INTERIM REPORT – FIRST HALF 2012 · INCOME STATEMENT First half First half Index Q2Q1 Q4 Q3 Full...

MANAGEMENT'S REPORT 3

Financial highlights – Danske Bank Group 3

Overview 4

Financial review 5

Balance sheet 8

Outlook for 2012 14

Business units 15

Banking Activities 16

Danske Markets and Treasury 19

Danske Capital 20

Danica Pension 21

Other Activities 23

INTERIM FINANCIAL STATEMENTS –

DANSKE BANK GROUP 24

Income statement 24

Statement of comprehensive income 25

Balance sheet 26

Statement of capital 27

Cash flow statement 29

Notes 30

INTERIM FINANCIAL STATEMENTS –

DANSKE BANK A/S 52

STATEMENT BY THE

MANAGEMENT 62

AUDITORS' REVIEW REPORTS 63

SUPPLEMENTARY INFORMATION 65

Interim Report – First Half 2012 is a translation of the original report in the Danish language (Delårsrapport – 1. halvår 2012). In case of discrepancies, the Danish version prevails.

INTERIM REPORT – FIRST HALF 2012

TABLE OF CONTENTS

DANSKE BANK INTERIM REPORT — FIRST HALF 2012 3/65

Financial highlights – Danske Bank Group

INCOME STATEMENT First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Net interest income 12,390 11,339 109 6,218 6,172 6,182 6,016 5,785 23,537

Net fee income 4,013 4,142 97 2,026 1,987 2,218 1,938 2,049 8,298

Net trading income 5,684 5,420 105 2,462 3,222 1,638 267 2,445 7,325

Other income 1,634 1,974 83 846 788 849 825 972 3,648

Net income from insurance business 883 328 269 699 184 976 -735 261 569

Total income 24,604 23,203 106 12,251 12,353 11,863 8,311 11,512 43,377

Expenses 13,482 14,029 96 6,632 6,850 6,459 5,499 6,678 25,987

Profit before loan impairment charges 11,122 9,174 121 5,619 5,503 5,404 2,812 4,834 17,390

Loan impairment charges 7,031 5,594 126 3,109 3,922 4,789 2,802 2,753 13,185

Profit before tax 4,091 3,580 114 2,510 1,581 615 10 2,081 4,205

Tax 1,805 1,673 108 1,007 798 415 394 881 2,482

Net profit for the period 2,286 1,907 120 1,503 783 200 -384 1,200 1,723

Attributable to non-controlling interests -1 12 - -1 - -1 - 14 11

BALANCE SHEET (END OF PERIOD) (DKK millions)

Due from credit institutions and central banks 72,660 59,893 121 72,660 105,085 74,041 81,036 59,893 74,041

Repo loans 341,600 280,488 122 341,600 343,235 256,027 219,460 280,488 256,027

Loans and advances 1,704,019 1,666,608 102 1,704,019 1,684,125 1,698,025 1,693,518 1,666,608 1,698,025

Trading portfolio assets 862,938 644,915 134 862,938 869,047 909,755 911,584 644,915 909,755

Investment securities 105,480 111,061 95 105,480 108,282 109,264 108,465 111,061 109,264

Assets under insurance contracts 237,717 222,203 107 237,717 234,295 230,668 225,568 222,203 230,668

Other assets 156,308 141,893 110 156,308 156,405 146,623 141,393 141,893 146,623

Total assets 3,480,722 3,127,061 111 3,480,722 3,500,474 3,424,403 3,381,024 3,127,061 3,424,403

Due to credit institutions and cen-tral banks 226,050 153,118 148 226,050 186,197 177,592 200,370 153,118 177,592

Repo deposits 407,625 263,558 155 407,625 382,934 269,515 272,969 263,558 269,515

Deposits 735,918 792,037 93 735,918 773,713 795,275 788,921 792,037 795,275

Bonds issued by Realkredit Dan-mark 596,837 529,808 113 596,837 604,323 557,699 534,245 529,808 557,699

Other issued bonds 316,967 410,409 77 316,967 363,892 366,920 359,022 410,409 366,920

Trading portfolio liabilities 628,008 429,391 146 628,008 627,332 697,913 677,319 429,391 697,913

Liabilities under insurance con-tracts 258,367 237,074 109 258,367 253,604 248,966 240,519 237,074 248,966

Other liabilities 120,248 113,410 106 120,248 117,622 117,340 111,930 113,410 117,340

Subordinated debt 62,584 72,288 87 62,584 64,033 67,328 70,059 72,288 67,328

Shareholders' equity 128,118 125,968 102 128,118 126,824 125,855 125,670 125,968 125,855

Total liabilities and equity 3,480,722 3,127,061 111 3,480,722 3,500,474 3,424,403 3,381,024 3,127,061 3,424,403

RATIOS AND KEY FIGURES

Earnings per share (DKK) 2.5 2.3 1.6 0.8 0.2 -0.4 1.3 1.9

Diluted earnings per share (DKK) 2.5 2.3 1.6 0.8 0.2 -0.4 1.3 1.9

Return on average share-holders' equity (%) 3.6 3.3 4.7 2.5 0.6 -1.2 3.8 1.4

Cost/income ratio (%) 54.8 60.5 54.1 55.5 54.4 66.2 58.0 59.9

Total capital ratio (%) 17.7 18.8 17.7 17.6 17.9 18.0 18.8 17.9

Tier 1 capital ratio (%) 16.2 16.6 16.2 16.0 16.0 16.0 16.6 16.0

Share price (end of period) (DKK) 81.4 95.3 81.4 94.5 73.0 78.6 95.3 73.0

Book value per share (DKK) 138.4 136.3 138.4 137.0 135.7 135.7 136.3 135.7

Full-time-equivalent staff (end of period) 20,997 21,536 20,997 21,160 21,320 21,567 21,536 21,320

Share ratios for 2011 have been divided by a factor of 1.0807 to reflect the share capital increase in April 2011.


Overview

• The Danske Bank Group has launched initiatives to improve earnings and ensure that its business model is competitive and creates value. In 2012, the Group is focusing on pricing and cost-savings initiatives and on improving customer satisfaction. These measures are proceeding on schedule.

• On 1 June 2012, the Group implemented organisational changes, and its financial reporting will reflect the

new organisation beginning on 1 January 2013. The new organisation is the first step in implementing the Group’s new strategy, which is expected to be completed by the end of the third quarter of 2012.

• In Ireland, part of the loan portfolio has been transferred to a separate new business unit, Non-core Ireland,

which is responsible for the controlled winding-up of these loans. The remaining activities at National Irish Bank will focus on business customers, and a down-scaled organisation will serve personal and small busi-ness customers through online and direct channel services.

Financial summary • The Danske Bank Group posted a profit before tax of DKK 4.1 billion for the first half of 2012. The net profit

was DKK 2.3 billion, a 20% rise from the net profit in the first half of 2011 and generally in line with expecta-tions. Excluding Non-core Ireland, profit before tax was DKK 6.4 billion.

• Total income rose 6% from the year-earlier level. Price increases lifted net interest income, but the effect of

the increases was partly offset by falling interest rates.

• Net trading income remained solid.

• Expenses fell 4% from the level in the year-earlier period. In the first half of 2011, expenses were high be-cause of expenses for the Danish Guarantee Fund for Depositors and Investors, and expenses in the first half of 2012 included a charge of DKK 0.5 billion related to name rights because of the rebranding of Sampo Bank.

• The Group’s programme to reduce costs and cut the headcount by about 2,000 is expected to be completed by the end of 2013.

• Loan impairment charges increased significantly from the level in the first half of 2011. Compared with the high level in the fourth quarter of 2011, however, charges declined for the second consecutive quarter, partly because of lower charges at Retail Banking Denmark and Corporate & Institutional Banking.

• After being placed on negative outlook, Danske Bank, like many other banks, saw its rating lowered in the second quarter of 2012. The Group has established considerable liquidity buffers to counter the effects of the downgrades.

Outlook for 2012 • Earnings before impairment charges at the banking units and Danske Capital are likely to remain stable, while

earnings at the other units will depend on financial market trends. • The trend in credit quality will generally depend on economic conditions in the Group’s markets. Total im-

pairment charges are likely to remain at the same high level as in 2011.

• The Group still expects earnings to remain low in 2012. Because of the economic climate, the outlook is sub-ject to considerable uncertainty.


Financial review

The Danske Bank Group posted a profit before tax of DKK 4.1 billion for the first half of 2012. The net profit was DKK 2.3 billion, a 20% rise from the net profit in the first half of 2011 and generally in line with expec-tations. Excluding Non-core Ireland, profit before tax was DKK 6.4 billion. The escalating financial crisis in the EU and uncer-tainty about the future of the euro led to a fall in short-term interest rates in the Group’s markets in the first half of the year. This was particularly evident in Den-mark as the Danish central bank lowered rates inde-pendently on a number of occasions to stabilise the Danish krone. In response to the extraordinarily low yields on the fixed-income markets, in the second quarter of 2012 the Danish Ministry of Business and Growth changed the discount yield curve used by the insurance and pension industry. Although interest rates remained low in the period, the Group’s earnings initiatives and tight cost control im-proved the financial results. Profit before loan impair-ment charges rose 21% from the year-earlier level. Difficult conditions persisted in several of the Group’s markets, though, and impairment charges were high at the units in Ireland and Northern Ireland and in some segments in Denmark. Danske Markets benefited from market trends in the first half of 2012. Income Income totalled DKK 24.6 billion, up 6% from the level in the first half of 2011, mainly because of higher net interest income and net income from insurance busi-ness. Net interest income amounted to DKK 12.4 billion, up 9% from the year-earlier figure. Price increases led to higher lending margins, which in turn had a positive effect on net interest income. This effect was partly

offset, however, by the pressure on deposit margins caused by declining short-term interest rates. All units generated net interest income above the level in the first half of 2011. The price increases alone lifted income by about DKK 1.9 billion.

Net fee income amounted to DKK 4.0 billion, down 3% from the year-earlier level. Danske Capital’s income declined because of a shift in the mix of assets under management. Net trading income remained solid, rising 5% from the level a year earlier. Other income fell to DKK 1.6 billion, down 17% from the level in the first half of 2011. The year-earlier fig-ure included a refund of about DKK 150 million of ex-cess VAT paid from 1995 to 2010. The Group’s insurance business generated net income of DKK 0.9 billion, against DKK 0.3 billion a year ear-lier. A better investment return and the booking of the risk allowance to income for three of the four interest rate groups had a positive effect on income. In the first half of 2011, the Group was able to book the risk al-lowance for only two groups. At 30 June 2012, the shadow account balance was DKK 1.2 billion.

PROFIT BEFORE LOAN IMPAIR-

MENT CHARGES First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Total Retail Banking Denmark 3,885 3,723 104 1,912 1,973 1,982 2,188 1,880 7,893

Total Retail Banking international 2,324 1,825 127 985 1,339 891 1,169 950 3,885

Corporate & Institutional Banking 958 908 106 496 462 572 493 484 1,973

Total Banking Activities 7,167 6,456 111 3,393 3,774 3,445 3,850 3,314 13,751

Danske Markets and Treasury 3,415 3,152 108 1,365 2,050 562 -650 1,367 3,064

Danske Capital 331 374 89 183 148 301 212 170 887

Danica Pension 883 328 269 699 184 976 -735 261 569

Other Activities -674 -1,136 - -21 -653 120 135 -278 -881

Total Group 11,122 9,174 121 5,619 5,503 5,404 2,812 4,834 17,390

Total Retail Banking international consists of retail banking and other retail units outside Denmark.


Expenses Expenses amounted to DKK 13.5 billion, down 4% from the level in the first half of 2011, mainly because of lower expenses for the Danish Guarantee Fund for Depositors and Investors. Expenses included a charge of DKK 0.5 billion related to name rights because of the rebranding of Sampo Bank and expenses of DKK 0.4 billion related to staff reductions and branch clo-sures. Since the beginning of 2012, the commitment to the Guarantee Fund has been based on fixed annual con-tributions. After the deduction of its share of the Fund’s assets before the change in the scheme, Dan-ske Bank’s commitment for 2012 amounts to about DKK 0.6 billion. During the first half of 2012, the Group closed 67 re-tail branches, including 31 in Denmark. Branch clo-sures are expected to continue throughout 2012. From November 2012, National Irish Bank will serve mainly personal customers from a new Personal Banking Centre in Dublin. As part of the reorganisation, National Irish Bank will close 27 branches and reduce its staff by about 100 persons. Expenses for the financial services employer tax and VAT amounted to DKK 0.9 billion, the same as in the year-earlier period. Loan impairment charges For the first half of the year, loan impairment charges amounted to DKK 7.0 billion, or 0.73% of lending and guarantees, against 0.58% for the first half of 2011. The charges related mainly to the commercial prop-erty segments in Ireland and Northern Ireland, per-sonal customers in Ireland and Denmark, and the shipping industry. LOAN IMPAIRMENT CHARGES

First half 2012 First half 2011

% of lending % of lending

(DKK millions) Charges and

guarantees Charges and

guarantees

Retail Banking Denmark 2,290 0.47 1,532 0.31

Retail Banking Finland 261 0.34 -5 -0.01

Retail Banking Sweden 271 0.28 51 0.06

Retail Banking Norway 121 0.17 140 0.21

Banking Activities Northern Ireland 906 3.50 935 3.69

Banking Activities Ireland 520 4.16 3,133 10.23

Banking Activities Baltics -257 -2.73 -133 -1.24

Other Banking Activities 68 0.64 93 0.92

Corporate & Institutional Banking 424 0.64 126 0.20

Non-core Ireland 2,390 18.67 -

Total Banking Activities 6,994 0.80 5,872 0.68

Danske Markets and Treasury 25 0.02 -231 -0.15

Danske Capital 12 0.15 -47 -0.93

Total 7,031 0.73 5,594 0.58

Individual charges amounted to a net DKK 7.3 billion, against a net DKK 5.3 billion a year earlier. Charges fell during the first half of 2012, however, because of lower charges against facilities to personal customers and to business customers in the Nordic countries. In-dividual charges were mostly adjustments of charges recognised in previous periods and a few new charges against facilities to shipping customers. Total charges included charges against facilities to personal customers of DKK 1.8 billion and charges against facilities to business customers of DKK 5.0 billion – with small and medium-sized enterprises ac-counting for DKK 3.6 billion of this amount. Financial counterparties accounted for DKK 0.2 billion.

The fall in charges against facilities to personal cus-tomers in the second quarter of 2012 took place mainly at Retail Banking Denmark. Charges against facilities to business customers re-lated mainly to the commercial property segment of Non-core Ireland and to shipping customers. Charges at Non-core Ireland were mostly adjustments of exist-ing charges prompted by the continued fall in property prices. Charges against facilities to shipping custom-ers equalled 3.4% of lending and guarantees and re-lated mainly to a few large exposures. Loan impair-ment charges in Denmark related mostly to consumer industries and the commercial property segment be-cause retail sales fell. The Danish FSA’s clarification of the rules on impair-ment charges did not have any noticeable effect on the level of charges. Tax Tax on the profit for the period amounted to DKK 1.8 billion. The tax charge is high relative to the profit for the period, mainly because the Group did not book the tax value of losses in Ireland.


Second quarter 2012 Profit before tax rose to DKK 2.5 billion in the second quarter of 2012 from DKK 1.6 billion in the first quar-ter. The increase was driven by higher net income from insurance business and a decline in loan im-pairment charges. Net interest income was unchanged at DKK 6.2 bil-lion. Price increases contributed DKK 0.2 billion to this amount. Increased margins on lending were, how-ever, offset by a decline in interest rates. Net trading income amounted to DKK 2.5 billion, against DKK 3.2 billion in the first quarter. Net income from insurance business rose to DKK 0.7 billion from DKK 0.2 billion in the first quarter. The fact that the Group booked the risk allowance for three of the four interest rate groups explains part of the in-crease; no risk allowance was booked in the first quarter. Expenses fell 3% from the first-quarter level and amounted to DKK 6.6 billion. Expenses in the first quarter were affected by a charge of DKK 0.5 billion related to name rights because of the rebranding of Sampo Bank, while the second quarter of 2012 was affected by expenses for staff reductions and branch closures. Loan impairment charges amounted to DKK 3.1 billion, a decline of DKK 0.8 billion from the level in the first quarter. Retail Banking Denmark and Banking Activities Northern Ireland saw much lower charges. Banking Activities Ireland recorded a decline of DKK 0.4 billion because of lower charges against facilities to personal customers and to consumer industries in the business segment. Charges at Non-core Ireland accounted for 44% of total charges in the second quarter.


Balance sheet LENDING (END OF PERIOD) First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Retail Banking Denmark 956,706 950,340 101 956,706 958,335 967,672 963,637 950,340 967,672

Retail Banking Finland 153,977 146,803 105 153,977 152,214 150,484 148,387 146,803 150,484

Retail Banking Sweden 187,665 182,218 103 187,665 186,133 185,418 180,317 182,218 185,418

Retail Banking Norway 139,873 130,249 107 139,873 136,866 132,102 129,799 130,249 132,102

Banking Activities Northern Ireland 48,043 48,929 98 48,043 48,146 53,326 52,831 48,929 53,326

Banking Activities Ireland 25,992 67,861 38 25,992 26,411 63,728 66,657 67,861 63,728

Banking Activities Baltics 19,589 22,254 88 19,589 20,199 20,501 21,444 22,254 20,501

Other Banking Activities 16,832 16,318 103 16,832 16,888 16,833 17,095 16,318 16,833

Corporate & Institutional Banking 110,939 103,483 107 110,939 107,647 108,769 108,034 103,483 108,769

Non-core Ireland 35,812 - - 35,812 36,426 - - - - Total Banking Activities 1,695,428 1,668,455 102 1,695,428 1,689,265 1,698,833 1,688,201 1,668,455 1,698,833

Danske Markets and Treasury 53,679 40,671 132 53,679 42,388 44,330 46,407 40,671 44,330

Danske Capital 5,937 6,293 94 5,937 6,279 6,075 6,266 6,293 6,075

Other Activities 1,565 -4,878 - 1,565 -3,312 -3,603 -936 -4,878 -3,603

Allowance account, lending 52,590 43,933 120 52,590 50,495 47,610 46,420 43,933 47,610

Total lending 1,704,019 1,666,608 102 1,704,019 1,684,125 1,698,025 1,693,518 1,666,608 1,698,025 DEPOSITS AND BONDS ISSUED BY REALKREDIT DANMARK (END OF PERIOD) (DKK millions)


Retail Banking Finland 99,979 102,431 98 99,979 101,755 105,256 104,568 102,431 105,256

Retail Banking Sweden 71,167 66,719 107 71,167 72,191 73,072 65,301 66,719 73,072

Retail Banking Norway 65,137 56,799 115 65,137 60,001 60,223 56,749 56,799 60,223

Banking Activities Northern Ireland 51,067 49,408 103 51,067 50,336 55,060 53,540 49,408 55,060

Banking Activities Ireland 21,645 37,921 57 21,645 31,214 37,787 37,462 37,921 37,787

Banking Activities Baltics 17,821 20,822 86 17,821 18,342 19,530 20,137 20,822 19,530

Other Banking Activities 5,271 4,936 107 5,271 5,261 5,225 6,649 4,936 5,225

Corporate & Institutional Banking 57,018 68,990 83 57,018 72,077 69,333 67,957 68,990 69,333

Non-core Ireland 1,230 - - 1,230 298 - - - - Total Banking Activities 680,606 690,953 99 680,606 688,047 701,481 693,624 690,953 701,481

Danske Markets and Treasury 58,554 101,854 57 58,554 85,547 97,412 96,768 101,854 97,412

Danske Capital 5,428 6,424 84 5,428 5,778 5,700 6,584 6,424 5,700

Other Activities -8,670 -7,194 - -8,670 -5,659 -9,318 -8,055 -7,194 -9,318

Total deposits 735,918 792,037 93 735,918 773,713 795,275 788,921 792,037 795,275

Bonds issued by Realkredit Danmark 596,837 529,808 113 596,837 604,323 557,699 534,245 529,808 557,699

Own holdings of Realkredit Danmark bonds 153,331 170,597 90 153,331 157,867 199,806 194,483 170,597 199,806

Total Realkredit Danmark bonds 750,168 700,405 107 750,168 762,190 757,505 728,728 700,405 757,505

Total covered bonds 190,027 134,329 141 190,027 159,436 160,805 150,546 134,329 160,805

Deposits and issued mortgage bonds etc. 1,676,113 1,626,771 103 1,676,113 1,695,339 1,713,585 1,668,195 1,626,771 1,713,585

Lending as % of deposits and is-sued mortgage bonds etc. 102 102 102 99 99 102 102 99 Lending At 30 June 2012, total lending to personal and busi-ness customers largely matched the level at 31 De-cember 2011. Lending at Retail Banking Denmark was down DKK 11 billion from the level at the end of 2011 be-cause of lower lending to personal customers and small and medium-sized enterprises.

In Denmark, new lending, excluding repo loans, amounted to DKK 17.7 billion. This amount included lending to personal customers of DKK 7.5 billion. Net new mortgage lending accounted for DKK 1.4 billion of new lending to personal customers. Lending equalled 102% of the total amount of depos-its, mortgage bonds and covered bonds, against 99% at the end of 2011.


Deposits After having been placed on negative outlook, Danske Bank saw its short-term rating lowered in the second quarter of 2012. As expected, the downgrade meant that some short-term money market deposits at Danske Markets were not renewed. The unit thus saw a total decline in net deposits of DKK 39 billion in the first half of 2012. Deposits at Retail Banking Denmark rose 5% from the level at the end of 2011. Excluding exchange rate ef-fects, total deposits at the units outside Denmark fell 10% from the level at the end of 2011, mainly be-cause National Irish Bank saw keener competition for business customer deposits. Deposits at the other banking units were stable. The Group aims to ensure a better balance between lend-ing and deposits. Credit exposure At 30 June 2012, credit exposure totalled DKK 3,654 billion, against DKK 3,611 billion at the end of 2011. Exposure from Danish and international lending ac-tivities amounted to DKK 2,382 billion, against DKK 2,299 billion at the end of 2011. Some DKK 969 billion of the total exposure derived from trading and investment activities, against DKK 1,020 billion at the end of 2011. Credit exposure from lending activities Total credit exposure from lending activities included amounts due from credit institutions and central banks, guarantees and irrevocable loan commitments. The exposure is measured net of accumulated im-pairment charges and includes repo loans. Personal customers accounted for 37% of credit ex-posure from lending activities, commercial customers for 38%, and financial counterparties for 20%. The remainder consisted of exposure to central banks and central and local governments. Of the exposure to commercial customers, small and medium-sized en-terprises accounted for 68%.

CREDIT EXPOSURE FROM LENDING ACTIVITIES 30 June Share of 31 Dec. Share of (DKK millions) 2012 total (%) 2011 total (%)

Retail Banking Denmark 965,669 41 976,962 43

Retail Banking Finland 162,516 7 158,008 7

Retail Banking Sweden 202,860 9 203,319 9

Retail Banking Norway 151,068 6 145,658 6

Banking Activities Northern Ireland 47,608 2 52,480 2

Banking Activities Ireland 24,384 1 52,695 3

Banking Activities Baltics 21,906 1 22,158 1

Other Banking Activities 63,037 2 55,586 2

Corporate & Institu-tional Banking 250,955 11 256,188 11

Non-core Ireland 24,066 1 - -

Total Banking Activities 1,914,069 81 1,923,054 84

Danske Markets and Treasury 456,239 19 365,692 16

Danske Capital 11,695 - 9,965 -

Total 2,382,003 100 2,298,711 100

Personal customers Credit exposure to personal customers covers loans secured on customers’ assets, consumer loans and fully or partially secured credits. At 30 June 2012, credit exposure to personal cus-tomers amounted to DKK 889 billion, the same as at 31 December 2011. Personal customer demand for credit has generally weakened over the past year. At 92%, the share of approved personal customer loan applications was unchanged from the level in the year-earlier period. Home financing accounted for DKK 791 billion of credit exposure to personal customers, with Realkredit Danmark loans accounting for DKK 423 billion of this amount. Most of the home loans were still variable-rate loans. Interest-only loans accounted for 55%, matching the first-half 2011 level. LOAN-TO-VALUE RATIO, HOME LOANS 30 June 31 Dec. (%) 2012 2011

Retail Banking Denmark 73.7 69.5

Realkredit Danmark 73.2 67.7

Retail Banking Finland 63.4 62.5

Retail Banking Sweden 69.4 70.3

Retail Banking Norway 63.6 63.6

Banking Activities Northern Ireland 77.9 78.0

Banking Activities Ireland 115.3 107.8

Banking Activities Baltics 84.0 84.1

Non-core Ireland 152.1 142.9

Average 73.0 69.9

Although market activity showed signs of stabilisation towards the end of the period, house prices continued downwards, especially in the Irish markets. Danish house prices also fell. Rising LTV ratios increase the risk that customers who are forced to sell their homes will do so at a loss.


Realkredit Danmark saw a fall in delinquency rates from 0.29% at 30 June 2011 to 0.24% at 30 June 2012. Credit quality at the other Nordic retail units remained good, and delinquency rates were unchanged. Low in-terest rates and a continuation of low unemployment had a positive effect on credit quality. Both Ireland and Northern Ireland saw a decline in unemployment during the first half of 2012. But the unemployment rates remain high, especially in Ireland, and personal customer credit quality at the two units still suffers from the fall in house prices. At Banking Activities Ireland, the home loan delinquency rate was 3.4%, against 3.0% at the end of 2011. Impairment charges at the unit amounted to DKK 0.2 billion, or 2.2% of lending and guarantees to personal custom-ers. At the Baltic units, impairment charges recorded net reversals, reflecting the continued improvement in the Baltic economies. Business customers Credit exposure to business customers consists of fully or partially secured operating financing and loans secured on assets. Credit exposure before loan impairment charges was at the same level as at the end of 2011. Credit expo-sure to small and medium-sized enterprises was un-changed, while exposure to large corporate customers rose. At 30 June 2012, credit exposure to business customers totalled DKK 898 billion and largely matched the level at 31 December 2011. Business customer credit quality was unchanged. The sensitivity of small and medium-sized enterprises to changes in consumer spending grew, however. The risk of deteriorating credit quality increases in step with the decline in house prices and disposable in-comes, particularly for the industries most sensitive to consumer spending. The underlying credit quality at Corporate & Institu-tional Banking remained good. Commercial property customers At 30 June 2012, credit exposure to commercial property customers totalled DKK 258 billion, against DKK 257 billion at 31 December 2011, with expo-sure in Denmark accounting for DKK 118 billion. After a long downward trend, the credit quality of the Dan-ish property portfolio stabilised. Credit exposure at the other Nordic units amounted to DKK 102 billion, and credit quality remained stable.

IMPAIRMENT CHARGES AND CREDIT EXPOSURE COMMERCIAL PROPERTY

First half

2012 30 June 2012

Charges Balance (% of Lending and

(DKK millions) lending and

guarantees) guarantees (%

of portfolio)

Retail Banking Denmark 446 2.8 48.2

Retail Banking Finland 12 0.4 6.1

Retail Banking Sweden 57 0.4 20.7

Retail Banking Norway 48 1.7 12.8

Banking Activities Northern Ireland 245 29.0 3.0

Banking Activities Ireland -157 20.2 0.1

Banking Activities Baltics -101 19.3 0.7

Other Banking Activities 8 3.1 0.6

Corporate &

Institutional Banking -4 - 4.0

Non-core Ireland 1,459 51.4 3.8

Total 2,013 6.7 100.0

At 30 June 2011, exposure to the Northern Ireland property sector amounted to DKK 7.3 billion. Property developers accounted for DKK 1.6 billion, or 3.4% of the total exposure of the Northern Ireland unit. Expo-sure to the Irish property sector, which amounted to DKK 9.6 billion, is part of Non-core Ireland. Property developers accounted for DKK 2.6 billion, or 10.7% of the total exposure at Non-core Ireland. Agricultural customers At 30 June 2012, agricultural customer credit expo-sure amounted to DKK 69.3 billion, against DKK 67.9 billion at the end of 2011. Loans provided by Realkredit Danmark accounted for DKK 45.2 billion, against DKK 45.0 billion at the end of 2011. In spite of improved terms of trade for agricultural produce, the credit quality of the agricultural portfolio remained weak because of high debt levels. Credit ex-posure to agricultural customers, mainly operating fa-cilities, totalled DKK 8.8 billion at Retail Banking Denmark, excluding Realkredit Danmark. Pig farmers, who accounted for 24% of the exposure, continued to have the poorest credit quality. Shipping customers At 30 June 2012, credit exposure to the shipping in-dustry amounted to DKK 46.1 billion, against DKK 48.4 billion at 31 December 2011. The pressure on the shipping industry continued. Excess capacity remained high, causing further declines in the value of shipping assets, with an adverse effect on the Group’s collateral. Generally low freight rates also affected li-quidity in the industry. Accumulated impairment charges against facilities to the shipping industry amounted to DKK 1.8 billion, or 4.7%, of lending and guarantees. Non-core Ireland The Group has identified a number of customer seg-ments at Banking Activities Ireland that will no longer be considered part of the Group’s core business. The main non-core segments are commercial property and


personal customer investment property. At 30 June 2012, credit exposure at Non-core Ireland totalled DKK 24 billion, with commercial property exposures accounting for DKK 9.6 billion and personal customer investment property exposures accounting for DKK 8.4 billion. The remaining DKK 6.0 billion related mostly to consumer industries. Impaired exposures made up 44% of the portfolio. Im-paired personal customer investment property expo-sures made up 4% of the portfolio. Financial counterparties Credit exposure to financial counterparties amounted to DKK 477 billion at 30 June 2012, against DKK 389 billion at the end of 2011. Most of the exposure related to bank facilities that were to a large extent secured on collateral. The credit quality of financial counterparties remained good. Exposure to small Danish credit institutions ac-counted for 2% of the total exposure to financial coun-terparties at 30 June 2012. Allowance account The allowance account holds accumulated loan im-pairment charges. At 30 June 2012, accumulated individual charges amounted to DKK 50.0 billion, or 2.4% of lending and guarantees. Accumulated collective charges amounted to DKK 4.0 billion, or 0.2% of lending and guarantees. The corresponding figures at 31 Decem-ber 2011 were DKK 44.5 billion and DKK 4.1 billion.

ALLOWANCE ACCOUNT 30 June 2012 31 December 2011

% of lending % of lending

(DKK millions) Balance

and guaran-

tees Balance

and guaran-

tees

Retail Banking Denmark 18,959 1.91 18,180 1.81

Retail Banking Finland 2,082 1.30 1,974 1.26

Retail Banking Sweden 1,447 0.75 1,226 0.64

Retail Banking Norway 1,618 1.08 1,474 1.04

Banking Activities Northern Ireland 6,158 11.82 5,083 8.95

Banking Activities Ireland 2,449 9.20 13,820 21.46

Banking Activities Baltics 1,931 9.58 2,244 10.63

Other Banking Activities 431 1.95 381 1.77

Corporate & Institu-tional Banking 1,970 1.46 1,455 1.08

Non-core Ireland 14,078 39.24 - - Danske Markets and Treasury 2,702 0.64 2,599 0.87

Danske Capital 181 0.91 168 1.04

Total 54,006 2.57 48,604 2.46

The property sector and personal customers ac-counted for 18% and 26%, respectively, of accumu-lated charges at the Nordic retail units, against 17% and 25% at the end of 2011. Rating categories 11 and 10 comprise individually impaired exposures. If a customer defaults on just a single facility, the customer’s downgrade applies to

the entire exposure. Downgrading takes place even if the customer has provided adequate collateral. The value of collateral is calculated as the market value less a haircut of usually 20-40%, depending on the type of collateral. EXPOSURE AT 30 JUNE 2012 Rating category (DKK billions) 11 10

Credit exposure before impairment charges 74.5 49.0

Accumulated impairment charges 38.4 11.6

Credit exposure 36.1 37.4

Collateral value 28.6 22.0

Total unsecured exposure 7.5 15.4

Covered by impairment charges and col-lateral (%) 89.9 68.6

Rating category 11 contains exposures to customers who, according to the Group’s definition, are in default. These customers are subject to debt collection, re-structuring or bankruptcy, or have one or more facili-ties on which a payment is more than 90 days past due. Rating category 10 contains customers with impaired exposures that are not in default. These exposures show signs of financial difficulty, including a risk of further impairment in the future. Most of the custom-ers continue to service their loans in a timely manner. In the first half of 2012, actual losses fell to DKK 2.6 billion from DKK 5.9 billion a year earlier. Actual losses in the first half of 2011 included the settlement of DKK 3.3 billion for the Group’s commitment under Danish Bank Package 1. Small business customers at Retail Banking Denmark accounted for most of the ac-tual losses in the first half of 2012. Of actual losses in the first half of 2012, DKK 0.6 billion was attributable to facilities not already subject to impairment, the same as in the first half of 2011. Trading and investment activities Credit exposure from trading and investment activities fell from DKK 1,020 billion at 31 December 2011 to DKK 969 billion at 30 June 2012. The fall was caused mainly by declining derivatives values. The Group has made agreements with many of its counterparties to net positive and negative market values. The net exposure was DKK 105 billion, against DKK 99 billion at 31 December 2011, and most of it was secured by collateral management agreements. The value of the bond portfolio, excluding customer funds at Danica Pension, was DKK 484 billion, with DKK 68 billion recognised at fair value in accordance with the rules on available-for-sale financial assets. Of the total bond portfolio, 98.1% was recognised at fair value and 1.9% at amortised cost. The Group has not reclassified bonds since 2008.


Most of the bond portfolio is liquid and can be used as collateral for loans from central banks and thus forms part of the liquidity reserve. BOND PORTFOLIO 30 June 31 Dec. (%) 2012 2011

Government bonds and bonds guaranteed by central or local governments 28 28

Bonds issued by quasi-government institutions 1 2

Danish mortgage bonds 46 46

Swedish covered bonds 13 14

Other covered bonds 5 5

Short-dated bonds (CP etc.), primarily with banks 3 2

Corporate bonds 4 3

Total holdings 100 100

Available-for-sale bonds included in total holdings 14 15

Holdings of government bonds consisted primarily of bonds issued by the Nordic countries, Germany and the UK. The net exposure to government bonds from Ireland, Portugal, Spain and Italy was DKK 5.8 billion. All holdings of government bonds issued by these countries were recognised at fair value. Danica Pension’s exposure to government bonds from Ireland, Portugal, Spain and Italy totalled DKK 7.2 billion, with policyholders receiving most of the return and assuming most of the risk. The bond portfolio did not include government bonds issued by Greece. Capital and solvency The Group’s capital base consists of tier 1 capital (eq-uity capital and hybrid capital after deductions) and tier 2 capital. At 30 June 2012, the capital base amounted to DKK 158 billion, and the total capital ra-tio was 17.7%. The core tier 1 capital ratio stood at 12.1%. Hybrid capital raised from the Danish state accounted for 2.7 percentage points. Risk-weighted assets amounted to DKK 893 billion at 30 June 2012, against DKK 906 billion at 31 Decem-ber 2011. The Group uses mainly the internal ratings-based (IRB) approach to calculate risk-weighted as-sets for credit risk. At 30 June 2012, the Group’s solvency need ratio was 10.4%. Under Danish law, the Group must pub-lish its solvency need on a quarterly basis. More de-tailed information is available at www.danskebank.com/ir. The Basel III rules are in the process of being imple-mented in the EU’s CRD IV. The final document is ex-pected to be presented in the second half of 2012. The European Banking Authority will subsequently pro-pose detailed rules for many areas, for example liquid-ity requirements and certain aspects of capital re-quirements. Once CRD IV is finalised, the Group will assess whether the new rules change the implications for Danske Bank relative to the Commission’s July 2011 proposal. Danske Bank’s Annual Report 2011 and Risk Management 2011 provide more details about

the preliminary assessment of the implications of the new rules for the Group’s capital position. Ratings Fitch Ratings maintained Danske Bank’s long-term A rating (negative outlook) and short-term F1 rating in the first half of 2012, while Standard & Poor’s low-ered Danske Bank’s long-term rating from A to A- (stable outlook] and its short-term rating one notch to A-2. A general downgrade by Moody’s of many European banks in the first half of 2012 also affected a number of Danish banks, including Danske Bank. In May 2012, Moody’s lowered Danske Bank’s long-term rat-ing from A2 to Baa1 and its short-term rating from P-1 to P-2. Both ratings now have a stable outlook. Moody’s ratings in particular are affected by the fact that Denmark has not yet designated systemically im-portant financial institutions (SIFIs). Under the political agreement on Danish Bank Pack-age 4 of September 2011, a committee was set up to analyse the criteria that a bank must meet to be con-sidered a SIFI in Denmark. The Group expects that it will be considered a Danish SIFI. The committee is to report to the minister for business and growth by the end of 2012, and requirements for Danish SIFIs will not be clarified until then. The Group considers it critical that the supervision and regulation of Danish SIFIs conform to interna-tional standards. It is also key that rules on the resolu-tion of SIFIs match international conventions. The Group’s current ratings are not satisfactory. The initiatives launched to improve earnings and the focus on ensuring a better balance between lending and de-posits are expected to improve its ratings. Macroeco-nomic trends, particularly in Ireland, Northern Ireland and Denmark, along with the regulatory framework in Denmark, however, may delay the process. Mortgage bonds and mortgage-covered bonds issued by Realkredit Danmark are rated AAA by Standard & Poor’s (stable outlook). In the first half of 2012, Realkredit Danmark began a collaboration with Fitch Ratings, and in June, Realkredit Danmark’s bonds were rated AAA by Fitch Ratings. Funding and liquidity The relatively positive market sentiment that prevailed in the first quarter disappeared in the second quarter when high volatility and uncertainty returned. This negative turn of events resulted mainly from renewed concerns over the stability of the euro zone and also from the uncertain rating outlooks for many European banks.


As expected, the rating downgrades meant that some short-term money market deposits at Danske Markets as well as short-dated bonds were not renewed. The substantial deposits held by the banking units were not affected by the downgrades. The Group had prepared for the change in ratings and has for some time maintained a large liquidity reserve, for example by setting up an extensive covered bond programme. In the first half of 2012, the Group thus issued covered bonds for DKK 39 billion. In addition, the Group issued senior debt for DKK 17 billion and junior covered bonds for DKK 20 billion. At the end of June 2012, the Group had, as planned, redeemed state-guaranteed bond issues for DKK 30 billion. The remainder of the state-guaranteed bond issues was redeemed in July 2012. In the autumn of 2011, the Danish central bank ex-panded its lending facility to Danish banks by allowing them to borrow on the basis of high-quality loans. A number of other European countries have similar pro-grammes. The Danish central bank followed the ECB by introducing an option for Danish banks to raise loans with a maturity of three years. At 30 June 2012, the Group had drawn around DKK 15 billion on the Danish central bank facility and around DKK 40 billion on the ECB facility, with bonds provided as collateral. The Group maintained a strong liquidity position throughout the period. It expects to be able to continue operations even if access to the capital markets is cut off for much longer than 12 months. This is shown in the Moody’s liquidity curve, which the Group uses as one element of its liquidity management. The Group’s 12-month liquidity curve is positive for more than two and a half years.

The liquidity buffer still exceeds DKK 300 billion. The Group has taken measures to ensure compliance with the loss coverage ratio (LCR) requirement by the end of 2012, well ahead of the expected EU requirement in 2014. The Group expects to achieve compliance with the requirement by changing the composition of the liquidity buffer and by including holdings of Danish mortgage bonds and own covered bonds. In addition, the Group plans to issue senior debt and covered bonds, although the issues will be more moderate than in the first half of 2012. Executive management On 15 February 2012, Peter Straarup retired from his position as chief executive officer, and Eivind Kolding became the new chief executive officer. On 1 June 2012, Lars Mørch joined the Executive Board as head of the Group’s Business Banking unit. Per Skovhus and Georg Schubiger, members of the Executive Board, resigned from their positions on 15 June 2012 and 1 June 2012, respectively. Robert Endersby has been appointed Chief Risk Officer & Head of Group Credit. He will take up his new position no later than 1 October 2012 and will also become a member of the Executive Board.


Outlook for 2012

The year 2012 began with some optimism in the fi-nancial markets in the wake of the monetary easing introduced by the European Central Bank towards the end of 2011. The initial optimism quickly disap-peared, however, as the unstable political situation in Greece, combined with the difficulties in Spain, put the problems in Europe back on the agenda. The ECB cut its leading rate in July 2012, and the Danish central bank followed suit, pushing the Dan-ish certificate of deposit rate into negative territory. Interest rates are forecast to be generally un-changed or falling in the remainder of 2012. The Group will continue its efforts to increase in-come, and further price increases are likely to follow those already announced. The announced and im-plemented initiatives are expected to raise income by around DKK 4 billion a year from the level in 2011. Lower key interest rates will reduce the effect of price increases, however. Overall, net interest in-come is likely to increase from the 2011 level. Including charges related to name rights because of the rebranding of Sampo Bank and reorganisation expenses, expenses in 2012 are expected to rise 4% over the level in 2011. The Group’s programme to reduce costs and cut the headcount by about 2,000 is expected to be completed by the end of 2013. The performance of market-related activities – in Danske Markets and Danica Pension – will depend greatly on trends in the financial markets. Part of the risk allowance is likely to be booked in 2012.

The Irish economy will continue to face structural challenges, and because of the economic climate, the level of future impairment charges is uncertain. The outlook for rental property and property devel-opers in Northern Ireland is also uncertain. Loan im-pairment charges at the units in Ireland and North-ern Ireland are likely to remain high as stated in the first-quarter report. The trend in credit quality will generally depend on economic conditions in the Group’s markets, and to-tal impairment charges are likely to remain at the same high level as in 2011. The Group still expects earnings to remain low in 2012. Because of the economic climate, the outlook is subject to considerable uncertainty.


Business units

INCOME First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011


Retail Banking Finland 1,847 1,766 105 897 950 924 891 924 3,581

Retail Banking Sweden 1,745 1,574 111 858 887 860 791 801 3,225

Retail Banking Norway 1,486 1,259 118 765 721 674 631 640 2,564

Banking Activities Northern Ireland 850 771 110 428 422 408 408 404 1,587

Banking Activities Ireland 269 510 53 131 138 285 259 252 1,054

Banking Activities Baltics 379 359 106 191 188 188 185 182 732

Other Banking Activities 1,206 1,108 109 642 564 557 539 522 2,204

Corporate & Institutional Banking 1,482 1,445 103 752 730 815 769 747 3,029

Non-core Ireland 211 - - 90 121 - - - - Total Banking Activities 17,839 16,932 105 8,974 8,865 8,982 8,638 8,630 34,552

Danske Markets and Treasury 4,989 4,576 109 2,064 2,925 1,246 -106 2,049 5,716

Danske Capital 859 924 93 447 412 614 442 453 1,980

Danica Pension 883 328 269 699 184 976 -735 261 569

Other Activities 34 443 8 67 -33 45 72 119 560

Total Group 24,604 23,203 106 12,251 12,353 11,863 8,311 11,512 43,377

Banking Activities consists of the Group’s retail banking units and Corporate & Institutional Banking (CIB). The retail units serve all types of personal cus-tomers (including private banking customers served at finance centres), small businesses and medium-sized companies. Mortgage finance operations in Denmark are carried out through Realkredit Danmark. Real es-tate agency operations are conducted by the home and Fokus Krogsveen estate agency chains. The re-sults of the Group’s property finance operations are included in the retail unit figures. The Group has iden-tified Banking Activities Ireland’s non-core activities. These activities involve commercial and investment property exposures, including personal customer in-vestment property exposures, as well as exposures to small and medium-sized enterprises in some sectors. The specialised local CIB units in Denmark, Sweden, Norway and Finland serve the largest and most com-plex companies in the Nordic countries, including pension funds, insurance companies and other finan-cial institutions, and multinational companies with significant banking business in the region. Products and services include lending, financial instruments for risk management and investment purposes, cash management services, advice on mergers and acquisi-tions, and assistance with equity and debt issues in the international financial markets. Danske Markets is responsible for the Group’s activi-ties in the financial markets. Trading activities include trading in fixed-income products, foreign exchange and equities. Institutional Banking at Danske Markets covers facilities with international financial institu-tions outside the Nordic region. Facilities with Nordic financial institutions form part of Banking Activities. Group Treasury is responsible for the Group’s strate-gic fixed-income, foreign exchange and equity portfo-lios and serves as the Group’s internal bank. Danske Capital develops and sells asset and wealth management products and services. They are mar-

keted through the banking units and directly to busi-nesses, institutional clients and external distributors. Danske Capital also supports the advisory and asset management activities of the banking units. Through Danske Bank International in Luxembourg, Danske Capital provides international private banking ser-vices to clients outside the Group’s home markets. Danica Pension carries out the Group’s life insurance and pension activities for both personal and business customers. Products are marketed through a range of distribution channels, mainly banking units and own insurance brokers and advisers. Danica Pension offers two market-based products: Danica Balance and Danica Link. These products allow customers to select their own investment profiles, and the return on savings depends on market trends. Danica Pension also offers Danica Traditionel. This product does not offer individual investment profiles, and Danica Pension sets the rate of interest on policyholders’ savings. Other Activities encompasses expenses for the Group’s support functions and real property. Other Activities also covers eliminations, including the elimination of returns on own shares. Capital is allocated to the individual business units on the basis of each unit’s share of the Group’s average risk-weighted assets calculated prior to the transition to the Capital Requirements Directive. Insurance com-panies are subject to special statutory capital re-quirements. Capital is allocated to the insurance busi-ness in compliance with these requirements. Expenses are allocated to the business units at mar-ket price level. Other Activities supplies services to business units, and transactions are settled at unit prices or on an arm’s-length basis, if possible, on the basis of consumption and activity. Assets and liabili-ties are broken down into business unit operations and presented in the business unit sections.


_____________________ BRANCHES 578

______________________ EMPLOYEES 13,201

______________________

PRE-TAX PROFIT DKK 173 MILLION

Banking Activities

BANKING ACTIVITIES First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Net interest income 12,295 11,193 110 6,159 6,136 6,150 5,964 5,724 23,307

Net fee income 3,246 3,325 98 1,634 1,612 1,666 1,542 1,648 6,533

Net trading income 708 667 106 361 347 375 344 328 1,386

Other income 1,590 1,747 91 820 770 791 788 930 3,326

Total income 17,839 16,932 105 8,974 8,865 8,982 8,638 8,630 34,552

Expenses 10,672 10,476 102 5,581 5,091 5,537 4,788 5,316 20,801

Profit before loan impairment charges 7,167 6,456 111 3,393 3,774 3,445 3,850 3,314 13,751

Loan impairment charges 6,994 5,872 119 3,052 3,942 4,817 3,552 3,148 14,241

Profit before tax 173 584 30 341 -168 -1,372 298 166 -490

Loans and advances (end of period) 1,695,428 1,668,455 102 1,695,428 1,689,265 1,698,833 1,688,201 1,668,455 1,698,833

Allowance account, total (end of period) 51,123 41,853 122 51,123 48,943 45,837 44,486 41,853 45,837

Deposits (end of period) 680,606 690,953 99 680,606 688,047 701,481 693,624 690,953 701,481

Bonds issued by Realkredit Danmark (end of period) 750,168 700,405 107 750,168 762,190 757,505 728,728 700,405 757,505

Allocated capital (avg.) 90,568 81,468 111 89,997 91,138 91,174 90,383 90,011 86,122

Profit before loan impairment charges as % p.a. of allocated capital 15.8 15.8 15.1 16.6 15.1 17.0 14.7 16.0

Pre-tax profit as % p.a. of allocated capital (ROE) 0.4 1.4 1.5 -0.7 -6.0 1.3 0.7 -0.6


Full-time-equivalent staff 13,201 13,524 98 13,201 13,351 13,470 13,538 13,524 13,470

• Profit before tax of DKK 0.2 billion; excluding

Non-core Ireland, profit before tax was DKK 2.5 billion

• Profit before loan impairment charges of DKK 7.2 billion

• Net interest income up 10%, mainly because of price increases

• Loan impairment charges up 19% from the year-earlier level

• Lending matched the level at the end of 2011, while deposits were down 3%

Market conditions The low interest rates in the Group’s markets contin-ued to affect the business environment of the banking units in the first half of 2012. The ECB kept its rates low in the first six months of the year, while the Danish central bank lowered its certificate of deposit and lending rates independently on 25 May and again on 1 June 2012. The central banks in Sweden and Norway also lowered key inter-est rates in the first half of 2012. The Group continued its pricing initiatives to strengthen earnings and offset the effects of low inter-est rates and rising funding costs.

NON-CORE IRELAND First half Q2 Q1 (DKK millions) 2012 2012 2012

Total income 211 90 121

Expenses 106 53 53

Profit before loan impairment charges 105 37 68

Loan impairment charges 2,390 1,374 1,016

Profit before tax -2,285 -1,337 -948

Loans and advances (end of period) 35,812 35,812 36,426

Allowance account, total (end of period) 14,078 14,078 12,894

Deposits (end of period) 1,230 1,230 298

Retail Banking Denmark raised lending rates on se-lected products in early February and again in early April and also announced higher lending rates effec-tive from 15 August. Previously announced measures at Realkredit Danmark were implemented on 1 January 2012. After further assessment of its prices, Realkredit Danmark introduced a new pricing structure, primarily for personal customers, on 1 July 2012.


Retail Banking Norway and Retail Banking Sweden raised selected lending rates in the autumn of 2011 as part of a general repricing initiative. In addition, Re-tail Banking Norway adjusted margins and loan fees in the first half of 2012. Both units are striving to achieve a better balance between loans and deposits to minimise funding costs. Retail Banking Finland continued to suffer from low European interest rates, and rising funding costs prompted the unit to adjust the prices of new home loans and other types of new property loans. The Irish and Northern Ireland economies remained under pressure, and interest rates were low. Banking Activities Ireland repriced home loans in the fourth quarter of 2011, with full effect in the first half of 2012. Banking Activities Northern Ireland adjusted the prices of loans for both personal and business customers. The Baltic economies benefited from an improved business environment in the first half of 2012. Corporate & Institutional Banking saw increasing lending volumes and slightly increasing lending mar-gins. Deposits declined towards the end of the period, mainly because of a reduction of the Group’s credit rating. Financial summary At DKK 17.8 billion, the total income of Banking Ac-tivities rose 5% from the level in the first half of 2011, mainly because of higher net interest income. Net interest income amounted to DKK 12.3 billion, up 10% from the level in the first half of 2011. The main driver of this trend was a general rise in lending mar-gins resulting from price increases. The Group bene-fited from higher margins on lending to both personal and business customers. Loan impairment charges rose DKK 1.1 billion from the year-earlier level. Retail Banking Denmark saw a general deterioration in customer credit quality, while

Corporate & Institutional Banking recorded an in-crease in charges that stemmed mainly from a few exposures to the shipping industry. Loan impairment charges at Banking Activities Ireland declined sub-stantially because of lower charges against facilities to personal customers and consumer industries in the business segment. Operations With the aim of providing market-leading advisory services through efficient and profitable channels, the Group began restructuring the Danish branch network in the first half of 2012. To an increasing degree, customers are handling day-to-day banking transactions themselves through online, mobile and tablet banking solutions and the contact centre, which is open 24/7 year round. The Group is reducing the number of branches and developing large advisory centres. With intensive knowledge sharing among advisers, the centres will deliver services that meet the increasing demands of customers. In Denmark, the Group is introducing a new structure with four regions: Central-North Jutland, South Den-mark, Zealand and Copenhagen. During the first half of 2012, the Group closed 67 branches (31 in Denmark) and thus had 578 branches at the end of June 2012. Branch closures are expected to continue throughout 2012. All units continue to focus on improving customer sat-isfaction. The units regularly follow up on customer experience, and customer recommendations are monitored and translated into operations improve-ments. The Group also continues its efforts to develop strong self-service solutions to enable customers to carry out even more transactions at their conven-ience. Non-core Ireland In the first half of 2012, the Group started the process of transferring non-core customers of Banking Activities Ireland to a separate unit. This process has been carried out as planned. Non-core Ireland had a loss before tax of DKK 2.3 bil-lion. Lending, consisting mainly of commercial and in-vestment property loans, including loans to personal customers exposed to investment property, totalled DKK 35.8 billion. Deposits came to DKK 1.2 billion. Market shares In its core markets, the Group generally maintained its shares of lending at first-half 2011 levels. The market shares of deposits were challenged by keener competition in some markets. The units in Finland and Sweden saw a fall, mainly because of in-creased competition for business customer deposits.


In Norway, the market share of deposits improved, mainly because of an increase in public-sector depos-its.

MARKET SHARE OF LENDING 30 June 30 June (%) 2012 2011

Denmark (including mortgage loans) 28.5 28.6

Finland 11.7 12.0

Sweden 5.5 5.7

Norway 5.1 5.3

MARKET SHARE OF DEPOSITS 30 June 30 June (%) 2012 2011

Denmark 30.0 30.2

Finland 11.2 12.0

Sweden 4.3 4.8

Norway 5.3 4.7

Changes in statistical reporting at Statistics Norway have made it impossible to update market shares for Norway at 30 June 2012. The latest figures therefore show the market shares at 31 March 2012.


______________________ EMPLOYEES

841

______________________ TOTAL INCOME

DKK 4,989 MILLION

______________________

PRE-TAX PROFIT

DKK 3,390 MILLION

Danske Markets and Treasury

DANSKE MARKETS AND TREASURY First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Total income 4,989 4,576 109 2,064 2,925 1,246 -106 2,049 5,716

Expenses 1,574 1,424 111 699 875 684 544 682 2,652

Profit before loan impairment charges 3,415 3,152 108 1,365 2,050 562 -650 1,367 3,064

Loan impairment charges 25 -231 - 52 -27 -52 -750 -396 -1,033

Profit before tax 3,390 3,383 100 1,313 2,077 614 100 1,763 4,097

Due from credit institutions and repo loans (end of period) 414,260 340,381 122 414,260 448,320 330,068 300,496 340,381 330,068

Loans and advances (end of period) 53,679 40,671 132 53,679 42,388 44,330 46,407 40,671 44,330

Allowance account, total (end of period) 2,702 2,583 105 2,702 2,498 2,599 2,518 2,583 2,599

Net trading and investment portfolio (end of period) 407,834 408,688 100 407,834 407,348 423,235 442,221 408,688 423,235



Profit before loan impairment charges as % p.a. of allocated capital 55.7 87.5 42.9 69.6 21.0 -24.9 65.9 34.5

Pre-tax profit as % p.a. of allocated capital (ROE) 55.3 94.0 41.2 70.5 23.0 3.8 84.9 46.1

Cost/income ratio (%) 31.5 31.1 33.9 29.9 54.9 - 33.3 46.4

PROFIT BEFORE TAX (DKK millions)

Danske Markets 3,372 2,538 133 1,011 2,361 851 446 1,119 3,835

Group Treasury 18 845 2 302 -284 -237 -346 644 262

Total Danske Markets and Treasury 3,390 3,383 100 1,313 2,077 614 100 1,763 4,097

• Satisfactory and increasing net trading income • Strong customer activity and a better environ-

ment for hedging transactions • High level of customer satisfaction – Danske

Markets is the leading fixed-income and deriva-tives trader in the Nordic region

In the first quarter of 2012, expectations of a con-trolled solution to the Greek debt problems and cen-tral banks’ provision of emergency liquidity im-proved market sentiment. But when support for the crisis measures negotiated by the EU and the IMF in particular waned and expectations of economic growth both in and outside Europe faded in the sec-ond quarter, uncertainty in the financial markets deepened. At DKK 3.4 billion, profit before tax at Danske Markets and Treasury matched the year-earlier figure. Expenses rose 11% from the year-earlier level, mainly because of higher performance-based com-pensation at Danske Markets. Danske Markets posted a pre-tax profit of DKK 3.4 billion, significantly above the year-earlier level. In-creased customer activity and better conditions for

hedging between the euro and Nordic currencies fu-elled the positive trend. Trading activity in derivatives and government and mortgage bonds in particular was stronger and gen-erated better earnings. Debt capital market activity also grew. The increase in earnings was driven by both primary and secondary activities. The Prospera research institute conducted cus-tomer satisfaction surveys on the Nordic fixed-income and derivatives markets in the period, and Danske Markets was the highest-rated broker in these markets. Group Treasury’s pre-tax profit was down DKK 0.8 billion from the year-earlier level. The main reason was higher funding costs. In the second quarter, Group Treasury posted an extraordinary gain of DKK 0.4 billion through an adjustment of the Group’s pension plans. The Group’s net exposure to southern European government bonds is limited, and market value fluc-tuations have little effect on net trading income. The Group’s average VaR (10-day horizon, confi-dence level of 95%) was DKK 251 million, against DKK 261 million in the first half of 2011.


______________________ EMPLOYEES

569

______________________ PRE-TAX PROFIT

DKK 319 MILLION

_________________________

MARKET SHARE IN THE NORDIC REGION

10.6%

Danske Capital DANSKE CAPITAL First half First half Index Q2 Q1 Q4 Q3 Q2 Full year

(DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Net interest income 60 55 109 30 30 31 33 28 119

Net fee income 783 830 94 405 378 566 399 410 1,795

Other income 16 39 41 12 4 17 10 15 66

Total income 859 924 93 447 412 614 442 453 1,980

Expenses 528 550 96 264 264 313 230 283 1,093

Profit before loan impairment charges 331 374 89 183 148 301 212 170 887

Loan impairment charges 12 -47 - 5 7 24 - 1 -23

Profit before tax 319 421 76 178 141 277 212 169 910

Loans and advances (end of period) 5,937 6,293 94 5,937 6,279 6,075 6,266 6,293 6,075

Allowance account, total (end of period) 181 163 111 181 176 168 161 163 168


Allocated capital (avg.) 334 294 114 340 327 336 319 315 311


Assets under management (DKK billions) 636 603 105 636 632 606 587 603 606

• Profit before loan impairment charges down 11% • Above-benchmark returns for 73% of Danske

Invest funds • All Danske Invest funds have now migrated to the

shared IT platform

In the first half of 2012, total income at Danske Capi-tal amounted to DKK 859 million, down 7% from DKK 924 million in the first half of 2011. One reason for the fall was a shift in the mix of assets under man-agement. Total expenses declined 4%, mainly because of lower costs for performance-based compensation. At 30 June 2012, assets under management amounted to DKK 636 billion, up DKK 30 billion from the level at 31 December 2011. Net sales to institu-tional and retail banking customers amounted to DKK 10.6 billion in the first half of 2012. Develop-ments in the financial markets led to total capital gains of DKK 19.4 billion. Net sales of DKK 10.6 billion break down into inflows of DKK 6.8 billion from retail banking customers and inflows of DKK 3.8 billion from institutional clients. Danske Capital’s share of the Nordic mutual fund market, measured by asset value, was 10.6% at the end of June, down 1.3 percentage points from the level at the end of 2011. The main reason for the de-cline was the loss of one large administrative man-date.

In the first half of 2012, 73% of Danske Capital’s mu-tual funds posted above-benchmark returns. Of the bond-based funds, 82% delivered above-benchmark returns. For equity-based funds, the figure was 69%. Some 47% of Danske Invest funds ranked in the top third of European funds in their categories.


______________________ EMPLOYEES 813

________________________ INCOME DKK 883 MILLION

_______________________ TOTAL PREMIUMS DKK 12,604 MILLION

Danica Pension

DANICA PENSION First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Danica Traditionel 615 547 112 294 321 298 275 283 1,120

Unit-linked business 177 179 99 103 74 24 66 89 269

Health and accident business -53 12 - -33 -20 -23 21 13 10

Return on investments 303 146 208 91 212 240 199 125 585

Financing result -47 -78 - -25 -22 -37 -48 -45 -163

Special allotment -44 -125 - -40 -4 56 -25 -62 -94

Change in shadow account -68 -353 - 309 -377 418 -1,223 -142 -1,158

Net income from insurance business 883 328 269 699 184 976 -735 261 569

Premiums, insurance contracts 10,099 10,165 99 4,634 5,465 5,596 4,786 4,973 20,547

Premiums, investment contracts 2,505 4,033 62 1,082 1,423 1,681 1,016 2,076 6,730

Provisions, insurance contracts 250,833 233,336 107 250,833 248,331 243,304 236,708 233,336 243,304

Provisions, investment contracts 26,463 24,770 107 26,463 27,108 24,540 22,302 24,770 24,540

Customer funds, investment assets Danica Traditionel 191,965 182,456 105 191,965 189,487 188,699 185,849 182,456 188,699

Danica Balance 33,179 25,410 131 33,179 31,844 28,596 25,527 25,410 28,596

Danica Link 50,330 46,438 108 50,330 50,927 47,201 42,622 46,438 47,201


Net income as % p.a. of allocated capital 19.3 11.3 30.8 8.0 43.1 -33.5 17.9 7.7

• Net income from insurance business of DKK 0.9

billion • Total premiums down 11% to DKK 12.6 billion,

mainly because of a fall in Swedish premiums • Total Danish premiums down 5% • Expense ratio at the Danish unit down from

4.8% to 4.5%

The Group’s insurance business generated income of DKK 883 million, against DKK 328 million a year earlier. The booking of the risk allowance for three of the four interest rate groups had a positive effect on income. The Danish Ministry of Business and Growth reached an agreement with the insurance and pen-sion industry under which the discount yield curve used for long yields was changed. The agreement took effect on 12 June 2012. The change aligns Danish rules with the coming Solvency II rules and caused a reduction of Danica Pension’s life insur-ance provisions of DKK 1.3 billion at 30 June 2012. The amount that may be drawn on the bonus poten-tial of paid-up policies to cover capital losses was increased by DKK 1.1 billion. The agreement also places a ceiling of 2% on the rate of interest on policyholders’ savings until 1 January 2014 and limits the possibility of distribut-ing dividends to shareholders. The agreement was a response to the pressure on the fixed-income markets that arose because of a

lack of confidence in the euro towards the end of the first half of 2012. Long European yields fell to a re-cord-low level. Investor interest in Danish govern-ment bonds lowered Danish government bond yields further. The low yields increased pension companies’ need for hedging, and since the European market for long-dated bonds was not liquid, this demand pushed long yields further down. The investment return on equity was 1.1%, and the investment return on customer funds in Danica Traditionel was 4.8%. Including changes in technical provisions, the return on customer funds was 3.6%. The return on the market-based products, Danica Balance and Danica Link, was DKK 2.6 billion, or an average rate of return of 5.1%. The result for the unit-linked (market-based) busi-ness was at the year-earlier level. In Denmark, in-come was down slightly from the year-earlier level because of keener competition that resulted in lower prices for Danish business customers. The result for the health and accident business was lower than in the first half of 2011 because of the higher claims ratio resulting from the lower prices for Danish business customers. Moreover, the health and accident result for the first half of 2012 did not benefit from run-off gains on claims, while the result for the first half of 2011 included gains of DKK 50 million.


Total premiums were down 11% from the level in the first half of 2011. Total Danish premiums fell 5%, but regular premiums were up 1%. In the first half of 2011, premiums were higher because of two new large company pension schemes, while premiums in the first half of 2012 were affected by Danica Pension’s decision not to participate in tenders with unrealistically low prices. At the Swedish unit, premiums fell 34%. The decline in Sweden occurred because at the end of 2011 Swedish banks introduced a product similar to Danica Pension’s custody account savings product but priced much lower. At the Norwegian unit, premiums grew DKK 0.3 billion, partly because of sales through new distribution channels. At 30 June 2012, the collective bonus potential for the contribution groups stood at DKK 1.5 billion, or DKK 1.1 billion above the level at 1 January 2012. Danica Pension also reduced – by DKK 1.6 billion to DKK 0.2 billion – the amount drawn on the bonus potential of paid-up policies to cover losses in 2011. The amount drawn relates to one interest rate group only. Including a capital buffer of DKK 9.7 billion, Danica Pension’s total financial strength stood at DKK 11.2 billion. The continued decline in yields in the spring made the Danish FSA focus on the traffic light stress-testing scenarios for pension companies and re-quest additional reporting. Danica Pension has al-ways been in the green light scenario. For Danica Pension to book the full risk allowance to income in 2012, each interest rate group must have an investment return of 1-5% in the remainder of 2012, assuming that the moving yield spread be-tween Danish and German government bonds used in the calculation of the discount yield curve nar-rows to zero during the second half of 2012.


____________________ EMPLOYEES

5,573

_____________________ PRE-TAX PROFIT

DKK -674 MILLION

Other Activities

OTHER ACTIVITIES First half First half Index Q2 Q1 Q4 Q3 Q2 Full year (DKK millions) 2012 2011 12/11 2012 2012 2011 2011 2011 2011

Net interest income 35 91 38 29 6 1 19 33 111 Net fee income -16 -13 - -13 -3 -14 -3 -9 -30 Net trading income -29 140 - 25 -54 -1 19 54 158 Other income 44 225 20 26 18 59 37 41 321 Total income 34 443 8 67 -33 45 72 119 560 Expenses 708 1,579 45 88 620 -75 -63 397 1,441 Profit before loan impairment charges -674 -1,136 - -21 -653 120 135 -278 -881 Loan impairment charges - - - - - - - - - Profit before tax -674 -1,136 - -21 -653 120 135 -278 -881

PROFIT BEFORE TAX (DKK millions)

Real property 64 131 49 -1 65 61 74 80 266

Own shares -32 158 - 22 -54 22 94 99 274

Other, including Group support functions -706 -1,425 - -42 -664 37 -33 -457 -1,421

Total Other Activities -674 -1,136 - -21 -653 120 135 -278 -881

Other Activities posted a loss before tax of DKK 0.7 billion, against a loss before tax of DKK 1.1 billion in the first half of 2011. In the first half of 2012, the elimination of returns on own shares led to a capital loss of DKK 32 mil-lion, against a capital gain of DKK 158 million in the year-earlier period. Other income amounted to DKK 44 million, against DKK 225 million a year earlier. In 2011, the item benefited particularly from a refund of excess VAT paid in previous years. Expenses amounted to DKK 0.7 billion, against DKK 1.6 billion in the first half of 2011. The item fell mainly because the Group recognised an esti-mated commitment of DKK 1.1 billion to the Dan-ish Guarantee Fund for Depositors and Investors in the first half of 2011 and because writedowns of the assets of a temporarily acquired company were adjusted by DKK 0.1 billion. Expenses for the first half of 2012 included a charge of DKK 0.5 bil-lion related to the rights to use the Sampo Bank brand name.


Income statement – Danske Bank Group

First half First half Q2 Q2 Full year (DKK millions) 2012 2011 2012 2011 2011

Interest income 40,362 38,997 19,982 19,815 80,819 Interest expense 22,548 22,870 11,000 11,729 47,478 Net interest income 17,814 16,127 8,982 8,086 33,341 Fee income 5,802 6,014 2,761 2,885 11,760 Fee expenses 1,987 2,102 1,010 1,052 4,034 Net trading income 6,138 2,103 -216 1,021 -3,326 Other income 2,581 2,767 1,488 1,306 5,469 Net premiums 10,000 10,060 4,677 5,019 20,475 Net insurance benefits 14,986 11,058 4,070 5,375 18,705 Income from associates 78 99 47 55 125 Profit on sale of associates and group undertakings 3 13 1 13 16 Staff costs and administrative expenses 12,236 13,091 6,167 6,301 24,280

Amortisation, depreciation and impairment charges 2,085 1,758 874 823 3,451

Profit before loan impairment charges 11,122 9,174 5,619 4,834 17,390 Loan impairment charges 7,031 5,594 3,109 2,753 13,185 Profit before tax 4,091 3,580 2,510 2,081 4,205 Tax 1,805 1,673 1,007 881 2,482 Net profit for the period 2,286 1,907 1,503 1,200 1,723

Portion attributable to

shareholders of Danske Bank A/S (the Parent Company) 2,287 1,895 1,504 1,186 1,712 non-controlling interests -1 12 -1 14 11

Net profit for the period 2,286 1,907 1,503 1,200 1,723

Earnings per share (DKK) 2.5 2.3 1.6 1.3 1.9 Diluted earnings per share (DKK) 2.5 2.3 1.6 1.3 1.9

Proposed dividend per share (DKK) - - - - - Earnings per share and diluted earnings per share for 2011 have been divided by a factor of 1.0807 to reflect the share capital increase in April 2011.


Statement of comprehensive income – Danske Bank Group

First half First half Q2 Q2 Full year (DKK millions) 2012 2011 2012 2011 2011

Net profit for the period 2,286 1,907 1,503 1,200 1,723

Other comprehensive income

Translation of units outside Denmark 341 -656 293 -267 223

Hedging of units outside Denmark -468 558 -377 249 -273

Unrealised value adjustments of available-for-sale financial assets 204 -255 -264 -275 -951

Realised value adjustments of available-for-sale financial assets 13 13 - 6 28

Tax on other comprehensive income 34 -64 148 13 285

Total other comprehensive income 124 -404 -200 -274 -688

Total comprehensive income for the period 2,410 1,503 1,303 926 1,035

Portion attributable to

shareholders of Danske Bank A/S (the Parent Company) 2,411 1,491 1,304 912 1,024

non-controlling interests -1 12 -1 14 11

Total comprehensive income for the period 2,410 1,503 1,303 926 1,035


Balance sheet – Danske Bank Group

30 June 31 Dec. 30 June (DKK millions) 2012 2011 2011

ASSETS

Cash in hand and demand deposits with central banks 36,906 28,617 20,444

Due from credit institutions and central banks 154,362 180,870 142,088

Trading portfolio assets 862,938 909,755 644,915

Investment securities 105,480 109,264 111,061

Loans and advances at amortised cost 1,242,280 1,126,482 1,168,498

Loans at fair value 721,637 720,741 696,403

Assets under pooled schemes and unit-linked investment contracts 65,377 61,888 64,956

Assets under insurance contracts 237,717 230,668 222,203

Holdings in associates 1,086 989 1,028

Intangible assets 21,603 22,233 22,456

Investment property 4,256 4,624 4,797

Tangible assets 6,756 7,267 7,313

Current tax assets 355 580 1,207

Deferred tax assets 1,891 1,791 1,865

Other assets 18,078 18,634 17,827

Total assets 3,480,722 3,424,403 3,127,061

LIABILITIES

Due to credit institutions and central banks 515,557 393,388 317,167

Trading portfolio liabilities 628,008 697,913 429,391

Deposits 854,036 848,994 891,546

Bonds issued by Realkredit Danmark 596,837 557,699 529,808

Deposits under pooled schemes and unit-linked investment contracts 73,368 69,211 69,852

Liabilities under insurance contracts 258,367 248,966 237,074

Other issued bonds 316,967 366,920 410,409

Current tax liabilities 178 423 424

Deferred tax liabilities 6,793 6,278 6,587

Other liabilities 39,909 41,428 36,547

Subordinated debt 62,584 67,328 72,288

Total liabilities 3,352,604 3,298,548 3,001,093

SHAREHOLDERS' EQUITY

Share capital 9,317 9,317 9,317

Foreign currency translation reserve -313 -186 -234

Reserve for available-for-sale financial assets -2,036 -2,253 -1,572

Retained earnings 121,150 118,917 118,404

Proposed dividends - - -

Shareholders of Danske Bank A/S (the Parent Company) 128,118 125,795 125,915

Non-controlling interests - 60 53

Total shareholders' equity 128,118 125,855 125,968

Total liabilities and equity 3,480,722 3,424,403 3,127,061


Statement of capital – Danske Bank Group (DKK millions) Changes in shareholders' equity Shareholders of Danske Bank A/S (the Parent Company)

Foreign Reserve for currency available- Non- Share translation for-sale Retained Proposed controlling capital reserve assets earnings dividends Total interests Total

Shareholders' equity at 1 January 2012 9,317 -186 -2,253 118,917 - 125,795 60 125,855

Net profit for the period - - - 2,287 - 2,287 -1 2,286


Translation of units outside Denmark - 341 - - - 341 - 341

Hedging of units outside Denmark - -468 - - - -468 - -468

Unrealised value adjustments of avail-able-for-sale financial assets - - 204 - - 204 - 204

Realised value adjustments of avail-able-for-sale financial assets - - 13 - - 13 - 13

Tax on other comprehensive income - - - 34 - 34 - 34

Total other comprehensive income - -127 217 34 - 124 - 124

Total comprehensive income for the period - -127 217 2,321 - 2,411 -1 2,410

Transactions with owners

Dividends paid - - - - - - -14 -14

Share capital increase - - - - - - - -

Share offering costs - - - - - - - -

Acquisition of own shares - - - -7,719 - -7,719 - -7,719

Sale of own shares - - - 7,599 - 7,599 - 7,599

Share-based payments - - - - - - - -

Acquisition of non-controlling interests - - - - - - -45 -45

Tax on entries on shareholders' equity - - - 32 - 32 - 32

Shareholders' equity at 30 June 2012 9,317 -313 -2,036 121,150 - 128,118 - 128,118 Shareholders' equity at 1 January 2011 6,988 -136 -1,330 99,205 - 104,727 15 104,742

Net profit for the period - - - 1,895 - 1,895 12 1,907 Other comprehensive income

Translation of units outside Denmark - -656 - - - -656 - -656

Hedging of units outside Denmark - 558 - - - 558 - 558

Unrealised value adjustments of available-for-sale financial assets - - -255 - - -255 - -255

Realised value adjustments of available-for-sale financial assets - - 13 - - 13 - 13

Tax on other comprehensive income - - - -64 - -64 - -64

Total other comprehensive income - -98 -242 -64 - -404 - -404

Total comprehensive income for the period - -98 -242 1,831 - 1,491 12 1,503


Dividends paid - - - - - - - -

Share capital increase 2,329 - - 17,703 - 20,032 - 20,032

Share offering costs - - - -270 - -270 - -270

Acquisition of own shares - - - -10,072 - -10,072 - -10,072

Sale of own shares - - - 9,989 - 9,989 - 9,989

Share-based payments - - - - - - - -

Acquisition of non-controlling interests - - - - - - 26 26

Tax on entries on shareholders' equity - - - 18 - 18 - 18

Shareholders' equity at 30 June 2011 9,317 -234 -1,572 118,404 - 125,915 53 125,968

For as long as the Danish state holds hybrid capital in Danske Bank and guarantees bond issues, Danske Bank A/S may distribute dividends if such dividends can be paid in full out of the net profit.

30 June 31 Dec. 30 June 2012 2011 2011

Share capital (DKK) 9,317,390,340 9,317,390,340 9,317,390,340

Number of shares 931,739,034 931,739,034 931,739,034

Number of shares outstanding 925,590,320 927,111,498 924,284,829

Average number of shares outstanding for the period 926,668,260 879,181,672 831,532,517

Average number of shares outstanding, including dilutive shares, for the period 926,668,260 879,181,672 831,534,149

The number of shares outstanding, the average number of shares outstanding for the period, and the average number of shares outstanding, including dilutive shares, for the period have been adjusted for the share capital increase in April 2011.


Statement of capital – Danske Bank Group

30 June 31 Dec. 30 June (DKK millions) 2012 2011 2011

Capital base and total capital ratio

Shareholders' equity 128,118 125,855 125,968

Revaluation of domicile property at fair value 1,247 1,281 1,258

Pension obligations at fair value -409 348 -281 Tax effect 82 -58 93 Reserves in undertakings consolidated on a pro rata basis 3,002 2,991 2,991

Shareholders' equity calculated in accordance with the rules of the Danish FSA 132,040 130,417 130,029

Expected dividends -760 - -630

Intangible assets of banking operations -21,485 -22,127 -22,308

Deferred tax assets -1,865 -1,600 -1,781

Deferred tax on intangible assets 715 923 1,005

Revaluation of domicile property -638 -743 -677

Other statutory deductions -71 -44 -

Core tier 1 capital 107,936 106,826 105,638

Hybrid capital 40,612 42,366 41,501

Difference between expected losses and impairment charges - - -

Statutory deduction for insurance subsidiaries -4,230 -4,175 -3,966

Other statutory deductions - - -

Tier 1 capital 144,318 145,017 143,173

Subordinated debt, excluding hybrid capital 17,535 20,480 21,534

Hybrid capital - - -

Revaluation of domicile property 638 743 677

Difference between expected losses and impairment charges - - -

Statutory deduction for insurance subsidiaries -4,230 -4,175 -3,966

Other statutory deductions - - -

Capital base 158,261 162,065 161,418

Risk-weighted assets 892,510 905,979 860,293

Core tier 1 capital ratio (%) 12.1 11.8 12.3

Tier 1 capital ratio (%) 16.2 16.0 16.6

Total capital ratio (%) 17.7 17.9 18.8

The total capital and tier 1 capital ratios have been calculated in accordance with the Capital Requirements Directive. Risk-weighted assets calculated under the Basel I rules amounted to DKK 1,451.9 billion at 30 June 2012 (31 December 2011: DKK 1,414.6 billion). The solvency need, calculated on the basis of the transitional rules, was DKK 92.9 billion (31 December 2011: DKK 90.5 billion), equal to 80% of the capital requirement of 8% of risk-weighted assets.


Cash flow statement – Danske Bank Group

First half First half Full year (DKK millions) 2012 2011 2011

Cash flow from operations

Profit before tax 4,091 3,580 4,205

Tax paid -1,298 -1,322 -671 Adjustment for non-cash operating items 7,025 7,120 17,259

Cash flow from operating capital -21,525 -126,530 -83,447

Total -11,707 -117,152 -62,654

Cash flow from investing activities

Acquisition/sale of businesses 3 17 19

Acquisition/sale of own shares -120 -83 126

Acquisition of intangible assets -144 -212 -418

Acquisition/sale of tangible assets -116 -80 -339

Total -377 -358 -612

Cash flow from financing activities

Changes in subordinated debt and hybrid capital -5,008 -3,648 -10,850

Dividends - - -

Share capital increase - 19,762 19,761

Change in non-controlling interests -62 38 45

Total -5,070 16,152 8,956

Cash and cash equivalents at 1 January 206,297 260,607 260,607 Change in cash and cash equivalents -17,154 -101,358 -54,310

Cash and cash equivalents, end of period 189,143 159,249 206,297


Notes – Danske Bank Group

Note

1 Critical accounting policies and estimates The Danske Bank Group’s interim report for the first half of 2012 has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Dan-ish disclosure requirements for interim reports of listed fi-nancial institutions. The Group has not changed its significant accounting policies from those followed in Annual Report 2011, which provides a full description of the Group’s significant accounting policies. Management’s estimates and assumptions of future events that will significantly affect the carrying amounts of assets and liabilities underlie the preparation of the consolidated fi-nancial statements. The estimates and assumptions that are deemed critical to the consolidated financial statements are • the fair value measurement of financial instruments • the measurement of loans and advances • the measurement of goodwill • the measurement of liabilities under insurance contracts and the net obligation for defined benefit pension plans • the recognition of deferred tax assets The estimates and assumptions are based on premises that management finds reasonable but which are inherently un-certain and unpredictable. The premises may be incomplete, unexpected future events or situations may occur, and other parties may arrive at other estimated values. Fair value measurement of financial instruments Critical estimates are not used for measuring the fair value of financial instruments where the value is based on prices quoted in an active market or on generally accepted models employing observable market data. Measurements of finan-cial instruments that are only to a limited extent based on ob-servable market data, such as the measurement of unlisted shares and certain bonds for which there is no active market, are subject to estimates. At 30 June 2012, financial instru-ments measured on the basis of non-observable input ac-counted for around 0.8% of total assets. Measurement of loans and advances The Group makes impairment charges to account for any im-pairment of loans and advances that occurs after initial rec-ognition. Impairment charges consist of individual and collec-tive charges and rely on a number of estimates, including identification of loans or portfolios of loans with objective evi-dence of impairment, expected future cash flows and the value of collateral. The Group determines the need for im-pairment charges on the basis of the customer’s expected ability to repay debt. This ability depends on a number of fac-tors, including the customer’s earnings capacity and trends in general economic growth and unemployment. Expectations of deteriorating repayment ability reduce credit quality and lead to downgrading of the customer. If all customers were downgraded one rating category, collec-tive impairment charges would increase by about DKK 6.6 billion. The losses incurred under non-performing loan agreements depend, among other factors, on the value of col-lateral received.

If the value of collateral decreased 10%, individual impair-ment charges would increase by about DKK 4 billion. At 30 June 2012, loans and advances accounted for around 56% of total assets. Measurement of goodwill Goodwill on acquisition is tested for impairment at least once a year. Impairment testing requires management to estimate future cash flows from acquired units. A number of factors af-fect the value of such cash flows, including discount rates, changes in the real economy, customer behaviour and com-petition. Goodwill is particularly sensitive to changes in im-pairment test assumptions about the normalised long-term return. If this return was lowered 20%, goodwill would de-crease DKK 0.3 billion. Note 23 of Annual Report 2011 con-tains further information about impairment tests and sensi-tivities. At 30 June 2012, goodwill amounted to DKK 18.7 bil-lion, or less than 1% of total assets. Measurement of liabilities under insurance contracts and the net obligation for defined benefit pension plans Calculations of liabilities under insurance contracts and the net obligation for defined benefit pension plans are based on a number of actuarial computations that rely on assumptions about a number of variables, including mortality and disability rates and salary increases. The calculations are particularly sensitive to changes in the discount rate. The discount rate used for calculating liabilities under insur-ance contracts is based on the discount yield curve. The dis-count yield curve is fixed on the basis of a zero-coupon yield curve estimated on the basis of euro swap market rates to which is added the yield spread between Danish and German government bonds and a mortgage yield curve spread. Since the end of 2011, the yield spread has been calculated as a 12-month moving average. In response to the extraordinarily low yields on the fixed-income markets, the Danish Ministry of Business and Growth reached an agreement with the insur-ance and pension industry under which the discount yield curve used for long yields was changed. The agreement took effect on 12 June 2012. The change aligns Danish rules with the coming Solvency II rules and caused a reduction of Danica Pension’s life insurance provisions of DKK 1.3 billion at 30 June 2012. Page 159 of Annual Report 2011 contains a sensitivity analysis of liabilities under insurance contracts. The discount rate used for calculating the net obligation for defined benefit plans is based on the market rate of high-quality corporate bonds with maturities similar to the matur-ity of the pension obligations. If the discount rate was lowered one percentage point, the net obligation would increase by DKK 2.5 billion, with DKK 1.3 billion falling within the corridor method’s threshold value. The remaining DKK 1.2 billion would be expensed over the next ten years. At 30 June 2012, liabilities under insurance contracts and the net obligation for defined benefit pension plans accounted for around 7% of total liabilities. Recognition of deferred tax assets Deferred tax assets arising from unused tax losses are rec-ognised to the extent that such losses can be offset against


(cont’d)


Note

1 tax on future profit. Recognition of deferred tax assets re-quires management to assess the probability and amount of future taxable profit at units with unused tax losses. At 30 June 2012, deferred tax assets stood at DKK 1.4 billion, or 0.04% of total assets. The tax base of unrecognised tax loss carry-forwards, relating primarily to the Group’s banking op-erations in Ireland, amounted to DKK 2.1 billion. Annual Report 2011 and Risk Management 2011 provide a detailed description of the Group’s significant risks and the external factors that may affect the Group. Risk Management 2011 is not covered by the statutory audit. Standards and interpretations not yet in force The International Accounting Standards Board (IASB) has is-sued a number of amendments to the International Financial Reporting Standards (IFRSs) that have not yet come into force. Similarly, the International Financial Reporting Interpre-tations Committee (IFRIC) has issued a new interpretation that has not yet come into force. The sections below explain the changes that are likely to affect the Group’s financial re-porting. In October 2010, the IASB reissued IFRS 9, Financial Instru-ments. The aim of the reissuance project is, once the amendments to IFRS 9 are completed, to let the standard re-place IAS 39 in its entirety. IFRS 9 now provides principles for classification and derecognition of financial instruments. Principles for impairment and hedge accounting are expected to follow in 2012 or 2013. The IASB is also considering cer-tain amendments to the classification principles. The transitional rules of the amended IFRS 9 prescribe im-plementation of the standard by 2015. The EU has decided to postpone adoption of the amended IFRS 9 until all details of the standard are known. Under the current IFRS 9, financial assets are classified on the basis of the business model adopted for managing the as-sets and on the basis of their contractual cash flow charac-teristics, including any embedded derivatives (unlike IAS 39, IFRS 9 no longer requires bifurcation). Assets held with the objective of collecting contractual cash flows that are solely payments of principal and interest are measured at amor-tised cost. Other assets are measured at fair value through profit or loss. Equities may be measured at fair value through Other comprehensive income, however, and a business may opt for fair value adjustment of its loans, advances, etc. pro-vided it satisfies certain requirements. The principles applicable to financial liabilities are largely un-changed from IAS 39. In general, financial liabilities are still measured at amortised cost with bifurcation of embedded derivatives not closely related to a host contract. Financial li-abilities measured at fair value comprise derivatives, the trading portfolio and liabilities designated at fair value through profit or loss. Value adjustments relating to the in-herent credit risk of financial liabilities designated at fair value are, however, recognised in Other comprehensive in-come unless this leads to an accounting mismatch.

IFRS 9 incorporates the existing derecognition principles of IAS 39. The Group does not expect the amended IFRS 9 to materially affect the measurement of its financial instruments, although the standard does not allow the classification of bonds as available-for-sale assets. Such instruments are measured at amortised cost or fair value through profit or loss. Meaningful classification of financial instruments is not possible without information about the future parts of IFRS 9 to clarify the overall accounting effects of the standard. The IASB ended its project on consolidation in May 2011 by issuing a number of new International Financial Reporting Standards (IFRS 10, IFRS 11 and IFRS 12) and revised stan-dards (IAS 27 and IAS 28). With these standards, the IASB has established a uniform definition of control to be used for determining whether an entity should be consolidated and enhanced disclosure requirements for consolidated and non-consolidated entities, joint arrangements and associates. The standards, which have not yet been adopted by the EU, must be implemented in 2013, at the latest. The Group does not expect the new requirements to significantly change its con-solidation of businesses. In May 2011, the IASB issued IFRS 13, Fair Value Measure-ment. The standard introduces a new definition of fair value and provides guidance on how to measure fair value as well as disclosure requirements for fair value. IFRS 13 applies when another standard requires fair value to be used or dis-closed. The standard, which has not yet been adopted by the EU, must be implemented in 2013, at the latest. The Group does not expect IFRS 13 to significantly affect its financial re-sults. In June 2011, the IASB reissued IAS 19, Employee Benefits. The amended standard eliminates the option of deferring the recognition of actuarial gains and losses on defined benefit pension plans, known as the “corridor method”. The present value of pension obligations and the fair value of plan assets must be recognised in the balance sheet instead. The amended standard must be implemented in 2013, at the lat-est. At 30 June 2012, the new requirements would have de-creased shareholders’ equity by DKK 267 million (the amount deferred under the corridor method net of tax). The effect on net profit will be immaterial as actuarial gains and losses are recognised in Other comprehensive income. The other comprehensive income and shareholders’ equity items will become more volatile, though. The statement of capital will not be affected as it is already prepared without the use of the corridor method. In December 2011, the IASB clarified the IAS 32 require-ments for offsetting financial instruments. The clarification is expected to increase the offsetting of positive and negative market values of derivatives. The IASB also enhanced its IFRS 7 disclosure requirements to include both gross and net amounts when offsetting financial instruments and rights to additional set-off in the event of counterparty default. The changes, which have not yet been adopted by the EU, must be implemented in 2014 and 2013, respectively.



Note (DKK millions)

2 Business segments first half 2012

Banking Danske Markets Danske Danica Other Elimina- Reclassi- Activities and Treasury Capital Pension Activities tions Total fication Highlights

Net interest income 12,295 2,112 60 3,189 35 123 17,814 -5,424 12,390

Net fee income 3,246 255 783 -453 -16 - 3,815 198 4,013

Net trading income 708 2,131 16 3,435 3 -155 6,138 -454 5,684

Other income 1,590 405 - 148 503 -65 2,581 -947 1,634

Net premiums - - - 10,000 - - 10,000 -10,000 -

Net insurance benefits - - - 14,986 - - 14,986 -14,986 -

Income from equity investments - 86 - -13 8 - 81 -81 -

Net income from insurance business - - - - - - - 883 883

Total income 17,839 4,989 859 1,320 533 -97 25,443 -839 24,604

Expenses 10,672 1,574 528 437 1,175 -65 14,321 -839 13,482

Profit before loan impairment charges 7,167 3,415 331 883 -642 -32 11,122 - 11,122

Loan impairment charges 6,994 25 12 - - - 7,031 - 7,031

Profit before tax 173 3,390 319 883 -642 -32 4,091 - 4,091

Loans and advances, excluding reverse transactions 1,652,403 50,981 5,778 - 13,024 -18,167 1,704,019 - 1,704,019

Other assets 553,653 6,283,715 20,666 306,758 84,193 -5,472,282 1,776,703 - 1,776,703

Total assets 2,206,056 6,334,696 26,444 306,758 97,217 -5,490,449 3,480,722 - 3,480,722

Deposits, excluding repo deposits 680,606 58,554 5,428 - 3,337 -12,007 735,918 - 735,918

Other liabilities 1,434,882 6,263,879 20,682 297,600 78,085 -5,478,442 2,616,686 - 2,616,686

Allocated capital 90,568 12,263 334 9,158 15,795 - 128,118 - 128,118

Total liabilities and equity 2,206,056 6,334,696 26,444 306,758 97,217 -5,490,449 3,480,722 - 3,480,722

Internal income -4,741 2,974 210 488 1,069 - -

Amortisation and depreciation charges 1,253 2 5 - 310 - 1,570

Impairment charges for intangible and tangible assets - - - - 515 - 515

Reversals of impairment charges - - - - - - -

Pre-tax profit as % p.a. of allocated capital (avg.) 0.4 55.3 191.0 19.3 -8.1 - 6.4

Cost/income ratio (%) 59.8 31.5 61.5 33.1 220.5 - 56.3

Full-time-equivalent staff (avg.) 13,337 849 569 828 5,563 - 21,146

In its financial highlights, the Group recognises earnings contributed by Danske Markets as net trading income and earnings contributed by Danica Pension as net income from insurance business. Other income includes earnings contributed by fully consolidated subsidiaries taken over by the Group under non-performing loan agreements and held for sale. The Reclassification column shows the adjustments made to the detailed figures in the calculation of the highlights. The number of full-time equivalent staff does not include about 1,000 employees of fully consolidated subsidiaries taken over by the Group under non-performing loan agreements and held for sale. Internal income and expenses are allocated to the individual segments on an arm’s-length basis. Funding costs for lending and deposit activities are allocated on the basis of a maturity analysis of loans and deposits, interbank rates and funding spreads and depend on fi-nancial market trends.



Note (DKK millions) 2 Business segments first half 2011

(cont'd) Banking Danske Markets Danske Danica Other Elimina- Reclassi- Activities and Treasury Capital Pension Activities tions Total fication Highlights

Net interest income 11,193 1,687 55 3,019 91 82 16,127 -4,788 11,339

Net fee income 3,325 212 830 -442 -13 - 3,912 230 4,142

Net trading income 667 2,598 37 -1,257 -18 76 2,103 3,317 5,420

Other income 1,740 - 2 476 605 -56 2,767 -793 1,974

Net premiums - - - 10,060 - - 10,060 -10,060 -

Net insurance benefits - - - 11,058 - - 11,058 -11,058 -

Income from equity investments 7 79 - 10 16 - 112 -112 -

Net income from insurance business - - - - - - - 328 328

Total income 16,932 4,576 924 808 681 102 24,023 -820 23,203

Expenses 10,476 1,424 550 480 1,975 -56 14,849 -820 14,029

Profit before loan impairment charges 6,456 3,152 374 328 -1,294 158 9,174 - 9,174

Loan impairment charges 5,872 -231 -47 - - - 5,594 - 5,594

Profit before tax 584 3,383 421 328 -1,294 158 3,580 - 3,580

Loans and advances, excluding reverse transactions 1,631,615 38,161 6,152 - 9,975 -19,295 1,666,608 - 1,666,608

Other assets 448,254 4,949,306 15,496 280,395 254,338 -4,487,336 1,460,453 - 1,460,453

Total assets 2,079,869 4,987,467 21,648 280,395 264,313 -4,506,631 3,127,061 - 3,127,061

Deposits, excluding repo deposits 690,953 101,854 6,424 - 4,645 -11,839 792,037 - 792,037

Other liabilities 1,307,448 4,878,412 14,930 274,584 228,474 -4,494,792 2,209,056 - 2,209,056

Allocated capital 81,468 7,201 294 5,811 31,194 - 125,968 - 125,968

Total liabilities and equity 2,079,869 4,987,467 21,648 280,395 264,313 -4,506,631 3,127,061 - 3,127,061

Internal income -7,034 5,499 249 543 743 - -

Amortisation and de-preciation charges 1,192 2 19 - 432 - 1,645

Impairment charges for intangible and tangible assets - - - - 113 - 113

Reversals of impairment charges - - - - - - -

Pre-tax profit as % p.a. of allocated capital (avg.) 1.4 94.0 286.4 11.3 -8.3 - 5.7

Cost/income ratio (%) 61.9 31.1 59.5 59.4 290.0 - 61.8

Full-time-equivalent staff (avg.) 13,450 856 542 841 5,784 - 21,473



Note (DKK millions) 3 Banking Activities first half 2012 Northern Non-core

Denmark Finland Sweden Norway Ireland Ireland Baltics Other CIB Ireland Total

Net interest income 6,270 1,122 1,384 973 604 207 244 222 1,059 210 12,295

Net fee income 1,590 532 265 146 185 39 74 32 384 -1 3,246

Net trading income 355 51 69 45 54 17 57 21 36 3 708

Other income 149 142 27 322 7 6 4 931 3 -1 1,590

Total income 8,364 1,847 1,745 1,486 850 269 379 1,206 1,482 211 17,839

Expenses 4,565 1,545 856 922 535 451 183 985 524 106 10,672

Profit before loan impairment charges 3,799 302 889 564 315 -182 196 221 958 105 7,167

Loan impairment charges 2,290 261 271 121 906 520 -257 68 424 2,390 6,994

Profit before tax 1,509 41 618 443 -591 -702 453 153 534 -2,285 173

Loans and advances 956,706 153,977 187,665 139,873 48,043 25,992 19,589 16,832 110,939 35,812 1,695,428

Credit exposure 965,669 162,516 202,860 151,068 47,608 24,384 21,906 63,037 250,955 24,066 1,914,069

Allowance account 18,959 2,082 1,447 1,618 6,158 2,449 1,931 431 1,970 14,078 51,123

Profit before loan im-pairment charges as % p.a. of allocated capital 17.0 8.5 16.8 14.6 30.7 -24.9 30.2 27.4 15.4 14.3 15.8

Pre-tax profit as % p.a. of allocated capital (ROE) 6.7 1.2 11.7 11.5 -57.6 -95.9 69.9 19.0 8.6 - 0.4

Cost/income ratio (%) 54.6 83.6 49.1 62.0 62.9 167.7 48.3 81.7 35.4 50.2 59.8

Deposit margin 0.31 0.27 0.65 0.71 0.81 0.11 0.73 - 0.65 0.57 -

Lending margin 1.32 0.72 1.26 1.00 2.13 1.75 1.11 - 1.18 1.55 -

Impairment charges as % p.a. of lending and guarantees 0.47 0.34 0.28 0.17 3.50 4.16 -2.73 0.64 0.64 18.67 0.80

Banking Activities first half 2011 Net interest income 5,918 1,002 1,158 760 548 456 240 159 952 - 11,193

Net fee income 1,631 501 304 130 151 31 71 69 437 - 3,325

Net trading income 313 32 71 52 67 19 43 18 52 - 667

Other income 278 231 41 317 5 4 5 862 4 - 1,747

Total income 8,140 1,766 1,574 1,259 771 510 359 1,108 1,445 - 16,932

Expenses 4,512 1,641 860 924 588 361 181 872 537 - 10,476

Profit before loan impairment charges 3,628 125 714 335 183 149 178 236 908 - 6,456

Loan impairment charges 1,532 -5 51 140 935 3,133 -133 93 126 - 5,872

Profit before tax 2,096 130 663 195 -752 -2,984 311 143 782 - 584

Loans and advances 950,340 146,803 182,218 130,249 48,929 67,861 22,254 16,318 103,483 - 1,668,455

Credit exposure 970,648 153,263 203,066 142,694 48,497 57,603 23,803 42,246 246,682 - 1,888,502

Allowance account 16,660 1,890 1,161 1,610 3,856 12,555 2,569 467 1,085 - 41,853

Profit before loan im-pairment charges as % p.a. of allocated capital 17.8 4.2 15.1 10.3 17.5 9.6 28.0 29.3 17.0 - 15.8

Pre-tax profit as % p.a. of allocated capital (ROE) 10.3 4.4 14.0 6.0 -71.8 -191.4 48.9 17.7 14.6 - 1.4

Cost/income ratio (%) 55.4 92.9 54.6 73.4 76.3 70.8 50.4 78.7 37.2 - 61.9

Deposit margin 0.67 0.61 0.76 1.01 0.79 0.29 0.67 - 0.64 - -

Lending margin 1.10 0.56 1.02 0.64 1.96 1.30 1.34 - 0.99 - -

Impairment charges as % p.a. of lending and guarantees 0.31 -0.01 0.06 0.21 3.69 10.23 -1.24 0.92 0.20 - 0.68

The tables break down the banking activities. As the Non-core Ireland segmentation was made in 2012, comparative figures are not shown.



Note (DKK millions) 3 Profit before loan impairment charges (cont'd) First half First half Index Q2 Q1 Q4 Q3 Q2 Full year 2012 2011 12/11 2012 2012 2011 2011 2011 2011


Retail Banking Finland 302 125 242 103 199 67 161 102 353

Retail Banking Sweden 889 714 125 414 475 400 395 355 1,509

Retail Banking Norway 564 335 168 296 268 184 197 179 716

Banking Activities Northern Ireland 315 183 172 155 160 -17 154 81 320

Banking Activities Ireland -182 149 - -195 13 99 88 70 336

Banking Activities Baltics 196 178 110 100 96 86 102 89 366 Other Banking Activities 221 236 94 117 104 101 106 104 443

Corporate & Institutional Banking 958 908 106 496 462 572 493 484 1,973

Non-core Ireland 105 - - 37 68 - - - -

Total Banking Activities 7,167 6,456 111 3,393 3,774 3,445 3,850 3,314 13,751

Danske Markets and Treasury 3,415 3,152 108 1,365 2,050 562 -650 1,367 3,064

Danske Capital 331 374 89 183 148 301 212 170 887

Danica Pension 883 328 269 699 184 976 -735 261 569


Total Group 11,122 9,174 121 5,619 5,503 5,404 2,812 4,834 17,390

Profit before tax

Retail Banking Denmark 1,509 2,096 72 910 599 286 1,037 1,108 3,419

Retail Banking Finland 41 130 32 -48 89 -63 99 136 166

Retail Banking Sweden 618 663 93 353 265 245 399 350 1,307

Retail Banking Norway 443 195 227 289 154 75 66 163 336

Banking Activities Northern Ireland -591 -752 - -105 -486 -541 -565 -525 -1,858

Banking Activities Ireland -702 -2,984 - -279 -423 -1,524 -1,490 -1,780 -5,998

Banking Activities Baltics 453 311 146 191 262 185 125 182 621 Other Banking Activities 153 143 107 77 76 42 103 28 288

Corporate & Institutional Banking 534 782 68 290 244 -77 524 504 1,229

Non-core Ireland -2,285 - - -1,337 -948 - - - -

Total Banking Activities 173 584 30 341 -168 -1,372 298 166 -490

Danske Markets and Treasury 3,390 3,383 100 1,313 2,077 614 100 1,763 4,097

Danske Capital 319 421 76 178 141 277 212 169 910

Danica Pension 883 328 269 699 184 976 -735 261 569


Total Group 4,091 3,580 114 2,510 1,581 615 10 2,081 4,205



Note (DKK millions)

4 Amortisation, depreciation and impairment charges Expenses for the first half of 2012 include a charge of DKK 0.5 billion relating to name rights because of the rebranding of Sampo Bank as part of the Group’s decision to market all its banking operations under the Danske Bank brand name.

5 Contingent liabilities The Group uses a variety of loan-related financial instruments to meet customers’ financial requirements. Instruments include loan offers and other credit facilities, guarantees and instruments not recognised in the balance sheet.

30 June 31 Dec. 30 June 2012 2011 2011

Guarantees Financial guarantees 12,754 12,123 12,228

Mortgage finance guarantees 725 1,537 2,172

Other guarantees 69,131 69,471 72,751

Total 82,610 83,131 87,151

Other contingent liabilities

Irrevocable loan commitments shorter than 1 year 55,145 63,013 37,856

Irrevocable loan commitments longer than 1 year 98,816 106,459 129,094

Other unutilised loan commitments 586 942 735

Total 154,547 170,414 167,685

In addition to credit exposure from lending activities, loan offers made and revocable credit facilities granted by the Group amounted to DKK 345 billion (31 December 2011: DKK 355 billion). These items are included in the calculation of risk-weighted assets in accordance with the Capital Requirements Directive. Owing to its business volume, the Danske Bank Group is continually a party to various lawsuits and disputes. In view of its size, the Group does not expect the outcomes of pending lawsuits and disputes to have any material effect on its financial position. A limited number of employees are employed under terms which grant them, if they are dismissed before reaching their normal retire-ment age, an extraordinary severance and/or pension payment in excess of their entitlement under ordinary terms of employment. As the sponsoring employer, the Group is liable for the pension obligations of a number of company pension funds. Through participation in the mandatory Danish deposit guarantee scheme, Danish banks make an annual payment of 0.25% of the net deposits covered by the Danish Guarantee Fund for Depositors and Investors. Payments are made to the Fund’s bank department until the assets of the scheme exceed 1% of the covered net deposits. When a bank is wound up under the provisions of Danish bank packages 3 and 4, customers’ covered net deposits are covered by the bank department. If further losses are incurred upon the resolution of a bank after the transfer of its activities to the Financial Stability Company, these are covered by the Fund’s winding-up and restructuring depart-ment. Danske Bank’s share of any loss incurred by this department is just over one third. The Group is the lessee in a number of non-cancellable operating leases, involving mainly leasing of real property, equipment, furniture and fixtures. The Group recognises lease payments as an expense over the lease term but does not recognise the operating lease assets in its balance sheet. Such assets are recognised by the lessors.

6 Repo and reserve transactions In repo transactions, which involve selling securities to be repurchased at a later date, the securities remain in the balance sheet, and the amounts received are recognised as deposits. At 30 June 2012, the fair value of such securities totalled DKK 403.0 billion (31 December 2011: DKK 268.0 billion). Counterparties are entitled to sell the securities or deposit them as collateral for loans. In addi-tion, the Group had deposited own bonds worth DKK 55.8 billion as collateral. The amount was eliminated in the financial statements and not recognised in the balance sheet. In reverse transactions, which involve buying securities to be resold at a later date, the Group is entitled to sell the securities or de-posit them as collateral for loans. The securities are not recognised in the balance sheet, and amounts paid are carried as loans. At 30 June 2012, the fair value of reverse transaction securities was DKK 333.4 billion (31 December 2011: DKK 254.4 billion), of which securities sold or deposited as collateral totalled DKK 167.9 billion (31 December 2011: DKK 163.9 billion).



Note (DKK millions)

7 Assets deposited as collateral At 30 June 2012, the Group had deposited securities worth DKK 39,527 million as collateral with Danish and international clearing centres and other institutions (31 December 2011: DKK 50,674 million). At 30 June 2012, the Group had provided cash and securities worth DKK 79,677 million as collateral for derivatives transactions (31 December 2011: DKK 71,249 million). The Group had registered assets under insurance contracts worth DKK 286,986 million as collateral for policyholders’ savings at 30 June 2012 (31 December 2011: DKK 278,858 million). The Group had registered loans at fair value worth DKK 721,637 million and other assets worth DKK 39,867 million as collateral for bonds issued by Realkredit Danmark, including mortgage-covered bonds, at 30 June 2012 (31 December 2011: DKK 720,741 mil-lion and DKK 34,514 million, respectively), as well as junior covered bonds issued by Realkredit Danmark. At 30 June 2012, the Group had registered loans and advances worth DKK 233,653 million and other assets worth DKK 7,338 mil-lion as collateral for covered bonds issued under Danish and Finnish law (31 December 2011: DKK 198,760 million and DKK 8,108 million, respectively).



Note (DKK millions)

8 Fair value information for financial instruments Financial instruments are carried in the balance sheet at fair value or amortised cost.

30 June 2012 31 December 2011 Amortised Amortised

Fair value cost Fair value cost

Financial assets

Cash in hand and demand deposits with central banks - 36,906 - 28,617

Due from credit institutions and central banks - 154,362 - 180,870

Trading portfolio assets 862,938 - 909,755 -

Investment securities 96,359 9,121 97,866 11,398

Loans and advances at amortised cost - 1,242,280 - 1,126,482

Loans at fair value 721,637 - 720,741 -

Assets under pooled schemes and unit-linked investment contracts 65,377 - 61,888 -

Assets under insurance contracts 206,096 - 200,888 -

Total 1,952,407 1,442,669 1,991,138 1,347,367 Financial liabilities

Due to credit institutions and central banks - 515,557 - 393,388

Trading portfolio liabilities 628,008 - 697,913 -

Deposits - 854,036 - 848,994

Bonds issued by Realkredit Danmark 596,837 - 557,699 -

Deposits under pooled schemes and unit-linked investment contracts 73,368 - 69,211 -

Other issued bonds - 316,967 - 366,920

Subordinated debt - 62,584 - 67,328

Other liabilities (irrevocable loan commitments and guarantees) - 669 - 465

Total 1,298,213 1,749,813 1,324,823 1,677,095

Following a period of decreasing uncertainty in the first months of 2012, the debt crisis triggered renewed market volatility in the re-mainder of the first half of the year. A high degree of uncertainty reigned in the markets, particularly in southern Europe, while the mar-kets in northern Europe saw historically low interest rates as a result of an inflow of capital.

Financial instruments at amortised cost Fair value calculations for financial instruments recognised at amortised cost are affected significantly by estimates as almost all cal-culations are made on the basis of non-observable input. The Group uses fair value hedge accounting for most of its interest rate risk. Fair value adjustments to the credit risk on loans and advances measured at amortised cost are recognised in loan impairment charges. General trends in the financial markets have occasioned a narrowing of bond credit spreads, causing the fair value of bonds issued by the Group and measured at amortised cost to increase from 96.1% of the amortised cost at 31 December 2011 to 96.9% at 30 June 2012. The loss that would arise from redemption at the higher fair value is not recognised in the income statement.

Financial instruments at fair value Note 43 of Annual Report 2011 provides more information about fair value calculation methods for financial instruments. Financial instruments valued on the basis of quoted prices in an active market are recognised in the Quoted prices category. Financial instruments valued substantially on the basis of other observable input are recognised in the Observable input category. This category covers instruments such as derivatives valued on the basis of observable yield curves and exchange rates and illiquid mortgage bonds valued by reference to the value of similar, liquid bonds. Other financial instruments are recognised in the Non-observable input cate-gory. This category covers instruments such as unlisted shares and derivatives, and valuation relies on extrapolation of yield curves, correlations or other model input of material importance to valuation. Developments in the financial markets did not result in any significant reclassification of bonds between the Quoted prices and Observ-able input categories in the first half of 2012.



Note (DKK millions) 8 Quoted Observable Non-observable

(cont'd) 30 June 2012 prices input input Total

Financial assets

Derivatives 4,835 456,512 18,373 479,720

Trading portfolio bonds 372,982 8,912 - 381,894

Trading portfolio shares 719 - 605 1,324

Investment securities, bonds 80,150 13,262 - 93,412

Investment securities, shares 184 - 2,763 2,947

Loans at fair value - 721,637 - 721,637

Assets under pooled schemes and unit-linked investment contracts 65,377 - - 65,377

Assets under insurance contracts, bonds 142,721 4,064 96 146,881

Assets under insurance contracts, shares 45,320 594 5,657 51,571

Assets under insurance contracts, derivatives 3,134 4,510 - 7,644

Total 715,422 1,209,491 27,494 1,952,407

Financial liabilities

Derivatives 4,068 437,101 18,966 460,135

Obligations to repurchase securities 167,870 - 3 167,873

Bonds issued by Realkredit Danmark 596,837 - - 596,837

Deposits under pooled schemes and unit-linked investment contracts - 73,368 - 73,368

Total 768,775 510,469 18,969 1,298,213

31 December 2011

Financial assets

Derivatives 3,948 529,305 17,717 550,970

Trading portfolio bonds 348,141 9,953 - 358,094

Trading portfolio shares 348 - 343 691

Investment securities, bonds 86,374 8,772 - 95,146

Investment securities, shares 133 - 2,587 2,720

Loans at fair value - 720,741 - 720,741

Assets under pooled schemes and unit-linked investment contracts 61,888 - - 61,888

Assets under insurance contracts, bonds 144,855 2,491 151 147,497

Assets under insurance contracts, shares 43,524 526 4,728 48,778

Assets under insurance contracts, derivatives 1,085 3,528 - 4,613

Total 690,296 1,275,316 25,526 1,991,138

Financial liabilities

Derivatives 4,368 510,721 18,972 534,061

Obligations to repurchase securities 163,092 743 17 163,852

Bonds issued by Realkredit Danmark 557,699 - - 557,699

Deposits under pooled schemes and unit-linked investment contracts - 69,211 - 69,211

Total 725,159 580,675 18,989 1,324,823



Note (DKK millions)

8 At 30 June 2012, financial instruments valued on the basis of non-observable input comprised unlisted shares of DKK 9,022 million(cont’d) (31 December 2011: DKK 7,658 million), illiquid bonds of DKK 96 million (31 December 2011: DKK 151 million) and derivatives with

a net market value of DKK -593 million (31 December 2011: DKK -1,255 million). An increase or decrease of 10% in the fair value of unlisted shares would amount to DKK 903 million (2011: DKK 766 million), with DKK 566 million (2011: DKK 473 million) relating to shares allocated to policyholders, who assume most of the risk on the shares. The estimated fair value of illiquid bonds significantly depends on the estimated credit spread. A widening of 50bp would decrease fair value by DKK 1 million, while a narrowing of 50bp would increase fair value by DKK 1 million. A substantial number of derivatives val-ued on the basis of non-observable input are hedged by similar derivatives or are used for hedging the credit risk on bonds also valued on the basis of non-observable input. In the first half of 2012, the Group recognised unrealised value adjustments in respect of unlisted shares and credit bonds valued on the basis of non-observable input of DKK 549 million (31 December 2011: DKK 778 million).

Shares, bonds and derivatives valued on the basis of non-observable input

First half 2012 Full year 2011

Shares and Shares and bonds Derivatives bonds Derivatives

Fair value at 1 January 7,792 -1,255 7,099 -718

Value adjustment through profit or loss 549 104 826 -192

Value adjustment through other comprehensive income - - - -

Acquisitions 1,135 -769 1,915 389

Sale and redemption -302 1,327 -1,047 -734

Transferred from quoted prices and observable input - - - -

Transferred to quoted prices and observable input -56 - -1,001 -

Fair value at 31 December 9,118 -593 7,792 -1,255

9 Other issued bonds 30 June 31 Dec.

2012 2011

Commercial paper 37,276 69,500

Other 279,691 297,420

Total 316,967 366,920

Other issued bonds are recognised at amortised cost.

Foreign

1 Jan.

currency 30 June Nominal value 2012 Issued Redeemed translation 2012

Commercial paper 98,891 335,997 396,276 1,214 39,826

Other 311,769 90,474 90,281 1,983 313,945

Other issued bonds 410,660 426,471 486,557 3,197 353,771

Foreign

1 Jan.

currency 31 Dec.

Nominal value 2011 Issued Redeemed translation 2011

Commercial paper 261,614 1,338,751 1,494,507 -6,967 98,891

Other 309,857 60,422 60,746 2,236 311,769

Other issued bonds 571,471 1,399,173 1,555,253 -4,731 410,660



(DKK millions)

Risk management Annual Report 2011 provides a detailed description of the Danske Bank Group’s risk management practices. The Management’s report describes changes to the risk management practices.

Breakdown of credit exposure Credit exposure, Contracts, Credit exposure, Counterparty risk other trading and full risk assumed 30 June 2012 Total lending activities (derivatives) investing activities Insurance risk by customers

Balance sheet items

Demand deposits with central banks 27,153 27,153 - - - -

Due from credit institutions and central banks 72,660 72,660 - - - -

Repo loans with credit institutions and central banks 81,702 81,702 - - - -

Trading portfolio assets 862,938 - 479,720 383,218 - -

Investment securities 105,480 - - 105,480 - -

Loans and advances at amortised cost 982,382 982,382 - - - -

Repo loans 259,898 259,898 - - - -

Loans at fair value 721,637 721,637 - - - -

Assets under pooled schemes and unit-linked investment contracts 65,377 - - - - 65,377

Assets under insurance contracts 237,717 - - - 237,717 -

Off-balance-sheet items

Guarantees 82,610 82,610 - - - -

Irrevocable loan commitments shorter than 1 year 55,145 55,145 - - - -

Irrevocable loan commitments longer than 1 year 98,816 98,816 - - - -

Other unutilised commitments 586 - - 586 - -

Total 3,654,101 2,382,003 479,720 489,284 237,717 65,377

Non-core Ireland portion 24,066 24,066 - - - -

31 December 2011

Balance sheet items

Demand deposits with central banks 18,015 18,015 - - - -

Due from credit institutions and central banks 74,041 74,041 - - - -

Repo loans with credit institutions and central banks 106,829 106,829 - - - -

Trading portfolio assets 909,755 - 550,970 358,785 - -

Investment securities 109,264 - - 109,264 - -

Loans and advances at amortised cost 977,284 977,284 - - - -

Repo loans 149,198 149,198 - - - -

Loans at fair value 720,741 720,741 - - - -

Assets under pooled schemes and unit-linked investment contracts 61,888 - - - - 61,888

Assets under insurance contracts 230,668 - - - 230,668 -

Off-balance-sheet items

Guarantees 83,131 83,131 - - - -

Irrevocable loan commitments shorter than 1 year 63,013 63,013 - - - -

Irrevocable loan commitments longer than 1 year 106,459 106,459 - - - -

Other unutilised commitments 942 - - 942 - -

Total 3,611,228 2,298,711 550,970 468,991 230,668 61,888

In addition to credit exposure from lending activities, loan offers made and revocable credit facilities granted by the Group amounted to DKK 345 billion (31 December 2011: DKK 355 billion). These items are included in the calculation of risk-weighted assets in accordance with the Capital Requirements Directive.



(DKK millions)

Credit exposure from lending activities The table Credit exposure broken down by industry (GICS) shows the credit exposure of the Group’s core banking business by industry and cus-tomer segment. The breakdown follows the Global Industry Classification Standard (GICS), supplemented by the Personal customers, Subsidised housing companies, and Central and local governments categories. Credit exposure broken down by industry (GICS)

Impaired

Personal Commercial Financial Public Past due but Not in 30 June 2012 customers customers customers customers Total not impaired default In default

Central and local governments - - - 117,673 117,673 9 40 -

Subsidised housing companies - 123,930 - - 123,930 185 791 2,905

Banks - - 154,136 - 154,136 1 4 -

Diversified financials - - 247,830 - 247,830 50 1,311 3,953

Other financials - - 75,477 - 75,477 22 594 168

Energy and utilities - 46,304 - - 46,304 170 46 89

Consumer discretionary - 83,761 - - 83,761 731 2,816 1,402

Consumer staples - 120,766 - - 120,766 760 5,283 1,865

Commercial property - 258,201 - - 258,201 1,245 10,691 12,466

Construction, engineering and building products - 36,452 - - 36,452 203 1,936 1,677

Transportation and shipping - 67,935 - - 67,935 452 2,381 1,536

Other industrials - 71,271 - - 71,271 967 2,481 357

IT - 14,449 - - 14,449 62 118 31

Materials - 43,464 - - 43,464 708 768 573

Health care - 25,234 - - 25,234 43 81 15

Telecommunication services - 6,227 - - 6,227 - 318 361

Personal customers 888,893 - - - 888,893 6,280 7,764 8,681

Total 888,893 897,994 477,443 117,673 2,382,003 11,888 37,423 36,079

Non-core Ireland portion 8,369 15,503 113 81 24,066 308 3,221 7,414

31 December 2011

Central and local governments - - - 122,495 122,495 106 - -

Subsidised housing companies - 123,161 - - 123,161 227 789 1,580

Banks - - 178,778 - 178,778 - 47 -

Diversified financials - - 153,010 - 153,010 402 1,540 3,901

Other financials - - 56,915 - 56,915 33 2 186

Energy and utilities - 40,698 - - 40,698 24 100 28

Consumer discretionary - 83,208 - - 83,208 942 2,438 1,321

Consumer staples - 117,666 - - 117,666 745 5,381 1,770

Commercial property - 257,267 - - 257,267 1,775 10,823 10,382

Construction, engineering and building products - 36,572 - - 36,572 245 1,895 1,893

Transportation and shipping - 71,824 - - 71,824 336 941 2,019

Other industrials - 77,995 - - 77,995 397 3,505 1,654

IT - 15,615 - - 15,615 66 113 54

Materials - 42,483 - - 42,483 138 358 -

Health care - 27,562 - - 27,562 144 80 39

Telecommunication services - 4,494 - - 4,494 3 550 15

Personal customers 888,968 - - - 888,968 9,839 7,072 8,324

Total 888,968 898,545 388,703 122,495 2,298,711 15,422 35,634 33,166

The Non-core Ireland exposure derived mainly from the Commercial property and Personal customers industries. Exposure to these industries to-talled DKK 18.0 billion at 30 June 2012.



(DKK millions)

Credit exposure broken down by geographical area The table shows the credit exposure of the Group’s core banking business by country and customer segment. Impaired

Personal Commercial Financial Public Past due but Not in 30 June 2012 customers customers customers customers Total not impaired default In default

Denmark 553,148 431,469 195,606 68,619 1,248,842 5,697 24,747 14,858

Finland 103,436 89,505 3,465 4,976 201,382 2,139 1,630 2,260

Sweden 88,347 154,328 25,636 10,280 278,591 672 1,811 1,288

Ireland 23,202 22,536 6,900 3,139 55,777 624 3,754 8,340

UK 20,668 32,023 107,160 9,164 169,015 550 2,132 2,680 Germany 580 12,592 2,747 16,697 32,616 33 176 37

Estonia 5,294 4,247 239 182 9,962 417 - 448

Latvia 1,035 1,134 47 - 2,216 66 175 81

Lithuania 4,723 3,199 555 594 9,071 134 587 661

Spain 859 45 410 - 1,314 4 16 34

France 571 1,583 2,989 - 5,143 11 3 54

Italy 145 85 184 - 414 1 4 10

Portugal 58 - 39 1 98 - 1 1

Greece 39 4 - - 43 - - 1

Belgium 292 1,716 4,143 - 6,151 1 5 9

Cyprus 27 2,543 80 - 2,650 - - 63

Netherlands 182 1,182 2,154 - 3,518 1 10 -

Luxembourg 277 424 61,849 80 62,630 1 11 169

Poland 72 2,541 1,369 128 4,110 3 3 20

Other EU member states 201 457 255 - 913 1 32 20

Norway 81,534 107,606 6,929 2,473 198,542 1,491 1,741 1,277

Eastern Europe 82 1,675 1,931 236 3,924 - - 3

Switzerland 793 2,559 1,353 - 4,705 14 - 30

Turkey 31 66 1,840 - 1,937 - - 3

Other European countries 199 16 718 - 933 5 16 174

North America 1,089 18,636 37,874 - 57,599 11 552 3,533

Central and South America 124 659 1,594 115 2,492 1 3 4

Africa 153 1,370 2,044 667 4,234 1 4 9

Asia 1,568 2,984 6,968 322 11,842 10 10 11

Oceania 164 810 365 - 1,339 - - 1

Total 888,893 897,994 477,443 117,673 2,382,003 11,888 37,423 36,079

Geographical segmentation is based on the customer’s country of residence rather than the location in which the individual transaction is re-corded. The table lists the countries to which the Group has a total exposure above DKK 1 billion as well as Ireland, Portugal, Italy, Greece and Spain. Total Non-core Ireland exposure amounted to DKK 24.1 billion at 30 June 2012 and derived mainly from exposure to customers resident in Ire-land.



(DKK millions)

Impaired

Personal Commercial Financial Public Past due but Not in 31 December 2011 customers customers customers customers Total not impaired default In default

Denmark 561,918 428,731 188,286 62,721 1,241,656 7,864 23,197 13,038

Finland 100,937 88,684 4,369 6,800 200,790 2,063 1,095 2,585

Sweden 85,567 158,662 27,727 16,812 288,768 288 1,173 1,062

Ireland 24,543 25,169 9,966 7,430 67,108 902 5,262 7,519

UK 19,968 33,535 66,088 16,802 136,393 462 966 2,695

Germany 545 12,389 2,180 390 15,504 19 180 35

Estonia 5,553 4,545 145 336 10,579 480 32 426

Latvia 1,075 890 177 - 2,142 50 179 85

Lithuania 4,723 3,211 554 784 9,272 136 600 635

Spain 879 45 433 - 1,357 8 29 30

France 581 1,742 3,147 - 5,470 9 4 63

Italy 127 62 106 - 295 1 4 10

Portugal 109 - 70 - 179 1 1 1

Greece 40 2 - - 42 - - -

Belgium 273 1,175 3,131 - 4,579 1 1 8

Cyprus 15 2,511 76 - 2,602 - 90 -

Netherlands 166 1,248 2,107 - 3,521 1 3 -

Luxembourg 272 316 27,957 151 28,696 1 153 11

Poland 76 2,593 1,212 36 3,917 2 22 15

Other EU member states 193 354 292 - 839 2 59 3

Norway 77,395 104,493 8,062 8,930 198,880 3,077 2,364 1,213

Eastern Europe 78 1,571 1,849 145 3,643 - 2 1

Switzerland 718 2,483 1,354 - 4,555 27 - 18

Turkey 31 65 1,833 - 1,929 - 47 1

Other European countries 212 164 570 - 946 7 10 176

North America 1,106 18,082 26,905 - 46,093 7 133 3,507

Central and South America 110 663 1,473 127 2,373 - 6 1

Africa 146 1,275 1,401 696 3,518 1 - 2

Asia 1,458 3,149 7,069 335 12,011 13 21 25

Oceania 154 736 164 - 1,054 - 1 1

Total 888,968 898,545 388,703 122,495 2,298,711 15,422 35,634 33,166



(DKK millions) Credit exposure broken down by rating category

30 June 2012 Upper Lower Personal Commercial Financial Public Non-core Rating category PD PD customers customers customers customers Total Ireland portion 1 0.00 0.01 5,899 2,636 10,130 65,576 84,241 -

2 0.01 0.03 77,765 11,135 42,190 23,288 154,378 67

3 0.03 0.06 125,161 108,114 173,957 6,614 413,846 1,087

4 0.06 0.14 181,776 150,332 68,112 4,878 405,098 1,179

5 0.14 0.31 180,862 180,949 51,384 4,909 418,104 2,289

6 0.31 0.63 120,661 163,996 105,392 6,826 396,875 1,281

7 0.63 1.90 99,657 132,113 10,496 3,769 246,035 1,004

8 1.90 7.98 61,135 69,661 6,841 1,344 138,981 3,984

9 7.98 25.70 19,532 28,071 2,911 429 50,943 2,540

10 25.70 99.99 7,764 27,710 1,909 40 37,423 3,221

11 100.00 100.00 8,681 23,277 4,121 - 36,079 7,414

Total 888,893 897,994 477,443 117,673 2,382,003 24,066

31 December 2011 Rating category 1 0.00 0.01 6,253 3,704 10,132 70,133 90,222 -

2 0.01 0.03 76,962 10,811 53,557 23,423 164,753 -

3 0.03 0.06 121,592 110,004 133,683 5,525 370,804 -

4 0.06 0.14 171,951 144,554 65,229 4,078 385,812 -

5 0.14 0.31 183,553 182,371 46,465 4,332 416,721 -

6 0.31 0.63 119,536 160,654 53,146 9,194 342,530 -

7 0.63 1.90 106,557 134,648 11,436 4,293 256,934 -

8 1.90 7.98 67,841 74,841 6,453 1,173 150,308 -

9 7.98 25.70 19,327 29,230 2,926 344 51,827 -

10 25.70 99.99 7,072 26,973 1,589 - 35,634 -

11 100.00 100.00 8,324 20,755 4,087 - 33,166 -

Total 888,968 898,545 388,703 122,495 2,298,711 -



(DKK millions)

Impairment charges Rating categories 10 and 11 include customers with exposures for which objective evidence of impairment exists and individual impairment charges are made. Exposure to customers in the other rating categories is subject to collective impairment testing. The allowance account includes all impairment charges against loans and advances at amortised cost, loans at fair value, amounts due from credit institutions and central banks, and irrevocable loan commitments and guarantees. Allowance account broken down by segment and type of impairment

Impairment charges

Personal Commercial Financial Public Allowance

account, customers customers customers customers total Individual Collective

1 January 2011 7,206 28,706 7,855 2 43,769 39,201 4,568

New impairment charges 4,522 15,854 522 2 20,900 19,701 1,199

Reversals of impairment charges from previous periods 2,250 3,484 613 - 6,347 4,703 1,644

Write-offs debited to allowance account 703 5,746 3,702 - 10,151 10,151 -

Foreign currency translation 9 144 49 - 202 193 9

Other items 58 182 -9 - 231 231 -

31 December 2011 8,842 35,656 4,102 4 48,604 44,472 4,132

New impairment charges 3,016 8,080 331 - 11,427 10,256 1,171

Reversals of impairment charges from previous periods 1,391 2,969 184 1 4,545 3,201 1,344

Write-offs debited to allowance account 433 1,570 5 - 2,008 2,008 -

Foreign currency translation 30 278 73 - 381 356 25

Other items 22 123 2 - 147 147 -

30 June 2012 10,086 39,598 4,319 3 54,006 50,022 3,984

Non-core Ireland portion 1,187 12,639 252 - 14,078 13,751 327

Collective impairment charges include charges that reflect the migration of customers from one rating category to another. If all customers were downgraded one rating category with no corresponding interest rate change, collective impairment charges would increase by about DKK 6.6 bil-lion (31 December 2011: DKK 7.1 billion). If the value of collateral provided by customers in rating categories 10 and 11 decreased 10%, individual impairment charges would increase by about DKK 4 billion (31 December 2011: about DKK 3 billion). In the second quarter of 2012, the Danish FSA clarified the rules on impairment charges against weak exposures measured at amortised cost. The rules detail the criteria for identifying objective evidence of impairment and the method of calculating impairment charges in the event of ob-jective evidence of impairment. The clarified rules did not have any noticeable effect on charges. Allowance account broken down by balance sheet item

30 June 31 Dec. 2012 2011 Due from credit institutions and central banks 93 93

Loans and advances at amortised cost 49,685 44,943

Loans at fair value 2,905 2,667

Other liabilities 1,323 901

Total 54,006 48,604

Loan impairment charges First half First half 2012 2011

New and increased impairment charges 11,427 10,670

Reversals of impairment charges 4,545 4,214

Write-offs charged directly to income statement 599 619

Received on claims previously written off 352 1,428

Interest income, effective interest method -98 -53

Total 7,031 5,594



(DKK millions)

Allowance account, impairment charges and collateral broken down by industry

Credit exposure Collateral Allowance account Impairment charges

30 June 31 Dec. 30 June 31 Dec. 30 June 31 Dec. First half First half 2012 2011 2012 2011 2012 2011 2012 2011

Central and local governments 117,673 122,495 41,248 39,555 3 4 - -

Subsidised housing companies 123,930 123,161 100,742 94,709 916 763 166 166

Banks 154,136 178,778 77,867 85,775 117 94 5 8

Diversified financials 247,830 153,010 196,905 119,352 4,078 3,872 198 -223

Other financials 75,477 56,915 58,337 50,504 124 136 10 4

Energy and utilities 46,304 40,698 10,946 7,895 91 62 29 22

Consumer discretionary 83,761 83,208 35,288 35,562 4,816 4,733 567 469

Consumer staples 120,766 117,666 55,957 62,249 3,885 3,867 305 653

Commercial property 258,201 257,267 187,806 182,445 17,681 15,614 2,013 3,084

Construction, engineering and building products 36,452 36,572 10,481 14,339 4,911 4,089 805 544 Transportation and shipping 67,935 71,824 33,716 35,902 2,319 1,682 619 123

Other industrials 71,271 77,995 18,771 20,368 3,132 2,857 374 384 IT 14,449 15,615 1,811 2,145 450 486 9 -79

Materials 43,464 42,483 10,102 9,952 1,056 1,253 15 -148

Health care 25,234 27,562 6,504 6,833 163 136 28 10

Telecommunication services 6,227 4,494 558 455 178 114 62 3

Personal customers 888,893 888,968 696,876 686,661 10,086 8,842 1,826 574

Total 2,382,003 2,298,711 1,543,915 1,454,701 54,006 48,604 7,031 5,594

Non-core Ireland accounted for DKK 15.2 billion (mainly real property) of total collateral at 30 June 2012.



(DKK millions) Allowance account, impairment charges and collateral broken down by geographical area

Credit exposure Collateral Allowance account Impairment charges

30 June 31 Dec. 30 June 31 Dec. 30 June 31 Dec. First half First half 2012 2011 2012 2011 2012 2011 2012 2011 Denmark 1,248,842 1,241,656 782,179 775,243 20,101 19,102 1,759 1,472

Finland 201,382 200,790 132,602 131,115 2,548 2,371 333 206

Sweden 278,591 288,768 211,685 197,764 1,492 1,313 278 15

Ireland 55,777 67,108 32,622 38,323 16,507 13,814 3,533 3,120

UK 169,015 136,393 133,027 110,056 6,517 5,353 980 941 Germany 32,616 15,504 3,052 1,943 244 180 60 62

Estonia 9,962 10,579 6,380 6,484 724 834 -57 -65

Latvia 2,216 2,142 943 944 307 353 -78 -138

Lithuania 9,071 9,272 5,148 5,250 917 1,042 -86 59

Spain 1,314 1,357 648 758 23 23 1 -

France 5,143 5,470 5,916 5,793 66 51 18 -23

Italy 414 295 77 69 8 7 - 3

Portugal 98 179 48 103 2 3 -1 -

Greece 43 42 30 32 1 1 - -

Belgium 6,151 4,579 2,794 1,499 8 18 -2 -1

Cyprus 2,650 2,602 2,043 1,748 49 18 30 -

Netherlands 3,518 3,521 1,334 1,388 19 16 3 -10

Luxembourg 62,630 28,696 48,983 24,210 74 90 -15 -29

Poland 4,110 3,917 907 840 12 11 1 -1

Other EU member states 913 839 172 144 16 9 3 -2

Norway 198,542 198,880 133,454 123,263 1,664 1,526 101 152

Eastern Europe 3,924 3,643 534 559 7 5 1 3

Switzerland 4,705 4,555 736 755 69 52 12 -2

Turkey 1,937 1,929 142 164 4 2 1 -

Other European countries 933 946 573 672 86 81 4 -8

North America 57,599 46,093 31,563 19,280 2,443 2,228 144 -159

Central and South America 2,492 2,373 1,814 1,701 3 2 - 1

Africa 4,234 3,518 1,381 1,311 16 14 - -

Asia 11,842 12,011 3,011 3,176 73 78 8 -2

Oceania 1,339 1,054 117 114 6 7 - -

Total 2,382,003 2,298,711 1,543,915 1,454,701 54,006 48,604 7,031 5,594

Non-core Ireland accounted for DKK 15.2 billion of total collateral in Ireland at 30 June 2012 and collateral derived mainly from exposure to cus-tomers resident in Ireland.



(DKK millions)

Credit exposure from trading and investing activities At 30 June 2012, the Group’s credit exposure from trading and investing activities amounted to DKK 969 billion, relating primarily to bonds (DKK 484 billion) and derivates with positive fair value (DKK 480 billion). Bond portfolio

Central and Quasi- Danish Swedish Other local govern- government mortgage covered covered Short-dated Corporate 30 June 2012 ment bonds bonds bonds bonds bonds bonds (CP etc.) bonds Total Held-for-trading 126,800 5,967 142,301 62,997 13,185 14,954 15,691 381,895

Designated 336 3 23,728 - 841 - 83 24,991

Available-for-sale 450 572 58,704 - 8,577 - 118 68,421

Held-to-maturity 7,342 - - - 116 - 1,662 9,120

Total 134,928 6,542 224,733 62,997 22,719 14,954 17,554 484,427

31 December 2011 Held-for-trading 118,744 8,218 132,070 66,543 12,363 10,304 9,852 358,094

Designated 402 3 22,633 - 1,276 - 372 24,686

Available-for-sale 939 557 59,448 - 9,396 - 120 70,460

Held-to-maturity 9,911 - - - - - 1,487 11,398

Total 129,996 8,778 214,151 66,543 23,035 10,304 11,831 464,638

The bond portfolio includes bonds worth DKK 146.9 billion (31 December 2011: DKK 145.7 billion) recognised as assets under insurance contracts. For bonds classified as held-to-maturity, fair value equalled amortised cost at 30 June 2012. At the end of 2011, fair value also equalled amortised cost.



(DKK millions) Bond portfolio broken down by geographical area

Central and Quasi- Danish Swedish Other local govern- government mortgage covered covered Short-dated Corporate 30 June 2012 ment bonds bonds bonds bonds bonds bonds (CP etc.) bonds Total Denmark 23,852 - 224,733 - 758 1,077 5,514 255,934

Sweden 32,210 - - 62,997 - 3,773 2,999 101,979

UK 13,198 4 - - 7,705 284 57 21,248

Norway 7,566 - - - 4,763 4,254 3,736 20,319

USA 308 2,196 - - 236 - 761 3,501

Spain 615 3 - - 5,337 161 - 6,116

France 6,291 - - - 2,355 867 16 9,529

Luxembourg - 4,240 - - - 56 1,813 6,109

Canada 1,654 - - - - - - 1,654

Finland 5,792 99 - - 546 2,629 509 9,575

Ireland 2,763 - - - 106 - 2 2,871

Italy 2,362 - - - - - - 2,362

Portugal 43 - - - - - - 43

Austria - - - - - - 145 145

Netherlands 3,870 - - - 679 1,159 1,289 6,997

Germany 30,648 - - - 18 501 279 31,446

Other 3,756 - - - 216 193 434 4,599

Total 134,928 6,542 224,733 62,997 22,719 14,954 17,554 484,427

31 December 2011

Denmark 25,777 - 214,151 - - 1,061 2,199 243,188

Sweden 18,687 - - 66,543 - 2,936 3,641 91,807

UK 16,202 33 - - 7,768 306 8 24,317

Norway 6,337 - - - 3,947 2,706 2,468 15,458

USA 1,329 4,709 - - 233 2 591 6,864

Spain 884 - - - 6,145 155 217 7,401

France 10,598 - - - 3,800 1,825 105 16,328

Luxembourg - 4,035 - - - - 558 4,593

Canada 2,836 - - - - - 335 3,171

Finland 5,230 1 - - 333 199 461 6,224

Ireland 1,503 - - - 90 - 18 1,611

Italy 6 - - - - 7 - 13

Portugal 83 - - - - - - 83

Austria 2,495 - - - - - - 2,495

Netherlands 4,568 - - - 481 657 916 6,622

Germany 31,977 - - - 2 414 309 32,702

Other 1,484 - - - 236 36 5 1,761

Total 129,996 8,778 214,151 66,543 23,035 10,304 11,831 464,638

Credit exposure to government bonds issued by Ireland, Portugal, Italy and Spain amounted to DKK 5.8 billion at 30 June 2012 (31 December 2011: DKK 2.5 billion). All government bonds issued by these countries were recognised at fair value. When unsettled transactions in bonds issued by these countries and hedging transactions are taken into account, the total risk exposure was DKK 1.8 billion (31 December 2011: DKK 1.3 billion). At 30 June 2012, the bond portfolio did not include government bonds issued by Greece. Exposures below DKK 1 billion are aggregated in the Other category. Risk Management 2011 provides additional details about the Group’s risk exposure. The publication is not covered by the statutory audit.



(DKK millions) Derivatives with positive fair value 30 June 2012 31 Dec. 2011

Derivatives with positive fair value 627,415 550,970

Netting (under accounting rules) 147,695 -

Carrying amount 479,720 550,970

Netting (under capital adequacy rules) 374,792 451,714

Net current exposure 104,928 99,256

Derivatives with positive fair value after netting for accounting purposes:

Interest rate contracts 374,298 438,498

Currency contracts 102,500 109,349

Other contracts 2,922 3,123

Total 479,720 550,970

The increase in netting for accounting purposes was attributable mainly to an increase in the use of clearing centres.


Interim financial statements – Danske Bank A/S

(DKK millions)

The financial statements of the Parent Company, Danske Bank A/S, are prepared in accordance with the Danish Financial Business Act and the Danish FSA’s Executive Order on Financial Reports for Credit Institutions and Investment Companies, etc. The rules are identical to the Group’s IFRS compliant valuation and measurement principles with the following exceptions: • Domicile property is measured (revalued) at its estimated fair value • The corridor method is not applied to pension obligations • The available-for-sale financial assets category is not used

The estimated fair value of domicile property is determined in accordance with schedule 9 to the Danish FSA’s Executive Order on Financial Reports for Credit Institutions and Investment Companies, etc. Available-for-sale financial assets are measured at fair value through profit or loss. Holdings in subsidiary undertakings are measured on the basis of the equity method, and tax payable by these undertakings is expensed under Income from associates and group undertakings. The format of the Parent Company’s financial statements is not identical to the format of the consolidated financial statements prepared in accordance with IFRSs. The table below shows the differences in net profit and shareholders’ equity between the IFRS consolidated financial statements and the Par-ent Company’s financial statements presented in accordance with Danish FSA rules.

Net profit Shareholders' equity

First half First half 30 June 31 Dec. 2012 2011 2012 2011

Consolidated financial statements (IFRSs) 2,286 1,907 128,118 125,855 Domicile property -13 -6 1,247 1,281 Available-for-sale financial assets 217 -242 - - Pension obligations -772 -203 -409 348 Tax effect 74 151 82 -58 Reserves in undertakings consolidated on a pro rata basis - - 3,002 2,991

Consolidated financial statements (Danish FSA rules) 1,792 1,607 132,040 130,417 Non-controlling interests -1 12 - 60 Reserves in undertakings consolidated on a pro rata basis - - 3,002 2,991 Goodwill on acquisition of non-controlling interests - - 18 24

Parent Company financial statements (Danish FSA rules) 1,793 1,595 129,056 127,390


Income statement – Danske Bank A/S

Note (DKK millions) First half

2012 First half

2011 Interest income 21,798 21,620

Interest expense 12,585 12,921

Net interest income 9,213 8,699

Dividends from shares etc. 286 139

Fee and commission income 4,723 4,943

Fees and commissions paid 1,318 1,468

Net interest and fee income 12,904 12,313

1 Value adjustments 2,818 3,007

Other operating income 908 1,271

Staff costs and administrative expenses 9,219 8,120

Amortisation, depreciation and impairment charges 1,065 1,175

Other operating expenses 27 1,141

Loan impairment charges etc. 5,110 3,973

Income from associates and group undertakings 1,682 673

Profit before tax 2,891 2,855

Tax 1,098 1,260

Net profit for the period 1,793 1,595


Statement of comprehensive income – Danske Bank A/S

Note (DKK millions) First half

2012 First half

2011 Net profit for the period 1,793 1,595


Translation of units outside Denmark 432 -675

Hedging of units outside Denmark -468 558

Fair value adjustment of domicile property -114 -

Tax on other comprehensive income 97 -124

Total other comprehensive income -53 -241

Total comprehensive income for the period 1,740 1,354


Balance sheet – Danske Bank A/S

Note (DKK millions) 30 June

2012 31 Dec

2011 30 June

2011 ASSETS

Cash in hand and demand deposits with central banks 27,635 17,536 11,201

Due from credit institutions and central banks 195,181 217,386 180,978

Loans, advances and other amounts due at amortised cost 1,034,424 917,201 965,140

Bonds at fair value 500,637 530,544 514,264

Bonds at amortised cost 4,662 5,172 5,381

Shares etc. 3,558 3,076 3,787

Holdings in associates 775 701 751

Holdings in group undertakings 98,110 97,408 94,973

Assets under pooled schemes 45,499 43,503 44,122

Intangible assets 19,223 19,186 19,115

Land and buildings 4,075 4,242 4,208

Investment property 113 112 108

Domicile property 3,962 4,130 4,100

Other tangible assets 2,931 3,171 3,055

Current tax assets 1,033 487 1,362

Deferred tax assets 514 467 737

Assets temporarily taken over 209 230 225

Other assets 490,685 565,643 301,437

Prepayments 911 682 881

Total assets 2,430,062 2,426,635 2,151,617

LIABILITIES AND EQUITY

AMOUNTS DUE

Due to credit institutions and central banks 577,040 453,317 353,904

Deposits and other amounts due 697,506 685,872 735,130

Deposits under pooled schemes 46,905 44,670 45,082

Issued bonds at amortised cost 257,742 326,729 373,030

Current tax liabilities 145 410 378

Other liabilities 652,982 717,931 445,517

Deferred income 1,043 1,099 756

Total amounts due 2,233,363 2,230,028 1,953,797

PROVISIONS FOR LIABILITIES

Provisions for pensions and similar obligations 1,087 849 288

Provisions for deferred tax 4,685 4,029 4,417

2 Provisions for losses on guarantees 1,199 1,087 710

Other provisions for liabilities 44 11 340

Total provisions for liabilities 7,015 5,976 5,755

SUBORDINATED DEBT

Subordinated debt 60,628 63,241 65,033

SHAREHOLDERS' EQUITY

Share capital 9,317 9,317 9,317

Accumulated value adjustments 232 374 248

Equity method reserve 24,884 24,884 25,914

Retained earnings 94,623 92,815 91,553

Proposed dividends - - -

Total shareholders' equity 129,056 127,390 127,032

Total liabilities and equity 2,430,062 2,426,635 2,151,617


Statement of capital – Danske Bank A/S

(DKK millions)

Changes in shareholders' equity Foreign currency Equity Share translation Revaluation method Retained Proposed capital reserve reserve reserve earnings dividends Total

Shareholders' equity at 1 January 2012 9,317 -369 743 24,884 92,815 - 127,390

Net profit for the period - - - - 1,793 - 1,793


Translation of units outside Denmark - 432 - - - - 432

Hedging of units outside Denmark - -468 - - - - -468

Fair value adjustment of domicile property - - -114 - - - -114

Tax on other comprehensive income - - 8 - 89 - 97

Total other comprehensive income - -36 -106 - 89 - -53

Total comprehensive income for the period - -36 -106 - 1,882 - 1,740


Share capital increase - - - - - - - Share offering costs - - - - - - -

Acquisition of own shares - - - - -7,719 - -7,719

Sale of own shares - - - - 7,599 - 7,599

Share-based payments - - - - - - -

Tax on entries on shareholders' equity - - - - 46 - 46

Shareholders' equity at 30 June 2012 9,317 -405 637 24,884 94,623 - 129,056

Shareholders' equity at 1 January 2011 6,988 -310 675 25,914 72,689 - 105,956

Net profit for the period - - - - 1,595 - 1,595


Translation of units outside Denmark - -675 - - - - -675

Hedging of units outside Denmark - 558 - - - - 558

Fair value adjustment of domicile property - - - - - - -

Tax on other comprehensive income - - - - -124 - -124 Total other comprehensive income - -117 - - -124 - -241

Total comprehensive income for the period - -117 - - 1,471 - 1,354


Share capital increase 2,329 - - - 17,703 - 20,032 Share offering costs - - - - -270 - -270 Acquisition of own shares - - - - -10,072 - -10,072 Sale of own shares - - - - 9,989 - 9,989

Share-based payments - - - - - - -

Tax on entries on shareholders' equity - - - - 43 - 43 Shareholders' equity at 30 June 2011 9,317 -427 675 25,914 91,553 - 127,032

For as long as the Danish state holds hybrid capital in Danske Bank and guarantees bond issues, Danske Bank A/S may distribute dividends if such dividends can be paid in full out of the net profit.


Notes – Danske Bank A/S

Note (DKK millions) 30 June

2012 30 June

2011 1 Value adjustments

Loans at fair value 70 -285

Bonds 1,189 550

Shares etc. -194 275

Investment property - -7

Currency 809 812

Derivatives 2,192 -732

Assets under pooled schemes 2,650 -144

Deposits under pooled schemes -2,651 264

Other liabilities -1,247 2,274

Total 2,818 3,007

2 Impairment charges for loans, advances and guarantees Loans, advances Loans, advances Other Other and guarantees, and guarantees, amounts due, amounts due, individual collective individual collective impairment impairment impairment impairment Total

Impairment charges at 1 January 2012 34,793 3,405 93 - 38,291 Impairment charges during the year 8,105 730 - - 8,835

Reversals of impairment charges from previous years 4,023 1,178 1 - 5,202

Other changes 298 11 1 - 310

Impairment charges at 30 June 2012 39,173 2,968 93 - 42,234

Value adjustment of assets taken over - - - - -

Impairment charges at 1 January 2011 31,537 3,833 86 - 35,456 Impairment charges during the year 15,204 989 7 - 16,200 Reversals of impairment charges from previous years 12,170 1,417 1 - 13,588 Other changes 222 - 1 - 223

Impairment charges at 31 December 2011 34,793 3,405 93 - 38,291

Value adjustment of assets taken over - - - - -



Note (DKK millions)

3 Developments in lending activities in Denmark in the first half of 2012 In May 2009, Danske Bank A/S raised subordinated loan capital in the form of hybrid capital of DKK 24 billion from the Danish state. Under Danish law, banks that raise state-funded capital must publish semi-annual statements on developments in their Danish lend-ing activities. Danske Bank A/S grants loans to personal and business customers in a number of countries. The table below shows the trend in loans and advances, irrevocable loan commitments and guarantees before impairment charges for business customers (including the public sector) and personal customers of Danske Bank A/S.

Loans etc. before impairment charges

30 June 2012 31 Dec. 2011

Business

customers Personal

customers Total Share (%) Business

customers Personal

customers Total Share (%)

Denmark 274,944 143,548 418,492 31 290,008 150,767 440,775 35 Finland 18,331 10 18,341 1 16,579 12 16,591 1 Sweden 176,453 88,186 264,639 20 201,004 85,331 286,335 23 Ireland 44,486 25,534 70,020 5 49,006 26,309 75,315 6 UK 156,401 524 156,925 12 67,933 520 68,453 6 Germany 14,032 207 14,239 1 13,214 181 13,395 1 Baltics 11,796 11,776 23,572 2 11,168 12,242 23,410 2 Other EU member states 98,132 812 98,944 7 46,167 761 46,928 4 Norway 116,170 81,331 197,501 15 116,385 77,254 193,639 15 Eastern Europe 1,470 31 1,501 0 1,454 30 1,484 0 Other European countries 4,261 238 4,499 0 4,325 201 4,526 0 North America 60,213 471 60,684 5 78,380 462 78,842 6 Rest of world 12,885 547 13,432 1 15,601 489 16,090 1 Total 989,574 353,215 1,342,789 100 911,224 354,559 1,265,783 100 Most of Danske Bank A/S’s markets saw a small improvement in macroeconomic conditions in the first half of 2012. The government debt crisis in the euro zone continued to adversely affect household and business sentiment, also in markets outside the euro zone. This contributed to low demand for credit. Danske Bank A/S grants credits on the basis of information about customers’ individual financial circumstances and monitors cus-tomers’ financial situation on an ongoing basis to assess whether the basis for credit has changed. Facilities should match the individ-ual customers’ financial situation, including earnings, capital and assets, and business volume with Danske Bank to a reasonable de-gree, and customers must be able to substantiate their repayment ability. Collateral is usually required for credit facilities. Danske Bank A/S exercises caution before granting credit facilities to businesses in troubled or cyclical industries. The Group monitors credit facilities regularly through its credit systems and procedures established for that purpose. Danske Bank A/S supported its creditworthy customers throughout the first half of 2012. Danske Bank A/S maintains its increased focus on certain industries, including the property and agricultural sectors. More information about the Group’s lending policy, rating of customers and credit risk management is available in section 4 of Risk Management 2011, published on 9 February 2012. The publication is not covered by the statutory audit. Risk Management 2011 is available at www.danskebank.com/ir.



Note (DKK millions)

3 In the first half of 2012, Danske Bank A/S generally raised lending rates on variable rate loans. Because interest rates on Danske(cont’d) Prioritet accounts are pegged to the Danish central bank’s certificate of deposit rate, the rates on these loans were lowered in the

first half of 2012, however, as the certificate of deposit rate was lowered several times during the period. The interest rate levels for households were higher at the end of the first half of 2012 than at the beginning of the year. The levels for non-financial business customers matched the levels prevailing at the beginning of the year.

Danish business customers’ demand for credit, measured in terms of the loan amounts applied for, fell 41% from the level in the first half of 2011. The number of loan applications from existing customers fell 27% in the first half of 2012. Credit demand from new cus-tomers also fell in the period. The share of approved applications from existing customers was 87%, matching the level in the same period of 2011. The share of approved applications from new customers rose. Credit demand from Danish personal customers rose 1% from the level in the second half of 2011. Credit demand from new custom-ers matched the level in the second half of 2011. The share of approved applications was unchanged at 92% in the first half of 2012.



Note (DKK millions)

3 The table below shows the trend in loans and advances, irrevocable loan commitments and guarantees before impairment charges(cont’d) for customers of Danske Bank A/S resident in Denmark.

Loans etc. before impairment charges 30 June 2012 31 Dec. 2011

Existing customers New customers Total Total

Public sector 14,349 41 14,390 14,772

Business customers

Agriculture, hunting, forestry and fisheries 10,746 25 10,771 10,515

Manufacturing industries and extraction of raw materials 37,427 816 38,243 38,046

Energy and utilities 6,693 2 6,695 4,727

Building and construction 5,873 46 5,919 5,890

Trade 17,745 38 17,783 17,236

Transport, hotels and restaurants 18,837 511 19,348 21,151

Information and communication 4,948 6 4,954 3,589

Finance and insurance 113,859 524 114,383 130,774

Property administration 23,141 165 23,306 23,340

Other 18,920 232 19,152 19,968

Total business customers 258,189 2,365 260,554 275,236

Personal customers

Mortgages 111,045 1,879 112,924 115,878

Other 30,449 175 30,624 34,889

Total personal customers 141,494 2,054 143,548 150,767

Total 414,032 4,460 418,492 440,775

New customers are customers to which Danske Bank A/S has not granted loans or other credit facilities in the past 12 months. In compliance with statutory requirements, this lending statement is available as a separate document at www.danskebank.com/ir.



First half

2012 Full year

2011 First half

2011 RATIOS AND KEY FIGURES

Total capital ratio (%) 23.1 23.1 24.4

Tier 1 capital ratio (%) 21.3 20.9 21.9

Return on equity before tax (%) 2.3 2.5 2.5

Return on equity after tax (%) 1.4 1.1 1.4

Cost/income ratio (DKK) 1.19 1.10 1.20

Interest rate risk (%) 0.1 0.4 0.1

Foreign exchange position (%) 4.3 2.5 3.2

Foreign exchange risk (%) - - -

Loans and advances plus impairment charges as % of deposits 144.5 130.6 128.2

Gearing of loans and advances (%) 8.0 7.2 7.6

Growth in loans and advances (%) 12.8 -2.3 2.8

Surplus liquidity in relation to statutory liquidity requirement (%) 122.3 107.4 144.0

Large exposures as % of capital base 12.1 32.6 21.3

Funding ratio 0.75 0.71 0.71

Lending growth (year-on-year) 7.2 -1.2 -3.0

Real property exposure 12 13 12

Impairment ratio (%) 0.4 0.9 0.3

Earnings per share (DKK) 1.9 1.6 2.0

Book value per share (DKK) 138.5 137.0 137.1

Proposed dividend per share (DKK) - - -

Share price end of period/earnings per share (DKK) 42.3 44.7 48.3

Share price end of period/book value per share (DKK) 0.59 0.53 0.69

The ratios and key figures are defined by the Danish FSA’s Executive Order on Financial Reports for Credit Institutions and Investment Compa-nies, etc. Share ratios have not been adjusted to reflect the share capital increase in April 2011.


Statement by the management

The Board of Directors and the Executive Board (management) have considered and approved Interim Report – First Half 2012 of the Danske Bank Group. The consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and the Parent Company’s interim financial statements have been prepared in accordance with the Danish Financial Business Act. Furthermore, the interim report has been prepared in accor-dance with Danish disclosure requirements for interim reports of listed financial institutions. In our opinion, the interim financial statements give a true and fair view of the Group’s and the Parent Company’s assets, liabilities, shareholders’ equity and financial position at 30 June 2012 and of the results of the Group’s and the Parent Company’s operations and the consolidated cash flows for the period starting on 1 January 2012 and ending on 30 June 2012. Moreover, in our opinion, the management’s report includes a fair review of devel-opments in the Group’s and the Parent Company’s operations and financial position and describes the significant risks and uncertainty factors that may affect the Group and the Parent Company.

Copenhagen, 7 August 2012

Executive Board

Eivind Kolding Chairman

Tonny Thierry Andersen Member of the Executive Board

Thomas F. Borgen Member of the Executive Board

Henrik Ramlau-Hansen

Member of the Executive Board

Lars Mørch Member of the Executive Board

Board of Directors

Ole Andersen Niels B. Christiansen Urban Bäckström Chairman Vice chairman Michael Fairey Mats Jansson Jørn P. Jensen Majken Schultz Trond Ø. Westlie Susanne Arboe Helle Brøndum Carsten Eilertsen Charlotte Hoffmann Per Alling Toubro


Auditors’ reports Internal Audit’s report We have reviewed the interim financial statements of the Danske Bank Group and Danske Bank A/S for the pe-riod starting on 1 January 2012 and ending on 30 June 2012, pp. 24-61. Scope of review A review of interim financial statements consists of making inquiries, primarily of persons responsible for finan-cial and accounting matters, as well as performing analytical procedures and other review procedures. A review is substantially less in scope than an audit and consequently, the review does not provide assurance that we have become aware of all significant matters that might be identified in an audit. We have not conducted an audit, and, accordingly, we express no audit opinion. Opinion Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim fi-nancial statements have not been prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and Danish disclosure requirements for listed financial institutions. Furthermore, nothing has come to our attention that causes us to believe that the interim financial statements of Danske Bank A/S have not been prepared, in all material respects, in accordance with the Danish Financial Business Act.


Jens Peter Thomassen Group Chief Auditor


Independent auditors’ report To the shareholders of Danske Bank A/S We have reviewed the interim financial statements of the Danske Bank Group and Danske Bank A/S for the pe-riod starting on 1 January 2012 and ending on 30 June 2012, pp. 24-61. The interim financial statements com-prise the income statement, statement of comprehensive income, balance sheet, statement of capital and notes for the Group as well as for Danske Bank A/S and the consolidated cash flow statement. The consolidated interim fi-nancial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and Danish disclosure requirements for listed financial institutions. The Parent Company’s interim financial statements have been prepared in accordance with the Danish Financial Business Act. Management is responsible for the interim financial statements. Our responsibility is to express a conclusion on the interim financial statements based on our review. Scope of review We conducted our review in accordance with ISRE 2410 DK, Review of Interim Financial Information Performed by the Independent Auditor, and additional requirements under Danish audit regulation. A review of interim finan-cial statements consists of making inquiries, primarily of persons responsible for financial and accounting mat-ters, as well as performing analytical procedures and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and additional require-ments under Danish audit regulation, and consequently, the review does not provide assurance that we have be-come aware of all significant matters that might be identified in an audit. We have not conducted an audit, and ac-cordingly, we express no audit opinion. Opinion Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim fi-nancial statements have not been prepared, in all material respects, in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and Danish disclosure requirements for listed financial institutions. Furthermore, nothing has come to our attention that causes us to believe that the interim financial statements of Danske Bank A/S have not been prepared, in all material respects, in accordance with the Danish Financial Business Act.


KPMG Statsautoriseret Revisionspartnerselskab

Lars Rhod Søndergaard Jesper Ridder Olsen State Authorised Public Accountant State Authorised Public Accountant


Supplementary information

Conference call Danske Bank will hold a press conference and a conference call on 7 August 2012 upon the presentation of its interim report for the first half of 2012. The press conference is scheduled for 10.00am CET, and the con-ference call for 2.30pm CET. The press conference and the conference call will be webcast live at www.danskebank.com.

Financial calendar 30 October 2012

Interim Report – First Nine Months 2012

7 February 2013 Annual Report 2012

18 March 2013 Annual general meeting

2 May 2013 Interim Report – First Quarter 2013

1 August 2013 Interim Report – First Half 2013 31 October 2013

Interim Report – First Nine Months 2013

Contacts Eivind Kolding Chairman of the Executive Board +45 45 14 60 01 Henrik Ramlau-Hansen Chief Financial Officer

+45 45 14 06 66

Martin Gottlob Head of Investor Relations

+45 45 14 07 92

Links Danske Bank Group www.danskebank.com Retail Banking Denmark www.danskebank.dk Retail Banking Finland www.sampobank.com Retail Banking Sweden www.danskebank.se Retail Banking Norway www.fokus.no Banking Activities Northern Ireland www.northernbank.co.uk Banking Activities Ireland www.nationalirishbank.ie Realkredit Danmark www.rd.dk Danske Capital www.danskecapital.com Danica Pension

www.danicapension.dk

More information about the Group’s financial results is available at www.danskebank.com/reports.

http://www.danskebank.com/�

http://www.rd.dk/�

INTERIM REPORT – FIRST HALF 2012 · INCOME STATEMENT First half First half Index Q2Q1 Q4 Q3 Full...

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