Interim Report First Quarter of 2000

Transcription

1 Interim Report First Quarter of 2000 Page 1 of 9

2 DEN DANSKE BANK Group Core earnings and net profit for the Q1 Q1 Index Full year period (DKr million) / Total core income 4,306 3, ,821 Operating expenses and depreciation 2,338 1, ,173 Core earnings before provisions 1,968 1, ,648 Provisions for bad and doubtful debts Core earnings 1,844 1, ,159 Profit on sale of subsidiaries Earnings from investment portfolios , Profit on ordinary operations before tax 2,278 1, ,321 Tax ,293 Net profit for the period 1, ,028 Balance sheet highlights (DKr billion) Loans and advances Bonds and shares, etc Due to credit institutions and central banks Deposits Issued bonds Subordinated debt Shareholders' equity Total assets Ratios and key figures Net profit per share, DKr Net profit as % of average shareholders' equity Core earnings as % of average shareholders' equity Cost/core income ratio, % Solvency ratio, % (excl. first-quarter profits) Core (tier 1) capital ratio, % (excl. first-quarter profits) Share price end of period, DKr Book value per share, DKr Number of full-time employees end of period in: Danske Bank and consolidated subsidiaries 12,365 11,641 12,397 Non-consolidated subsidiaries (insurance companies) 1,048 1,444 1,128 Rating -Moody's (short-term) P-1 P-1 P-1 -Moody's (long-term) Aa3 Aa3 Aa3 -S&P (short-term) A-1 A-1 A-1 -S&P (long-term) A+ A+ A+

3 Review Den Danske Bank Group recorded an after-tax profit of DKr1,603m for the first quarter of 2000, against DKr933m for the first quarter of The tax charge was DKr675m, against DKr376m the year before. Core earnings rose by DKr545m to DKr1,844m, mainly as a result of increased securities trading and asset management activity. Earnings from investment portfolios rose by DKr424m to DKr434m. The Group s solvency ratio (the firstquarter results not incorporated) was 10.3%. The core (tier 1) capital ratio stood at 6.8%. There was a significant increase in customers use of the Group s e- banking facilities in the first quarter. Retail Banking gained a satisfactory number of new customer contracts. Thirteen per cent of securities trading at Retail Banking took place through the e-banking facilities. In March, Den Danske Bank launched a WAP banking service. Core earnings were better than expected at the release of the 1999 Annual Report, as high activity in securities markets raised earnings from trading and asset management activities. When comparing Profit-and-Loss and Balance-Sheet items for the first quarter of 2000 with those for the year before, it should be taken into account that Fokus Bank was not incorporated into the Group Accounts until June 1, 1999, and that the non-life insurance companies were sold off as at the end of Fokus Bank s core earnings for the first quarter of 2000 were DKr107m before accounting for the cost of funding the acquisition. The non-life technical result contributed DKr6m to firstquarter earnings. Operating expenses and depreciation rose by DKr431m from the year before, in line with expectations. Expenses rose by 5% not counting Fokus Bank and the increase in provisions for performance-related bonus payments that was prompted by higher profits from trading activities. IT and e- finance development costs remained high. The cost/core income ratio declined, as had been expected, and now amounts to 54.3%, slightly better than the Group s target. The charge for bad and doubtful debts was DKr124m, against DKr175m the year before. Den Danske Bank reached a settlement with the Danish government in the Faroese banking affair on March 23, 2000 and, in April, the Bank made an ex gratia payment of DKr300m to the Danish government. The amount had been provided as at the end of 1999 and hence did not affect the first-quarter results. The tax charge was 30% of pre-tax profit. The total assets of the Group rose to stand at DKr770bn at March 31, The solvency ratio was 10.3% (first-quarter results not incorporated). The return on equity grew to 20.5%. This Quarterly Report has been prepared in accordance with the Copenhagen Stock Exchange guidelines for issuers of listed securities. The accounting policies are unchanged from The Group s business areas The business areas of the Group performed satisfactorily and slightly ahead of expectations. Danske Securities and Asset Management made a particular contribution owing to high activity on equity markets in the first quarter. 3

4 A breakdown of core earnings before provisions by business area shows that Retail Banking, Danske Securities and Asset Management are contributing an increasing share of total earnings. Core earnings before provisions Q Core earnings before provisions Q % 5% 10% 0% 41% Retail Banking Wholesale Banking Danske Securities Asset Management 9% 1% 9% 3% 36% Life and Pensions 29% Other areas 42% Core earnings before provisions by business area were as follows: Year to date (DKr million) Retail Banking Wholesale Banking Danske Securities Core income 2,430 1, Operating expenses and depreciation 1,645 1, Core earnings before provisions Total assets (average) 227, , , , Risk-weighted items (average) 171, , , , Allocated capital (average) 11,974 7,954 13,981 16, Year to date (DKr million) Asset Management Life and Pensions Other areas Core income Operating expenses and depreciation Core earnings before provisions Total assets (average) 8,121 7, Risk-weighted items (average) 5,257 3, Allocated capital (average) ,373 5,

5 Retail Banking continued to make progress and saw strong activity in the first quarter of A growing business volume, particularly a sharp advance in sales of investment products, contributed to the results of this division. Return on allocated capital remained at 26% before provisions. Retail Banking continued to focus on measures to enhance efficiency. In Denmark, the ongoing restructuring of the Copenhagen branch network will cut the number of branches by 21. Expenses rose by 19%. Expenses were more or less flat not counting the integration of Fokus Bank. In Sweden, Retail Banking recorded very satisfactory improvement in earnings and an advance in lending and sales of investment products. Wholesale Banking reduced its capital requirement from the first quarter of 1999 and raised the return on allocated capital. Profit has not yet reached a satisfactory level, however. Trading on interest rate and currency markets made a particularly strong contribution to first-quarter profit. Danske Securities, Den Danske Bank s investment banking division, had strong growth in equity trading volume. The sharp increase in earnings from equity activities is not likely to be maintained during the rest of Expenses increased owing to the enlargement of the investment banking division in 1999 and higher provisions for performance-related bonuses in Asset Management saw good growth in core earnings, also in Norway and Sweden. Earnings growth arose from an increase in client funds under management, stronger activity and a change in the composition of client funds. Private Banking also made good progress in the first quarter. Life and Pensions saw profits develop in line with expectations. The volume of life premiums with company pension clients increased at a good rate. Sales of unitlinked products in Sweden, which were launched in 1999, showed strong growth. The agreement to co-operate with Topdanmark on non-life business developed as planned. Outlook For the whole of 2000, Den Danske Bank expects core income to show improvement, expenses and depreciation to rise slightly from 1999, and provisions for bad and doubtful debts to be at a similar level to The Group does not expect to maintain the high level of activity recorded in the first quarter of 2000 throughout the year. Earnings from securities trading are forecast to lose some momentum. The Group expects core earnings for the remaining nine months of this year to exceed those generated in the same period of Earnings from investment portfolios during the rest of this year will depend significantly on the level of securities prices at the year-end. The tax charge for 2000 is expected to equal the Danish corporation tax rate. The Group expects to publish its Half-Year Report on August 17, Copenhagen, May 11, 2000 Den Danske Bank Aktieselskab 2-12 Holmens Kanal Reg.No Copenhagen DK-1092 Copenhagen K 5

6 DEN DANSKE BANK Group Core earnings and net profit Q1 Q4 Q3 Q2 Q1 Full year (DKr million) Net interest income, excluding earnings from investment portfolios 2,341 2,286 2,233 2,062 2,012 8,593 Fee and commission income (net) 1,211 1, ,749 Trading income Other core income Core insurance income Total core income 4,306 4,147 3,736 3,557 3,381 14,821 Operating expenses and depreciation 2,338 2,923 2,177 2,166 1,907 9,173 Core earnings before provisions 1,968 1,224 1,559 1,391 1,474 5,648 Provisions for bad and doubtful debts Core earnings 1, ,533 1,428 1,299 5,159 Profit on sale of subsidiaries Earnings from investment portfolios Profit on ordinary operations before tax 2,278 2,013 1,395 1,604 1,309 6,321 Tax ,293 Net profit for the period 1,603 1,819 1,115 1, ,028 Balance sheet highlights (DKr billion) Loans and advances Bonds and shares, etc Due to credit institutions and central banks Deposits Issued bonds Subordinated debt Shareholders' equity Total assets Total off-balance-sheet items

7 DEN DANSKE BANK Group Movements in Den Danske Bank Group's shareholders' equity Q1 Q1 Full year (DKr million) Shareholders' equity at January 1 30,542 30,366 30,366 Net profit for the period 1, ,028 Dividends 0 0-1,323 Goodwill fully written off at the time of acquisition ,562 Change in minority interests Shareholders' equity 32,110 31,248 30,542 The share capital is made up of 52,925,000 shares, totalling DKr5,293m. Solvency (excluding net profit for the period) (DKr million) Core capital, less statutory deduction for own shares 30,210 30,044 30,252 Supplementary capital, less statutory deductions 15,702 11,732 14,867 Total capital base, less statutory deductions 45,912 41,776 45,119 Weighted items outside trading portfolio 392, , ,527 with market risk included in trading portfolio 51,697 54,609 46,819 Total weighted items 444, , ,346 Solvency ratio (%) Core (tier 1) capital alone (%) The solvency ratio is subject to a statutory minimum requirement of (%)

8 Core earnings before provisions, breakdown DEN DANSKE BANK Group Q1 Q4 Q3 Q2 Q1 Full year (DKr million) Retail Banking Core income 2,430 2,336 2,330 2,044 1,903 8,613 Operating expenses and depreciation 1,645 2,026 1,595 1,537 1,378 6,536 Core earnings before provisions ,077 Allocated capital 11,974 11,071 10,617 9,125 7,954 9,703 Wholesale Banking Core income 989 1, ,786 Operating expenses and depreciation ,608 Core earnings before provisions ,178 Allocated capital 13,981 14,601 14,868 16,729 16,084 15,637 Danske Securities Core income Operating expenses and depreciation Core earnings before provisions Allocated capital Asset Management Core income Operating expenses and depreciation Core earnings before provisions Allocated capital Life and Pensions Profit from life insurance Non-life technical result Net interest from investments, etc Core insurance income Funding costs, net Core earnings before provisions Allocated capital 5,373 5,402 5,409 5,421 5,402 5,411 Other areas Core income Operating expenses and depreciation Core earnings before provisions Group Core income 4,306 4,147 3,736 3,557 3,381 14,821 Operating expenses and depreciation 2,338 2,923 2,177 2,166 1,907 9,173 Core earnings before provisions 1,968 1,224 1,559 1,391 1,474 5,648 8

9 The Group s business areas: Retail Banking provides services to personal customers and small and mediumsized business customers served by the Nordic branch network. Retail Banking offers a range of standardised and competitive financial products of high quality. This business area encompasses the Group s leasing and factoring operations Wholesale Banking serves the Group s large corporate and institutional clients. This division is responsible for the Group s global trading activities on interest rate and foreign exchange markets. Danske Securities, the Group s investment banking division, is responsible for corporate finance activities and the sales and trading of equities and equity-related products. Danske Securities is active on four Nordic stock exchanges Asset Management provides investment portfolio services to institutional clients and other large investors, primarily in the Nordic region. Moreover, Asset Management provides private banking services and unit trust products in the Nordic and other European markets. Life and Pensions services are provided by Danica, which targets personal and business customers directly and also markets its products through Retail Banking s outlets. 9