KommuneKredit Reports Lower Profit Due to New Funding Model

KommuneKredit, a Danish financial institution, reported its interim results for the first half of 2026, revealing a significant shift in its financial performance due to changes in its funding model. The company saw a profit before value adjustments and tax of DKK 146 million, a decrease from DKK 338 million in the same period last year. The decline is attributed to lower net interest income, which came to DKK 250 million, a drop of DKK 118 million from the DKK 368 million reported in the first half of 2025.

Despite the lower net interest income, KommuneKredit experienced a positive value adjustment of financial instruments worth DKK 190 million, contributing to a comprehensive income of DKK 262 million. This figure is a significant improvement from the DKK -139 million reported in the same period last year. The company's equity rose to DKK 10,361 million, with an equity ratio of 4.2 percent, surpassing the Board of Directors' target of at least 3 percent.

KommuneKredit's lending activity was robust, with net lending amounting to DKK 6.4 billion for the first half of 2026, compared to DKK 1.3 billion in the same period last year. The value of total loans and leases increased by DKK 7.5 billion to DKK 207.2 billion. The company attributes this high lending activity to the new funding model, which was implemented on 15 September 2026, following a change in the funding model on 26 March 2025. The Danish State now buys KommuneKredit’s bonds at interest rates corresponding to the State’s own funding costs, leading to lower lending rates and lease payments since 1 April 2025.

Looking ahead, KommuneKredit expects net interest income to remain at DKK 250 million for the full year 2026, maintaining its initial forecast. The company has also revised its expectations for net lending, projecting it to reach DKK 6.5 billion for the year, up from the previous estimate of DKK 5.5 billion. This upward adjustment accounts for known repayments and anticipated lower lending activity in the second half of 2026, following the high activity in the first half of the year. Administrative expenses are expected to remain at DKK 225 million, and the company anticipates a profit before value adjustments and tax of DKK 275 million for the full year.

KommuneKredit's CEO, Jens Lundager, commented, "The new funding model has brought about significant changes in our operations, leading to lower lending rates and lease payments. While this has impacted our net interest income, the positive value adjustments and the robust lending activity indicate a strong financial position for the company."

The company remains optimistic about its future, as the new funding model is expected to create annual savings of up to DKK 1 billion for Danish society, ultimately benefiting citizens and taxpayers.