Debt investor update - Danske Bank · Debt investor update –Q1 2017 Danske Bank Working on...

Debt investor update

Q1 2017

11

Debt investor update – Q1 2017

DisclaimerNOT FOR DISTRIBUTION INTO ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS DOCUMENT.

IMPORTANT: You must read the following before continuing. The following disclaimer applies to the following investor presentation (the “Document”) and you are therefore required to read it carefully before reading or making any other use of the Document. By attending the meeting where this presentation is made and/or by otherwise accessing the Document, you shall be deemed to give the representations below and agree to the following limitations.

The Document may not be reproduced, retransmitted or further distributed to the press or any other person or published, in whole or in part, for any purpose. Failure to comply with this restriction may constitute a violation of applicable securities laws. The Document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities Danske Bank OYJ (the “Issuer”) or Danske Bank A/S (the “Parent”) in any jurisdiction or an inducement to enter into investment activity. No part of the Document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever.

Confirmation of your representation: The Document was accessed by you or sent at y our request and, by accepting the email to which the Document was attached and/or accessing the Document, you shall be deemed (in addition to the above) to have represented to the Issuer, the Parent and each of BNP Paribas and Merrill Lynch International (each a "Solicitation Agent" and, together, the "Solicitation Agents") and Lucid Issuer Services Limited (the "Tabulation Agent") that:

• you are a holder or a beneficial owner of the covered bonds issued by the Issuer and listed in the Document (collectively, the "Covered Bonds"); • you are not a U.S. person (as defined in Regulation S under the United States Securities Act of 1933, as amended), and are not acting for the account or benefit of any U.S. person, and that you are not located or resident in the United States; • you shall not pass on the Document to third parties or otherwise make the Document publicly available; • you are otherwise a person to whom it is lawful to send the Document or for the Issuer to make an invitation pursuant to the Consent Solicitations (as defined in a consent solicitation memorandum dated 2 May 2017 (the “Consent Solicitation Memorandum”) under applicable laws and regulations; • you consent to delivery of the Document to you by electronic transmission (if applicable); and • you have understood and agreed to the terms set forth in this disclaimer.

You are otherwise reminded that the Document has been delivered to you on the basis that you are a person into whose possession the Document may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located or resident. The Document should not be forwarded or distributed to any other person and should not be reproduced in any manner whatsoever. Any materials relating to the Consent Solicitations do not constitute, and may not be used in connection with, any form of offer or solicitation in any place where such offers or solicitations are not permitted by law.

None of the Issuer, the Parent, the Solicitation Agents or the Tabulation Agent are able to, and they do not, express any opinion on the merits or terms of any Consent Solicitation or Extraordinary Resolution (all as defined in the Consent Solicitation Memorandum), or make any recommendation whether or not a holder of Covered Bonds should participate in the relevant Consent Solicitation(s) or otherwise participate at the Meeting(s) applicable to them. Each holder of Covered Bonds must carefully review the applicable documents in connection with the Consent Solicitation(s) and come to a decision, either on its own or with the assistance of its professional advisers, as to whether or not it wishes to participate in any Consent Solicitation or Extraordinary Resolution. If any holder of Covered Bonds is in any doubt as to the action it should take, it is recommended to seek its own financial advice, including as to any tax consequences, from its broker, bank manager, solicitor, accountant, independent financial adviser authorised under the Financial Services and Markets Act 2000 (if in the United Kingdom) or other financial, tax or legal adviser.

Any decision regarding participation or otherwise in any Consent Solicitation or Extraordinary Resolution should be made solely on the basis of the information contained in the Consent Solicitation Memorandum. The information contained in the Document has not been independently verified. None of the Issuer, the Parent, the Solicitation Agents or the Tabulation Agent are under any obligation to update or keep current the information contained herein. Accordingly, no representation or warranty or undertaking, express or implied, is given by or on behalf of the Issuer, the Parent, the Solicitation Agents and the Tabulation Agent as to, and no reliance should be placed on, the accuracy, completeness or fairness of the information or opinions contained herein. None of the Issuer, the Parent, the Solicitation Agents or the Tabulation Agent accepts any liability whatsoever for any loss howsoever arising from any use of the Document or its contents or otherwise arising in connection with the Document.

Restrictions

The Consent Solicitations are only being made outside the United States, to persons other than “U.S. persons” (as defined in Regulation S under the Securities Act). Any purported participation in any Consent Solicitation resulting directly or indirectly from a violation of these restrictions will be invalid and any participation in any Consent Solicitation by a person that is located or resident in the United States or that is a U.S. person or by any agent, fiduciary or other intermediary acting on a non-discretionary basis for a beneficial owner that is giving instructions from within the United States or that is any U.S. person will not be accepted.This Document is not an offer of securities for sale in the United States or to any U.S. person. Securities may not be offered or sold in the United States absent registration or an exemption from registration. The Covered Bonds and the Guarantee (as defined in the Consent Solicitation Memorandum) have not been, and will not be, registered under the Securities Act, or the securities laws of any state or other jurisdiction of the United States, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, unless an exemption from the registration requirements of the Securities Act is available.Each holder of Covered Bonds participating in any Consent Solicitation will represent that it is not a U.S. person (as defined in Regulation S under the Securities Act), and is not acting for the account or benefit of any U.S. person, and that it is not located or resident in the United States. For the purpose of this Document, “United States” means the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia.The distribution of this Document in certain jurisdictions may be restricted by law, and persons into whose possession this Document comes are requested to inform themselves about, and to observe, any such restrictions. Any failure to comply with this restriction may constitute a violation of applicable securities laws.This presentation contains "forward-looking statements", which include, without limitation, any statements preceded by, followed by or including the words "targets," "believes," "expects," "aims," "intends," "may," "anticipates," "would," "could" or similar expressions or the negative thereof. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding the Parent’s financial position, business strategy, plans and objectives of management for future operations are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Parent’s control that could cause the Parent's actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Parent’s present and future business strategies and the environment in which the Parent will operate in the future. These forward-looking statements speak only as at the date of this presentation. The Issuer and Parent cautions you that forward-looking statements are not guarantees of future performance and that its actual financial position, business strategy, plans and objectives of management for future operations may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Parent’s financial position, business strategy, plans and objectives of management for future operations are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Issuer and Parent expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based.

22


Agenda

Danske Bank consent solicitation

Group financial update

Funding and liquidity

Covered bonds and ratings

Appendix

3

11

20

23

25

33


Danske Bank Working on Simplifying its Legal Structure

Overview and Objectives:

Danske Bank is asking for Covered Bondholders’ consent to modify the conditions

to reflect the substitution of the Issuer as part of the Demerger process

• To achieve a uniform organizational structure across the Nordic Markets, Danske Bank is planning to merge its activities in Finland into a single branch. This will be pursued as a cross-border merger between Danske Bank Plc and Danske Bank A/S, Helsinki branch into a single branch.

• As a result of the cross-border merger, Danske Bank Plc will be dissolved and cease to exist

What

Why

• A simplified legal structure will decrease complexity and cater for efficiency by aligning the legal structure to the way Danske Bank operate the bank

• A uniform organizational structure will not lead to changes in Danske Bank´s presence in Finland nor to changes for the way Danske Bank services its customers

How

• Prior to the Cross-Border Merger, Danske Bank Plc intends to:

• Conduct a partial demerger so that its mortgage credit banking business, together with its existing Covered Bonds and the related Cover Pool shall be transferred to a New Issuer, Danske Mortgage Bank Plc (“DMB”)

• Enter into a Deed Poll (and a Supplemental Trust Deed) as well as a guarantee in order to preserve the existing Covered Bonds' status and protect the interest of current Covered Bond holders

44


1

DANSKE BANK A/S

DANSKE BANK A/S,

HELSINKI BRANCH

DANSKE BANK PLC

VARIOUS

SUBSIDIARIES

Mortgage

Bank operations

DANSKE BANK A/S

FINLAND BRANCH

DANSKE MORTGAGE

BANK PLC

VARIOUS SUBSIDIARIES

DANSKE BANK A/S

DANSKE BANK

PLC

DANSKE

MORTGAGE BANK

PLC

VARIOUS

SUBSIDIARIES

DANSKE BANK A/S

DANSKE BANK A/S,

HELSINKI BRANCH

Overview of Demerger and Merger proposals: The New Issuer

Danske Mortgage Bank Plc (DMB), a wholly owned subsidiary of Danske Bank A/S, will operate solely as a mortgage credit institution and conduct its activities in cooperation with branches and other customer service points of the Danske Bank Group in Finland.

DMB will purchase residential mortgage loans from other members of the Danske Bank Group. Purchases will be financed through theprincipal repayments and interest payments on such loans, the issuance of further covered bonds and by a credit facility provided by Danske Bank Plc and, following the Cross-Border Merger, Danske Bank A/S.

Danske Bank Plc and, following the Cross-Border Merger, Danske Bank A/S will originate the mortgage loans in accordance with itscredit granting policy and handle any credit processes and decisions regarding the mortgage loans contained in the Cover Pool onbehalf of DMB under a Servicing Agreement.

Danske Bank Plc and/or Danske Bank A/S, as applicable, will be responsible for handling DMB's liquidity and short-term funding

Current Structure After Demerger After Demerger and Merger

Key points

The operational aspects with respect to the management of the Finnish Cover Pool will remain substantially unchanged

55


Deed Poll, Supplemental Trust Deed & Guarantee

Danske Bank Plc /

Danske Bank A/S

Danske Mortgage Bank

Plc (DMB)

1 2

DMB and Danske Bank Plc are also entering into a Deed Poll (for 2019 and 2020 Covered Bonds), a Supplemental Trust Deed (for 2021 Covered Bonds) – both governed by English law - as well as a Danske Bank Plc Guarantee (governed by Finnish law) respectively to ensure that the interests of Covered Bondholders are adequately protected post the implementation of the Demerger

Pursuant to the Deed Poll and Supplemental Trust Deed, DMB will agree to assume all of the obligations of Danske Bank Plc as issuer and principal debtor in respect of the relevant Covered Bonds, on the date of implementation of the Demerger

Danske Bank Plc will enter into a guarantee governed by Finnish law on the date of implementation of the Demerger in favour of the holders of existing Covered Bonds to discharge any claims of such holders in respect of principal and interest under the Covered Bonds only to the extent these are not paid by Danske Bank Plc and are not met out of the assets of the cover pool held by DMB.

If the proposed cross-border merger is implemented the obligations of Danske Bank Plc in respect of the guarantee will become obligations of Danske Bank A/S

A guarantee from Danske Bank Plc and, following the Cross-Border Merger, Danske Bank A/S, is expected to help maintain the Aaa-rating on the bonds and ECB-eligibility

2

1

Danske Bank Plc and Danske Bank A/S have taken, in their opinion, necessary steps to ensure that the interests of Covered

Bondholders are adequately protected post the implementation of the Demerger and the completion of the Cross-Border Merger,

via the execution of each Deed Poll and the Supplemental Trust Deed, as well as each Guarantee

66


Moody’s: No Rating Impact Expected

“Moody's announced today that the proposed demerger of the covered bond business of Danske Bank Plc (counterparty risk assessment Aa3(cr), long-term rating A1 positive, adjusted baseline credit assessment baa1) into a new entity, Danske Mortgage Bank Plc (the "New Issuer"), would not, in and of itself and as of this time, result in the downgrade or withdrawal of the ratings assigned to the bonds issued under Danske Bank Plc's covered bond programme.

Under the proposed demerger, the assets and liabilities of Danske Bank Plc’s covered bond business, including the covered bonds issued under Danske Bank Plc’s covered bond programme, would be transferred to the New Issuer with effect on or around 1 October 2017.

However, the covered bond rating would be linked to the credit strength of Danske Bank A/S (counterparty risk assessment Aa3(cr), senior unsecured debt rating A2 positive, adjusted baseline credit assessment baa1), the parent company of Danske Bank Plc and of the New Issuer.

This is because Danske Bank A/S will establish a liquidity line for the benefit of the New Issuer to ensure the New Issuer has sufficient funds to meet its payment obligations under the currently existing covered bonds.

In addition, covered bondholders will benefit from a secondary right of recourse against Danske Bank Plc for any missing amounts after recourse to the cover pool. The covered bond rating is currently linked to the credit strength of Danske Bank Plc as Issuer. “

Moody’s, Tuesday 2nd May 2017

77


Danske Bank Plc. Covered Bond Consent Solicitation

Key Elements Proposed Amendments

• Danske Bank Plc is asking holders of its outstanding Covered Bonds, to consider and pass Extraordinary Resolutions with respect to each series of Covered Bonds in advance of the implementation of the Demerger

• DMB and Danske Bank Plc have taken (in their opinion) necessary steps to ensure the interests of Covered Bondholders are adequately protected post the implementation of the Demerger (and the completion of the proposed cross-border merger), via the execution of the Deed Poll / Supplemental Trust Deed as well as the Danske Bank Plc Guarantee

• Danske Bank Plc is undertaking the Consent Solicitation to receive confirmation from Covered Bondholders that they support the Demerger proposal and the Proposed Amendments and thereby remove any unforeseen legal uncertainties for existing stakeholders including Covered Bondholders

• The interests of Covered Bondholders are of foremost importance to Danske Bank

• It is the intention of Danske Bank Plc to consummate a process which achieves substantially the same results as the Demerger (and the subsequent proposed cross-border merger) irrespective of the outcome of the Consent Solicitation, and which may be achieved without any consent of Covered Bondholders and would not constitute a default under the terms of the Covered Bonds (nor would the subsequent proposed cross-border merger)

• The purpose of each Consent Solicitation is to modify the conditions of the relevant series of Covered Bonds and the related documents to provide that the Covered Bondholders:

1. Approve certain modifications to the Conditions of, and related documents for, the relevant Series to reflect the substitution of DMB in place of Danske Bank Plc as issuer and principal debtor in respect of such Series and the provision of a guarantee from Danske Bank Plc, and

2. agree to release and waive all rights, claims, actions or entitlements arising under Finnish law (including, without limitation, the right to object to the Demerger) against each of Danske Bank Plc, DMB and Danske Bank A/S in respect of the Demerger

• Subject to certain conditions (including the Extraordinary Resolutions being passed for the relevant series) as specified in the Consent Solicitation Memorandum dated 2 May 2017,Covered Bondholders who vote in favour of the relevant

Extraordinary Resolution by the Early Instruction Deadline

will receive an Early Participation Fee of 0.10% of the

principal amount of the relevant Covered Bonds

88


Summary of Covered Bond Terms Pre- and Post-Demerger:

Current Post-demerger

Issuer

(Primary Obligor)Danske Bank Plc Danske Mortgage Bank plc

Status of Covered

Bonds

Direct, unconditional and unsubordinated obligations of the Issuer and in accordance with the MCBA. Any residual claims rank pari passu with the other unsecured and unsubordinated obligations of Danske Bank Plc

Direct, unconditional and unsubordinated obligations of the Issuer and in accordance with the MCBA. Any residual claims rank pari passu with the other unsecured and unsubordinated obligations of Danske Mortgage Bank Plc

Expected Issue

RatingsAaa (Moody’s) Aaa (Moody’s)

Status N/AGuaranteed by Danske Bank Plc (and after the Merger by Danske Bank A/S), as further described in each Guarantee

Maturity Date 2019/2020/2021 2019/2020/2021

Coupon Fixed Fixed

Coupon Payments Annually Annually

Put/Call Feature None None

Redemption Soft Bullet Soft Bullet

Listing Luxembourg Stock Exchange Luxembourg Stock Exchange

Clearing Euroclear and Clearstream, Luxembourg Euroclear and Clearstream, Luxembourg

Form of Covered

BondsBearer Form Bearer Form

Governing Law

English law, except that provisions relating to the coverage of the Covered Bonds pursuant to MCBA are governed by, and construed in accordance with, Finnish law

English law, except that provisions relating to the coverage of the Covered Bonds pursuant to MCBA are governed by, and construed in accordance with, Finnish law. Each Guarantee will be governed by Finnish law


99



Quorum & Majority Requirements

Investor Steps

ISIN / Common Code Outstanding Nominal Amount Quorum (at original meeting) Requisite Majority

2019 Covered BondsXS0834714254 /

083471425EUR1,000,000,000 ≥50% ≥75% of votes cast


132564876EUR1,000,000,000 ≥50% ≥75% of votes cast


064046306EUR1,000,000,000 ≥75% ≥75% of votes cast

1. Check holdings of target securities

2. Ask Tabulation Agent for Consent Solicitation Memorandum (“CSM”) (which is made available subject to certain distribution restrictions)

• Lucid Issuer Services Limited | Tel: +44 20 7704 0880 | Email: [email protected]

3. If the decision to participate is taken, contact internal Corporate Actions Department or Custodian to deliver valid Consent Instruction

• Vote before Early Deadline (18 May) to be eligible to receive Early Participation Fee of 0.10% of the principal amount of relevant Covered Bonds

4. Contact Solicitation Agents as set out in the CSM for questions concerning the proposals

5. Contact Tabulation Agent for questions concerning voting

1010


Time schedule for consent solicitation, demerger and merger

• Announcement of Consent Solicitation to pass extraordinary resolution 2 May 2017

• Early Participation Deadline in order to be eligible for Early Participation Fee 18 May 2017

• Adjourned meetings if necessary quorum is not obtained June 2017

• Expected incorporation of New issuer on the Demerger date 01 October 2017

Key deadlines


Early Participation

Deadline for receipt of

consent instruction

2 May

18 May

25 May

Expiration

deadline

Announcement

of Consent

Solicitation

31 May [Jun]

Payment day no later

than 3 business days

following extraordinary

resolution being passed (if

applicable)

Bondholders’

Meetings

Demerger

Complete

Objection Date

Latest date for

creditors to object

to demerger plan

31 Aug

Expected

incorporation

of New Issuer

Merger end

2017

1 Oct

Intermediate

announcement

of result

1111


Overview: Danske Bank has a strong Nordic franchise

1 .Excluding agricultural centres in Denmark * Total lending before loan impairment charges. Lending by country excludes Corporates & Institutions and Wealth Management, however most of these are Nordic clients.

Danske Bank lending breakdown*

For divestment

Non-core (Ireland & Conduits)

Personal banking activities in Estonia

Facts

3.4 million customers

263 branches1

15 countries

19,316 full-time employees

Business Units (% of total lending)

Personal Banking (43%)

Business Banking (39%)

Corporates & Institutions (12%)

Wealth Management (4%)

Northern Ireland (3%)

Northern

Ireland

Denmark

Norway Sweden

Finland

Baltics

3%

51%

10% 12%

9%

1212


Strong footprint within retail lending

Lending by business unit*; %; Q1 2017 Credit exposure by industry; %; Q1 2017

0

1

1

1

1

1

2

2

2

2

2

2

2

2

3

4

4

6

12

16

34

Credit Institutes

IT & telecom

Transportation

Constr. & building products

Shipping

Health care

Investment funds

Materials

Energy & Utilities

Insurance

Consumer staples

Other commercials

Agriculture

Banks

Other financials

Consumer discretionary

Non-profit & Associations

Industrial Services etc.

Personal customers

Public Institutions

Commercial property

Total lending of DKK

1,727bn

Total credit exposure

of DKK 2,658bn

43%

39%

4%

12%

3%0%

Personal Banking Wealth Management

Business Banking Northern Ireland

C&I Other

* Total lending before loan impairment charges

1313


* Before goodwill impairments in 2014 and 2015 **Expenses in 2014 and 2015 have been restated to reflect the organizational changes

Steadily improving financial results

Total income; DKK bn Total expenses**; DKK bn Group loan loss ratio; bps RoE after tax*; %

8,6

2016

13.1

2015

11.6

20142016

22.6

2015

23.2

2014

24.0

-1

20

20162015

0

20142014

45.3

2016

48.0

2015

45.6

1414


Key points, Q1 2017 vs Q1 2016

Net profit: DKK 5.5 bn, up 12% from Q1 2016*

Income statement and key figures (DKK m)

• Return on equity of 14.4%

• Total income up 10%, driven by all major income lines

• Other income in Q1 2016 included sale of headquarters

• Expenses up 8%, partly because Q1 2016 benefited from one-off items; cost/income ratio of 45.3%.

• Lending volume up 4%

Key points, Q1 2017 vs Q4 2016

• NII down 1% due to two less interest days in Q1

• Fee income down 5%, reflecting performance fees and shadow account booking in Q4 2016

• Expenses down 5% due to seasonality

• Net loan loss reversal as credit quality continued to improve

• CET1 capital ratio at 15.5% and REA of DKK 799 bn

* Q1 2016 included the sale of headquarters.

Q1 2017 Q1 2016 Index Q4 2016 Index

Net interest income 5,739 5,259 109 5,790 99

Net fee income 3,850 3,382 114 4,032 95

Net trading income 2,705 1,597 169 2,323 116

Other income 356 1,231 29 757 47

Total income 12,649 11,469 110 12,902 98

Expenses 5,724 5,310 108 6,056 95

Profit before loan impairment charges 6,925 6,159 112 6,847 101

Loan impairment charges -235 -130 181 -160 147

Profit before tax, core 7,160 6,289 114 7,007 102

Profit before tax, Non-core -19 -18 106 32 -

Profit before tax 7,140 6,271 114 7,039 101

Tax 1,610 1,326 121 1,449 111

Net profit 5,530 4,945 112 5,590 99

Return on avg. shareholders' equity (%) 14.4 13.1 14.5

Cost/income ratio (%) 45.3 46.3 46.9

Common equity tier 1 capital ratio (%) 15.5 15.0 16.3

EPS (DKK) 5.8 5.0 5.8

Lending (DKK bn) 1,705 1,640 104 1,689 101

Deposits and RD funding (DKK bn) 1,659 1,559 106 1,631 102

- of which deposits (DKK bn) 884 812 109 859 103

Risk exposure amount (DKK bn) 799 841 95 815 98


1515

867

944

893 390

572

274

403

22,642

21,034

2015

23,237

20,502

2016

* Includes a VAT reversal and the reversal of a provision for operational risk ** Expenses for 2014 and 2015 are restated to reflect the new Wealth Management unit. *** 2015 charge represents 11 months of amortisation because of a write-down in December 2015.

Expenses: Up 8% from a low level in Q1 2016 owing to activity-

driven costs, regulatory compliance and digitalisation

Total expenses ex goodwill charge, 2012-2016 (DKK m)

Total expenses ex goodwill charge (DKK m)

Other costs

Bonuses

Amortisation of customer relations***

Deposit guarantee and resolution funds

Severance payments

76

134

79

Q1 2017

5,724

Other costs

39

Rent

39

One-offs Q1’16*

ITSeverance pay

41

Variable comp.

Staff costs ex variable comp.

Q1 2016

5,3106

Change in expenses (DKK m)

23,794

2012

24,642

2016

22,642

2015

23,237

21,827

1,410

2014

23,972

22,641

1,331

2013

ReportedRestated**

96

283

81

Q1 2017

5,724

5,264


1616* Includes Non-core **The loan loss ratio is defined as annualised quarterly impairment charges as a percentage of loans and guarantees.

Impairments: Loan loss ratio of -5 bp in the first quarter of 2017

Group impairments,* 2012 to Q1 2017 (DKK bn/bp) Impairment drivers, Q1 2017 vs Q4 2016

Loan loss ratio,** annualised (bp)Impairments (DKK m)

• Credit quality continued to improve, resulting in a net reversal of DKK 235 m in core activities

• At Personal Banking, loan impairment charges were up because of model adjustments

• Reversals continued in most industries and all countries in Business Banking

• Impairments at C&I continued to be driven by oil-relatedexposure; collective impairments were unchanged in Q1

• Improved credit quality and higher collateral values drove net reversals in Wealth Management and Northern Ireland

60

50

40

30

20

10

0

-10

18

12

6

0

-6

70

Q1 2017

-0.2

2016

-0.2

2015

-0.1

2014

3.7

2013

5.4

2012

12.5

Loan loss ratio* (rhs)Impairments

Q1 2017 Q1 2016 Q4 2016 Q3 2016

Personal Banking 56 -165 -188 -110

Business Banking -285 -29 -181 -31

C&I 80 195 282 468

Wealth Management -25 -51 -55 -8

Northern Ireland -61 -81 -22 -60

Other activities 0 1 3 5

Total core -235 -130 -160 264

Non-core 1 2 -67 -17

Group -234 -128 -227 247

Q1 2017 Q1 2016 Q4 2016 Q3 2016

Personal Banking 3 -9 -10 -6

Business Banking -17 -2 -11 -2

C&I 7 20 27 42

Wealth Management -13 -29 -30 -4

Northern Ireland -54 -64 -20 -54

Other activities 5 5 137 78

Total core -5 -3 -3 5

Non-core 3 3 -136 -33

Group -5 -3 -5 5


1717

Capital: Strong capital base; CET1 capital ratio of 15.5%

Capital ratios, under Basel III/CRR (%) Estimated capital buffer structure, %

Regulatoryrequirement*

16.7

10.6

1.5

Q1 2017fully

loaded

20.0

15.4

2.4

2.2

Q1 2017 reported

20.4

16.3

2.8

2.7

2015 reported

21.0

16.1

2.4

2.5

2016 reported

2.5

2.4

15.5

21.8

Pillar II component (total 2.7%)

Hybrid T1/AT1

Tier 2

CET1

* Pro forma fully phased-in reg. requirement in 2019. ** Assuming REA equal to Q1 2017, CET1 target of min. 14% (target range 14%-15%) and that reg. requirements are met by relevant capital instruments. Under current Danish rules, Pillar II does not count towards automatic MDA.

14

4

0

18

16

2

12

10

8

6

10.6

7.0

14.0

15.5

9.4

2019E

4.5

3.0

2.5

0.6

2018E

4.5

2.4

1.9

0.6

2017E

8.1

4.5

1.8

1.30.6

Q1 2017A

8.1

4.5

1.8

1.30.5

CET1 trigger point 7%

CET1 min req.

Systemic risk buffer

CET1 (Q1 2017) 15.5%

CET1 target (minimum 14%)

Capital conservation buffer

Countercyclical capital buffer

7.0 6.0 4.7 3.5

Sliding scale of restrictions

MDA buffer**

2.7

2.0

12.1


1818* On June 30 2016, Danske Bank Group stopped consolidating Danmarks Skibskredit A/S and LR Realkredit A/S for the purpose of regulatory capital. This lead to a drop in CET1 of DKK 3 bn and a simultaneous drop in REA of DKK 16.2 bn.** Before goodwill impairment charges *** Based on year-end communicated distributions

Strong CET1 capital build-up since 2008; Available Distributable

Items (ADI) in excess of DKK 100 bn

2008 2009 2010 2011 2012 2013 2014 2015 2016

REA 960 834 844 906 819 852 865 834 815

CET1 ratio 8.1% 9.5% 10.1% 11.8% 14.5% 14.7% 15.1% 16.1% 16.3%

Net profit** 1.0 1.7 3.7 1.7 4.7 7.1 13.0 17.7 19.9

Distributed to shareholders 5.9 0 0 0 0 2.0 10.5*** 17.1*** 18.9***

Total assets 3,544 3,098 3,214 3,424 3,485 3,227 3.453 3,293 3,484

133134130126119

107

857977

2014

+DKK 56 bn

2016*2013201220092008 2010 20152011

REA, CET1, profit and distribution (DKK bn, %)

Common Equity Tier 1, 2008 – 2016; DKK billion


1919

Regulatory themes - MREL

Own funds and senior unsecured* (% of REA) MREL requirements in Denmark (preliminary)

• Danske Bank as a D-SIFI will be subject to MREL requirements.

• Danske Bank welcomes the review of the BRRD and the proposal to harmonise the TLAC standard and MREL.

• We expect an MREL requirement from the Danish FSA before the end of 2017.

• The final outcome is yet to be determined.

Volume:

• The Danish FSA has signaled willingness to discuss transitional arrangements with the industry. Details are yet to be disclosed.

• FSA’s preliminary calibration of MREL in line with the current EBA guidelines (not accounting for the proposed changes to the BRRD), i.e.,

• Loss absorption amount = total capital req. + CBR

• Recapitalisation amount = loss absorption amount

Type of instrument:

• Subordination is expected in some form as part of the eligibility requirements for MREL and the FSA has said that it wishes to conform with any emerging European standard.

With appropriate transitional arrangements, our relatively short senior maturity profile leaves ample flexibility to refinance into a new eligible instrument.

Senior maturity profile* (DKK bn)

Q4 2016

19.9

4.5

37.4

13.0Own funds

Senior <1Y

Senior >1Y

34

20242021

2

8

20232017 20222019

37

0

24

2026

16

2020

21

0

2018 2025

0

* Includes structured notes.

2020


Funding structure and sources: Danish mortgage system is

fully pass-through

Issued RD bondsRD mortgages

Covered bonds

Bank mortgages

DepositsBank loans

Senior debt

Funding

1,969

775

159

884

151

Loans

1,705

775

343

587

10

2

13

9

55

-3

5

9 9

2

13

9

54

-2

79

Deposits credit inst.

Repos, net

CD & CP

EquitySubord. debt

Covered bonds

Senior unsecured

Deposits

Q1 2017

Q4 2016

Short-term funding Long-term funding

Loan portfolio and long-term funding, Q1 2017 (DKK bn) Funding sources (%)

2121


Funding programmes and currencies: Euro market remains the

main source of funding

Largest funding programmes, end-Q1 2017

Senior debt by currency, end-Q1 2017

Covered bonds by currency, end-Q1 2017

45%

82%

33%

59%

97%

35%

9%

2%

10%

12%

69%

3%

4%SEK

CHF

NOK

DKK

EUR

GBP

Total DKK 159 bn

1%1%

2%

1%3%

9%

26% 57%

HKD

JPY

GBP

AUDNOK

SEK

USD

EUR

Total DKK 151 bn

Utilisation

EMTN Programme

Limit: EUR 35 bn

Global Covered Bond

Limit: EUR 30 bn

US Commercial Paper

Limit: USD 6 bn

US MTN (144A)

Limit: USD 10 bn

French Commercial Paper

Limit: EUR 10 bn

UK Certificate of Deposit

Limit: USD 15 bn

ECP Programme

Limit: EUR 13 bn

2222


* Spread over 3M EURIBOR.

Funding and liquidity: DKK 31 bn of long-term funding issued in

Q1 2017; LCR-compliant at 156%

156158

137136

124

Q3 2016Q2 2016Q1 2016

100

Q1 2017Q4 2016

26

35 3835

2027

114 6

2020: DKK 73 bn

478bp263bp

44bp

27bp

2

2019: DKK 59 bn

250bp

33bp

57bp

2018: DKK 71 bn

201bp

40bp

41bp

Tier 1Tier 2SeniorCov. bonds

31

85

7064

39

2017E

70-90

2016201520142013

CompletedFunding plan

17

58

11

17

12

75

0

New Q1 2017: DKK 31 bn

310bp

19bp

17bp

Redeemed Q1 2017: DKK 22 bn

68bp

160bp

193bp

58bp

Redemptions 2017: DKK 66 bn

65bp

100bp

82bp

50bp

1

37

Tier 2Senior Tier 1Cov. bonds

Maturing funding,* 2018–2020 (DKK bn and bp)

Changes in funding,* Q1 2017 (DKK bn and bp) Long-term funding ex RD (DKK bn)

Liquidity coverage ratio (%)

2323


Overview: Danske Bank Group Covered Bond Universe

• Realkredit Danmark, which has been a Covered Bond issuer since 1851

• Based on Danish legislation

• Specialized Mortgage Bank

• Fully-owned subsidiary in Danske Bank Group

• Primarily loans from Denmark

• Follows the “Specific Balance Principle”= matched funding

• Funding via daily tap issues in DKK through the Danish Market

• AAA/AA+ rating

• Danske Bank PLC, which has been a Covered Bond issuer since 2005

• Sampo Pankki changed name to Danske Bank Plc on 15 November 2012

• Based on Finnish Legislation

• Fully-owned subsidiary in the Danske Bank Group – we are looking into the possibilities of merging the subsidiary and our Finnish branch into a single branch

• Issued directly on the balance sheet

• Only residential loans from Finland

• Funding through benchmarks in EUR, € 10 bn Medium Term Note and Covered Bond programme

• Aaa programme rating

• New Swedish CB programme,

which is to be a Covered Bond issuer from 2017

• Based on Swedish legislation

• Fully-owned subsidiary in Danske Bank Group

• Only loans from Sweden

• Funding via frequent tap issues in SEK through the Swedish Market supplemented by EUR benchmarks

• Expected AAA rating (rating agency to be determined)

• Danske Bank A/S,

which has been a Covered Bond issuer since 2007

• Cover-Pools D, I and C

• Based on Danish legislation

• Loans from the Group’s banking activities in Denmark, Norway and Sweden

• Issued directly on the balance sheet

• Multiple Cover Pool set-up

• Follows the “General Balance Principle”

• Multi currency benchmarks and PP, € 30 bn Global Covered Bond programmeme

• AAA/AAA programme rating

2424


Danske Bank’s credit ratings

Moody’s (Pos) S&P (Stable) Fitch (Stable)

Aaa AAA AAA

Aa1 AA+ AA+

Aa2 AA AA

Aa3 AA- AA-

A1 A+ A+

A2 A A

A3 A- A-

Baa1 BBB+ BBB+

Baa2 BBB BBB

Baa3 BBB- BBB-

Ba1 BB+ BB+

Ba2 BB BB

… … …

Ca D D

Senior unsecured

Tier 2

Additional Tier 1

Inv

es

tm

en

t g

ra

de

Sp

ec

ula

tiv

e g

ra

de

S&P Global upgrades SACP rating

• On July 8 2016, S&P raised Danske Bank’s SACP (Stand-Alone Credit Profile) rating from a- to a as a result of Danske Bank’s improved capitalisation.

Moody’s upgrades Danske Bank’s deposit rating – outlook

changes to positive

• On 12 October 2016, Moody’s upgraded Danske Bank's long-term deposit rating to A1 from A2 and affirmed all other ratings. Moody’s also changed the outlook to positive from stable on Danske Bank’s ratings.

• The positive outlook reflects Danske Bank’s improvements in financial metrics to date and the expectation of a continuation of the positive trend.

Rating affirmed by Fitch

• On August 22 2016, Fitch affirmed Danske Bank’s rating with a stable outlook. The asset quality and profitability score were raised from ‘a-’ to ‘a’.

Danske Bank’s long-term instrument ratings and outlook*

* Outlook refers to the senior unsecured ratings of Danske Bank A/S. Capital centre T of RD is rated AA+ by Fitch, capital centre S is rated AAA.

Covered bonds Danske Bank A/S

Covered bonds Danske Bank Plc

Covered bonds RD

2525


Appendix

Covered bonds (Group, Finland, Hypotek, Realkredit Danmark)

Business Units

Special topics

Macroeconomics

Contact details

26

35

37

40

42

2626


Danske Bank Group: The three cover pools - Overview

Residential Residential Combined

Characteristics Cover Pool D Cover Pool I Cover Pool C

Pool notional DKK 36.3bn (EUR 5.09bn equivalent)

DKK 118.0bn (EUR15.8bn equivalent)

DKK 55.6bn (EUR 7.5bn equivalent)

Number of Loans 64,489 114,882 6,198

Substitution collateral 0 0 0

Average Loan Size DKK 0.6m (EUR 76,000 equivalent)

DKK 1.0m (EUR 138,000 equivalent)

DKK 9.0m (EUR 1.2m equivalent)

Property Type 100% owner-occupied 84% owner-occupied, 16% housing cooperatives

9.0% Agriculture, Forestry, Horticulture, 15% Industrial, 4% Cooperative Housing, 24% Rental Housing, 43% Retail, 5% Other

WA LTV (Indexed) 55.3% 54.2% 54.8%

Loan seasoning 15 % (<5y), 85 % (>5y) 69 % (<5y), 31 % (>5y) 94 % (<5y), 6 % (>5y)

Repayment type 85 % (Bullet), 15 % (Amortising) 49 % (Bullet), 51 % (Amortising) 33 % (Bullet), 67 (Amortising)

Rate type Floating rate Fixed (18% ), Floating (82%) Floating rate

Geographical location 100% Denmark 36% Sweden, 64% Norway 75% Sweden, 25% Norway

Issuance Notional DKK 31.7bn (EUR 4.3bn equivalent)



OC at cut-off date 13.9% (2% committed) 12.70% (2% committed) 28.0% (2% committed)

Cut-off date 31 December 2016 31 December 2016 31 December 2016

Rating (S&P/Fitch/Moody’s) AAA/AAA/- AAA/AAA/- AAA/AAA/-

2727


Finnish covered bonds: Key characteristics and regional

distribution (as at 31st March 2017)

Pool notional EUR 5.5bn

Number of Loans 81,106

Substitution collateral 0

Number of Borrowers 62,961

Total Value of Properties N/A

Number of Properties 70,825

Average Property Value N/A

Property Type

100% Finnish prime owner occupied residential properties, no vacation/second homes, no commercial mortgages

WA LTV ( Indexed) 50.84%

WA Seasoning 5.8 years

WA Remaining Term 14.8 years

Rate Type Floating (91%), Fixed (9%)

Geographical location 100% Finland

Issuance Notional EUR 5bn

OC at cut-off date 7.6%

Cut-off date 31-Mar-17

Rating (Moody's) Aaa

Danske Bank Plc’s covered bonds carry the ECBC Covered Bond Label. Quarterly cover pool information is available at Danske Bank Plc’s website: http://www.danskebank.fi/en-fi/About/Press/Publications/Pages/InvestorReports.aspx

Key characteristics Regional distribution by collateral value

Finnish demography

2/3 of Finns live

south of this lineHelsinki

62.2%

22.6% 6.4%

6.1%

2.7%

62.2%

6.1%

22.6%

6.4% 2.7%

Oulu

Southern Finland

Western Finland

Eastern Finland

Lapland

http://www.danskebank.fi/en-fi/About/Press/Publications/Pages/InvestorReports.aspx

2828


Finnish covered bonds: Asset pool characteristics (as at 31st

March 2017)Loan-To-Value distribution (weighted average LTV 50.86 %) Loan size distribution (weighted average loan size 68 KEUR)

Loan seasoning (weighted average seasoning 5.8 years) Reference rate distribution; %

Total balance (MEUR) Total balance (MEUR)Number of loans Number of loans

Number of loansTotal balance (MEUR)

2,000

0

6,000

8,000

10,000

12,000

600

1,000

800

4004,000

200

0

10

-20

%

20

-30

%

0-1

0 %

50

-60

%

40

-50

%

30

-40

%

90

-10

0 %

80

-90

%

70

-80

%

60

-70

%

>1

00

%

Loan balance, EURmLoan count

15,000

20,000

25,000

5,000

800

1,000

600

0

10,000

0

400

200

75

-10

0

20

0-2

25

25

0-2

75

22

5-2

50

12

5-1

50

50

-75

25

-50

0-2

5

10

0-1

25

17

5-2

00

15

0-1

75

30

0-3

25

32

5-3

50

35

0-3

75

37

5-4

00

>4

00

27

5-3

00

Loan balance, EURmLoan count

700

4,000300

100

12,000

2,000

500

900

8,000

10,000

6,000

0

800

600

400

200

0

19

99

20

07

19

97

19

96

19

95

19

93

20

13

19

91

20

08

20

09

20

06

20

10

19

92

20

11

20

12

20

14

20

15

20

16

19

98

19

90

19

89

19

88

19

87

19

86

20

00

20

05

20

02

20

04

20

01

20

03

Loan count Loan balance, EURm

50%

23%

10%

5%3%

9%

EURIB 12M

EURIB 3M

EURIB 6M PRIME

FIXED EURIB 1M

2929


Danske Hypotek: Purpose and Structure

• Ensure stable funding for our customers through the cycle• Long term funding solution for continued growth of Swedish retail mortgage business• Market communication; strong commitment to the Swedish Market

Danske Bank Group has a strong commitment to the Swedish mortgage market

Existing cover pools

Cover pool in Danske Hypotek

New originated loans

Asset release

Danske BankSwedish

mortgage lending

Origination

Principal andinterest

New lending

Swedish mortgage lending

“Danske Hypotek AB”

Parent LoanSale ofmortgages

CoveredBonds

Bondproceeds

Principal andinterest

EMTCNCovered Programme

SEKCovered Programme

Danske Hypotek - Structure Transfer capacity of eligible assets into Danske Hypotek

100

2017 2018 2019 20212020

SEK bn

30

Financial results for Q1 2013Debt investor update – Q1 2017

Danske Hypotek: Availability of assets for future Cover pool

- Overview

Characteristics Eligible assets in phase one Eligible assets in phase two Final Cover Pool

Collateral type – 100 pctSwedish residentialmortgages*

100pct residential mortgages to private individuals (retail)

100pct residential mortgages to owners of Multi-Family Properties

76pct retail, 24pct Multi-Family.

Pool notional SEK 87.6bn (EUR 9.2bn equivalent)

SEK 27.4bn (EUR 2.9bn equivalent)

SEK 114.9bn (EUR 12.0bn equivalent)

Number of Loans 89,156 2,137 91,293

Number of Borrowers 43,238 1,294 44,532

Number of Properties 45,377 2,327 47,704

Average Loan Size SEK 0.98m (EUR 102,000 equivalent)

SEK 12.82m (EUR 1.3m equivalent)

SEK 1.3m (EUR 131,000 equivalent)

Property Type 32% Tenant Owner Rights, 63% Single Family Housing , 5% Holiday Housing

25% Cooperative Housing, 75% Rental Housing

76% Retail, 6% Cooperative Housing, 18% Rental Housing

WA LTV (Indexed) 53.04% 58.37% 54.31%

WA Seasoning 3.85 years 1.24 years 3.23 years

WA Remaining Term 42.32 years 3.51 years 33.10 years

Pool type Dynamic Dynamic Dynamic

Rate type 85% Floating rate, 15% Fixed rate 100pct Floating rate 89% Floating rate, 11% Fixed rate

Geographical location 100% Sweden 100% Sweden 100% Sweden

Pool Cut Date 28-02-2017 28-02-2017 28-02-2017

Personal Banking loans Business Banking loans Total loan book

*Excluding any potential substitution collateral (AAA rated securities)

The relevant assets currently available on the Danske Bank balance sheet is shown below. The actual portfolio and the timing of the transfer to Danske Hypotek will be determined close to the actual relevant transfer dates. Key input factors, in transfer decisions, will be the demand from the Swedish investors and the development in the Swedish loan book

31


Assets Liabilities

Securities holdings

Due from banks

Equity

Mortgage assets

Debt issued for the funding of OC

Due to banks

Covered bonds issued

Realkredit Danmark balance sheet

End 2016

InvestorBorrower

Loan proceeds

Interest payments

Repayments

Prepayments

Losses

Margins

Mortgage banks are licensed as specialist mortgage banks under

Danish law and financial institutions under EU law

• Mortgage banks required to comply with e.g. the CRR

Activities of mortgage banks confined to mortgage lending funded

by issuance of covered bonds

• Lending activities not eligible for covered bond funding are

prohibited

• Deposit taking is prohibited Covered bond investor bankruptcy

privilege extends to all assets on the balance sheet of the

issuer

• Realkredit Danmark is well capitatised with a total capital ratio

of 30.1% and a solvency need of 10.8% of REA

Mortgage banks employ a cash flow pass through structure

• Proceeds from covered bond sale match mortgage proceeds

• Covered bonds issued on tap on a daily basis

• Borrower payment of interest and repayment match payment

of interest and principal to bondholders

• Borrower prepayments match either bond drawings and bond

buy backs

• Only margins and losses are absorbed by mortgage banks

Elimination of interest rate risk, funding risk, liquidity risk and

prepayment risk

Realkredit Danmark: The Danish mortgage banking model

The specialist mortgage banking principle The pass through principle

32


DKK238.0bn

Homeowner55%

Rental residential

16%

Commercial21%

Agriculture8%

S&P Fitch Total

Rating OC Rating OC OC posted

AAA 7.07% AA+ 9.0% 9.9%

Exposures

Mortgages and covered bonds issued

Exposures

Mortgages and covered bonds issued

Covered bonds issued Mortgage assetsCovered bonds issued Mortgage assets

DKKbnDKKbn

DKK475.6bn

S&P Fitch Total

Rating OC Rating OC OC posted

AAA 6.44% AAA 6.5% 7.6%

-400 -200 0 200 400

Fixed rate

Interest reset

Floating rate

Capped floating rate

-300 -200 -100 0 100 200 300

Homeowner67%

Rental residential

21%

Commercial9%

Agriculture3%

Capital centre T Capital centre S

Realkredit Danmark capital centres

3333


59%

41%

Variable rate (6m-10yrs)

Fixed rate (10yrs-30yrs)

111 10686

68

Fixed rate

5 yrs+3-4 yrs1-2 yrs

500

250

0

8

6

4

2

020162012200820042000

No. of forced sales (rhs)Unemployment10Y swap rate

* In addition, we charge a fee of 30 bp of the bond price for refinancing of 1- and 2-year floaters and a fee of 20 bp for floaters of 3 or more years.

Realkredit Danmark and the Danish housing market:

Portfolio overview

With amortisation Interest-only

Unemployment and foreclosures (%/No.)

Portfolio facts, Realkredit Danmark, Q1 2017 Stock of retail loans (DKK 433 bn), Realkredit Danmark, Q1 17 (%)

Mortgage margins, 80% LTV, owner-occupied (bp)

• Approx. 370,000 loans (residential and commercial)• 1,635 loans in 3- and 6-month arrears• 50 repossessed properties• DKK 10 bn of loans with LTV ratio>100%, including

DKK 3 bn with public guarantee• Average LTV ratio of 64%

LTV ratio at origination (legal requirement)

• Residential: max. 80%• Commercial: max. 60%

+refinancingfee*

143 138118

101

Fixed rate

5 yrs+3-4 yrs1-2 yrs

Adjustable rate*

47%53%

Interest only (up to 10yrs)

Repayment

3434


Realkredit Danmark: 45% of new retail loans are fixed rate

loans; compliant with all regulatory requirements

165188192201208225230

265

Q4Q2Q1Q4Q3 Q1Q3Q2Q1Q4Q3Q2Q1Q4Q3

-38%

Loan portfolio, FlexLån F1-F4 (DKK bn)

Key points Supervisory diamond for Danish mortgage institutions

• 45% of new retail loans in Q1 were fixed-rate loans and 38% were 5- to 10-year variable rate loans

• Total stock of fixed rate loans to retail customers continued to increase, now amounting to 41% of the book

• Total stock of loans amounted to DKK 757 bn:*

o 57% to retail

o 20% to residential rental

o 17% to commercial property

o 6% to agriculture

2013 2014 2015 2016

Refinancing need:

Max. 12.5% of portfolio quarterly and max. 25% annually

Concentration risk:Sum of 20 largest exposures/CET1 < 1

Interest risk:

(LTV ratio > 75% of legal limit and interest rate fixed < 2 years) < 25% of portfolio

Growth:

Max.15% annually in certain segments

Interest-only loans:

Max. 10% of portfolio with LTV ratio > 75% of legal limit

* Nominal value.

2017

3535


Banking units: Loan growth and higher activity continue at the

Nordic banking units

Pre-tax return on allocated capital (%) Financial highlights, Q1 2017 vs Q1 2016

Income statement (DKK m)

Personal Banking

• Total income up, driven by all income lines• Expenses up 6% due to increased IT development costs• Lending up 3%, driven by Norway and Sweden Business Banking

• Total income up 4%, reflecting higher NII and fee income• Expenses down 3% due to reduced staff costs • Lending up 4%, with growth in all markets

Northern Ireland

• Result affected by GBP/DKK depreciation of 9%, restructuring costsand decline in net reversal of impairments

15.9

Northern Ireland

16.1

Business Banking

15.8

Personal Banking

24.420.6

18.2

Q1 2016Q1 2017

Q1 2017 Q1 2016 Index Q1 2017 Q1 2016 Index Q1 2017 Q1 2016 Index

Net interest income 1,963 1,904 103 2,135 2,085 102 342 385 89Net fee income 841 789 107 455 393 116 115 121 95Net trading income 200 162 123 146 153 95 24 23 104Other income 178 124 144 141 132 107 3 9 33Total income 3,182 2,979 107 2,877 2,763 104 484 538 90Expenses 1,896 1,795 106 1,112 1,142 97 309 285 108Profit before loan impairment charges 1,286 1,184 109 1,765 1,621 109 176 253 70Loan impairment charges 56 -165 - -285 -29 - -61 -81 75Profit before tax 1,230 1,349 91 2,049 1,650 124 237 334 71

Lending (DKK bn) 746 722 103 672 646 104 47 48 97Deposits and RD funding (DKK bn) 668 647 103 556 527 106 59 60 99- of which deposits (DKK bn) 267 256 104 232 223 104 59 60 99

Northern IrelandPersonal Banking Business Banking

3636


C&I and Wealth Management: Increased client activity at C&I;

rebound in fee income at Wealth Management

C&I: Financial highlights, Q1 2017 vs Q1 2016 Wealth Management: Financial highlights, Q1 2017 vs Q1 2016

Wealth Management: Income statement (DKK m)

• Total income up 50% compared to income in challenging environment in Q1 2016

• Fee income up 33% owing to increased client activity in Capital Markets and General Banking

• Trading income reflects strong client activity at FICC driven by geopolitical events

• Expenses up 10% owing mainly to positive one-offs in Q1 2016 and increased performance-based compensation in Q1 2017

• Impairment charges were made mainly against facilities in the oil sector

C&I: Income statement (DKK m)

• Assets under management up 8% owing to positive inflow from net sales, net premiums and performance

• Net sales at Asset Management* of DKK 9.9 bn in Q1 2017, with inflow from both institutional and retail clients; net premiums of DKK 11.4 bn at Danica Pension in Q1 2017

• Fee income up 13% driven by positive financial markets and higher customer activity

• Expenses up 11% due to increased activity and restructuring costs

*Danske Capital and Danica unit-linked.

Q1 2017 Q1 2016 Index

Net interest income 758 727 104Net fee income 722 543 133Net trading income 2,075 1,090 190Other income - 14 - Total income 3,556 2,374 150Expenses 1,217 1,103 110Profit before loan impairment charges 2,338 1,271 184Loan impairment charges 80 195 41Profit before tax 2,259 1,076 210Pre-tax return on allocated capital (%) 23.2 10.7Lending (DKK bn) 199 188 106Deposits (DKK bn) 257 216 119

Q1 2017 Q1 2016 Index

Net interest income 182 168 108Net fee income 1,749 1,550 113Net trading income 103 85 121Other income 28 104 27Total income 2,062 1,907 108Expenses 1,016 918 111Profit before loan impairment charges 1,046 989 106Loan impairment charges -25 -51 49Profit before tax 1,070 1,040 103Pre-tax return on allocated capital (%) 31.6 25.6Lending (DKK bn) 73 69 106Deposits (DKK bn) 62 58 106Assets under management (DKK bn) 1,463 1,351 108

3737


Credit quality: Positive trend in credit quality continues; NPLs

decreased 14% y/y

* Ex Baltics. Note: Non-performing loans are loans in rating categories 10 and 11 against which individual impairments have been made.

Individual loan impairment charges* (DKK bn) Gross non-performing loans (DKK bn)

Allowance account by business unit (DKK bn)

Q1 2017

0.0

-1.7

0.7

1.0

Q4 2016

-0.4

Q3 2016

0.1

Q2 2016

0.2

Q1 2016

-0.3

Reversal

Increased

New

5.5

12.7

0.51.2

Q1 2017

22.4

2.5

Q4 2016

23.5

Q3 2016

25.1

Q2 2016

25.3

Q1 2016

26.3

Personal Banking

Business Banking

Corporates & Institutions

Wealth Management

Northern Ireland

8.0

11.7

17.7

Q1 2017

37.4

Q4 2016

40.4

Q3 2016

42.7

Q2 2016

42.6

Q1 2016

43.4

Net exposure not in default

Net exposure in defaultIndividual allowance account

3838


Credit exposure: The agriculture industry benefits from improved

output prices; limited oil-related exposure

Agriculture exposure (2.4 % of Group net exposure) Oil-related exposure (0.9 % of Group net exposure)

Agriculture by segment, Q1 2017 (DKK m)

• Net exposure amounted to DKK 24 bn*

• The vast majority of the oil-related exposure is managed by specialist teams for customer relationship and credit management at C&I

• Total collective charges stood at DKK 1.2 bn

• Collective impairments towards second-round effects of the low oil price in Norway were increased by DKK 36 m to DKK 242 m after a portfolio review

• Individual impairments of DKK 0.2 bn booked in Q1 owing mainly to impairment on derivatives that according to accounting treatment are recognised not in the allowance account but as part of the fair value of derivatives

Oil-related exposure, Q1 2017 (DKK m)

• The pressure on the Danish agricultural industry continued to ease off somewhat as pig prices remained stable while milk prices increased further

• No impairment charges were booked in Q1

• Total collective impairment charges, covering 1.4% of gross credit exposure, amount to DKK 0.9 bn

• RD represented 68% of total gross exposure and 14% of total accumulated impairment charges

Gross credit

exposure

Portionfrom RD

Acc.

Individual

impairment

charges

Net

credit

exposure NPL coverage ratio

Business Banking 55,639 43,317 2,746 52,893 88%

Growing of crops, cereals, etc. 18,365 15,209 336 18,029 92%

Dairy 9,046 7,018 1,050 7,995 88%

Pig breeding 12,916 10,427 1,167 11,750 89%

Mixed operations etc. 15,312 10,662 193 15,119 81%

Northern Ireland 4,747 - 58 4,689 76%

C&I 5,754 2,387 - 5,754 -

Others 224 1 1 223 -

Total before collective impairments 66,365 45,705 2,805 63,560 88%

Collective impairment charges 918 251

Total gross exposure 67,283

* The oil-related net credit exposure of DKK 24 bn is part of the energy and utilities industry (DKK 15 bn) and shipping (DKK 9 bn) industry.

Gross credit exposure

Acc. Individual

impairment

charges

Net credit

exposure

C&I 21,794 210 21,584

Oil majors 5,264 - 5,264

Oil service 7,992 41 7,951

Offshore 8,538 169 8,369

Business Banking 2,060 34 2,026

Oil majors 1 - 1

Oil service 1,956 34 1,922

Offshore 103 - 103

Others 5 0 5

Total before collective impairments 23,860 244 23,615

Collective impairment charges 1,184

Total gross exposure 25,043

3939


Non-core: Deleveraging progressed according to plan; REA of

DKK 11 bn at Q1 2017

Non-core loan portfolio, Q1 2017 (DKK bn) Non-core REA (DKK bn)

2831353727

14

19

2

3

2

2

Total

24

Commercialportfolio

1

Conduits etc.

6

Personal customers

(incl. Baltics)

18

Performing credit exposure

Non-performing credit exposure

Allowance account

12

10 108 8

6

55

53

-37%

Q1 2017

11

Q4 2016

13

Q3 2016

14

Q2 2016

15

Q1 2016

18

Non-core Banking

Non-core conduits, etc.

4040


Interest rates, leading (%)

Nordic macro economy

20162010

135

105

2006

120

902012 20142008

NorwayDenmark FinlandSweden

0

-2

2016

2

2006

6

2008 2010

4

20142012

2006 2008 2010 2012 2014 2016-1

0

1

2

3

4

5

6

2006 2008 2010 2012 2014 20160

2

4

6

8

10

Real GDP, constant prices (index 2005 = 100) Inflation (%)

Unemployment (%)

4141


Apartment prices (index 2005 = 100)

Nordic housing markets

Property prices (index 2005 = 100) House prices/nom. GDP (index 2005 = 100)

Apartment prices/nom. GDP (index 2005 = 100)

140

110

120

130

2006 2008 2010 2012 2014 2016

90

100

120

210

2016201420122010

90

2006 2008

150

180

2014 2016

120

160

200

240

280

320

2008 20102006 2012

Denmark Sweden Norway Finland

220

100

120

140

160

180

200

2006 2008 2010 2012 2014 2016

42


Contacts

Christoffer MøllenbachHead of Group TreasuryDirect: +45 45 14 63 60Mobile: +45 21 55 10 52E-mail: [email protected]

Bent CallisenHead of Group Funding, Group TreasuryDirect: +45 45 12 84 08Mobile: +45 30 10 23 05E-mail: [email protected]

Nicolaj VerdelinChief Funding Manager, Group TreasuryDirect: +45 45 12 85 14Mobile: +45 23 72 99 14E-mail: [email protected]

Thomas Halkjær JørgensenChief Portfolio Manager, Group TreasuryDirect: +45 45 12 83 94Mobile: +45 25 42 53 03E-mail: [email protected]

Claus Ingar Jensen Head of IR Direct: +45 45 12 84 83Mobile: +45 25 42 43 70 E-mail: [email protected]

John BäckmanChief IR OfficerDirect: +45 45 14 07 92 Mobile: +45 30 51 46 85E-mail: [email protected]

Robin Hjelgaard LøfgrenSenior IR Officer Direct: +45 45 14 06 04Mobile: +45 24 75 15 40E-mail: [email protected]

Louisa Grue BaruchSenior IR OfficerDirect: +45 45 13 92 34Mobile: +45 21 56 19 35E-mail: [email protected]

mailto:[email protected]








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