CONFERENCE CALL Eivind Kolding CEO & Chairman of the Executive Board Henrik Ramlau-Hansen CFO & Member of the Executive Board 7 August 2012
Agenda Key points Financial results Capital, funding and liquidity Strategy process Outlook for 2012 Q&A session Appendix: Trends in focus areas & business units 2
Highlights Income statement & key figures (DKK m) H1 2012 H1 2011 Index Q2 2012 Q1 2012 Index Net interest income 12,390 11,339 109 6,218 6,172 101 Net fee income 4,013 4,142 97 2,026 1,987 102 Net trading income 5,684 5,420 105 2,462 3,222 76 Other income 1,634 1,974 83 846 788 107 Net income from insurance business 883 328 269 699 184 380 Total income 24,604 23,203 106 12,251 12,353 99 Expenses 13,482 14,029 96 6,632 6,850 97 Profit bef. loan imp. charges 11,122 9,174 121 5,619 5,503 102 Loan impairment charges 7,031 5,594 126 3,109 3,922 79 Profit before tax 4,091 3,580 114 2,510 1,581 159 Tax 1,805 1,673 108 1,007 798 126 Net profit 2,286 1,907 120 1,503 783 192 Net profit ex non-core Ireland 4,571 - - 2,840 1,731 164 Return on avg. shareholders' equity (%) 3.6 3.3 109 4.7 2.5 189 C/I ratio (%) 54.8 60.5 91 54.1 55.5 98 Core tier 1 capital ratio (%) 12.1 12.3 98 12.1 12.0 101 Risk-weighted assets (bn) 893 860 104 893 900 99 Total loans ex repos (bn) 1,704 1,667 102 1,704 1,684 101 Deposits (ex repos) & RD bonds (bn) 1,486 1,492 100 1,486 1,536 97 Total assets (bn) 3,481 3,127 111 3,481 3,500 99 Loan loss ratio (%) 73 58 126 62 81 76 Key points H1 Best half year result since 2008 Improvement driven both by a solid increase in net interest income and lower expenses Impairments higher than H1 2011 due to deterioration of the macro economic climate Key points Q2 Resilient net interest income Solid trading income Danica: new discounting curve and risk allowance for 3 out of 4 groups Declining expenses, cost programme on track Lower impairments, in Denmark and Northern Ireland in particular 3
Net interest income: Resilient, but strong underlying drivers both positive and negative Quarterly net interest income (DKK m) Net interest income drivers Positive +7% Increased lending rates 6,182 6,172 6,218 Negative Low and declining central bank rates 6,016 Increased funding cost 5,785 Sensitivity Short term interest rate sensitivity across all currencies + 25 bp = DKK +800 m 25 bp = DKK 800 m 4
Net fee income: Stable despite low activity Quarterly net fee income (DKK m) Fee income drivers Portfolio fees Activity fees 2,049 1,938 2,218 1,987 2,026 Activity levels remain subdued Small decline in activity based fees Increase in portfolio based fees 1,412 1,374 1,499 1,299 1,386 Fee income split, Q2 2012 (%) Banking Activities ex CIB Danske Capital CIB 10 637 564 719 688 640 20 70 5
Trading: Strong H1 2012, but outlook is uncertain Quarterly trading income (DKK m) Trading income drivers 3,222 Solid trading income mainly from bond and derivatives trading Q2 gain on unlisted shares DKK 283 m and DKK 396 m on pension plans 2,445 2,462 Prospera Ranking Danske Markets selected most valued player in the Nordic bond and derivates markets 1,638 Interest rate sensitivity (group) 1 pp increase in yield curve: DKK -128 m Trading income split, Q2 2012 (%) FX & money market Repos & derivatives 4 18 Bonds & DCM Equities 267 33 45 6
Insurance: Result boosted by booking of risk allowance, helped by strong investment result and new discount curve Quarterly insurance income (DKK m) Key points 976 699 Risk allowance for 3 out of 4 groups New discount curve reduces liabilities with DKK 1.3 bn and improves the usable part of bonus potential of paid up policies with DKK 1.1 bn 261 184 Danish and German interest rate spread reduced, increasing liabilities with DKK 350 m Shadow account of DKK 1.2 bn Expect some risk allowance for the full year Premiums declining due to intensified price competition in Denmark and Sweden -735 7
Expenses: Elevated by restructuring cost, but cost programme on track Total expenses (DKK bn) No. of staff, end of period ( 000) Adjustments (bonus, severance, dep. guarantee, asset write down) Adjusted expenses 24 6,678 6,459 6,850 6,632 22 21 5,499 20 18 2007 Q2 12 2013* 6,226 6,179 5,944 5,572 6,221 No. of branches, end of period 900 700 578 500 2007 Q2 12 2013* * Estimated. 8
Impairments: Declining trend in recent quarters due to personal customers and SME s Impairments by customer segment (DKK bn) Impairment drivers Financials SMEs Large corp. Personal 4.8 Decline in impairments of DKK 800 m in Q2 Drop in impairments in Denmark and Northern Ireland 3.9 2.8 2.8 3.1 Q2 impairments primarily related to SME s in Denmark and Ireland Large corporates, including CRE in Ireland and shipping Personal customers across geographies No significant changes due to new rules from Danish FSA DKK 1.4 bn of total impairments from non-core Ireland 9
Impairments: Lower impairments in Denmark and Northern Ireland Impairments (DKK m) Loan loss ratio (bp, annualised) Denmark 1,330 960 Denmark 40 54 Finland 110 151 Finland 39 29 Sweden 210 61 Sweden 13 44 Norway 7 114 Norway 2 33 Northern Ireland 646 260 Northern Ireland 225 500 Ireland 436 84 Ireland 137 698 Baltics -166-91 Baltics -195-352 CIB 218 206 CIB 63 65 Non-core Ireland 1,016 1,374 Non-core Ireland 2,329 1,587 Group 3,109 3,922 Group 62 81 10
Capital: Earnings and capital efficiency increases tier 1 and core tier 1 Capital ratios, under CRD/Basel II (%) Total capital Tier 1 (including state hybrid) Core tier 1 ---- Solvency need 17.9 17.7 Capital drivers RWA of DKK 893 bn Government hybrid contributes with 2.7 %-point of the Tier 1 and total capital ratios DKK 2 bn state hybrid in Realkredit Danmark repaid in May 2012 16.0 16.2 ----------- 10.4 ---------- RWA Q1 12 900 11.8 12.1 Capital efficiency programme 10 Other 3 Q4 11 Q2 12 Q2 12 893 11
Funding, deposits and rating: Declining wholesale deposits after rating downgrade, but funding plan completed Deposits, end of period (DKK bn) Long term funding (DKK bn) Markets CIB BA, other 792 789 795 774 102 97 97 86 69 68 69 72 736 59 57 51 73 61 2010 2011 2012* Danske Bank s issuer rating 621 624 629 616 620 Moody s S&P Fitch Long-term Baa1 A- A Short-term P-2 A-2 F1 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Outlook Stable Stable Negative * End of July 2012. 12
Liquidity: Strong liquidity buffer despite deposit outflow 12-month liquidity*, end of period (DKK bn) Key points Q2 2011 Q4 2011 Q2 2012 12- month liquidity of more than DKK 125 bn 300 12-month liquidity curve remains positive for more than 2½ years Eligible liquidity buffer of more than DKK 300 bn 200 Goal: LCR compliant at the end of 2012 Bond portfolio rating, DKK 484 bn (%) AAA 100 A Other 11 5 0 3 mos 6 mos 9 mos 12 mos 84 * Moody s Financial Strength. Main assumptions: No access to capital markets; no refinancing of debt to credit institutions, issued bonds or subordinated capital; moderate reduction of business activities. 13
Strategy process: On track, to be completed in Q3 and reported in Q4 Corporate strategy Vision/Mission Corporate Story Corporates & Institutions strategy Business Banking strategy Personal Banking strategy Short-term measures 14
Outlook for 2012: Low result, but high uncertainty due to economic and financial instability Macro Sluggish economic recovery and low interest rate environment NII Re-pricing continues, declining central bank rates create headwinds Expenses Cost cutting on track with FTE reduction of 2,000 end 2013 Loan losses Expected to remain high for 2012, same level as 2011 Net profit Expected to remain low due to weak market conditions Strategy Strategic review to be completed in Q3 2012 15
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Appendix Tax 18 NII and margin developments 19 Expenses 22 Credit 23 Capital and funding 33 Business units 35 17
Adjusted tax rate close to 26%, but actual tax rate remains high owing to Ireland Actual and adjusted tax rates (DKK m) Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 Pre-tax profit 2,510 1,581 615 10 2,081 Pre-tax loss, BA Ireland 1,616 1,371 1,524 1,490 1,780 Permanent non-taxable difference* -93 34-69 -8-330 Adjusted pre-tax profit, Group 4,034 2,986 2,070 1,492 3,531 Tax according to P&L 1,007 798 415 394 881 Taxes from previous years** -22-85 2 2 31 Adjusted tax 984 713 417 396 912 Adjusted tax rate 24.4% 23.9% 20.1% 26.5% 25.8% Actual tax rate 40.1% 50.5% 67.5% NM 42.3% * Permanent non-taxable differences are due primarily to value adjustments and the dividend from Nets. ** Taxes from previous years are due primarily to a reduction of the tax rate in the UK. 18
Net interest income: Margin improvement visible in most markets Quarterly change in net interest income (DKK m) Net interest margins, NII/loan stock (%) Q1 12 6,172 Denmark 1.3 1.3 Q2 11 Q2 12 Lending volume 46 Finland 1.4 1.4 Funding 60 Sweden 1.3 1.4 Equity 28 Norway 1.2 1.5 Deposit volume 12 N. Ireland 2.3 2.5 Deposit margin* 127 Ireland** 1.3 1.5 Lending margin* 8 Baltics 2.1 2.4 Other 57 CIB 1.9 2.0 Q2 12 6,218 Group 1.4 1.5 * Lending and deposit margin affected by change in base rate from Treasury (net effect -50 m). ** Margins for Q2 11 for Ireland is including non-core Ireland. 19
Higher lending margins are beginning to feed through Quarterly lending margins (%) Quarterly deposit margins (%) Denmark* 1.10 1.17 1.31 1.34 0.29 0.33 0.60 0.79 Q3 11 Q4 11 Q1 12 Finland 0.47 0.68 0.77 0.66 0.16 0.36 0.38 0.66 Q2 12 Sweden 1.06 1.17 1.32 1.20 0.57 0.83 0.75 0.72 Norway 0.58 0.61 0.91 1.09 0.65 0.77 1.08 1.05 Northern Ireland 2.11 2.11 2.18 2.09 0.73 0.77 0.75 0.86 Ireland** 1.37 1.60 1.61 1.90 0.27 0.19 0.05 0.16 Baltics 1.29 1.27 1.23 1.11 0.75 0.75 0.67 0.73 CIB 1.10 1.18 1.18 1.18 0.69 0.65 0.60 0.69 * Includes Realkredit Danmark. ** Non-core Ireland is included in margins for Ireland prior to. 20
Net interest income: Trend in Realkredit Danmark Net interest income at Realkredit Danmark, excluding lending margins (DKK m) 2010 2011 2012 193 170 155 128 132 96 100 102 107 54 Q1 Q2 Q3 Q4 21
Expenses: On track with cost programme Expenses (DKK m) Quarterly change in expenses (DKK m) H1 12 H1 11 Index Q2 12 Q1 12 Index Expenses 13,482 14,029 96 6,632 6,850 97 Perf. based compensation 457 372 123 172 285 60 Severance payments etc. 363 173 210 303 60 505 Deposit guarantee scheme 34 1,145 - -64 98 - Asset write-down 463 113 410 0 463 - Adjusted expenses 12,165 12,226 100 6,221 5,944 105 Q1 12 6,850 Asset write-down Fjordbank Mors 463 162 Employees (number of FTEs) 23,624 Perf. based comp. 113 Severance etc. 243 22,093 21,522 21,320-323 20,997 Others 279 Q2 12 6,634 2008 2009 2010 2011 Q2 12 22
Impairment dynamics Individual loan impairment charges, ex Baltics (DKK bn) Change in allowance account (DKK m) New Increased Reversals 5.4 Allowance, end-2007 4,900 2.3 3.1 3.8 3.5 1.8 Gross impairments 104,082 Reversals 25,507 3.6 Write-offs 29,467-1.8 Allowance end-q2 2012 54,007 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 23
Loan quality Impairment-tested loans (%) Coverage, individual allowance /impairment-tested loans (%) Q1 12 Q1 12 Q2 12 Q2 12 Denmark 5.7 5.8 Denmark 31 31 Finland 3.8 3.8 Finland 31 31 Sweden 2.2 2.0 Sweden 32 34 Norway 3.2 3.2 Norway 33 33 N. Ireland 17.8 18.9 N. Ireland 62 63 Ireland 12.8 13.9 Ireland 54 52 Baltics 19.1 19.1 Baltics 49 47 CIB 3.2 4.8 CIB 45 35 Non-core Ireland 66.3 68.1 Non-core Ireland 52 56 Group 7.0 6.9 Group 40 40 Note: Loans in rating categories 10 and 11 are subject to individual impairment testing. Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. 24
Retail Banking Denmark, including Realkredit Danmark Impairments at Retail Banking Denmark, Q2 2012 (DKK m) Individual Collective Total Bank Personal customers 325-71 254 Agriculture 128-165 -36 Commercial property 211-10 201 Other 318-52 266 Total 982-298 685 RD Personal customers 110 12 122 Commercial 158-5 153 Total 268 7 275 Retail Banking Denmark 1,250-290 960 1-month arrears, Realkredit Danmark (% of stock) Loans by LTV and rating, Realkredit Danmark, end-q2 2012 (%) Rating 1-3 4-7 8-11 Total Public LTV ratio guarantee 0-20 7.6 22.3 4.0 33.8 0.4 20-40 5.1 19.1 3.6 27.9 0.4 40-60 3.3 14.4 3.0 20.8 0.4 60-80 1.8 8.5 1.8 12.1 0.4 80-100 0.7 2.6 0.7 4.0 0.4 >100 0.4 0.7 0.3 1.5 0.4 Total (DKK bn) 137 493 97 727 17 Portfolio facts, Realkredit Danmark, end-q2 2012 1.2 1.0 0.8 0.6 0.4 Q409 Q210 Q410 0.6 398,671 loans (residential and commercial) 2,941 loans in 3- and 6-month arrears (0.7%) 186 repossessed properties DKK 11 bn of loans with LTV > 100%, including DKK 3bn with public guarantee Average LTV ratio of 70% LTV ratio on origination (legal requirement) Residential: max. 80% Commercial: max. 60% 25
Denmark: House prices still declining but affordability keeps improving Danish house price by region (%) Affordability index, quarterly data from1985-2011 Region Prices Change Change in Preview* peaked since peak Q1 12 Q2 12 Copenhagen Q3 2006-28.1-0.8 Zealand Q2 2007-29.6 0.3 South Denmark Q2 2008-17.9 0.3 Central Jutland Q2 2008-16.6-3.3 Northern Jutland Q1 2008-13.9 0.2 Nationwide Q3 2007-20.6-0.8 1.1 Fixed rate Mixed rate 140 Above average = expensive 120 100 80 60 1985 1990 1995 Average Below average = cheap 2000 2005 2010 Danish housing market (000 s) Unemployment and foreclosures (%) No. housing units for sale 80 House price per sq m (rhs) 16 10 10Y swap rate Unemployment No. of forced sales (rha) 600 70 60 50 40 14 12 5 400 200 30 2007 2008 2009 2010 2012 * Leading indicator, based on monthly statistics from home (Danske Bank s real estate agency) that cover about one-third of the market. Sources: Danske Research, Danmarks Statistik, Association of Danish Mortgage Banks, home, Adam, Danish Central Bank, Skat and own calculations. 10 0 1996 2004 2012 0 26
Limited exposure to agriculture and shipping Agriculture: breakdown of loan portfolio, Q2 2012 (%) Mixed operations Other 6 14 Shipping: breakdown of loan portfolio, Q2 2012 (%) Other Agriculture Ro-Ro 9 25 Product tanker 2 6 Offshore supply 10 Car carriers 7 Chemical tanker Container Grocery trade 15 Pig farming 20 21 Cattle breeding 10 7 Offshore rig Gas tanker 15 10 8 Crude tanker 7 8 Dry bulk Cruise/Ferry Agricultural exposure and allowance, Q2 2012 (DKK bn) Business unit Gross Allowance Coverage exposure Realkredit Danmark 45.6 0.3 0.7% Retail Banking Denmark 11.2 2.4 21.5% - portion from pig farmers 3.2 1.1 33.6% Other business units 16.2 0.5 3.0% Total exposure 73.0 3.2 4.4% Shipping exposure and allowance, Q2 2012 (DKK bn) Business unit Gross exposure Allowance Coverage CIB 44.7 1.1 2.5% -portion from Danish customers 12.1 0.8 6.8% -portion from Norwegian customers 13.4 0.0 0.2% -portion from other customers 19.2 0.3 1.5% Other business units 3.1 0.6 21.1% Total exposure 47.8 1.8 3.7% 27
Macro trends Bankruptcies (index 1996 = 100) Business confidence indicator (index 1996 = 100) Denmark 400 Finland Norway Sweden Sweden 160 Finland Denmark 300 200 140 120 100 100 80 1996 2000 2004 2008 2012 60 1996 2000 2004 2008 2012 Rating upgrades*, corporates, 12-month rolling average (%) 100 Denmark Norway Sweden Finland CIB Property prices, Nordic countries (index 1996 = 100) 400 Denmark Norway Sweden Finland 50 Upgrades > downgrades Downgrades > upgrades 300 200 0 2009 2010 2011 2012 100 * Relation between upgrades and total rating changes. From Q4 2011, ratings are affected by recalibration. 1996 2000 2004 2008 2012 28
Denmark and Northern Ireland: Loan exposure Dividend Individual impairments Value of collateral Residential mortgage exposure Commercial property exposure Denmark (DKK bn) Northern Ireland (DKK bn) Denmark (DKK bn) Northern Ireland (DKK bn) 517.4 16.1 121.1 10.3 9.9 0.5 15.6 4.8 2.8 1.4 0.1 4.7 3.1 2.8 5.7 0.4 7.8 2.0 Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.2 bn Impaired 2% Collective impairments 0.0 bn Impaired 3% Collective impairments 0.3 bn Impaired 13% Collective impairments 0.1 bn Impaired 43% Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. 29
Q2 10 Q4 10 Q2 11 Q4 11 Q2 12 Ireland: Breakdown of loan portfolio Dividend Individual impairments Value of collateral Personal mortgages (DKK bn) Other (DKK bn) Total (DKK bn) Arrears*, private customers (%) 16.1 26.8 91-180 days 180+ days Market 10.7 10.2 1.8 0.1 1.8 3.6 0.5 0.7 0.4 1.9 1.1 3.4 0.9 0.3 1.2 Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.2 bn Impaired 11% Collective impairments 0.3 bn Impaired 17% Collective impairments 0.6 bn Impaired 13% Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. *Number of arrears, excluding buy-to-let financing. 30
Non-core Ireland Dividend Individual impairments Value of collateral CRE (DKK bn) Personal mortgages (DKK bn) Other* (DKK bn) Total (DKK bn) 19.4 38.1 16.1 1.7 9.0 9.7 24.4 3.1 9.7 1.9 0.1 6.4 1.3 13.8 1.0 3.1 4.7 0.8 2.0 7.5 Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Gross exposure Impaired loans Collective impairments 0.1 bn Impaired 83% Collective impairments 0.1 bn Impaired 21% Collective impairments 0.1 bn Impaired 65% Collective impairments 0.3 bn Impaired 64% Note: Value of collateral is capped by size of loan and reflects a haircut of at least 20%. Impaired loans are individually impairment tested (rating categories 10 and 11). Rating category 10 contains exposures to customers which are not in default but for which evidence of impairment exists; rating category 11 contains exposures to customers in default. * Consists primarily of consumer related industries. 31
Solid funding structure and liquidity position Loan portfolio and long-term funding, Q2 2012 (DKK bn) Maturing funding (DKK bn) 1,704 1,754 115 Senior debt 69 Hybrid T1 Subordinated T2 Senior Covered bonds Bank loans 598 736 Deposits 46 45 51 Bank mortgages 381 153 Covered bonds 34 26 16 RD mortgages 725 750 Issued RD bonds 11 10 9 4 1 1 2 1 1 0 0 Loans Funding 2012 2015 2018 2021 2024 2027 32
Central banks Due to credit inst. (ex. CIB) Repos Short-term bonds Deposits Mortgage finance (match funded) Cov. bonds Long-term bonds Subord. debt Shareholders eq. Well-diversified funding position Funding position (%) Funding sources (%) Q4 11 Q2 12 40 Central banks Subordinated debt 7 3 Equity 5 Deposits 29 30 20 Repos 12 10 Banks 7 0 S-T bonds 1 L-T bonds 6 Covered bonds 6 25 Match-funded DK mortgage bonds Short-term funding Long-term funding Issued long-term bonds: DKK 141bn incl. Sampo and RD Issued covered bonds: DKK 153 bn incl. Sampo 33
Retail Banking Denmark: Visible increase in net interest income but higher impairments lower the result Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 6,270 5,918 106 Net fee income 1,590 1,631 97 Other income 504 591 85 Total income 8,364 8,140 103 Total expenses 4,565 4,512 101 Profit bef. loan imp. charges 3,799 3,628 105 Loan impairment charges 2,290 1,532 149 Profit before tax 1,509 2,096 72 559 388 559 391 558 390 555 386 550 385 ROE before loan imp. charges 17.0 17.8 Margin trends, ex RD (%) Market shares, incl. CIB and repo lending*, ex RD (%) Lending Deposits Lending Deposits 4 36 3 32 2 28 1 24 0 20 * Danske Markets. 34
Retail Banking Finland: Strong net interest income, but low result due to loan losses Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Net interest income 1,122 1,002 112 Net fee income 532 501 106 Other income 193 263 73 Total income 1,847 1,766 105 Total integration expenses 211 264 80 Expenses ex total intgr. exp. 1,334 1,377 97 Profit bef. loan imp. charges 302 125 242 Loan impairment charges 261-5 - Profit before tax 41 130 32 320,996 ROE before loan imp. charges 8.5 4.2 Retail 94 49 Corporate 96 50 98 50 100 50 100 51 Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits 0.9 14 0.6 12 0.3 0.0 10 35
Retail Banking Sweden: High return held up by 20 % increase in net interest income Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 1,384 1,158 120 Net fee income 265 304 87 Other income 96 112 86 Total income 1,745 1,574 111 Expenses 856 860 100 Profit bef. loan imp. charges 889 714 125 Loan impairment charges 271 51 531 Profit before tax 618 663 93 101 82 100 82 101 83 86 100 86 99 ROE before loan imp. charges 16.8 15.1 Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits 1.5 6.0 1.0 5.5 5.0 0.5 4.5 0.0 4.0 36
Retail Banking Norway: Solid increase in total income more than double pre-tax profit Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 973 760 128 Net fee income 146 130 112 Other income 367 369 99 Total income 1,486 1,259 118 Expenses 922 924 100 Profit bef. loan imp. charges 564 335 168 Loan impairment charges 121 140 86 Profit before tax 443 195 227 69 58 71 60 74 58 77 58 78 60 ROE before loan imp. charges 14.6 10.3 Margin trends (%) Market shares, incl. CIB (%) Lending Deposits Lending Deposits 1.2 1.0 6 0.8 0.6 0.4 5 0.2 0.0 4 37
Banking Activities Northern Ireland: Moving in the right direction with higher income and lower costs and impairments Income statement (DKK m) Trend in lending volume*, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 604 548 110 Net fee income 185 151 123 Other income 61 72 85 Total income 850 771 110 Expenses 535 588 91 Profit bef. loan imp. charges 315 183 172 Loan impairment charges 906 935 97 Profit before tax -591-752 - 16 26 16 25-2% +12% 25 16 17 25 17 25 ROE before loan imp. charges 30.7 17.5 Margin trends (%) Market shares (%) Lending Deposits Retail Corporate 3 40 2 30 1 20 0 10 * Corporate lending volume excludes lending to public sector. 38
Banking Activities Ireland: Higher expenses due to restructuring of the continuing business Income statement (DKK m) Trend in lending volume, end of period (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 207 456 45 Net fee income 39 31 126 Other income 23 23 100 Total income 269 510 53 Expenses 451 361 125 Profit bef. loan imp. charges -182 149-122 Loan impairment charges 520 3,133 17 Profit before tax -702-2,984-27 41 27 40 27 37 17 9 17 9 ROE before loan imp. charges -24.9 9.6 Margin trends (%) Market shares (%) 2 Lending Deposits 4 Lending Deposits 3 1 2 0 1 Note: Figures from Q4 2011 and back are not restated after non-core split-up from Banking Activities Ireland. 39
Non-core Ireland: Marked by high impairments Income statement (DKK m) Trend in lending volume, end-of-period (DKK bn) H1 2012 H1 2011 Index Net interest income 210 - - Net fee income -1 - - Other income 2 - - Total income 211 - - Expenses 106 - - Profit bef. loan imp. charges 105 - - Loan impairment charges 2,390 - - Profit before tax -2,285 - - Retail Corporate Included in BA Ireland 9 27 9 27 Margin trends (%) Portfolio breakdown (%) Lending Deposits 1.6 1.5 CRE Personal mortgages Other 26% Included in BA Ireland 0.5 0.6 51% 24% Note: Figures from Q4 2011 and back are not restated after non-core split-up from Banking Activities Ireland. 40
Banking Activities Baltics: Higher income and increased write back of impairments increases pre-tax profit by 50 % Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Retail Corporate Net interest income 244 240 102 Net fee income 74 71 104 Other income 61 48 127 Total income 379 359 106 Expenses 183 181 101 Profit bef. loan imp. charges 196 178 110 Loan impairment charges -257-133 - Profit before tax 453 311 146 12 10 12 9 12 8 12 8 11 8 ROE before loan imp. charges 30.2 28.0 Margin trends (%) Market shares, lending (%) Lending Deposits Estonia Latvia Lithuania 3 12 2 9 6 1 3 0 0 41
CIB: Solid NII development and continued margin improvement, but higher loan losses from shipping and construction Income statement (DKK m) Trend in lending volume, average (DKK bn) H1 2012 H1 2011 Index Net interest income 1,059 952 111 Net fee income 384 437 88 Other income 39 56 70 Total income 1,482 1,445 103 Total integration expenses 12 61 20 Expenses ex total intgr. exp. 512 476 108 Profit bef. loan imp. charges 958 908 106 Loan impairment charges 424 126 337 Profit before tax 534 782 68 102 103 107 108 109 ROE before loan imp. charges 15.4 17.0 Margin trends (%) Geographical breakdown of lending, Q2 2012 (%) Lending Deposits Sweden 1.2 19 30 Denmark 0.8 0.4 Finland 15 0.0 36 Norway 42
Danske Markets & Treasury: Solid Q2 from derivates and bond trading, one off gains increase income in Treasury Income statement (DKK m) Trading income split, Q2 2012 H1 2012 H1 2011 Index Danske Markets 4,916 3,659 134 Group Treasury 73 917 - Total income 4,989 4,576 109 Expenses 1,574 1,424 111 Profit bef. loan imp. charges 3,415 3,152 108 Loan impairment charges 25-231 - Profit before tax 3,390 3,383 100 FX & money market Repos & derivatives Bonds & DCM Equities 33 4 18 ROE before loan imp. charges 55.7 87.5 45 Impairments, 3% of Group lending (DKK m) Trading activities, accumulated income (DKK bn) -396-52 -27 52 2010 8,000 6,000 2011 2012-750 4,000 2,000 0 Q1 Q2 Q3 Q4 43
Danske Capital: Lower fee income due to changed asset mix, margins remain flattish Income statement (DKK m) AuM customer breakdown (DKK bn) H1 2012 H1 2011 Index Private equity Institutional Retail* Life insurance Net interest income 60 55 109 Net fee income 783 830 94 - portion from performance fees -11 1 - Other income 16 39 41 Total income 859 924 93 Expenses 528 550 96 Profit bef. loan imp. charges 331 374 89 Loan impairment charges 12-47 - Profit before tax 319 421 76 16 187 245 188 Margin trends** (%) AuM asset breakdown (%) 0.4 0.3 Cash Equities Bonds 4 28 0.2 0.1 68 0.0 * Retail includes Danske Invest. ** Margin for asset management is adjusted income, including performance fees, divided by business volume, end of period. 44
% change in equities Danica Pension: Strong investment result and partially booked risk allowance Income statement (DKK m) Investment allocation for Danica Traditionel, end-q2 2012 (%) H1 12 H1 11 Index Equities Bonds Credit bonds Property Premiums (bn) 12.6 14.2 89 Danica Traditionel (insurance result) 615 547 112 Unit-linked (insurance result) 177 179 99 Health and accident (ins. result) -53 12 - Investment result 303 146 208 Financing result -47-78 - Special allotments -44-125 - Net income bef. postp. risk allow. 951 681 140 Change in shadow account -68-353 - Net income 883 328 269 Possibility of booking risk allowance in 2012*, end-q2 2012 (%) 17 58 5 8 71 67 3 73 50% 25% Full risk allowance 0% -25% Partial risk allowance No risk allowance -50% -2,00% -1,00% 0,00% 1,00% 2,00% % point change in interest rate 13 12 New schemes 14 10 Low 16 9 Medium 15 9 High * Under assumption of a rolling yield spread of 0 between Danish and German government bonds at the end of 2012. 45
Danica Pension s profit model 1 + 2 + 3 + 4 + 5 + 6 + 7 = Profit model Condition/ sensitivity H1 2012 DKK m Danica Traditionel. Mainly risk allowance 69 bp of technical provisions (DKK 173 bn) Unit-linked business. Longterm: approximately 0.4% of AuM Can be booked only if investment return is high enough and if no use of bonus potential of paid-up policies Prices and volume Risk allowance Other Solid income base but also price competition Health and accident business Combined ratio Price competition -53 Return on investment portfolio at shareholders risk Financing result Special allotments, depending on profit and business volume Shadow account Equity markets, interest rates S-T interest rate (equity allocated capital) Expected to be around DKK 0.1 billion in 2012 if investment return is at normal level Uncertainty because of dependency on investment return for the rest of the year Annualised investment return: 3.8% 656-41 177 303 Low short-term interest rate -47 Total 883-44 -68 46
Disclaimer Important Notice This presentation does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Danske Bank A/S in any jurisdiction, including the United States, or an inducement to enter into investment activity. No part of this presentation, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The securities referred to herein have not been, and will not be, registered under the Securities Act of 1933, as amended, and may not be offered, exercised or sold in the United States absent registration or an applicable exemption from registration requirements. References to a potential share offering by Danske Bank are included herein pursuant to Rule 135c of the Securities Act of 1933, as amended. This presentation contains forward-looking statements that reflect management s current views with respect to certain future events and potential financial performance. Although Danske Bank believes that the expectations reflected in such forwardlooking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors many of which are beyond Danske Bank s control. This presentation does not imply that Danske Bank has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided. 47