tion for those aged 30-34 has only improved marginally since
2012.
14
If this backlog is to be eliminated, the stagnation has to
be stopped, and the development reversed.
From a socioeconomic perspective, however, it is not enough
for a larger share of the population to achieve a higher level of
education. To be able to contribute to Greenland’s economy,
12
Greenland's Economic Council, 2018.
13
Greenland's Economic Council, 2018.
14
Statistics Greenland.
these people’s skills must match the skills needed in the econ-
omy. The range of higher education programmes in particular is
naturally limited in Greenland, so that in practice young people
apply abroad if they wish to take a long-cycle higher education
programme. This in itself is not problematic for as long as they
return to Greenland after graduating.
Figure 13 shows, how-
ever, that this is not the case for a considerable proportion of
those taking long-cycle higher education programmes. Of the
247 Greenlanders who completed a long-cycle higher educa-
tion programme in 2020, 81 lived abroad in 2023 – equivalent
to one in three. Of these 81 people, 42% studied abroad. At
the same time, only 20% of those who completed their educa-
tion abroad have returned to Greenland after three years with
new knowledge and acquired skills. This brain drain is not a
new phenomenon. Back in 2013, Greenland's Economic Coun-
cil pointed out, for example, that the proportion of people
who had emigrated back to Greenland after ten years in Den-
mark was only 40%. In comparison, this was the case for 80%
of Icelanders and 60% of Faroe Islanders. If Greenland could
achieve similar levels, the annual taxable income base from per-
sonal income taxes, for example, would increase by just over
DKK 13.5 million.
15
In addition, there would be the added value
that the individuals would be able to contribute through their
work. In this light, it would be worthwhile to work to increase
the incentive for young people who travel abroad in pursuit of
long-cycle higher education to return to Greenland, so that
they can contribute positively to the country’s further develop-
ment.
As previously indicated, the labour market also lacks skilled
manpower.
Figure 14 shows that the types of vocational educa-
tion completed by fewest people within the last five years, such
as agriculture, fisheries and art, are also the areas with the high-
est relative unemployment rates in 2023.
15
Calculations are based on the average annual taxable income of persons with long-
cycle higher educational qualifications.
72%
65%
59%
14%
19%
17%
24%
19%
15%
20%
24%
28%
54%
40%
34%
53%
47%
43%
8%
11%
13%
32%
40%
49%
23%
34%
42%
2002 2012 2022 2002 2012 2022 2002 2012 2022
Greenland Denmark EU
Annual Report
2023
Management’s Review
16
Figure 13
Residence three years after completion of long-cycle
higher education
Note: The bars show the country of residence in 2023 of Greenlanders who completed long-
cycle higher education in Greenland (blue) or abroad (red) three years ago. Abroad
refers to a ll countries outside Greenland.
Sources: Statistics Greenland.
Excluding the highest unemployment rate of 4% for agriculture
and fisheries, however, the unemployment rate fluctuates be-
tween only 1-2% for the other vocational education pro-
grammes. This emphasises that, in the current economic situa-
tion, the economy is close to full employment, where in prac-
tice a job is guaranteed for every type of education.
Demographic issues
The proportion of Greenland’s population aged over 60 has
been steadily increasing over the past decades and now ac-
counts for just over 15% of the population (see
Figure 15).
Even though this is positive, as it reflects increasing life expec-
tancy, there are also a number of challenges associated with
this development. The increasing number of elderly people will
raise public expenditure on pensions, healthcare and elderly
care. In addition, the population – including the elderly – will
generally expect an improvement in the quality of welfare ser-
vices in line with increased prosperity. This will further increase
public spending.
The pressure on public finances is only increasing as fewer chil-
dren are born. Since 1990, Greenland’s fertility rate has fallen
by almost 26%.
16
As a consequence, the dependency ratio has
increased, which means that fewer people of working age have
16
Statistics Greenland.
to finance the welfare of a relatively larger number of elderly
people.
Figure 14
Distribution of vocational education programmes com-
pared to the average unemployment rate
Number of people who completed a vocational education pro-
gramme in 2018-2022 and unemployment rates calculated for the
different types of vocational education programmes.
Not e: The ba rs s how t he nu mber of peopl e who compl eted a voca t i ona l educa t i on pro-
gramme in each of the six different categories in 2018-2022. The blue graph shows
the average monthly unemployment rate for each of the categories.
Sources: Statistics Greenland.
This means that not only public expenditure will increase as a
consequence of this demographic transition, since public reve-
nue is also expected to fall, due to lower tax revenue. Once
again, this is not a structural challenge faced by Greenland
alone. Many Western countries face the same challenge. In
Greenland's case, the challenge is exacerbated by the fact that
the Treasury’s revenue besides income taxes mainly comprises
the block grant. Since the block grant is adjusted in line with
wage and price development in Denmark, the block grant will
tend to constitute a smaller share of GDP. This reduces the
Treasury’s revenue and puts further pressure on government
finances.
The consequence of declining revenue and increased expendi-
ture is that the government budget will not balance in the long
term. This would require the present value of the Treasury’s
revenue and assets to exceed the present value of the expendi-
ture. Since this is not the case, the current fiscal policy is not
95%
58%
5%
42%
Living in Greenland Living abroad
Education finished abroad
Education finished in Greenland
166
81
2%
1%
2%
4%
1%
2%
0
100
200
300
400
500
600
700
Average unemployment rate
Annual Report
2023
Management’s Re
view
17
sustainable. An annual financing deficit of DKK 1.3 billion in the
long term is estimated. Calculated in GDP terms, the sustaina-
bility problem constitutes -6.6% of GDP.
17
The dimension of
this underlines the need for reforms.
Figure 15
Development in proportion of the population over 60
years of age
Proportion of the population over 60 years of age
Not e: Proporti on of t he popul a t i on a g ed over 6 0 f rom 1 9 9 0 to 2 0 2 3.
Sources: Statistics Greenland.
Inatsisartut has already raised the retirement age in two in-
stances. First, from 65 to 66 years, and then to the current 67
years. If politicians wish to maintain the current pension system,
which is only to a minimal extent based on private pension sav-
ings, it is necessary to raise the retirement age further in order
to create a self-sustaining economy. Naalakersusisut’s strategy
for the elderly from 2021 is based on the retirement age
matching the development in life expectancy. In this context,
however, it should also be mentioned that the expected retire-
ment period in Greenland is relatively short. This is because life
expectancy is a good ten years shorter than in Denmark, for
example, which has the same retirement age. Nonetheless, cal-
culations show that a reform of the retirement age, whereby
the number of years in retirement is maintained at the current
level, would reduce the sustainability problem by almost 1.8%
of GDP.
18
This makes this reform a very important initiative.
Moreover, a reform could ease the pressure on the labour
market, as more elderly people would remain part of the
workforce for longer.
Another way of retaining the elderly in the labour market is to
increase the incentive for people to stay in the labour market
even though they have reached the official retirement age. The
latest report from Greenland's Economic Council documents
this potential, as the employment rate for elderly people who
17
Greenland's Economic Council.
have just reached retirement age is lower in Greenland com-
pared to other countries. It is assessed that the abolition of the
mutual dependency obligation for pensioners will help to rem-
edy this. Until now, the pension level for certain income ranges
has depended on the spouse’s income. In practice, this has
meant that the marginal tax rate has been particularly high for
this target group. However, it is clear that a reform of this na-
ture will not be sufficient to resolve the sustainability problem.
The need for reform to future-proof the necessary long-term
sustainability and growth is far more extensive.
Inequality
Greenland continues to face major challenges with social ine-
quality. This is problematic, as it is well-known that social cohe-
sion can be challenged if social inequality becomes too great.
As
Figure 16 shows, in 2022 approximately 12% of Greenland's
population lived in relative poverty. Relative poverty is defined
as a person having less than half of the median income in the
country, taking due account of family size and structure. Fur-
thermore, the ratio in Greenland has been increasing slightly in
recent years. A growing proportion of Greenland's population
is thus lagging behind economically.
Figure 16
Inequality in Greenland compared to Denmark and the
Faroe Islands
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 yea rs whose 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 the number of family
members, i.e. the sca le economies that may arise from more adults and the ex-
penses associated with having children.
Sources: Statistics Greenland and Statistics Denmark.
When inequality is examined in a broader international context,
the gini coefficient is often used as an indicator. If this is 0, eve-
ryone in the country has the same income basis. On the other
18
Report on the Danish Commonwealth 2023.
15,27%
0%
5%
10%
15%
20%
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2015
2017
2019
2021
2023
12%
4%
0%
2%
4%
6%
8%
10%
12%
14%
2015 2016 2017 2018 2019 2020 2021 2022
Greenland Denmark Faroe Islands
Annual Report
2023
Management’s Review
18
hand, it will be 100 in a country where there is one person
who earns everything. In Greenland, the gini coefficient has
been relatively stable at around 34 (see
Figure 17).
Even though the low education level is one important reason,
to some extent the current tax system contributes to increas-
ing this – in a Nordic perspective – relative disparity in income
distribution. At present, the basic tax-free deduction, for exam-
ple, constitutes a fixed amount that is not adjusted in line with
price development. In practice, the deduction will therefore be
eroded over time, which will particularly affect smaller incomes.
In addition, earned income is subject to relatively high taxation,
while capital income is taxed more leniently.
Figure 17
Gini coefficients in selected countries
Gini index for relevant comparable countries
Note: 2022 figures: Greenland, Denma rk, Germany, France, Sweden, Norway and the Faroe
Islands, 2020 figures: UK, 2018 figures: Iceland
Sources: Statistics Greenland, Statistics Denmark, Eurostat and OECD Data.
Naalakkersuisut is aware of the potential negative effects of the
tax system's impact on inequality. Sustainability and Growth
Plan II therefore proposes that tax and duty reforms be imple-
mented in order to make the system more progressive. At the
same time, there is also a focus on not reducing the incentive
to work. Among other things, the reform proposes reducing
tax on earned income and increasing the obligation of recipi-
ents of public benefits and labour market allowances to make
themselves available to work. This will help to maintain the in-
centive to work without at the same time increasing social ine-
quality. In this context, increasing the level of education and la-
bour market participation is vitally important. Yet it is important
that taxation of high-value jobs does not result in the relocation
of these jobs, which would erode the tax base and fiscal policy
19
https://www.altinget.dk/sundhed/artikel/faa-overblikket-fem-noegletal-om-om-
sundhedsvaesenet-i-groenland-og-danmark
sustainability, even though relative inequality would be elimi-
nated.
Health
Greenland’s healthcare system is facing urgent challenges in the
face of demographic changes and society’s increasing expecta-
tions. A number of key health figures reveal that the average life
expectancy in Greenland is significantly lower than in Denmark,
and infant mortality is higher, while the total healthcare costs as
a ratio of GDP are lower (8.8% of GDP in Greenland and
10.8% of GDP in Denmark)
19
.
In spring 2023, the Health Commission published its report.
The report reveals a 'burning platform' of acute problems such
as staff shortages, a high proportion of short-term staff and an
ageing population, driving demand for healthcare services.
Added to the other investment and reform requirements, these
problems are particularly acute. Greenland faces the paradox of
a growing need for specialised healthcare coupled with a critical
lack of resources to meet these demands.
More than one hundred recommendations in the report point
to the need for both short-term and long-term measures.
These recommendations are not 'nice to have' additions, but
rather essential steps to relieve the massive pressure on the
healthcare system. This situation is not just a health challenge,
but also an important economic and social factor that requires
resources to achieve the sustainable development of Green-
land’s society, with a reduction rather than an increase in health
inequality.
Ready for the future?
We live in a complex and changing world. Among other things,
this has put the environment and climate change at the top of
the geopolitical agenda, with ambitious emission reduction tar-
gets as a result. In Greenland, we will increasingly be required
to manoeuvre in an ever more globalised world, where climate
change, war and geopolitics have a direct impact on our society
and economy. At the same time, digital threats and threats to
critical infrastructure are some of the trends that Greenland
has also had to deal with in recent years, in the face of increas-
ing expectations of what society must be able to deliver. All of
these elements exert upward pressure on public spending,
while there are few obvious opportunities to increase public
revenue. With a structurally low level of education, a shortage
of qualified manpower and a one-stringed, vulnerable economy,
we can ask what it will take to prepare Greenland for a future
that seems more and more uncertain?
37,5
35,5
34,5
29,8
28,8
27,7
27,6
27,5
23,2
21,1
USA
England
Greenland
France
Germany
Denmark
Sweden
Norway
Iceland
Faroe
Islands
Annual Report
2023
Management’s Review
19
A sustainable society fundamentally requires equal economic
opportunities and equal access to political participation for all of
its members. This includes that every person must have access
to education, healthcare and employment. Greenland's geo-
graphical conditions make this particularly difficult to achieve, as
healthcare and further education may lie beyond the reach of
people living in Greenland's smaller towns and settlements. As
in other countries, this means that more and more people are
moving to the larger towns, but it is still important not to for-
get those who choose to stay behind.
Education and health are therefore two core areas in which im-
provements are imperative in coming years. Improved human
and health capital will increase not only well-being, but also the
value creation contributed by the population, while also reduc-
ing the pressure on public budgets. This makes it imperative for
fiscal policy sustainability that more people gain education and
fewer end up in the youth target group. This shift would have
the potential to augment the supply of qualified labour, increase
the tax base, and reduce inequality and differences between
towns and settlements. It requires dedicated, long-term invest-
ment in the education sector, and an understanding that the re-
turn on this investment can only be realised several years into
the future. An improved healthcare system is also vitally neces-
sary, since economic growth requires a healthy society, and also
because continued support for the welfare state depends on
equal access to good public services. Without satisfactory pub-
lic services, this support will slowly diminish. This might take the
form of the relocation away from Greenland of a well-edu-
cated workforce, which could ultimately lead to an inability to
deliver core welfare services, resulting in greater inequality.
Almost just as fundamental for a sustainable and robust eco-
nomic model is resilience and a readiness to adapt to unpre-
dictable external influences. In simple terms, this can be seen as
a question of diversifying the economy – and whether parts of
the economy can support other elements in the event of un-
foreseen challenges. In Greenland, the economy is relatively
one-stringed. If fisheries fare badly – due to either low catch
volumes or low prices – the economic situation will also be ad-
versely affected. This makes Greenland’s economy extremely
vulnerable. To make Greenland’s economy more resilient,
greater business diversification is required. Measures to pro-
mote sustainable business development should therefore be ad-
dressed and prioritised.
Annual Report
2023
Management’s Review
20
Annual Report
2023
Management’s Review
21
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 ser-
vices and other services in the financial area for all citizens of
Greenland. We support society by promoting financial under-
standing, cooperating with educational institutions and the busi-
ness 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 en-
hanced responsibility to participate positively and actively in so-
ciety’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 com-
pany – for the benefit of Greenland”.
The BANK of Greenland hereby wishes to ensure the contin-
ued favourable development of the Bank through balanced fo-
cus on the four main areas:
Greenland’s best customer experience, best at em-
ployee development, best at business development,
and we create growth in Greenland. On an annual ba-
sis, the main areas are included in objectives which are continu-
ously 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 custom-
ers, 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 bene-
fit of Greenland.
Annual Report
2023
Management’s Review
22
Summary of Financial Highlights
2023
2022
2021
2020
2019
SELECTED OPERATING ITEMS:
Net interest and fee income
435,012
351,485
338,933
326,513
323,507
Value adjustments
40,058
-39,356
11,219
136
9,585
Other
operating income 5,803
6,588
6,185
5,369
5,722
Staff and administration expenses
211,166
195,056
186,385
178,734
170,895
Depreciation and impairment of tangible assets
8,158
7,320
7,014
6,948
6,672
Other operating expenses
2,815
2,706
2,497
2,610
2,788
Write
-downs on loans and receivables, etc. 14,160
4,523
1,537
12,828
7,959
Profit before tax
244,574
109,112
158,904
130,898
150,500
Tax
52,179
10,361
26,072
34,671
20,582
Profit for the year
192,395
98,751
132,832
96,227
129,918
SELECTED BALANCE SHEET ITEMS:
Lending
4,812,975
4,353,585
3,783,681
4,006,248
3,758,736
Deposits
6,413,469
5,942,479
5,363,871
5,847,772
5,687,451
Equity
1,479,123
1,318,592
1,267,911
1,176,917
1,077,676
Total assets
8,840,981
7,949,566
7,226,988
7,438,325
7,089,915
Contingent liabilities
1,774,426
1,934,125
1,781,465
1,621,831
1,479,537
KEY FIGURES FOR THE BANK (IN PER CENT)
Return on opening equity before tax and dividend
18.9
9.0
13.9
12.1
15.6
Return on opening equity after tax and dividend
14.9
8.1
11.6
8.9
13.5
Capital ratio
26.0
23.6
24.4
23.5
23.4
Individual solvency requirement
11.1
11.1
10.7
11.2
11.9
KEY RATIOS PER SHARE IN DKK
Profit for the year per
share, before tax 135.9
60.6
88.2
72.7
83.6
Profit for the year per share, after tax
106.9
54.9
73.8
53.5
72.2
Net book value per share
822
733
704
654
599
Dividend per share
55
20
40
25
0
Closing share price
625
590
598
590
545
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
2023
Management’s Review
23
Management´s Review for 2023
Principal activity
The BANK of Greenland’s principal activity is to offer financial
services to private customers, business customers and public in-
stitutions in Greenland. The Bank wishes to offer a wide prod-
uct range that is adapted to Greenland’s society and customers’
requirements, combined with professional advisory services.
Statement of income
Net interest income increased by TDKK 86.470 compared to
2022. Continued favourable economic development has laid
the course for expansion of lending throughout 2023. Together
with sharply rising interest rates, this has affected lending rates
positively. The increase in market interest rates in 2023 also
had a positive impact on the return on the Bank’s surplus li-
quidity, both as direct investments placed in Danmarks Na-
tionalbank and as interest on bonds.
Dividend on the Bank’s shareholdings amounts to TDKK 2.155,
compared to TDKK 1,822 in 2022.
Fee and commission income decreased by TDKK 2,864 from
2022 to 2023. The declining guarantee volume and lower insur-
ance commission during the year affected this item particularly
negatively. Other fee and commission income developed posi-
tively in 2023. Net interest and fee income increased by TDKK
83,527 in total, to TDKK 435,012.
Other operating income, primarily external rental income on
the Bank’s residential properties, amounted to TDKK 5,803,
compared to TDKK 6,588 in 2022. In 2023, the Bank reas-
signed a floor of the Bank’s head office building for its own op-
erations, resulting in a decrease in external rental income.
Staff and administration expenses increased by TDKK 16,110 to
TDKK 211,166. Staff expenses increased as a consequence of
pay increases under collective agreements and several staff in-
creases. The average number of full-time employees increased
by around six people in 2023. Administration expenses are at a
higher level of TDKK 102,054, compared to TDKK 89,837 in
2022. The higher level reflects an increase in BEC costs, card
costs and elective further training for the Bank’s employees.
Depreciation of properties and fixtures and fittings increased to
TDKK 8,158 compared to TDKK 7,320 in 2022. Revaluations
of the Bank’s properties in 2022 increased depreciation in
2023.
Other operating expenses increased by TDKK 109 to TDKK
2,815. 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 significantly higher than in 2022 and amounts to TDKK
218,677, compared to TDKK 152,991 in 2022.
Selected Highlights and Key Figures (not audited)
DKK 1,000
4.Q
3.Q
2.Q
1.Q
4.Q
3.Q
2.Q
1.Q
2023
2023
2023
2023
2022 2022 2022
2022
Net interest and fee income
119,981
111,043
99,933
104,056
96,307
87,370
82,061
85,747
Costs, depreciation and amortisation
61,918
51,492
51,814
56,914
59,254
48,059
48,572
49,197
Other operating income
1,346
1,451
1,613
1,392 2,025 1,514 1,414
1,635
Profit before value adjustments and write-downs
59,409
61,002
49,732
48,534
39,078
40,825
34,903
38,185
Value adjustments
20,248
8,817
3,085
7,907
6,316
-20,477
-14,528
-10,667
Write
-downs on loans, etc. 5,907
1,974
-713
6,992 1,483 928 1,394
718
Profit before tax
73,750
67,845
53,530
49,449
43,911
19,420
18,981
26,800
Annual Report
2023
Management’s Review
24
Considering Q4 2023 in isolation, net interest and fee income
amounted to TDKK 119,871 compared to TDKK 96,307 for
the same period of 2022. 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 for the same
period of the previous year, amounting to TDKK 61,918, com-
pared to TDKK 59,254 in Q4 2022. The increase particularly
reflects the aforementioned increase in staff numbers. Moreo-
ver, additional staff expenses of a one-off nature were incurred
in Q4 2023, which was not the case in 2022. Depreciation and
provisions at TDKK 5,907 are higher than the same period of
the previous year, but still at a low level. The profit before tax
in Q4 is thereby TDKK 73,750, compared to TDKK 43,911 for
the same quarter of 2022.
For the full year, value adjustment of securities and currencies
resulted in a gain of TDKK 40,048, compared to a loss of
TDKK 39,356 in 2022. The Bank’s holdings of sector equities
and the currency area performed favourably. At the same time,
the favourable market development has resulted in a capital
gain on the Bank’s bond portfolio of DKK 23.7 million in 2023,
compared with a loss of DKK 49.5 million in 2022.
Impairment of loans, etc. amounted to TDKK 14,160, which is
TDKK 9,637 higher than for 2022. This is still a modest overall
level. The total impairment amounts to 0.3% of the Bank's loans
and guarantees. The Bank continues to see a generally strong
credit quality in the lending portfolio.
In addition to the Bank’s individual impairment models, a man-
agement supplement is allocated, which at the end of 2023 to-
talled DKK 45.6 million. The supplement addresses industry and
credit risk, but in particular also risks associated with rising infla-
tion and interest rates, as well as cyclical uncertainties.
Profit before tax amounts to TDKK 244,574, compared to
TDKK 109,112 in 2022. Profit for the year is thus at the level
of DKK 244 million announced in January 2024. The profit be-
fore tax gives a return on equity of 17.5%.
Tax is calculated at 25% of the profit before tax, adjusted for
non-tax-liable income and non-deductible expenses. Green-
landic legislation has introduced the option of payment of on-
account tax in 2023, which the Bank has made use of. The
profit after tax is TDKK 192,395 for 2023, giving a return on
equity of 13.8%.
Balance sheet and equity
The BANK of Greenland’s balance sheet at year-end 2023 to-
tals TDKK 8,840,981, which is an increase of TDKK 891,415
from 2022. Deposits increased in Q4 2023, amounting to
TDKK 6,413,469 at the end of 2023. Compared to 2022, this is
an increase of TDKK 470,990. Deposits primarily increased in
the public sector customer segment and from business custom-
ers in 2023. The Bank’s deposits are mainly held on demand. In
2023, however, the Bank introduced fixed-term savings prod-
ucts on a wider scale.
In 2023, lending grew by 10.6% or TDKK 459,390, to TDKK
4,812,975. At the start of 2023, the Bank expected lending to
increase in 2023, but the growth is higher than first assumed.
At the same time, the Bank’s guarantees fell by TDKK 159,699
to TDKK 1,774,426. Title registration and conversion guaran-
tees declined particularly in 2023, while mortgage credit loss
guarantees were at the same level as last year.
Total loans and guarantees thereby increased by a total of
TDKK 299,691 to TDKK 6,587,401.
Development in business volume
TDK K
The Bank’s bond holdings increased by TDKK 146,299 to
TDKK 1,303,130. The Bank increased the portfolio in 2023,
while value adjustments also increased the portfolio.
Land and buildings increased by TDKK 13,772 to TDKK
298,142 in 2023. Due to increasing staff numbers, the Bank ac-
quired additional staff accommodation in 2023.
Including returns, the pension area, expressed as assets in pool
schemes, increased by 30.2% in 2023, to TDKK 513,822.
0
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
6.500.000
2019 2020 2021 2022 2023
Deposits Lending Guarantees
Annual Report
2023
Management’s Review
25
In accordance with the capital plan, in 2023 the Bank made an
additional Senior-Non-Preferred bond issue of TDKK 100,000.
The Bank also issued supplementary capital of TDKK 40,000 in
2023.
Equity amounts to TDKK 1,479,123, compared to TDKK
1,318,592 at the end of 2022. Share capital amounts to TDKK
180,000. The Bank does not have hybrid loan capital. The capi-
tal ratio is 26.0, compared to 23.6 in 2022.
Uncertainty of recognition and measurement
The main uncertainties concerning recognition and measure-
ment are related to write-downs on loans, provisions on guar-
antees, the valuation of financial instruments, and properties.
The management assesses that the uncertainty concerning the
presentation of the accounts for 2023 is at a responsible level
and is unchanged from the previous year.
On 29 November 2023, the Danish Financial Supervisory Au-
thority published the memorandum “Loss levels on exposures
secured by mortgages in real estate”, in which the Authority as-
sesses whether there is a well-developed and well-established
real estate market in Denmark, the Faroe Islands and Green-
land.
Particularly with regard to the Faroe Islands and Greenland, ac-
cording to the memorandum it was not possible for the Danish
FSA, on the basis of the established criteria, to assess whether
there is a well-developed and well-established market for resi-
dential and commercial properties on the Faroe Islands and in
Greenland. The assessment has an impact on the capital burden
of exposures secured by mortgages on real estate.
The Danish FSA therefore subsequently sent the memorandum
for consultation and contacted the North Atlantic banks, includ-
ing the BANK of Greenland, as well as mortgage credit insti-
tutes with North Atlantic property exposures, for further in-
vestigation of the real estate market in Greenland.
On this basis, the BANK of Greenland provided the Danish
FSA with a supplementary basis of experience based on local
knowledge of Greenland's real estate market, in order to sup-
port an assessment of whether a well-developed and well-es-
tablished real estate market exists in Greenland.
The status of the real estate market in Greenland is not ex-
pected to be clarified until the first half of 2024.
Compliance and anti-money laundering
The Danish FSA conducted an ordinary inspection visit in May
2023, with a concluding report on 28 September 2023. The
mandatory orders received after the inspection are described
on the Bank’s website under the following link:
20231005-redegørelse-om-inspektion-eng.pdf (banken.gl)
In general, the Bank considers the inspection process to be
constructive and satisfactory, and mandatory orders were is-
sued for areas of which the Bank is aware and is now in the
process of correcting.
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 re-
porting to the Board of Directors concerning the Bank’s money
laundering risks. In order for the Bank to comply with the statu-
tory obligation to act in the event of suspected money launder-
ing, in 2023 the Bank implemented a new transaction monitor-
ing system, which facilitates more detailed monitoring by the
Bank.
A separate compliance function was also established. The com-
pliance function is responsible for independent reporting to the
Executive Management and the Board of Directors. The com-
pliance function is responsible for assessment and control of
compliance with applicable legislation, industry standards and in-
ternal 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 coun-
terparties’ 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 financ-
ing/funding.
Annual Report
2023
Management’s Review
26
Operational risk: The risk that the Bank in full or in part incurs
financial losses as a consequence of inadequate or deficient in-
ternal 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 re-
quirement 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 6 December 2022, a revised MREL requirement was deter-
mined for the BANK of Greenland, at 29.4% of the Bank’s risk-
weighted assets at the end of 2021. The MREL requirement is
being phased in up to 2027. This means that in the course of
the coming years, the Bank must fulfil the requirement by issu-
ing capital instruments and consolidation of equity capital.
In continuation of the established MREL requirement, the Bank
made two further issues in 2023, with a view to targeted cov-
erage of the MREL requirement. A total of DKK 100 million
was issued in Senior Non-Preferred and DKK 40 million in sub-
ordinated debt.
Capital requirement
2023
2022
Pillar I
8.00%
8.00%
Pillar II
3.10%
3.10%
Solvency
requirement 11.1%
11.1%
SIFI buffer requirement
1.50%
1.50%
Capital reserve buffer require-
ment
2.50%
2.50%
Capital requirement
15.1%
15.1%
MREL requirement (phased in
linearly as from 1 January 2022)
4.90%
2.53%
Total capital requirement
20.0%
17.6%
Capital base, cf. Note 24
1,450,158
1,300,270
SNP issue
173,969
74,563
MREL capital base
1,624,127
1,374,833
MREL capital ratio
29.10%
25.00%
Surplus capital cover
9.1%
7.4%
The MREL requirement is being phased in as from 1 January
2022 on a linear basis over 6 years. This entails that the Bank
must fulfil an MREL requirement of 4.9% in 2023. From 1 Janu-
ary 2024, the Bank must fulfil an MREL requirement of 7.55%
on the basis of a revised MREL requirement of 30.2% notified
on 30 November 2023.
Sound capital base
In accordance with the Danish Financial Activities Act, the
Board of Directors and the Executive Management must en-
sure that the BANK of Greenland has an adequate capital base.
The capital adequacy requirement is the capital which, accord-
ing 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 Direc-
tors 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 risk-weighted assets did not grow at the same pace
as loans and guarantees in 2023, which is due to two factors.
As of On 1 July 2023, CRR II was introduced into Greenlandic
legislation, which entails increased SME reduction, and is also
part of the growth in lending in 2023 with a lower risk
weighting.
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 24.9 at the end of 2023, and the capital ratio
was 26.0. Taking into account the uncertainties described above
concerning exposures secured by mortgages in real estate, the
Bank considers it essential that the core capital ratio is at a level
that can accommodate these uncertainties.
Based on the aforementioned, the Bank’s Board of Directors
makes the recommendation to the Annual General Meeting
that dividend of DKK 55 per share be paid for 2023, equivalent
to 51% of the profit after tax.
As at 31 December 2023, the Bank’s individual solvency re-
quirement was compiled at 11.1%. The BANK of Greenland
thereby has surplus capital cover before the buffer require-
ments of 14.9%. After deductions for the capital reserve buffer
requirement of 2.5% and the SIFI buffer requirement of 1.5%,
the surplus cover is 10.9%.
Annual Report
2023
Management’s Review
27
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 calculated immediate surplus cover of TDKK
833,948, which comprises the difference between the capital
requirement (solvency requirement) and the actual capital (cap-
ital ratio). The management assesses that the capital is adequate
to cover the risk related to the Bank’s activities.
The BANK of Greenlands capital plan 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 2023. Reference is
also made to the Bank’s risk management report for 2023 at
https://www.banken.gl/en/investor/public-disclosure/ The re-
port has not been audited.
The BANK of Greenland’s calculated capital and solvency requirement according to the 8+ model
2023 2022
Capital re-
quirement
Solvency re-
quirement
Capital re-
quirement
Solvency re-
quirement
Pillar I requirement
445,843
8.0%
440,087
8.0%
Credit risk
120,061
2.2%
119,785
2.2%
Market risk
22,404 0.4%
21,077
0.4%
Operational risk
15,646
0.3%
16,302
0.3%
Other risk
12,256
0.2%
15,323
0.2%
Capital and solvency requirement
616,210
11.1%
612,574
11.1%
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 ra-
tio. LCR must be at least 100%.
At the end of 2023, the Bank had an LCR of 259.0% and
thereby fulfilled the LCR requirement
DKK 1,000
2023
2022
Liquidity buffer LCR
2,735,104
2,450,912
Outflow, net
1,055,997
1,111,490
LCR
259.0%
220.5%
The Supervisory Diamond for banks
The BANK of Greenland has considered the benchmarks set
out in the Danish FSA’s Supervisory Diamond for banks. The
Supervisory Diamond states four benchmarks for banking activ-
ities which the Bank aims to fulfil. At the end of 2023, 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 larg-
est exposures is compiled at 150.0%, which is satisfactorily be-
low the Danish FSA’s threshold of 175%. It must be noted that
approximately 37 percentage points concern exposures to
publicly-owned enterprises.
Annual Report 2023
Management’s Review
28
In accordance with the table above, the property exposure
amounts to 22.1%. 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 expo-
sure. The Bank expects the property exposure to be reduced
in 2024.
Investor Relations
The BANK of Greenland seeks to ensure transparency con-
cerning the Bank and there is good communication and dia-
logue 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 stake-
holders.
• Increase awareness of the BANK of Greenland in investor
circles in Greenland and abroad.
• Give investors structured, continuous and planned infor-
mation 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 concern-
ing both price-relevant and other matters relating to the Bank.
In 2023, the BANK of Greenland entered into a collaboration
with HC Andersen Capital, which includes quarterly online in-
vestor presentations.
The BANK of Greenland publishes information that may be of
relevance to its share price as company notifications via Noti-
fied - Nasdaq OMX and on the Bank’s website under “Inves-
tor” https://banken.gl/en/about-us/investor/ . The content of the
notifications includes quarterly, interim and annual reports, in-
cluding 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 subse-
quently published on the BANK of Greenland’s website, so that
it is generally available.
The Executive Management is responsible for informing inves-
tors and other stakeholders, by agreement with the Board of
Directors. In special cases, the Executive Management may au-
thorise senior staff members to notify investors and other
stakeholders.
At a price of 625 at the end of 2023, the price of the BANK of
Greenland’s share has increased since the end of 2022, when
the price was 590. The BANK of Greenland will propose to
the annual general meeting that the dividend payment for 2023
be DKK 55 per share, or a total of DKK 99 million. It should be
noted that in Greenland dividend is tax deductible for the divi-
dend paying company.
Shareholders
The BANK of Greenland’s overall financial objective is to
achieve a competitive return for the shareholders.
At 31 December 2023, the BANK of Greenland had 2,539
shareholders registered by name, which is slightly fewer than at
31 December 2022, when the number of shareholders regis-
tered by name was 2,723. Shareholders registered by name ac-
count for approximately 93% of the share capital. In accord-
ance with Section 28a of the Danish Companies Act, six share-
holders 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 devel-
opment in the Bank’s operations and balance sheet, tax optimi-
sation and regulatory solvency requirements. For 2023, the rec-
ommendation will be made to the annual general meeting to
pay dividend of DKK 55 per share, which should be viewed in
conjunction with the description given under Capital. The capi-
tal ratio is 26.0 and the core capital ratio is 24.9.
Annual Report 2023
Management’s Review
29
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 2024
It is expected that Greenland saw positive economic growth in
both 2022 and 2023. Despite inflation and rising interest rates,
the BANK of Greenland also expects moderate economic
growth in Greenland in 2024, 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 and 2023. Deposits are expected to be at the level of the
end of 2023.
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 slightly in 2024, for
which the primary reasons are the increased lending volume
and the development in interest rates.
Total expenses including depreciation and amortisation are ex-
pected to be higher than in 2023. A few staff increases and the
full effect of staff increases are expected in 2023. Administra-
tion 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 satis-
factory. 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.
Based on these factors, a profit before tax at the level of DKK
180-230 million for 2024 is expected, compared to DKK 244.6
million in 2023. The result is in accordance with the stock ex-
change announcement of 14 December 2023.
Customers
The BANK of Greenland has strong focus on customer satisfac-
tion, which is measured by an annual customer satisfaction sur-
vey. On this basis, measures are being initiated in areas where
customers believe that the Bank can do better.
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 cus-
tomers 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 com-
mercial 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 valua-
ble business advisory services. The Business Department coop-
erates with other financial partners to ensure customers’ access
to the best solutions and opportunities that depend on cooper-
ation 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.
The Bank’s role as a powerhouse is clearly apparent in current
years, with major investments being made in infrastructure. To
generate the greatest possible benefit for Greenland, the Bank,
together with KAIR, Grønlands Erhverv, Grønlandsbankens
0%
10%
20%
30%
40%
50%
60%
Pay-out ratio (before tax)
Pay-out ratio (after tax)
Annual Report 2023
Management’s Review
30
Erhvervsfond and a number of other good partners, has facili-
tated a number of customer events. The headlines have in-
cluded “Female Entrepreneurship”, “Business Angels in Green-
land”, “Local Business Development”, “After-work meeting with
the Governor of Danmarks Nationalbank”, “Sustainability – a
good business case?”, Investment events, “Hacker attacks –
Where are we now?” and a number of networking events.
Private customers are offered a simple and flexible product
range, to which more green products were added in 2023.
These are used to provide each customer with an individual so-
lution, matched to the customer’s needs. Due to the Bank’s
high market share, the Bank often has entire families as a cus-
tomer, and the Bank therefore always seeks to provide com-
prehensive advice for the benefit of the customer and the fam-
ily. Ongoing contact with the customer is crucial to ensuring a
good customer relationship, and the Bank seeks to be available
both in person and on the digital platforms required by the
customer. In 2023, the Bank had the major task of supporting
and ensuring the transition to NemKonto for the Bank’s cus-
tomers. The vast majority of the Bank’s customers registered
for NemKonto during 2023.
The Bank and society
The day-to-day business with the Bank’s customers in the
course of the year gave income totalling DKK 467 million, com-
pared to DKK 314 million in 2022. 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 cor-
porate tax, dividend tax and tax on staff remuneration. Employ-
ees receive salary and pension contributions, etc., after deduc-
tion of PAYE tax. The purchases made by the Bank from Dan-
ish suppliers are mainly IT services from BEC and Nets.
The BANK of Greenland makes a significant contribution to so-
ciety via tax payments that, for the last three years, have aver-
aged DKK 95 million per year.
DKK mill.
Employees
Our employees are the Bank's DNA and our most important
resource, and it is our employees who create and maintain
trusting relationships with our customers on a day-to-day basis.
The BANK of Greenland has a strong focus on competence
development via trainee programmes, trainee courses, supple-
mentary training, leadership development (HD, MBA and other
leadership programmes) and “on the job training”. In 2023, a
leadership compass was also prepared to support and help the
Bank’s managers navigate in the same direction. The leadership
compass is based on the Bank’s values.
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
administration or finance. At the same time, six advisers/finance
assistants are taking the financial academy training programme,
which they are expected to complete by mid-2025.
In 2023, the Bank launched two significant new employee pro-
grammes in collaboration with the Danish Financial Sector’s Ed-
ucation Centre. The first deals with a learning culture
0
20
40
60
80
100
120
140
2021 2022 2023
Annual Report 2023
Management’s Review
31
programme for everyone at the Bank. The purpose is to de-
velop the Bank’s learning culture, so that the Bank’s employees
promote open, curious, secure and solution-oriented behav-
iour, and experience psychological security in the workplace,
while the Bank learns and develops in step with the employees.
This takes place, among other things, by working with
knowledge about learning, feedback culture, prioritisation and
planning, as well as knowledge sharing.
In addition, in 2023, a one-year training programme was
launched for 16 of the Bank’s private advisers, where they fo-
cus on training in customer interviews, customer types, per-
sonal planning and efficiency. This programme will be com-
pleted in 2024.
In 2023, it was possible to fill 97.9% of the positions available
in the Bank.
The total number of employees was 150 at the end of 2023.
The average age is 43.9 and the average length of service is 8
years and 2 months. The employees comprise 105 women and
45 men.
Partners
The BANK of Greenland is a full-service bank in Greenland. Via
cooperation agreements with the best operators within finan-
cial 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 en-
suring 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 develop-
ment 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 en-
suring balance between development, growth and stability in Green-
land’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 understand-
ing.
Creating financial understanding for the individual customer, com-
pany or citizen opens up new opportunities and gives insights in or-
der 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, organisa-
tions 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.
Employee involvement
We wish to involve our employees on a broad basis in our efforts to
create financial understanding and support other CSR-related pro-
jects, 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 fo-
cus on human rights, labour rights, environment and development,
and anti-corruption. We will actively manage our obligation to re-
spect the ten principles, including our obligation to manage human
rights in accordance with the UN Guiding Principles on Business and
Human Rights, and in particular in relation to our customers, em-
ployees 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 re-
spect 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 re-
serve 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.”
Annual Report 2023
Management’s Review
32
CSR on an everyday basis
The aforementioned are extracts from the BANK of Green-
land’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.
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 sus-
tainable 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 com-
prises various information concerning environmental, social and
governance factors.
The BANK of Greenland’s Statutory Corporate Social Respon-
sibility Report, cf. Section 135 of the Order on the financial re-
porting of credit institutions and investment service companies,
etc., is available on the Bank’s website:
https://www.banken.gl/en/investor/social-responsibility/
In 2026, the BANK of Greenland will use data from 2025 to
report ESG points in the annual report in accordance with the
EU’s Corporate Sustainability Reporting Directive (CSRD).
CSRD expands the scope of non-financial reporting with new
reporting requirements. As part of CSRD, it is mandatory to
prepare a double materiality analysis. Double materiality, as de-
fined in the new directive, CSRD includes impact materiality
and financial materiality. Impact materiality refers to the com-
pany’s impact on the environment and society. Financial materi-
ality concerns the risks and opportunities faced by the company
in relation to the environment and society. A sustainability issue
is considered to be material for a company if it fulfils the re-
quirements for impact materiality, financial materiality, or both.
In the autumn, the BANK of Greenland prepared the first dou-
ble materiality analysis. This work took place with the help of
the entire Bank’s value chain, including employees. The double
materiality analysis will be an annual recurring analysis that will
give visibility to the Bank’s most material ESG impacts. ESG
stands for Environment, Social and Governance and covers en-
vironmental, climate, social and governance issues.
In 2024, the Bank must ensure that reporting data for ESG re-
porting is available and as valid as possible for when the Bank is
to disclose the ESG points for the 2025 annual report.
Corporate governance and statutory corporate
governance statement
The BANK of Greenland’s objective is to adhere to the recom-
mendations at all times and to the greatest possible extent. The
Corporate Governance Statement can be found on the Bank’s
website: https://www.banken.gl/en/investor/corporate-govern-
ance/
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 un-
der-represented gender" is adjusted continuously. At the end of
2023, 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-rep-
resented gender to be at least 33%. The target level for the un-
der-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 opportuni-
ties for career development and management positions. At the
end of 2023, managers reporting to the CEO comprised 14%
women and 86% men. For the rest of the management team,
the distribution at the end of 2023 was 53% women and 47%
men (including deputy managers). 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
In accordance with Section 80(8) of the Danish Financial Activi-
ties Act, at least once a year the Bank must publish details of
the offices which the Board of Directors has approved for per-
sons 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
In accordance with Section 132 a of the Accounting Order, the
Annual Report must include details of the managerial posts held
Annual Report 2023
Management’s Review
33
by listed banks’ Board of Directors and Executive Management
members in business enterprises. Reference is made to pages
82-85.
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 Sec-
tor’s Education Centre or other external providers of this ser-
vice. This evaluation is the basis for an assessment of several
matters concerning the Board of Directors: the Board mem-
bers’ 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 most recent evaluation was prepared by the
Danish Financial Sector’s Education Centre in October 2023.
The evaluation of the Board of Directors was at a high level,
and it was concluded that the Board has a good overall combi-
nation of competences in relation to the Bank’s business model.
Training in new areas for the Board of Directors was organised
in 2024, 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 au-
thorised 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 con-
trol system, internal auditing and risk systems;
• Monitor the statutory audit of the Annual Report; and
• 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 calcula-
tion of the significant accounting estimates is reviewed and as-
sessed. The committee meets immediately prior to the meet-
ings of the Board of Directors.
The remit of the Audit Committee is presented here:
https://www.banken.gl/en/about-us/board-of-directors/the-au-
dit-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 Commit-
tee.
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 strat-
egy 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 liquid-
ity; and
• Assess the Bank’s insurance cover of risks.
The remit of the Risk Committee is presented here:
https://www.banken.gl/en/about-us/board-of-directors/the-au-
dit-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 2023, 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/remuner-
ation-committee/
Annual Report 2023
Management’s Review
34
The remit of the Remuneration Committee and the remunera-
tion 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 2023, 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 Di-
rectors.
• Evaluation of the Board of Directors and composition of
the Board of Directors based on the competence require-
ments.
• Determination of a diversity policy.
• Determination of a policy for the under-represented gen-
der 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 remit of the Nomination Committee is presented here:
https://www.banken.gl/en/about-us/board-of-directors/nomina-
tion-committee/
The number of meetings in 2023 and attendance of the meet-
ings of the Board of Directors and all four committees can be
seen here: https://www.banken.gl/en/about-us/board-of-direc-
tors/
The 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 As-
sociation may be amended by a decision of the general meeting
if the proposal is adopted by at least 2/3 of both the votes cast
and the share capital with voting rights represented at the gen-
eral 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 sev-
eral 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 2023, 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 three 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 sub-
ject 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 intermedia-
tion of mortgage-credit loans to the Bank’s customers. The co-
operation 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 au-
tomatically be deemed to have withdrawn from the coopera-
tion agreement with effect from the end of the calendar year in
which the shareholding was divested/deposited. The coopera-
tion 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 2023
Management Statement
35
The Board of Directors and Executive Management have today
reviewed and approved the Annual Report for the financial
year from 1 January to 31 December 2023 for Grønlands-
BANKEN, aktieselskab.
The Annual Report is presented in compliance with the legal
requirements, including the Danish Financial Activities Act and
the Executive Order on Financial Statements for Credit Institu-
tions and Investment Firms, etc. The Annual Report is further-
more prepared in accordance with Danish disclosure require-
ments 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 2023, and of the result of the Bank’s activi-
ties and cash flows for the financial year from 1 January to 31
December 2023.
It is our opinion that the Management’s Review gives a true and
fair review of the development in the Bank’s activities and finan-
cial affairs, as well as a description of the significant risks and un-
certainties to which the Bank is subject.
In our opinion, the Annual Report for the financial year 1 Janu-
ary to 31 December 2023 with the file name “80050410-
2023-12-31-da” has been prepared, in all material respects, in
compliance with the ESEF Regulation.
The Annual Report is submitted for approval by the Annual
General Meeting.
Management Statement
Nuuk
, 27 February 2024
Executive Management
Martin Birkmose Kviesgaard
Board of Directors
Gunnar í Liða
Kristian Frederik Lennert
Maliina Bitsch Abelsen
Chair
Vice Chair
Lars Holst
Pilunnguaq F.
Johansen Kristiansen
Tulliaq Angutimmarik Olsen
Niels Peter Fleischer Rex
Peter Angutinguaq Wistoft
Ellen Dalsgaard Zdravkovic
Annual Report 2023
Audit Statement
36
The independent auditor’s report
To the shareholders of GrønlandsBANKEN A/S
Opinion
We have audited the annual financial statements of Grønlands-
BANKEN A/S for the financial year from 1 January to 31 De-
cember 2023, 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 ac-
counting policies applied and the cash flow statement. The an-
nual 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 2023 and of the result of the Bank’s activi-
ties for the financial year 1 January – 31 December 2023 in ac-
cordance 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 au-
diting standards and additional requirements under Danish au-
diting legislation. Our responsibility according to these standards
and requirements is described further in “Auditor’s responsibil-
ity for the audit of the annual financial statements”. We are in-
dependent 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 ser-
vices as described in Article 5(1) of Regulation (EU) no.
537/2014 have been performed.
We were appointed auditors of GrønlandsBANKEN A/S for
the first time on 1 July 1967 for the financial year 1967. We
have been reappointed annually by decision of the general
meeting for a total contiguous engagement period of 57 years
up to and including the financial year 2023.
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 2023. 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 sepa-
rate opinion on these matters.
Audit Statement
Annual Report 2023
37
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 in-
consistencies with the annual financial statements or the
knowledge we have obtained from the audit, or otherwise ap-
pears to contain material misstatements.
It is also our responsibility to consider whether the Manage-
ment’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 Manage-
ment’s Review is in accordance with the annual financial state-
ments and has been prepared in accordance with the require-
ments 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 4,813 million and guarantees to
DKK 1,774 million at 31 December 2023 (lending
amounted to DKK 4,354 million and guarantees to DKK
1,934 million at 31 December 2022).
The determination of expected write-downs on loans and
provisions for losses on guarantees, etc. is subject to consid-
erable uncertainty and to a certain extent is based on mana-
gerial 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 mat-
ter.
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 manage-
ment has described the handling of credit risks and the as-
sessment 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 in-
corporated in the models, and as managerial additions to
the models.
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 expo-
sures 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 ap-
plied 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 calcula-
tion 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 2023
38
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 accord-
ance with the Financial Activities Act and the additional disclo-
sure requirements for listed financial companies in Denmark.
The management is also responsible for the internal control
deemed necessary by the management in order to prepare an-
nual 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 man-
agement is responsible for assessing the Bank’s ability to con-
tinue as a going concern, for disclosing information concerning
continuation as a going concern, where relevant, and for apply-
ing the going concern basis of accounting, unless the manage-
ment intends to either liquidate the Bank, discontinue opera-
tions, 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 misstate-
ment, whether this is due to fraud or error, and to issue an au-
ditor’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 applicable in Denmark will always
detect a significant material misstatement when it exists. Mis-
statements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasona-
bly 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 replicable in Denmark,
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 appro-
priate 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 in-
volve collusion, forgery, intentional omissions, misrepresen-
tations, or the overriding of internal control.
• Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropri-
ate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Bank’s in-
ternal control.
• Evaluate the appropriateness of the accounting policies ap-
plied 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 mate-
rial 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 uncer-
tainty exists, we are required to draw attention in our audi-
tor’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 evi-
dence 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 rep-
resent the underlying transactions and events in a manner
that achieves fair presentation.
We communicate with the top-level management regarding,
among other matters, the planned scope and timing of the au-
dit and significant audit findings, including any significant deficien-
cies in internal control that we identify during our audit.
We also provide those charged with government with a state-
ment that we have complied with relevant ethical requirements
regarding independence, and notify them of all relations and
other matters that might reasonably influence our independ-
ence and, where relevant, related safeguards put in place to and
measures taken to eliminate threats.
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 pe-
riod 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
very rare cases where we find that the matter is not to be
communicated in our auditor’s report because its negative con-
sequences might reasonably be expected to carry greater
weight than the advantages to the general public of such disclo-
sure.
Annual Report 2023
39
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 or-
der to express an opinion as to whether the Annual Report for
01 January – 31 December 2023, with the file name
”80050410-2023-12-31-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 an-
nual 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 in-
clude control that the annual report is prepared in XHTML
format.
It is our opinion that, in all material respects, the Annual Report
for 01 January – 31 December 2023, with the file name
”80050410-2023-12-31-da”, has been prepared in accordance
with the ESEF Regulation.
Copenhagen, 27 February 2024
Deloitte
Statsautoriseret Revisionspartnerselskab
CVR no. 33 96 35 56
Anders O. Gjelstrup
State
-Authorised Public Accountant
MNE no.
mne10777
Annual Report 2023
Statement of Income
40
Annual Report 2023
Statement of Income
41
Statement of Income
DKK 1,000
Notes
2023
2022
3
Interest income
417,162
227,093
4
Negative interest income
0
-1,824
5
Interest expenses
87,468
3,040
6
Positive interest expenses
0
-20,995
Net interest income
329,694
243,224
Share dividend, etc.
2,155
1,822
7
Fees and commission income
103,933
106,796
Fees paid and commission expenses
769
357
Net interest and fee income
435,013
351,485
8
Value adjustments
40,057
-39,356
Other operating income
5,803
6,588
9, 10
Staff and administration expenses
211,166
195,056
Depreciation and impairment of tangible assets
8,158
7,320
Other operating expenses
2,815
2,706
13
Write
-downs on loans and receivables, etc. 14,160
4,523
Profit before tax
244,574
109,112
11
Tax
52,179
10,361
Profit for the year
192,395
98,751
PROPOSED ALLOCATION OF PROFIT
Profit for the year
192,395
98,751
In total available for allocation
192,395
98,751
Proposed dividend
99,000
36,000
Retained profit
93,395
62,751
Total allocation
192,395
98,751
Annual Report 2023
Statement of Comprehensive Income
42
Statement of Comprehensive Income
DKK 1,000
2023
2022
Profit for the year
192,395
98,751
Other comprehensive income:
Value adjustment of properties
5,643
32,030
Value adjustment of defined-benefit severance/pension scheme
-96
-93
Tax on value adjustment of properties
-1,411
-8,007
Other comprehensive income after tax
4,136
23,930
Comprehensive income for the year
196,531
122,681
Annual Report 2023
Balance Sheet
43
Balance Sheet
(year-end)
DKK 1,000
Notes
2023
2022
Cash balance and demand deposits with central banks
1,552,747
1,396,401
12
Receivables from credit institutions and central banks
120,150
118,619
13
Loans and other receivables at amortised cost
4,812,975
4,353,585
14
Bonds at fair value
1,303,120
1,156,821
15
Shares, etc.
135,614
120,063
18
Assets connected to pool schemes
513,822
394,576
Land and buildings in total
298,142
284,370
16
- Domicile properties
298,142
284,370
17
Other tangible assets
6,781
6,007
Other assets
93,202
115,145
Accruals and deferred income
4,428
3,979
Total assets
8,840,981
7,949,566
19
Liabilities to credit institutions and central banks
22,105
22,598
20
Deposits and other liabilities
6,413,469
5,942,479
Deposits in pool schemes
513,822
394,576
21
Issued bonds at amortised cost
173,969
74,563
Current tax liabilities
11
18,861
Other liabilities
63,274
58,527
Prepayments and deferred expenses
5,451
7,535
Total debt
7,192,101
6,519,139
Provisions for pensions and similar obligations
2,506
2,097
22
Provisions for deferred tax
84,762
67,126
13
Provisions for losses on guarantees
9,733
8,036
Other provisions
8,427
9,868
Total provisions
105,428
87,127
23
Subordinated debt
64,329
24,708
Total subordinated debt
64,329
24,708
Equity
24
Share capital
180,000
180,000
Revaluation reserves
65,883
61,651
Retained earnings 1,134,240
1,040,941
Proposed dividend
99,000
36,000
Total equity
1,479,123
1,318,592
Total liabilities
8,840,981
7,949,566
1
Accounting policies applied
2
Financial risks and policies
25-35
Other Notes
Annual Report 2023
Statement of Changes in Equity
44
Statement of Changes in Equity
DKK 1,000
Share capital
Revaluation
reserves
Retained
earnings
Proposed divi-
dend, net
Total equity
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 period
0
0 62,751
36,000
98,751
Equity, 31 December 2022
180,000
61,651
1,040,941
36,000
1,318,592
Equity, 1 January 2023
180,000
61,651 1,040,941
36,000
1,318,592
Dividend paid
0
0 0
-36,000
-36,000
Other comprehensive income
0
4,232 -96
0
4,136
Profit for the year
0
0 93,395
99,000
192,395
Equity, 31 December 2023
180,000
65,883 1,134,240
99,000
1,479,123
Annual Report 2023
Cash Flow Statement
45
Cash Flow Statement
DKK 1,000
2023
2022
Profit for the year
192,395
98,751
Write-downs on loans
14,160
4,523
Depreciation and impairment of tangible assets
8,158
7,320
Recognised profit on sale of tangible assets
-360
-275
Accruals and deferred expenses, net
-2,533
-112
Profit for the year after adjustment for non
-cash operating items 211,820
110,207
Liabilities to credit institutions and central banks
-493
9,453
Deposits
590,236
612,647
Issued bonds
141
93
Subordinated debt
63
0
Lending
-473,550
-574,427
Other working capital
-112,854
-61,669
Other liabilities
2,692
-7,968
Change in working capital
6,235
-21,871
CASH FLOWS FROM OPERATING ACTIVITIES
218,055
88,336
Sale of tangible assets
904
325
Purchase, etc. of tangible assets
-17,606
-11,773
CASH FLOWS FROM INVESTMENT ACTIVITIES
-16,702
-11,448
Dividend paid
-36,000
-72,000
Bond issue, including amortisation effect
99,265
24,828
Subordinated debt issue, including amortisation effect
39,558
24,708
CASH FLOWS FROM FINANCING ACTIVITIES
102,823
-22,464
CHANGE IN CASH AND CASH EQUIVALENTS
304,176
54,424
Cash and cash equivalents, beginning of year
2,621,841
2,567,417
Cash and cash equivalents, end of year
2,926,017
2,621,841
Cash balance and demand deposits with central banks
1,552,747
1,396,401
Fully secured and liquid cash and cash equivalents in credit institutions, cf. Note 12
120,150
118,619
Non
-mortgaged securities 1,253,120
1,106,821
Cash and cash equivalents, end of year
2,926,017
2,621,841
Annual Report 2023
Cash Flow Statement
46
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
47
1. Accounting policies applied 48
2. Financial risks and policies and targets for management of financial risks 53
3. Interest income 64
4. Negative interest income 64
5. Interest expenses 64
6. Positive interest expenses 64
7. Fees and commission income 64
8. Value adjustments 64
9. Staff and administration expenses 65
10. Audit fees 65
11. Tax on the profit for the year 66
12. Receivables from credit institutions and central banks 66
13. Lending 66
14. Bonds at fair value 69
15. Shares, etc. 69
16. Head office properties 69
17. Other tangible assets 69
18. Assets connected to pool schemes 69
19. Debt to credit institutions and central banks 70
20. Deposits and other liabilities 70
21. Issued bonds at amortised cost 70
22. Provisions for deferred tax 71
23. Subordinated debt 71
24. Share capital 71
25. Capital statement 72
26. Contingent liabilities 72
27. Legal cases 72
28. Currency exposure 73
29. Interest risk rate 73
30. Related parties 73
31. Derivative financial instruments 74
32. Fair value of financial instruments 76
33. Sensitivity calculations 78
34. Five-Year Financial Highlights and Key Figures 79
35. Definition of key ratios 80
Overview of Notes
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
48
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 2022.
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 ac-
crue 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 recogni-
tion takes place as described for each accounting item below.
On recognition and measurement, account is taken of predicta-
ble risks and losses arising before the presentation of the An-
nual 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 fi-
nancial year. However, increases in the value of head office
properties that do not match previous impairment are recog-
nised 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 re-
ceive/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 owner-
ship. The BANK of Greenland does not apply the rule on re-
classification of certain financial assets from fair value to amor-
tised 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 manage-
ment in accordance with accounting policies, and on the basis
of historical experience, as well as assumptions which the man-
agement 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 as-
sumptions and estimates are significant to the accounts, are
stated below.
On the preparation of the annual financial statements, the man-
agement 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 State-
ments 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 meas-
urement of these assets and liabilities, and the significant estima-
tion uncertainty related to the preparation of the Annual Re-
port for 2023, 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
assumptions. If these assumptions are changed, the
Notes to the Annual Report,
including Accounting policies
applied
1.
Accounting policies applied
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
49
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 esti-
mates 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 percent-
age yield of e.g. 0.5% would change the valuation of this
property by DKK 8 million. 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 broker assessments of a
wide selection of the Bank’sproperties, to support the valuation.
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 ac-
tive 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 recog-
nised valuation techniques, which are based on observable cur-
rent 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 instru-
ments) 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. Receiv-
ables, 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. Ex-
change-rate differences arising between the rate on the trans-
action 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 redemp-
tion 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 Den-
mark on contributions to support financial stability in Green-
land. The contribution is divided into directly attributable com-
pensation contributions for the Bank’s MREL issuance costs,
and a basic amount.
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-enti-
tled interest items, or negative interest income and interest ex-
penses, respectively.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
50
Basic amounts received are not directly attributable to a single
cost element and are therefore recognised under other operat-
ing income. Compensation is recognised in the statement of in-
come in the relevant period.
The Bank has no unfulfilled commitments at the balance sheet
date, or other contingent items related to the public compensa-
tion.
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. Com-
mission and fees which are an integrated element of the effec-
tive interest rate on a loan are recognised as part of the amor-
tised 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 in-
terest 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 in-
terest rate is calculated on the basis of the contractual out-
standing 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 meet-
ing.
Value adjustments
Value adjustments comprise realised and unrealised value ad-
justments of assets and liabilities measured at fair value. Ex-
change rate adjustments and the effect of value adjustments of
hedge accounting are also included in the value adjustment.
Staff and administration expenses
Staff costs comprise salaries and social security expenses, pen-
sions, 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 pro-
grammes are recognised in the statement of income in the fi-
nancial year to which the cost can be attributed.
Administration expenses include IT expenses, marketing, insur-
ance, etc.
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 pen-
sion 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 man-
aged 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 in-
come, and profit and loss on sale of the Bank’s properties.
Other operating expenses include expenses of a secondary na-
ture in relation to the Bank’s activities, including operation and
maintenance of the Bank’s head office properties, and contribu-
tions 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.
Current tax liabilities are recognised in the balance sheet, com-
piled as the tax calculated on the taxable income for the year.
When calculating the taxable income,
Greenland is entitled to deduct dividends.
Deferred tax is recognised on all temporary difference be-
tween accounting values and taxable values of assets and liabili-
ties.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
51
Balance sheet
Cash balance and demand deposits with
central banks
Comprise cash balances and demand deposits at central banks
and are measured at fair value on first recognition, and subse-
quently measured at amortised cost.
Receivables from and debt to credit institutions and
central banks
Comprises receivables from credit institutions and time depos-
its 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 commis-
sion received, which are an integral element of the effective in-
terest rate.
Loans are measured at amortised cost, which is usually equiva-
lent 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 tech-
niques include the use of equivalent recent transactions be-
tween 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 sepa-
rate balance sheet items. Pool schemes are managed by an ex-
ternal partner. The Bank’s own return on pool activities is car-
ried under fee and commission income.
Head office properties
All of the Bank’s properties are defined as head office proper-
ties, including staff accommodation. Staff accommodation is as-
sessed to be necessary, to ensure the recruitment of new staff.
Properties are measured according to first recognition at re-as-
sessed 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 as-
sessment is obtained of the market value of the Bank’s head of-
fice 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 an-
nually on the basis of calculated capital values for the expected
future cash flows.
Increases in head office properties’ reassessed value are recog-
nised 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 build-
ings, and over 50 years to staff accommodation.
The head office property and newer bank buildings and staff
accommodation are written down to scrap value.
Other tangible assets
Machinery and fixtures and fittings are measured at cost less ac-
cumulated 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
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
52
of the financial year, including interest receivable. With the ex-
ception 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 com-
prise defrayed costs concerning subsequent financial years. Ac-
cruals 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 commis-
sion received, which are an integral element of the effective in-
terest rate.
Deposits and other liabilities comprise deposits with counter-
parties that are not credit institutions or central banks. Deposits
and other liabilities are measured at fair value on first recogni-
tion, 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 lia-
bility items. The item includes the negative market value of de-
rivative 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 in-
struments 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 amor-
tised 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 ac-
crued interest and commission. Prepayments and deferred in-
come 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 fi-
nancial 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. Obliga-
tions 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, irrevo-
cable credit undertakings and similar obligations that are not
carried to the balance sheet. Guarantees are measured at nom-
inal value, with deduction of loss provisions. Provisions for
losses are recognised under “Write-downs on loans and receiv-
ables, 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, invest-
ments and financing, and the Bank’s liquid assets at the begin-
ning 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 concern-
ing investment activities comprise payments concerning pur-
chase and sale of companies, activities and the purchase, devel-
opment, 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.
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 uncollateral-
ised 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 Su-
pervisory Authority.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
53
General
In accordance with Section 16 of the Order on the manage-
ment 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 so far
assessed that the Bank’s size, simple structure and uncompli-
cated activities do not justify a separate risk management func-
tion. The risk management function is therefore anchored in
the Executive Management. On the basis of the Bank’s develop-
ment, a risk director was appointed in 2023, who is expected
to be appointed as responsible for risk management.
The BANK of Greenland is exposed to various types of risk.
The objective of the Bank’s risk management policies is to mini-
mise the losses which may arise as a consequence of e.g. un-
foreseen development in the financial markets. The Bank works
with a balanced risk profile, both in credit terms and on the fi-
nancial markets. The Bank solely uses derivative financial instru-
ments (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 man-
agement, 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 ac-
tivities.
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 obli-
gations 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 di-
versification, whereby risk exposure is matched to the bor-
rower’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;
2.
Financial risks and policies and targets for management of financial risks
DKK 1,000
2023
2022
Maximum credit exposure
Cash balances and demand deposits at central
banks 1,552,747
1,396,401
Receivables from credit institutions and central banks
120,150
118,619
Loans and other receivables at amortised cost
4,812,975
4,353,585
Bonds at fair value
1,303,120
1,156,821
Shares, etc.
135,614
120,063
Other
assets, including derivative financial instruments 93,202
115,145
Off
-balance-sheet items
Guarantees
1,774,426
1,934,125
U
nutilised facilities 1,983,304
2,490,902
Exposure specification
Lending, cf. Note 13
4,812,975
4,353,585
Guarantees, cf. Note 25
1,774,426
1,934,125
Write
-downs and provisions on guarantees, cf. Note 13 205,599
188,045
Other adjustments
-20,398
-26,767
Gross exposure, cf. below
6,772,602
6,448,988
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
54
• As a general rule, loans, etc. to private customers are only
granted to customers resident in Greenland, or to custom-
ers 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 some-
what higher risk profile, and also supports existing custom-
ers 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 be-
tween 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 (pri-
mary), smaller towns (secondary), settlements and villages (ter-
tiary) and abroad (other), cf. Figure 3. According to the Bank’s
business model, lending and guarantees outside Greenland are
maximised at 10% of total lending and guarantees.
Figure
2
Lending and guarantee debtors by industries under business
0,0%
0,1%
0,5%
0,6%
2,5%
4,1%
8,6%
9,4%
9,4%
21,7%
2.3 Energy supply
2.7 Information and communication
2.2 Industry and extraction of minerals
2.8 Financing and insurance
2.1 Agriculture, hunting and forestry, and fishing
2.10 Other business
2.4 Building and construction i total
2.6 Transport, hotels and restaurants in total
2.5 Trade
2.9 Purchase and sale of real estate in total
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
55
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 au-
thorisations at credit department level and higher, and via ran-
dom sample controls in the individual departments.
Collateral security
The BANK of Greenland wishes to have adequate collateral se-
curity 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 commer-
cial);
• Mortgages on movable property, cars, boats, snow scoot-
ers, operating equipment, etc.;
• Mortgages on fishing vessels;
• Mortgages on fishing rights;
• Mortgages on easily negotiable securities;
• Surety pledges;
• Assignments; and
• Charges on units/shares in the companies to which
credit facilities have 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 condi-
tions, 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 valua-
tion 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 as-
sessed valuations are therefore based on the Bank’s current ex-
perience of market values for the trades completed.
The BANK of Greenland is involved in 70-80% of all property
transactions in Greenland and therefore has a large body of ex-
perience 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 con-
sequence of impairment or changes in practice concerning
89%
4%
3%
4%
Primary Secondary Tertiary Abroad
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
56
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:
• Stage 1 concerns assets for which there has been no signifi-
cant increase in credit risk. In this stage, the write-downs
equivalent to the expected 12-month credit loss are calcu-
lated.
• Stage 2 concerns assets for which there has been a signifi-
cant 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 as-
sessment of the credit loss in the asset’s lifetime.
There have been no changes in significant assumptions and val-
uation methods during the financial period.
Write-downs on loans and receivables are carried to an adjust-
ment 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 pro-
visions 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 re-
lation 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 percent-
age 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 in-
creased 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 in-
crease 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 in-
terest.
• 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 bank-
ruptcy or be subject to other financial restructuring.
• Lapse of an asset.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
57
Furthermore, the loan is at the latest assessed to be credit-im-
paired 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 calculation for exposures in stage 3,
where the risk mitigating collateral value amounts to more than
DKK 100,000, while other exposures are subject to model cal-
culation. 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 ei-
ther 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 qualita-
tive 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 individ-
ual inputs and also forward-looking information, including mac-
roeconomic conditions.
Determination of input to the write-down model
Input to the write-down model is based on the historical infor-
mation developed by the Bank’s data centre using statistic mod-
els.
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 es-
timated probability applying to a specific time (12-month PD).
Lifetime PD is compiled on the basis of 12-month PD accord-
ing to mathematical models and projections of 12-month PD.
This is based on expectations of the future and the develop-
ment 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 infor-
mation 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, in-
cluding 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 addi-
tion to collateral. Account is also taken of any price reduction if
the collateral is to be realised within a shorter period. The ex-
pected 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 main-
tained 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 indus-
tries, and a number of explanatory macroeconomic variables.
These relations are then subject to estimates of the macroeco-
nomic variables, based on prognoses from consistent 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, in-
crease in GDP, interest, etc. The prognoses are based on Dan-
ish figures. The Danish forecasts are currently perceived to be
applicable to conditions in Greenland, which is, however,
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
58
subject to some uncertainty – see also the section on manage-
rial additions.
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 cor-
rect the data centre’s estimates in the individual sectors and in-
dustries. The institution makes adjustments to these, based on
own expectations of the future, and according to the composi-
tion of the loans.
Managerial additions
Both IFRS 9 and the Danish Executive Order on Financial State-
ments 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 assess-
ment of a potentially greater risk on the Bank’s exposures than
is justified by the historical write-downs.
In both 2022 and 2023, the managerial additions is based pri-
marily on uncertainties concerning the model calculations, risk
assessment at sector level and the macroeconomic influences.
As a consequence of inflation, interest rate increases and cycli-
cal uncertainty, the BANK of Greenland has made a risk assess-
ment at industry level, where a general change in creditworthi-
ness at portfolio level, and the derived increased impairment
write-downs, are estimated. On this basis, the Bank has allo-
cated a management additions of DKK 45.6 million against a
supplement of DKK 41.8 million in 2022. This also includes a
method risk supplement.
Managerial additions broken down by stages
Stage 1
TDKK
Stage 2 and
2SVAG
TDKK
Managerial addi-
tions total TDKK
Business
5,698
21,709
27,407
Private
5,172
12,990
18,162
I alt
10,870
34,699
45,569
Write-downs in stage 3:
Write-downs on credit-impaired loans are compiled as the ex-
pected loss based on a number of possible outcomes for the
borrower’s situation and the Bank’s credit handling. The ex-
pected 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 com-
piled 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 origi-
nally determined. For variable-interest-rate loans and receiva-
bles, the current effective interest rate on the loan or receiva-
ble is used.
The general rule is that the write-down comprises the expo-
sure, 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 rea-
sonable expectation that outstanding amounts will be paid in, is
based on the concrete circumstances of the individual bor-
rower. 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. For companies, this is typically until the borrower has
completed bankruptcy proceedings, schemes of arrangement,
etc. For private individuals, it will still be sought to enter into
voluntary payment schemes and to take any legal collection
steps.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
59
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
%
2023
Public
689,217 10
695
0
Business:
Agriculture and fisheries
171,614 3
6,172
3
Industry and extraction of minerals
31,217 0
1,544
1
Energy supply
1,658 0
319
0
Construction and civil engineering
579,503 9
34,693
17
Trade
635,101 9
17,376
8
Transport, restaurants and hotels
633,847 9
14,975
7
Information and communication
4,760 0
162
0
Financing and insurance
37,447 1
668
0
Real estate
1,470,912 22
40,979
20
Other business
278,304 4
19,183
9
Business in total
3,844,363 57
136,071
66
Private
2,239,021 33
71,541
34
In total
6,772,601
100
208,307
100
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
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
60
Credit exposure distributed on classification, creditworthiness and stages
Classification
The Bank of Greenland
Classification
Danish Finan-
cial Supervi-
sory Authority
Stage 1
TDKK
Stage 2
TDKK
Stage 2SVAG
TDKK
Stage 3
TDKK
In total
TDKK
Rating 1
– 3
3/2A
3,445,291
74,057 0
0
3,519,348
Rating 4
– 8
2B
1,858,722
509,413 479,879
0
2,848,014
Rating 9
– 10
2C
0
0 199,949
0
199,949
Rating 11
1
0
0 0
205,290
205,290
In total
5,304,013
583,470 679,828
205,290
6,772,601
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
689,205
12
0
0
689,217
Business:
Agriculture and fisheries
139,169
12,688
11,619
8,138
171,614
Industry and extraction of miner-
als
25,361
3,425
1,498
933
31,217
Energy supply
1,197
0
72
389
1,658
Construction and civil
engineer-
ing
386,754
38,081
129,095
25,574
579,504
Trade
519,569
35,119
72,592
7,821
635,101
Transport, restaurants and hotels
522,432
23,031
81,004
7,381
633,848
Information and communication
4,566
6
188
0
4,760
Financing and insurance
30,685
4,746
2,016
0
37,447
Real estate
1,153,826
65,885
212,191
39,010
1,470,912
Other business
153,634
63,076
25,405
36,189
278,304
Business in total
2,937,193
246,055
535,681
125,434
3,844,363
Private
1,677,615
337,403
144,147
79,856
2,239,021
In total
5,304,013
583,470
679,828
205,290
6,772,601
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
61
Reason for value adjustment of exposures in stage 3
Credit exposures
before write-
downs
Write-downs
Accounting value
Collateral secu-
rity
Maximum credit
risk
2023
Bankruptcy
8,316
6,817
1,499
1,499
0
Collection
14,721
11,309
3,412
3,412
0
Financial difficulties
182,253
78,378
103,875
65,812
38,064
In total
205,290
96,504
108,786
70,723
38,064
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
Credit quality of exposures in general
Arrears or overdrafts > DKK 1,000
In DKK 1,000
2023
2022
0
-30 days 1,433
794
31
-60 days 1,086
408
61
-90 days 511
210
> 90 days
444
475
In total
3,474
1,887
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 creditworthi-
ness scale.
Credit exposures before write
-downs distributed by creditworthiness
Creditworthiness distributed on the Danish FSA’s categories from 3 to 1, where categ
ory 3 is included in 2a.
DKK 1,000
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)
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
62
The BANK of Greenland has no “non-impaired loans or guar-
antees” for which the loan terms have been eased as a conse-
quence of a borrower’s financial difficulties.
Market risk
The BANK of Greenland’s market risk is managed by fixed lim-
its 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 re-
ports 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 Depart-
ment also prepares a
report on a random day of the month, which is reported to
the Executive Management.
Interest rate risk
The Board of Directors’ guidelines for the Executive Manage-
ment 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 Dan-
ish Financial Supervisory Authority’s guidelines.
The Bank has set a minimum framework 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 manage-
ment of the Bank’s bond holdings to an external portfolio man-
ager. The portfolio manager is subject to the aforementioned
risk framework and works on the basis of a duration of 1.25-
1.75 years. Reference is made to Notes 29 and 31.
Share risk
The Board of Directors’ guidelines for the Executive Manage-
ment include a maximum shareholding (excluding sector
shares) for the risk which the Bank may assume. The Bank cur-
rently does not hold listed shares. Reference is made to Note
15.
Currency risk
The BANK of Greenland has adopted guidelines for the curren-
cies in which exposure is permitted, and the maximum expo-
sure for each currency. All significant currency exposures are
covered. The Bank had no significant currency exposures at the
end of 2023. Reference is made to Note 28 for further infor-
mation 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 fraction at level 175-225. LCR for the BANK of Greenland
is calculated at 259.0 % as of the end of 2023. Reference is also
made to key figures for LCR, as well as the key figures for lend-
ing 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 follow-
ing are examples. The Bank’s procedures are reviewed and re-
assessed at least once every other year, unless there are
changes in a procedure due to e.g. legislative changes, proce-
dural 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 re-
port 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 opera-
tional risks can be limited.
The BANK of Greenland considers dependence on key em-
ployees 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 individ-
ual persons in key roles in the Bank, and the Bank continuously
assesses the outsourcing of operating areas that are not im-
portant to the Bank’s competitiveness. The Bank also has great
focus on continuously improving the internal and external re-
cruitment 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 dis-
rupt operations. In the case of a geographically limited outage in
the branch network, the other branches will be able to con-
tinue 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 ex-
ternal premises. Customer-oriented temporary operations can
be established within one day.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
63
The Bank’s IT operations take place at Bankernes EDB Central
(BEC). The Bank closely follows the instructions and recom-
mendations received, just as the Bank does not undertake inde-
pendent development of IT systems.
The BANK of Greenland has entered into cooperation on in-
ternal 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 ex-
ternal and internal requirements at all times.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
64
3. Interest income
Receivables from credit institutions and central banks
49,448
1,150
Lending and other receivables
336,767
218,531
Bonds
29,770
7,412
Foreign exchange,
interest rate, equity, commodity and other contracts, as well as derivative fi-
nancial instruments
1,177
0
Total interest income
417,162
227,093
4. Negative interest income
Receivables from credit institutions and central banks
0
-1,074
Foreign exchange, interest rate, equity, commodity and other contracts, as well as derivative fi-
nancial instruments
0
-750
Total negative interest
0
-1,824
5. Interest expenses
Credit institutions and central banks
151
0
Deposits and other
liabilities 87,256
3,040
Issued bonds
61
0
Total interest expenses
87,468
3,040
6. Positive interest expenses
Credit institutions and central banks
0
-11
Deposits and other liabilities
0
-20,984
Total positive interest expenses
0
-20,995
7. Fees and commission income
Securities and securities accounts
7,780
8,629
Payment settlement
37,456
38,042
Loan transaction fees
4,968
5,589
Guarantee commission
31,134
32,228
Other fees and commission
22,595
22,308
Total fee and commission income
103,933
106,796
8. Value adjustments
Lending at fair value
1,982
-7,577
Bonds
23,654
-49,488
Shares
10,178
4,486
Currency
6,253
5,473
Foreign exchange, interest rate, equities, commodities and other contracts, as well as
derivative financial instruments
-2,010
7,750
Assets connected to pool schemes
42,371
-46,125
Deposits in pool schemes
-42,371
46,125
Total value adjustments
40,057
-39,356
Note 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 there-
fore disclosed.
DKK 1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
65
DKK 1,000
2023
2022
9. Staff and administration expenses
Staff expenses
Salaries 93,862
91,485
Other staff expenses 3,068
2,271
Pensions 11,613
10,979
Social security expenses 569
484
In total
109,112
105,219
Other administration expenses
102,054
89,837
The average number of employees in the financial year, converted to full
-time employees 143.5
137.4
Of which salaries and remuneration to the Board of Directors and the Executive Management
6,345
5,788
Six other employees (2022: five employees) whose activities have a significant influence on the
Bank’s risk profile:
Contractual remuneration, including free car and other benefits
6,571
5,449
Pension
802
675
10. Audit fees
Statutory audit of the annual financial statements
990
677
Other declarations with assurance
48
114
Tax advisory services
0
21
Other
services 382
30
Total fees to the auditors elected by the Annual General Meeting, who perform
the statutory audit
1,420
842
Non
-auditing services are provided by Deloitte, Statsautoriseret Revisionspartnerselskab and
comprise fees for mandatory declarations and general tax advisory.
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
66
DKK 1,000
2023
2022
11. Tax on the profit for the year
Tax on the profit for the year is calculated as follows:
Current tax
35,954 19,569
Deferred tax
16,225
-9,760
Change in deferred tax as a consequence of a change in the corporate tax supplement
0 -528
Adjustment to deferred tax prior year
0 1,080
In total
52,179 10,361
Tax on the profit for the year is broken down as follows:
Calculated 25% (2022: 26.5%) tax on the profit for the year
61,144 28,915
Change in deferred tax as a consequence of a change in the corporate tax supplement
0 -528
Adjustment to deferred tax prior year
0
1,080
Other adjustments
35 -26
Tax
value of dividend deduction -9,000 -19,080
In total
52,179 10,361
Effective tax rate
21.3% 9.5%
Corporate tax paid in 2023 amounts to TDKK 54,305
12. Receivables from credit institutions and central banks
On demand 72,150
60,619
Up to and including 3 months
15,000
0
Over 3 months and up to and including 1 year
33,000
40,000
Over 1 year and up to and including 5 years
0
18,000
In total
120,150
118,619
Receivables from credit institutions 120,150
118,619
In total
120,150
118,619
13. Lending
Write-downs on loans, guarantees and non-utilised credit facilities
New write-downs concerning new facilities during the year
16,292
20,471
Reversal of write-downs concerning redeemed facilities
-16,688
-17,415
Net write
-downs during the year as a consequence of changes in the credit risk 14,998
3,146
Losses without preceding write-downs
158
593
Received for claims previously written off
-600
-2,272
Recognised in the statement of income
14,160
4,523
Lending at amortised cost
4,812,975
4,353,585
Total lending by remaining term to maturity:
On demand
1,296,564
1,273,564
Up to and including 3 months
239,232
150,106
Over 3 months and up to and including 1 year
678,677
589,010
Over 1 year and up to and including 5 years
1,355,977
1,317,266
Over 5 years
1,242,525
1,023,639
In total
4,812,975
4,353,585
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
67
DKK 1,000
Stage 1
Stage 2
Stage 3
Total
Lending - continued
Write-downs on loans
31.12.2023
Start of the period
28,826
64,706
86,477 180,009
New write
-downs concerning new facilities during the year 5,007
9,510
1,016 15,533
Reversal of write
-downs concerning redeemed facilities -3,019
-2,942
-7,625 -13,586
Change in write
-downs at the beginning of the year –
transfer to stage 1
6,524
-5,889
-635 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-1,354
7,445
-6,091 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
-136
-1,229
1,365 0
Net write
-downs as a consequence of changes in the credit risk -8,547
6,402
15,215 13,070
Previously written down, now finally lost
-3,593 -3,593
Interest on written
-down facilities
4,433 4,433
Write
-downs in total 27,301
78,003
90,562
195,866
Write-downs on guarantees
31.12.2023
Start of the period
1,239
1,025
5,772 8,036
New write
-downs concerning new facilities during the year 201
414
16 631
Reversal of write
-downs concerning redeemed facilities -2
-3
-68 -73
Change in write
-downs at the beginning of the year –
transfer to stage 1
2,070
-154
-1,916 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-117
179
-62 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
-7
-48
55 0
Net write
-downs as a consequence of changes in the credit risk -2,288
1,282
2,145 1,139
Write
-downs in total 1,096
2,695
5,942
9,733
Write-downs on non-utilised drawing rights
31.12.2023
Start of the period
498
547
3,776 4,821
New write
-downs concerning new facilities during the year 21
107
0 128
Reversal of write
-downs concerning redeemed facilities -159
-34
-2,836 -3,029
Change in write
-downs at the beginning of the year –
transfer to stage 1
28
-3
-25 0
Change in write
-downs at the beginning of the year –
transfer to stage 2
-6
497
-491 0
Change in write
-downs at the beginning of the year –
transfer to stage 3
0
-1
1 0
Net write
-downs as a consequence of changes in the credit risk -37
-596
1,422 789
Write
-downs in total 345
517
1,847
2,709
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
68
DKK 1,000
Stage 1
Stage 2
Stage 3
Total
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
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 –
0
transfer to stage 1
557
-555
-2
Change in write
-downs at the beginning of the year –
0
transfer to stage 2
-41
724
-683
Change in write
-downs at the beginning of the year –
0
transfer to stage 3
-1
0
1
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
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
69
DKK 1,000
2023
2022
14. Bonds at fair value
Mortgage
-credit bonds 1,303,120
1,156,821
In total
1,303,120
1,156,821
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
0
Unlisted shares included at fair value
135,614
120,063
Reassessed value, year-end
135,614
120,063
16. Head office properties
Reassessed value, beginning of year
284,370
247,292
Additions during the year, including improvements
14,442
9,703
Disposals during the year
-544
0
Write
-offs -6,169
-5,056
Value changes recognised in other comprehensive income
5,642
32,030
Value changes recognised in the
statement of income 401
401
Reassessed value, year-end
298,142
284,370
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
accommodation in Nuuk was
obtained. The total change in value amounts to TDKK 32,431
in 2022.
No e
xpert assessment was obtained for the assessment of the Bank's other domicile proper-
ties.
17. Other tangible assets
Cost, beginning of year
31,401 56,637
Additions during the year, including improvements
3,164 2,070
Disposals during the year
-753 -27,306
Cost, year-end
33,812
31,401
Depreciation and write
-downs, beginning of year 25,394 49,985
Depreciation for the year
2,390 2,664
Reversal of depreciation concerning disposals
-753 -27,255
Depreciation and
write-downs, year-end 27,031 25,394
Accounting value, year-end
6,781
6,007
18. Assets connected to pool schemes
Investment associations
513,734
394,308
Non-invested funds
88
268
In total
513,822
394,576
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
70
19. Debt to credit institutions and central banks
On demand
22,105
22,598
In total
22,105
22,598
Debt to central banks
18,975
19,475
Debt to credit institutions
3,130
3,123
In total
22,105
22,598
20. Deposits and other liabilities
On demand
5,265,508
5,241,972
Up to 3 months
20,450
0
Over 3 months and up to and including 1 year
688,767
266,021
Over 1 year and up to and including 5 years
0
18,000
Over 5 years
438,744
416,486
In total
6,413,469
5,942,479
On demand
5,265,508
5,241,972
On terms of notice
858,360
442,216
Special deposit conditions
289,601
258,291
In total
6,413,469
5,942,479
21. Issued bonds at amortised cost
Bond issue
173,969
74,563
In total
173,969
74,563
Distribution in remaining duration
Over 1 year and up to and including 5 years
173,969
74,563
In total
173,969
74,563
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 re-
demption on 27 October 2026. The Bank has the option of early redemption as from 27 Oc-
tober 2025.
Loan raised as Senior Non
-Preferred, nominally 25,000
25,000
The loan was raised as Senior Non
-Preferred on 2 September 2022 and falls due for full re-
demption on 2 September 2027. The Bank has the option of early redemption as from 2 Sep-
tember 2026.
Loan raised as
Senior Non-Preferred, nominally 100,000
-
The loan was raised as Senior Non
-Preferred on 1 December 2023 and falls due for full re-
demption on 1 December 2030. The Bank has the option of early redemption as from 1 De-
cember 2027.
DKK
1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
71
22. Provisions for deferred tax
The year’s changes in deferred tax can be summarised as follows:
Deferred tax, beginning of year
67,126
68,326
The year’s deferred tax recognised in the statement of income for the year
16,225
-9,760
Adjustment of deferred tax concerning equity items
1,411
8,008
Adjustment to deferred tax prior year
0
1,080
Change in deferred tax as a consequence of a change in the corporate tax supplement
0
-528
In total
84,762
67,126
Deferred tax concerns:
Head office properties
59,406
57,614
Operating equipment
606
512
Proposed dividend for the financial year
24,750
9,000
In total
84,762
67,126
23. Subordinated debt
Capital certificate as below
64,329
24,708
In total
64,329
24,708
Subordinated debt included in the capital base according to CRR
64,329
24,708
Loan raised as subordinated debt, nominally
25,000
25,000
Interest rate, fixed rate
6.197%
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.
Loan raised as subordinated debt, nominally
40,000
-
Interest rate,
floating rate (CIBOR 6 with an addition of 400bp.) 8.113%
0.000%
The loan was raised on 1 June 2023 and falls due for full redemption on 1 June 2033. The Bank
has the option of early redemption as from 1 June 2028.
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%
DKK 1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
72
25. Capital statement
Credit risk
4,607,677
4,619,420
CVA risk
10,267
13,892
Market risk
233,494
238,978
Operational risk
721,601
628,793
Total risk exposure
5,573,039
5,501,083
Equity
1,479,123
1,318,592
Proposed dividend, accounting effect
-74,250
-27,000
Framework for ratio of own shares
-11,250
-10,620
Deductions for prudent valuation
-1,443
-1,568
Deductions for Non
-Performing Exposures -6,351
-3,842
Actual core capital
1,385,829
1,275,562
Supplementary capital
64,329
24,708
Capital base
1,450,158
1,300,270
Actual core capital ratio
24.9
23.2
Capital ratio
26.0
23.6
Statutory
requirement of actual core capital ratio (excluding capital reserve buffer) 4.5
4.5
Statutory capital ratio requirements
8.0
8.0
26. Contingent liabilities
Mortgage finance guarantees
1,042,320
989,198
Registration and remortgaging
guarantees 182,870
300,180
Other guarantees
549,236
644,747
In total
1,774,426
1,934,125
The Bank is a member of BEC (Bankernes EDB Central). On any withdrawal the Bank will be obliged to pay a with-
drawal fee to BEC equivalent to the preceding three years’ IT costs.
Like the rest of the Danish banking sector, the bank is obliged to pay in contributions to the Settlement and Guarantee
Fund.
27. Legal cases
The Bank is a party in pending lawsuits and the outcome of these would not affect the Bank’s financial position.
DKK 1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
73
28. Currency exposure
Assets in foreign currency, in total
57,495
47,633
Liabilities in foreign currency, in total
52,188
41,874
Exchange
-rate indicator 1 5,306
5,759
Exchange
-rate indicator 1 as a ratio of core capital 0.4
0.4
Exchange
-rate indicator 2 124
113
29. Interest risk rate
The Bank solely has fixed
-interest-rate assets in Danish kroner.
Interest rate risk for debt instruments, etc.
10,043
15,030
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 related pledges, for members of
the Bank’s Executive Management and Board of Directors
Executiv
e management 100
100
Board of Directors, including members elected by the employees
5,427
5,867
Pledges:
Executive Management
0
0
Board of Directors, including members elected by the employees
3,262
2,906
Significant terms:
Exposures with members of the Bank’s Board of Directors are entered into on normal busi-
ness terms.
Exposures with staff representatives on the Bank’s Board of Directors are entered into on per-
sonnel terms. For members of the Board of Dir
ectors 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 (n
umber).
Board of Directors
- Kristian Frederik Lennert 10
10
Board of Directors
- Yvonne Jane Poulsen Kyed (term ended in 2023) 0
10
Board of Directors
- Peter Angutinnguaq Wistoft 264
81
Executive Mangament
- Martin Birkmose Kviesgaard 1,455
1,455
DKK 1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
74
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 item
is amortised over the remaining term to maturity.
Lending
Amortised/nominal value
55,480
79,642
Accounting value
56,602
79,577
Covered with interest rate swap
Synthetic principal/nominal value
44,806
66,048
Accounting value
3,920
5,902
Lending at fixed interest rates
without cover
Amortised/nominal value
18,186
16,132
Accounting value
18,555
16,217
Nominal value
Positive
market value
Negative
market value
Net
market value
2023
Interest rate contracts
Swaps
44,805 4,030
49
4,080
Forwards/Futures, purchase
-4,969 23
-6
17
Forwards/Futures, sale
4,969 9
-21
-12
In total
44,805 4,062
22
4,085
Share contracts
Spot, purchase
126 7
-8
-1
Spot, sale
126 8
-7
1
In total
252 15
-15
0
In total
45,057 4,077
7
4,085
2022
Interest rate contracts
Swaps
76,049 6,002
-116
5,886
Forwards/Futures, purchase
-6,869 0
-93
-93
Forwards/Futures, sale
6,869 90
0
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
DKK 1,000
2023
2022
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
75
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
2023
Interest rate contracts
Swaps
0
0
127
0
Forwards/Futures, purchase
-4,969
17
0
0
Forwards/Futures, sale
4,969
-12
0
0
In total
0
5
127
0
Share contracts
Spot, purchase
126 -1
0
0
Spot, sale
126 1
0
0
In total
252 0
0
0
In total
252 5
127
0
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
25,255 831
19,423
3,248
In total
25,255
831
19,423
3,248
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
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
76
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 calcu-
lated 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 sig-
nificant 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 classifica-
tion 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 as at the balance
sheet date. Determining these shares’ fair value is subject to un-
certainty. 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 as-
sessed 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 cen-
tral 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 dif-
ference 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 dif-
ference 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.
32.
Fair value of financial instruments
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
77
DKK 1,000
Listed
prices
Level 1
Observable
prices
Level 2
Non-
observable
prices
Level 3
In total
2023
FINANCIAL ASSETS
Bonds
1,303,120 0
0
1,303,120
Shares
0 0
135,614
135,614
Positive market value of derivative financial instruments
0 4,077
0
4,077
In total
1,303,120 4,077
135,614
1,442,811
FINANCIAL LIABILITIES:
Negative market value of derivative financial instruments
0 91
0
91
In total
0
91
0
91
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
Positive market value of derivative financial instruments
0 6,097
0
6,097
In total
1,156,821 6,097
120,063
1,282,981
FINANCIAL LIABILITIES:
Negative market value of
derivative financial instruments 0 215
0
215
In total
0 215
0
215
DKK 1,000
2023 2023
2022
2022
Financial instruments recognised at amortised cost:
Amort. cost.
Fair value
Amort. cost.
Fair value
Receivables from credit institutions and central banks
120,150
120,156
118,619
118,616
Lending and other receivables
4,812,975
4,844,707
4,353,585
4,386,436
Liabilities to credit institutions and central banks
22,105 22,105
22,598
22,598
Deposits and other liabilities
6,413,469
6,412,878
5,942,479
5,941,824
Derivative financial instruments:
Interest rate swaps (net)
0
4,080
0
5,886
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
78
With regard to the Bank’s monitoring of market risks and calcu-
lation of the adequate capital base, a number of sensitivity cal-
culations 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 2023 had been
100 basis points higher, all other things being equal, the profit
for the year before tax would be TDKK 10,043 lower (2022:
TDKK 15,030 lower), primarily as a consequence of 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 cur-
rency, 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 2023, had experienced
a loss on currency positions of 2.5% of currency indicator 1, all
other things being equal, the profit for the year before tax
would be TDKK 133 lower (2022: TDKK 144 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 2023
had been 10% lower, all other things being equal, the profit for
the year before tax would be TDKK 13,561 lower (2021:
TDKK 12,006 lower), as a consequence of negative fair value
adjustment of the share portfolio.
Property risk:
If the value of the Bank’s properties on 31 December 2023 had
been 10% lower, the negative value adjustment of properties,
all other things being equal, would be TDKK 29,814 before tax
(2022: TDKK 28,437 lower).
33.
Sensitivity calculations
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
79
34. Five-Year Financial Highlights and Key Figures
2023
2022
2021
2020
2019
Net interest and fee income
435,012
351,485
338,933
326,513 323,507
Value adjustments
40,058
-39,356
11,219
136 9,585
Other operating income
5,803
6,588
6,185
5,369 5,722
Staff and administration expenses
211,166
195,056
186,385
178,734 170,895
Depreciation and impairment of tangible assets
8,158
7,320
7,014
6,948 6,672
Other operating expenses
2,815
2,706
2,497
2,610 2,788
Write
-downs on loans and receivables, etc. 14,160
4,523
1,537
12,828 7,959
Profit before tax
244,574
109,112
158,904
130,898
150,500
Tax
52,179
10,361
26,072
34,671 20,582
Profit for the year
192,395
98,751
132,832
96,227
129,918
SELECTED BALANCE SHEET ITEMS
Lending
4,812,975
4,353,585
3,783,681
4,006,248 3,758,736
Deposits
6,413,469
5,942,479
5,363,871
5,847,772 5,687,451
Equity
1,479,123
1,318,592
1,267,911
1,176,917 1,077,676
Total assets
8,840,981
7,949,566
7,226,988
7,438,325 7,089,915
Contingent liabilities
1,774,426
1,934,125
1,781,465
1,621,831 1,479,537
OFFICIAL KEY FIGURES:
Solvency ratio
26.0
23.6
24.4
23.5 23.4
Core capital ratio
24.9
23.2
24.4
23.5 23.4
Return on equity before tax
17.5
8.4
13.0
11.6 14.5
Return on equity after tax
13.8
7.6
10.9
8.5 12.5
Rate of return
2.2
1.2
1.8
1.3 1.8
Income per cost krone
2.0
1.5
1.8
1.7 1.8
Interest rate risk
0.7
1.2
1.2
1.1 2.1
Foreign exchange position
0.4
0.5
0.8
0.6 0.9
Lending plus write
-downs as a ratio of deposits 72.3
71.5
69.1
68.8 67.2
Lending as a ratio of equity
3.3
3.3
3.0
3.4 3.5
Growth in lending during the year
10.6
15.1
-5.6
6.6 8.3
Liquidity Coverage Ratio
259.0
220.5
238.6
241.0 238.8
NSFR (Net Stable Funding Ratio)
134.0
133.8
-
- -
Sum of large exposures
150.0
167.3
156.7
162.6 163.5
Ratio of receivables at reduced interest rates
0.9
0.4
0.5
0.8 0.8
Write
-down ratio for the year 0.2
0.1
0.0
0.2 0.1
Accumulated write
-down ratio 3.1
3.0
3.2
3.2 3.3
Profit for the year per share
106.9
54.9
73.8
53.5 72.2
Net book value per share
821.7
732.6
704.0
653.8 599.0
Dividend per share
55.0
20.0
40.0
25.0 0.0
Listed price/profit for the year per share (PE)
5.8
10.8
8.1
11.0 7.6
Stock exchange quotation/net book value per share
0.8
0.8
0.8
0.9 0.9
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
80
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 oper-
ating income as a percentage of personnel and administration
expenses, depreciation and write-down of intangible and tangi-
ble assets, other operating expenses and write-downs on loans
and receivables.
Interest rate risk
Interest rate risk as a percentage of core capital after deduc-
tions.
Currency position (currency indicator 1)
Currency indicator 1 is defined by the Danish FSA and ex-
presses the risk of losses on positions in foreign currency due
to fluctuating exchange rates. On an overall basis, the risk is cal-
culated 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
NSFR, Net Stable Funding Ratio
Available stable funding/Required stable funding
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.
35.
Definition of key ratios
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
81
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
82
Former CEO Gunnar í Liða
Born on 13 April 1960 (male)
Joined the Board of Directors on 6 April 2005. Last re-elected
in 2023. Current term expires in 2025.
Does not comply with the Committee on Corporate Govern-
ance’s definition of independence.
Chairman of the Audit Committee, Chairman of the Risk Com-
mittee, Chairman of the Nomination Committee and Chairman
of the Remuneration Committee.
Member of the Board of Directors of:
• Gist and Vist P/F (Chairman)
• P/F SMJ Ráðgevandi verkfrøðingar
• SMJ Rådgivende Ingeniører A/S
Chairman of the Nomination Committee of:
• Bakkafrost P/F
Gunnar í Liða holds an MSc(Econ), supplemented with a man-
agement 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. Gun-
nar 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 Govern-
ance’s definition of independence.
Member of the Audit Committee, member of the Risk Com-
mittee, member of the Nomination Committee and member
of the Remuneration Committee.
Member of the Board 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 Len-
nert 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.
Board and Management
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
83
Proprietor Maliina Bitsch Abelsen
Pikiala A/S
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 Board 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 responsibil-
ity 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 Direc-
torate in Nuuk.
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 2023. Current term expires in 2025.
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 account-
ing 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 Board of Directors of:
• Arbejdernes Landsbank A/S
• Arbejdernes Landsbanks Fond
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).
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
84
Credit consultant
Pilunnguaq Frederikke Johansen Kristiansen
GrønlandsBANKEN A/S
Born on 24 October 1988 (female)
Joined the Board of Directors on 28 March 2023. Current
term expires in 2027.
Member of the Audit Committee and member of the Risk
Committee
Business adviser Tulliaq Angutimmarik Olsen
GrønlandsBANKEN A/S
Born on 25 February 1992 (male)
Joined the Board of Directors on 28 March 2023. Current
term expires in 2027.
Member of the Audit Committee and member of the Risk
Committee
Communication and Marketing Manager
Niels Peter Fleischer Rex
GrønlandsBANKEN A/S
Born on 02 October 1981 (male)
Joined the Board of Directors on 27 March 2019. Current
term expires in 2027.
Member of the Audit Committee, member of the Risk Com-
mittee and member of the Remuneration Committee
Member of the Board of Directors of:
• Elite Sport Greenland
• 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 Board of Directors of:
• Usisaat ApS
As a state-authorised public accountant with many years’ expe-
rience from the auditing sector, Peter Wistoft has considerable
accounting and auditing experience, so that the Board considers
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
85
him to be an independent member of the Audit Committee
with accounting and auditing qualifications.
Peter Wistoft is Head of Finance & Administration of Trinity
Hotel og Konference Center A/S, and a former CEO of Kalaallit
Airports Holding A/S. He is a state-authorised public account-
ant and a former partner in firm of accountants and consultants
Deloitte. Peter Wistoft also holds strategic management qualifi-
cations from INSEAD.
Peter Wistoft has served as auditor and adviser to large com-
panies within retail trade, energy supply, telecom and postal ac-
tivities, construction and housing administration, and public ad-
ministration – including the Government of Greenland.
Peter Wistoft has extensive experience within crisis manage-
ment, restructuring, mergers, demergers, prospectuses and
IPOs, etc. and has deep insight into accounting and special legis-
lation concerning Greenland. Peter Wistoft has also instructed
boards of directors, primarily within corporate governance.
CEO Ellen Dalsgaard Zdravkovic
Nærpension forsikringsformidling A/S and
Customer Service Director at AP Pension A/S
Born on 05 July 1972 (female)
Joined the Board of Directors on 24 March 2021. Last re-
elected in 2023. Current term expires in 2025.
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 trans-
formations, 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 Board of Directors of:
• BEC Financial Technologies a.m.b.a.
• Fugleværnsfonden
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
86
The BANK of Greenland
Imaneq 33
Postbox 1033
GL-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
Proprietor Maliina Bitsch Abelsen
Former Executive Vice President Lars Holst
Credit consultant Pilunnguaq Frederikke Johansen Kristiansen*)
Business adviser Tulliaq Angutimmarik Olsen*)
Communication and Marketing Manager Niels Peter Fleischer
Rex*)
Finance and Administration Manager Peter Angutinguaq
Wistoft
CEO Ellen Dalsgaard Zdravkovic
*) Employee elected
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 em-
ployees.
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
Information about the BANK of
Greenland
Annual Report 2023
Notes to the Annual Report, including Accounting policies applied
87
Financial Calendar for 2024
Annual Report 2023
27 February
Annual General Meeting in Nuuk
20 March
Interim report, First Quarter 2024
13 May
Interim report, First Half 2024
21 August
Interim Report, First Nine Months 2024
06 November
Notifications to the stock exchange in 2023
1 March
Annual Report 2023
1 March
Notice convening the 2022 Annual General Meeting
21 March
Flagging of
Annual General Meeting powers of attorney to the Board of Directors
23 March
Election of employee members to the BANK of Greenland's Board of Directors
28 March
Minutes of the 2023 Annual General Meeting
24 April
Upward adjustment of
expectations for 2023
9 May
Quarterly Report, First Quarter 2023
23 May
The BANK of Greenland is investigating the possibility of issuing supplementary capital
24 May
The BANK of Greenland issues DKK 40 million in Tier 2 capital
01 June
New
employee representative on the BANK of Greenland’s Board of Directors
21 July
Upward adjustment of expectations for 2023
16 August
Quarterly Report, Second Quarter 2023
14 September
Financial Calendar for 2024
18 October
Upward adjustment of
expectations for 2023
1 November
Quarterly Report, Third Quarter 2023
06 November
Reportable transactions with the BANK of Greenland shares
29 November
The BANK of Greenland issues DKK 100 million Senior
-Non-Preferred
14 December
Outlook for 2024
Financial Calendar and Stock
Exchange Notifications