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The full data:
Management's report
Financial statements
Financial highlights - Danske Bank Group
Executive summary
Financial review
Personal & Business Customers
Large Corporates & Institutions
Danica Pension
Northern Ireland
Non-core
Group Functions
3
4
6
11
13
15
17
19
20
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
Statements
Statement by the management
Independent auditor's review report
Supplementary information
24
25
26
27
29
30
62
63
64
Danske Bank / Interim report – first quarter 2021 3/64
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Total income
Operating expenses
Impairment charges, other intangible assets
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Tax
Net profit
Q1
2021
5,450
3,402
1,266
491
195
10,805
6,273
-
4,531
497
4,034
20
4,054
914
Q1
2020
5,560
3,240
141
99
186
9,227
6,385
-
2,842
4,251
-1,409
-254
-1,663
-374
3,139
-1,289
Index
21/20
98
105
-
-
105
117
98
-
159
12
-
-
-
-
-
Q4
2020
5,447
3,644
1,044
350
97
10,582
7,316
379
2,886
713
2,173
-113
2,059
609
Index
Q1/Q4
Full year
2020
100
93
121
140
201
102
86
-
157
70
186
-
197
150
22,151
12,217
4,297
1,669
594
40,928
26,648
379
13,901
7,001
6,900
-596
6,304
1,715
1,450
216
4,589
Attributable to additional tier 1 etc.
115
195
59
118
97
551
Balance sheet (end of period)
(DKK millions)
Due from credit institutions and central banks
Repo loans
Loans
Trading portfolio assets
Investment securities
Assets under insurance contracts
Total assets in Non-core
Other assets
336,606
276,908
221,566
336,609
1,827,873 1,781,846
706,541
292,797
527,969
6,168
134,195
652,541
302,638
532,470
1,913
141,952
152
82
345,938
257,883
103 1,838,126
682,945
296,769
545,708
2,797
139,064
92
103
101
31
106
97
107
345,938
257,883
99 1,838,126
682,945
96
296,769
102
545,708
98
2,797
68
139,064
102
Total assets
4,072,903 4,007,691
102 4,109,231
99 4,109,231
Due to credit institutions and central banks
Repo deposits
Deposits
Bonds issued by Realkredit Danmark
Other issued bonds
Trading portfolio liabilities
Liabilities under insurance contracts
Total liabilities in Non-core
Other liabilities
Subordinated debt
Additional tier 1
Shareholders' equity
Total liabilities and equity
Ratios and key figures
Dividend per share (DKK)
Earnings per share (DKK)
Return on avg. shareholders' equity (% p.a.)
Net interest income as % p.a. of loans and deposits
Cost/income ratio (C/I), (%)
C/I, excluding impairment on intangible assets (%)
Total capital ratio (%)
Common equity tier 1 capital ratio (%)
Share price (end of period) (DKK)
Book value per share (DKK)
Full-time-equivalent staff (end of period)
111,284
250,403
1,229,654
771,138
358,195
419,881
574,696
2,538
146,355
38,253
8,615
161,890
96,839
307,804
995,249
762,026
351,612
603,008
565,202
2,492
124,476
31,968
14,428
152,587
115
81
125,267
223,973
124 1,193,173
775,844
101
360,127
102
499,331
70
591,930
102
2,975
102
135,596
118
32,337
120
8,508
60
160,171
106
125,267
89
112
223,973
103 1,193,173
775,844
360,127
499,331
591,930
2,975
135,596
32,337
8,508
160,171
99
99
84
97
85
108
118
101
101
4,072,903 4,007,691
102 4,109,231
99 4,109,231
-
3.5
7.5
0.72
58.1
58.1
23.4
18.1
118.7
189.7
21,978
-
-1.7
-3.8
0.80
69.2
69.2
22.3
17.6
76.9
178.8
22,032
2.0
1.6
3.4
0.73
72.7
69.1
23.0
18.3
100.7
187.6
22,376
100
2.0
4.7
2.6
0.76
66.0
65.1
23.0
18.3
100.7
187.6
22,376
98
*The financial highlights have been restated as explained in note G2(b). The financial highlights represent alternative performance measures that are non-IFRS measures. Note G3 provides an explanation of differ-
ences in the presentation between IFRS and the financial highlights. For a description of the alternative performance measures used and definition of ratios, see Definition of Alternative Performance Measures on
page 21.
Executive summary
On 19 April 2021, the Board of Directors of Danske Bank
A/S appointed Carsten Rasch Egeriis as Chief Executive
Officer. He replaced Chris Vogelzang who resigned from his
position. The execution of the plan to make us a better bank
for the benefit of all our stakeholders will still continue.
The first quarter of 2021 was the first with our new
organisational structure, under which our commercial
activities are now organised in two business units; Personal
& Business Customers and Large Corporates & Institutions.
From a reporting point of view, the activities are organised in
four reporting segments, including also Danica Pension and
Northern Ireland. Furthermore, the Commercial Leadership
Team was established with effect from 1 February 2021.
This team is responsible for ensuring strong cooperation
across the Group and focuses on developing Danske Bank’s
customer offerings. The redesigned organisation will reduce
complexity, increase efficiency and ensure that we become
even more competitive for our customers.
In the first quarter of 2021, the Nordic economies steered
well through the second wave of the pandemic. Sectors not
directly affected by the lockdowns thrived in particular, for
example the manufacturing and construction industries.
Similarly, the housing markets in the Nordic countries
maintained their good performance at the beginning of 2021.
On the other hand, certain sectors, such as the travel and
tourism sectors, remained affected by the negative economic
effects of the lockdowns. Denmark experienced the first
lockdown, while
quarter
less
full
comprehensive
in the other Nordic countries. Overall,
however, government support packages continued to help
affected sectors, just as they are lowering credit demand.
lockdowns were
in
forward,
the positive effect of
Looking
the gradual
implementation of vaccine programmes is expected to
stimulate the economy. Furthermore, the recovery of
economic activity in Denmark as well as in the other Nordic
countries during the rest of the year is likely to generate
customer activity and credit demand, thus supporting our
income streams in the second half of the year.
In general, our diversified and resilient business model
continued to prove valuable in the current lending and
interest rate environment, ensuring a positive development
in income.
Financials
Danske Bank posted a net profit of DKK 3.1 billion for the first
quarter of 2021, against DKK -1.3 billion for the same period
in 2020. The increase was driven by a 17% rise in total
income and
the
macroeconomic developments as well as a continued decline
in operating expenses as a result of our strict focus on cost
control.
impairment charges due
lower
to
The return on shareholders’ equity was 7.5%, against -3.8%
in the first quarter of 2020.
Danske Bank / Interim report – first quarter 2021 4/64
In the first quarter of 2021, we saw growth in lending from
the same period in 2020. This was driven mainly by Personal
& Business Customers Nordic, with Norway in particular
seeing good commercial momentum.
At Personal & Business Customers Denmark, on the other
hand, bank lending to personal customers continued to
decline as customers switched
loans.
Furthermore, the repayment of bank loans accelerated in the
first quarter as a result of personal customers having ample
liquidity.
to mortgage
Deposit volumes maintained an elevated level at both
Personal & Business Customers and Large Corporates &
Institutions.
Net interest income was positively impacted by deposit
repricing initiatives in Denmark that took effect in January
2021 and higher Group volumes. This positive effect was,
however, offset by continued product mix effects as well as
margin effects at Large Corporates & Institutions.
Net fee income and net trading income continued to deliver in
the first quarter on the back of strong customer activity.
Specifically, we saw our investment banking offerings at
Institutions continue to generate
Large Corporates &
business, as we won
important mandates to assist
customers with the raising of capital and provided advisory
services, which is evidence that the investments in our
capital markets platform are paying off. Assets under
management in Asset Management increased, driven partly
by customers moving deposits to investments products.
The result of our insurance business at Danica Pension
increased, due primarily to a higher result from the life
insurance business, which benefited significantly from an
increase in the investment result.
Credit quality remains strong, and we continue to see a low
level of actual credit deterioration. We do see some sectors
affected, but Danske Bank has only minor exposure to these
and maintains a prudent post-model adjustment buffer. For
the first quarter of 2021, we recognised impairments of
DKK 0.5 billion. Within our oil-related exposure, impairment
charges continue on a lower trajectory.
The execution of our Better Bank plan proceeded according
to plan in the first quarter. Our new organisation is now in
place, and our Better Bank initiatives have become an even
more integral part of the business. We also continue to see
the results of our strict focus on cost control, with a
downward trend in total costs, as we saw lower costs in the
first quarter in line with expectations. We will carry on with
our execution of the planned cost initiatives in 2021.
Our capital position remained strong with a total capital ratio
of 23.4 % and a CET1 capital ratio of 18.1%.
Sustainable financing
In the first quarter, new green loans were launched across
the various business customer segments. The product range
for sustainable financing was widened with an offering for
business customers of green loans for large investments and
an expansion of our green loans offering through Realkredit
Danmark by lowering the threshold for obtaining green loans
from DKK 100 million to DKK 30 million.
In terms of green bond underwriting, we maintained our top
position among the banks in the Nordic countries.
Annual General Meeting
Danske Bank’s Annual General Meeting was held on 16
March 2021. The proposed dividend for 2020 of DKK 2 per
share was approved by the meeting and was paid out on 19
March 2021.
Danske Bank / Interim report – first quarter 2021 5/64
Outlook for 2021
Based on the development seen in the first quarter of 2021,
we maintain our outlook for 2021 with a net profit in the
range of DKK 9-11 billion.
We expect total income to be slightly higher than the level in
2020, subject mainly to commercial momentum and broader
economic developments.
Expenses are expected to be no more than DKK 24.5 billion,
driven by ongoing cost initiatives and lower costs for
transformation and remediation.
Loan impairments are expected to be no more than DKK 3.5
billion, subject to a modest macroeconomic recovery based
on a positive impact from COVID-19 vaccines.
We maintain our ambition for a return on shareholders’
equity of 9-10% in 2023.
Financial review
First quarter 2021 vs first quarter 2020
Net profit increased to DKK 3,139 million (Q1 2020: a loss
of DKK 1,289 million) in spite of the lockdown that was in
place throughout the first quarter of 2021 in Denmark. The
increase was due mainly to a rise in total income of 17% and
a significant reduction in loan impairment charges.
Income
Net interest income stood at DKK 5,450 million (Q1 2020:
DKK 5,560 million) and thus decreased slightly. The
decrease occurred despite the positive effects of larger
volumes, an increase in the amortisation of loan origination
fees as a result of stronger demand for credit facilities, as
well as lower customer deposit rates and positive exchange-
rate movements. The fall was due primarily to lower lending
margins and other interest-related items and a minor effect
from fewer interest days in the quarter.
Net fee income rose 5% to DKK 3,402 million (Q1 2020:
DKK 3,240 million), as high activity on the capital markets led
to an increase in corporate finance activities at Large
Corporates and Institutions.
Net trading income increased to DKK 1,266 million (Q1
2020: DKK 141 million). The increase was due primarily to
income at Large Corporates &
improved net trading
Institutions as a result of an
in market
conditions from the first quarter of 2020. A gain of DKK 227
million on the sale of shares in the Group’s private equity
portfolio also contributed to the increase,
improvement
Net income from insurance business amounted to DKK 491
million (Q1 2020: DKK 99 million). The increase was due
mainly to higher fees and an increased investment result in
the life insurance business. The health and accident business
also saw a positive development, which was, however
countered by a provision for pension yield tax of DKK 200
million.
Expenses
Operating expenses decreased to DKK 6,273 million (Q1
2020: DKK 6,385 million) and thus continued the downward
trend into the first quarter of 2021. The decrease mainly
reflects our Better Bank transformation efforts and a decline
in costs relating to the Estonia case. A one-off investment of
DKK 122 million to ensure good working-from-home
conditions had a partly offsetting effect.
Loan impairments
Loan impairment charges in core activities amounted to
DKK 497 million (Q1 2020: DKK 4,251 million).
Impairments mainly reflected a credit deterioration of
individual customer exposures of DKK 400 million relating
mostly to segments hit by the continued lockdown of
societies, in respect of which we have seen part of the effect
materialising on specific credit exposures. The full effect of
the corona crisis is, however, still uncertain and depends on
the phase-out of government support packages and the roll-
Danske Bank / Interim report – first quarter 2021 6/64
out of vaccinations. Consequently, corona crisis-related post-
model adjustments were reversed only to a small degree.
The expected increase in the allowance account as a result of
EBA guidelines on credit risk modelling is fully included as of
this quarter through post-model adjustments established to
address the impact.
On 16 April 2021, the Danish FSA published orders
regarding impairments. The conclusions were known to
Danske Bank and were addressed in the impairment levels in
the fourth quarter of 2020.
Personal & Business Customers accounted for the main part
of the loan impairment charges due to charges made against
individual customer exposures as a result of the corona
crisis, for instance in the hotel, restaurants, and leisure
segment. We continued to see limited spillover into other
sectors. However, whether this will continue to be so is
uncertain due to the length of lockdowns and uncertainty
regarding the phasing out of government support packages.
At Large Corporates & Institutions, loan impairment charges
fell owing to a decline in charges against exposures to
customers in the oil and gas industry. Charges against
exposures to customers outside the oil and gas industry
were limited.
Loan impairment charges
Q1 2021
Q1 2020
(DKK millions)
Charges
% of net
credit
exposure1
% of net
credit
exposure1
Charges
Personal & Business
Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
435
0.11
1,751
0.45
69
-7
1
0.09
-0.06
0.12
2,328
165
7
3.40
1.22
0.50
0.90
Total core
497
0.10
4,251
1 Defined as net credit exposure from lending activities in core segments,
excluding exposures related to credit institutions and central banks and loan
commitments.
First quarter 2021 vs fourth quarter 2020
Net profit increased DKK 1,689 million from the level in the
fourth quarter of 2020. The increase was due mainly to a
decline of 14% in operating expenses, lower impairment
charges for other tangible assets and an increase in total
income.
Net interest income was stable from the fourth to the first
quarter. Reduced customer deposit rates in particular as
well as higher deposit volumes and favourable exchange-rate
movements had a positive effect on net interest income,
however, this was offset by a negative effect from fewer days
Danske Bank / Interim report – first quarter 2021 7/64
Our market share of lending increased in Finland, while it was
stable in Sweden and Norway. In Denmark, our market share
of lending, excluding repo loans, decreased to 25.2% (end-
2020: 25.5%). The decrease was due primarily to a lower
market share in the business segment of the banking market.
Our market share of deposits was stable in Sweden, while it
was lower in Finland and Norway. In Denmark, our market
share of deposits fell to 30.2% (end-2020: 30.5%), due
primarily to a lower market share in the retail segment.
Credit exposure and credit quality
Credit exposure from lending activities in core segments
decreased to DKK 2,710 billion (end-2020: DKK 2,728
billion), as higher activity with personal customers in Norway
was more than offset by lower activity at Realkredit Danmark,
fewer loan commitments and lower deposits with central
banks.
Credit quality remained overall strong in most segments in
the first quarter of 2021. The potential effects of the corona
crisis remain to be seen, and apart from existing portfolios
that are challenged, the volume of new non-performing loans
was limited in the first quarter of 2021. At Large Corporates
& Institutions, the general rating trend was slightly positive,
which resulted in the lowest quarterly loan impairment
Institutions
charges since 2018. Large Corporates &
actively reduced its net oil-related exposure (excluding oil
majors) by 45% in 2020.
Total net non-performing loans (NPL) saw a decrease from
the level at the end of 2020, driven mainly by lower NPL in
the construction and building materials and consumer goods
industries and in the agriculture industry.
The NPL coverage ratio increased to 84% from 75% at the
end of 2020, due to a combination of lower NPL and higher
impairments and collateral in respect of NPL customers.
The risk management notes on pp. 49-61 provide more
information about non-performing loans.
Non-performing loans (NPL) in core segments
(DKK millions)
Gross NPL
NPL allowance account
Net NPL
Collateral (after haircut)
31 Mar.
2021
31 Dec.
2020
30,931
31,776
13,219 12,934
17,712
18,842
15,112
14,567
NPL coverage ratio (%)
NPL coverage ratio of which is in default (%)
NPL as a percentage of total gross exposure (%)
83.6
99.4
1.1
75.2
100.0
1.2
The NPL coverage ratio is calculated as allowance account NPL
exposures relative to gross NPL net of collateral (after haircuts).
in the quarter, higher funding costs and a decrease in the
amortisation of loan origination fees.
Net fee income decreased to DKK 3,402 million (Q4 2020:
3,644 million). Despite an increase in net fee income at
Personal & Business Customers related primarily to
personal customers, net fee income fell as the fourth quarter
benefited from a seasonal increase in performance fees at
Large Corporates & Institutions, Asset Management, which
was partly offset by lower income from a distribution
agreement in Finland.
Net trading income increased to DKK 1,266 billion from
DKK 1,044 million in the fourth quarter. The increase was
due to a seasonal increase in income at Large Corporates &
Institutions, Markets, and higher trading income in Equities.
A gain of DKK 227 million on the sale of shares in the Group’s
private equity portfolio also contributed to the increase,
Operating expenses fell to DKK 6,273 million, a decrease of
14% from the fourth quarter. The decrease was due to the
Group’s continued focus on costs, lower costs for compliance
lower
remediation and the Estonia case as well as
transformation costs.
Loan impairment charges decreased to DKK 497 million (Q4
2020: DKK 713 million). Impairments relating to individual
customer exposures subject
to credit deterioration
amounted to DKK 400 million. Personal & Business
Customers accounted for the main part of the charges due to
the charges made as a result of the corona crisis.
Impairments decreased notably at Large Corporates &
Institutions owing to lower charges against facilities to
customers in the oil and gas industry. Furthermore, we saw
reversals of charges against a single–name exposure, which
contributed further to the decline in charges.
The remainder of the impairment charges were attributable
to adjustments to macroeconomic scenarios.
Lending and deposits
Lending decreased 1% from the level at the end of 2020. The
decrease was due primarily to a decline in lending at Large
Corporates & Institutions. A substantial amount of credit
facilities was comitted
in order to support
customers in managing the impact of the corona crisis. As
the economic outlook has improved, customers are drawing
less on these facilities. At Personal & Business Customers,
an increase in lending at Personal Customers Nordic was
offset by a decrease in lending at Realkredit Danmark.
last year
Deposits increased 3% from the level at the end of 2020.
Deposits continued to be affected by low consumer spending,
direct government support to customers and corporate
customers having secured backup liquidity.
In Denmark, new gross
loans,
amounted to DKK 20.4 billion (Q1 2020: DKK 13.1 billion).
Lending to retail customers accounted for DKK 6.8 billion
(Q1 2020: DKK 2.8 billion) of this amount.
lending, excluding repo
Allowance account
by business units
(DKK millions)
Personal & Business
Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
31 Mar. 2021
Accum.
impairm.
charges
% of net
credit
exposure1
31 Dec. 2020
Accum.
impairm.
charges
% of net
credit
exposure1
15,930
1.02
15,773
1.01
5,493
1,036
17
1.81
1.80
0.34
5,777
990
15
1.84
1.87
0.31
Total
22,477
1.16
22,554
1.16
1 Defined as net credit exposure from lending activities in core segments,
excluding exposures related to credit institutions and central banks and
loan commitments.
Capital ratios and requirements
At the end of March 2021, the total capital ratio was 23.4%,
and the CET1 capital ratio was 18.1%, against 23.0% and
18.3%, respectively, at the end of 2020. The movement in
the capital ratios during the first quarter of 2021 was driven
mainly by an increase in the total REA, which was partly
countered by the realised net profit. The total capital ratio
was further affected by an issue of tier 2 capital in February
2021, resulting in a 0.4 percentage points increase in the
total capital ratio.
During the first quarter of 2021, the total REA increased
approximately DKK 14 billion, due primarily to increased
volatility in the financial markets, driving the REA for market
risk upwards.
Danske Bank’s capital management policies are based on the
Internal Capital Adequacy Assessment Process (ICAAP). In
this process, Danske Bank determines its solvency need
ratio. The solvency need ratio consists of the 8% minimum
capital requirement under Pillar I and an individual capital
add-on under Pillar II.
At the end of March 2021, the Group’s solvency need ratio
was 12.5%, a slight decrease of 0.1 percentage points from
the level at the end of 2020.
The solvency need still includes the DKK 10 billion required
under the orders issued by the Danish FSA in 2018 as a
consequence of the Estonia case. The amount is covered by
common equity tier 1 (CET1) capital, as ordered by the
Danish FSA.
A combined buffer requirement (CBR) applies in addition to
the solvency need ratio. At the end of March 2021, the
Group’s combined capital buffer requirement was 5.6%.
Danske Bank / Interim report – first quarter 2021 8/64
Capital ratios and requirements
(% of the total REA)
Capital ratios
CET 1 capital ratio
Total capital ratio
Capital requirements (incl. buffers)**
CET 1 requirement
- portion from countercyclical buffer
- portion from capital conservation buffer
- portion from SIFI buffer
Solvency need ratio
31 March
2021
Fully
phased-in*
18.1
23.4
13.2
0.1
2.5
3.0
12.5
17.9
23.2
13.2
0.1
2.5
3.0
12.5
Total capital requirement
18.1
18.1
Excess capital
CET 1 capital
Total capital
4.9
5.3
4.7
5.1
* Based on fully phased-in rules and requirements including the fully
phased-in impact of IFRS 9.
** The total capital requirement consists of the solvency need ratio and
the combined buffer requirement. The fully phased-in countercyclical
capital buffer is based on the buffer rates announced at the end of March
2020.
The calculation of the solvency need ratio and the combined
capital buffer requirement is described in more detail in
section 5 of Risk Management 2020, which is available at
danskebank.com/ir.
Minimum requirement for own funds and eligible liabilities
The Group received an updated decision from the Danish FSA
on the minimum requirement for own funds and eligible
liabilities (MREL) on 28 December 2020 based on Q2 2020
data. The requirement is set at two times the solvency need
and one time the SIFI buffer and capital conservation buffer.
Further, the CBR must now be met in addition to the MREL.
At the end of 2020, the requirement was equivalent to
DKK 207 billion and DKK 245 billion with the CBR
considered in addition to the MREL, corresponding to 30.5%
and 36.1% of the REA adjusted for Realkredit Danmark,
respectively. Taking the deduction of capital and debt buffer
requirements in Realkredit Danmark into account, MREL
eligible liabilities amounted to DKK 276 billion.
The transition to the full MREL has been relatively shorter for
the Group than for its peers. In combination with a relatively
high Danish MREL, the Group has issued a significant amount
of non-preferred senior debt over the past couple of years.
The Danish FSA has currently set the subordination
requirement as the higher of 8% of total liabilities and own
funds (TLOF) and two times the solvency need and one time
the CBR.
At the end of March 2021, the subordination requirement
was equivalent to DKK 208 billion. Subordinated MREL-
eligible liabilities stood at DKK 244 billion.
Danske Bank / Interim report – first quarter 2021 9/64
Leverage ratio
With the adoption of Capital Requirements Regulation II (CRR
II), a minimum leverage ratio requirement of 3% will be
introduced in the second quarter of 2021. At the end of
March 2021, the Group’s leverage ratio was 4.4% under
both the transitional rules and the fully-phased in rules.
154%), with an LCR reserve of DKK 737 billion (31 Decem-
ber 2020: DKK 710 billion).
The requirement for the net stable funding ratio forms an in-
tegral part of our funding planning, and we are already com-
fortably adhering to the requirement.
Capital targets and capital distribution
The CET1 capital ratio target was kept at above 16% in the
short term to ensure a sufficiently prudent buffer in relation
to the capital requirement. The total capital target was kept
at above 20%. Danske Bank fully meets these capital targets.
The Board of Directors will continue to adapt capital targets
to regulatory developments in order to ensure a strong
capital position.
Danske Bank’s general dividend policy remains unchanged,
and it is still our ambition to pay out 40-60% of net profit for
the year.
Danske Bank has strong capital and liquidity positions, and
the Board of Directors monitors the situation closely and
remains committed
to
shareholders when the economic impact of the corona crisis
is clear.
to returning excess capital
Funding and liquidity
Corona vaccination roll-outs have supported optimism, and
the financial markets are gradually adapting to more normal
economic conditions.
During the first quarter of 2021, the Group issued senior
debt of DKK 1 billion, covered bonds of DKK 8 billion and tier
2 capital of DKK 5.6 billion, bringing total long-term wholesale
funding to DKK 14.6 billion.
Our strategy of securing more funding directly in our main
lending currencies, including NOK and SEK, remains in place,
but we will also utilise central bank facilities to obtain funding
in the most cost-efficient manner.
We plan for regular issues in the EUR benchmark format in
covered bonds, senior and non-preferred senior bonds as
well as issues in the domestic USD market for senior and
non-preferred senior bonds in the Rule 144A format. The
benchmark issues are expected to be supplemented by pri-
vate placements of bonds.
From time to time, we will issue in GBP, JPY, CHF and other
currencies when market conditions allow. Issuance plans for
subordinated debt in either the additional tier 1 or tier 2 for-
mats will depend on balance-sheet growth and redemptions
on the one side and our capital targets on the other. Any issu-
ance of subordinated debt may cover part of our funding
need. Note G6 provides more information about the issuing
of bonds in 2021.
Danske Bank’s liquidity position remained robust. Stress
tests show that we have a sufficient liquidity buffer well be-
yond 12 months. At the end of the first quarter of 2021, our
liquidity coverage ratio stood at 151% (31 December 2020:
At 31 March 2021, the total nominal value of outstanding
long-term funding, excluding equity-accounted additional tier
1 capital and debt issued by Realkredit Danmark, was
DKK 372 billion (31 December 2020: DKK 369 billion).
The Supervisory Diamond
The Danish FSA has identified a number of specific risk
indicators for banks and mortgage institutions and has set
threshold values with which all Danish banks must comply.
The requirements are known as the Supervisory Diamond.
At the end of March 2021, Danske Bank was in compliance
with all threshold values. A separate report is available at
danskebank.com/ir.
Realkredit Danmark also complies with all threshold values.
New regulation
In December 2017, the Basel Committee on Banking Super-
vision (BCBS) published the final and revised standards for
REA calculations (Basel IV). Due to the corona crisis, the
BCBS has delayed the implementation of the Basel IV stand-
ards from 2022 to 2023. This will also delay the process for
implementation of the standards in the EU, and the EU Com-
mission is now expected to publish a legislative proposal in
the second quarter of 2021.
As part of the European Banking Authority’s (EBA) roadmap
to enhance internal models used to calculate credit risk,
Danske Bank has started implementing the revised set of
EBA guidelines and technical standards. For the first half of
2021, we expect the REA to increase around DKK 25-35 bil-
lion, of which around DKK 12 billion materialised in the first
quarter of 2021. We expect further increases in the second
half of 2021 of a similar magnitude as for the first half of the
year, all else equal.
In February 2021, the Danish implementation of the EU
covered bonds package was presented to the Danish
parliament. The rules include a requirement for a cover pool
liquidity buffer and stipulate eligible cover pool assets.
Further, a new requirement for a minimum level of cover pool
overcollateralisation is introduced. On the basis of the
legislation presented to the Danish parliament, the new rules
are expected to have only a limited impact on the Group. The
new rules are expected to be adopted in the second quarter
of 2021 and to apply from the second quarter of 2022.
Changes to the Executive Leadership Team and the Board of
Directors
On 19 April 2021, the Board of Directors of Danske Bank
A/S appointed Carsten Rasch Egeriis as Chief Executive
Officer. He replaced Chris Vogelzang, who resigned from his
position following a decision by the Dutch authorities to name
him a suspect in connection with their investigations of
Danske Bank / Interim report – first quarter 2021 10/64
Estonia case
The internal investigation at Danske Bank was completed in
the fourth quarter of 2020, and Danske Bank has reported
the findings to the relevant authorities investigating Danske
Bank. We continue to fully cooperate with the authorities,
which may require Danske Bank to undertake further internal
investigation in 2021. The overall timing of the authorities’
investigations remains unknown and is not within Danske
Bank’s control.
potential violations of Dutch legislation relating to the
prevention of money laundering at ABN AMRO. The Executive
Leadership Team now consists of Carsten Rasch Egeriis,
Berit Behring, Stephan Engels, Frans Woelders, Karsten
Breum, Glenn Söderholm and Philippe Vollot.
In the context of the changes to the Executive Leadership
Team mentioned above, Gerrit Zalm resigned from the Board
of Directors on 19 April 2021.
Following the appointment of Carsten Rasch Egeriis as new
Chief Executive Officer, George Anagnostopoulos will take
over as head of Group Risk Management on an interim basis
until a new Chief Risk Officer is in place.
Furthermore, Christian Sagild decided not to stand for re-
election at the Annual General Meeting held on the 16 March
2021. The Board of Directors thus now consists of Karsten
Dybvad, Jan Thorsgaard Nielsen, Carol Sergeant, Martin
Blessing, Lars-Erik Brenøe, Raija-Leena Hankonen, Bente
Avnung Landsnes, Bente Bang, Kirsten Ebbe Brich, Thorbjørn
Lundholm Dahl and Charlotte Hoffmann.
Danske Bank / Interim report – first quarter 2021 11/64
Personal & Business Customers
In the first quarter of 2021, the coronavirus pandemic continued to have a significant impact on the societies in which we operate.
The lockdown of societies has accelerated customer demand for more digital banking solutions and since the beginning of 2020,
this has resulted in increased digital offerings, as well as a reduction in our physical presence across our core markets. The Better
Ways of Working organisation was launched in January with the perspective of driving efficiency and accelerating digitalisation by
working in more agile ways across business units and increasing the empowerment of employees. Among the digital offerings was
a new digital tool called Proctor, which has been launched to provide investment customers with an improved and more customised
overview of the costs associated with investing. The tool was launched in Denmark and Luxembourg in the first quarter of 2021
and roll-out in the other Nordic countries will follow.
Sustainability also continued to be high on the agenda in the first quarter of 2021. Personal & Business Customers launched
several green products and has a focus on financing eco-friendly solutions. Across the various business customer segments, new
green loans were launched in the first quarter of 2021. The product range for sustainable financing was widened with an offering
for business customers of green loans for large investments and an expansion of our green loans offering through Realkredit
Danmark by lowering the threshold for obtaining green loans from DKK 100 million to DKK 30 million. In addition, Danske Bank
Sweden and Norway will also be offering business customers green loans for assets below DKK 100 million. Asset Finance
supported bus companies in both Norway and Sweden with the financing of electric bus fleets.
Profit before tax was up DKK 1.1 billion from the same period last year due to lower loan impairment charges.
Personal & Business Customers
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions before impairments
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
Q1
2021
3,879
1,750
150
196
5,975
3,638
2,337
435
Q1
2020
3,951
1,815
162
194
6,122
3,528
2,594
1,751
Index
21/20
98
96
93
101
98
103
90
25
Q4
2020
3,910
1,414
153
164
5,641
4,318
1,322
-73
Index
Q1/Q4
Full year
2020
99
124
98
120
106
84
177
-
16,018
6,080
575
702
23,375
15,716
7,659
1,996
1,903
843
226
1,396
136
5,663
13,925
696,439
1,529,183 1,471,201
14,358
602,048
1,046,385 1,034,985
70,036
73,009
104 1,532,786
13,957
97
116
685,609
101 1,058,209
67,919
104
-
-
-
-
100
0.72
7.8
8.2
76.5
6,913
100 1,532,786
13,957
100
685,609
102
99 1,058,209
68,929
107
-
-
-
-
99
0.75
11.1
8.2
67.2
6,913
Net interest income as % p.a. of loans and deposits
Profit before loan impairment charges as % p.a. of allocated capital
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
0.71
12.8
10.4
60.9
6,853
0.76
14.8
4.8
57.6
6,824
Assets under management
(DKK millions)
Assets under custody
601,757
446,958
135
596,467
101
596,467
Fact Book Q1 2021 provides financial highlights at customer type level for Personal & Business Customers. Fact Book Q1 2021 is available at
danskebank.com/ir.
Danske Bank / Interim report – first quarter 2021 12/64
First quarter 2021 vs first quarter 2020
Profit before tax increased DKK 1.060 million, mainly as a
result of decreasing loan impairment charges.
First quarter 2021 vs fourth quarter 2020
Profit before tax increased DKK 507 million, due primarily to
increased net fee income and lower operating expenses.
Net interest income decreased 2%. This was due to margin
pressure and a challenged interest rate environment across
the Nordic countries. The effects were only partly mitigated
by growing volumes and repricing initiatives for deposits in
our market in Denmark, which took effect in the first quarter
of 2021.
Net fee income decreased 4% despite increased investment
activity. This was due to a combination of lower refinancing
activity than in the same period last year and the second
lockdown caused by the coronavirus pandemic. The effect of
the latter materialised mainly in the form of a decline in card
use and other service fees.
Net trading income decreased due to lower foreign exchange
activity as a result of the lockdown.
Operating expenses increased 3% due to costs for ongoing
compliance remediation as well as the planned costs for the
Better Bank transformation.
In the first quarter of 2021, loan impairments charges
amounted to DKK 435 million (Q1 2020: DKK 1,751 million),
and impairments thus returned to a more normal level that
although still affected by the corona crisis was not impacted
to the extent seen in the first quarter of 2020. The
impairment charges for the first quarter of 2021 were driven
mainly by charges against individual customer exposures
made as a result of the corona crisis as well as model
adjustments.
Lending volumes increased, mainly in Personal Customers
Nordic, driven by the partnership agreements in Norway and
Sweden. Deposit volumes
increased due to business
customers’ liquidity management as a result of the corona
crisis, lower spending and government support packages.
Net interest income was on par with the level in the fourth
quarter of 2020. Deposit repricing initiatives were offset
mainly by a downward traction in terms of lending volumes
and margin pressure.
Net fee income increased, mainly because the fourth quarter
of 2020 was affected by lower income from a distribution
agreement in Finland.
Net trading income was on par with the income in the fourth
quarter of 2020.
Operating expenses decreased 16% due to transformation
and redundancy costs being booked in the fourth quarter of
2020. Furthermore, the effects of the cost
initiatives
executed in 2020 are starting to materialise.
Lending volumes decreased as the need for credit facilities
fell among personal customers in Denmark and among
business customers generally and as businesses were also
helped by government support packages. However, the
partnerships in Norway continued to fuel growth.
The first quarter of 2021 saw loan impairment charges of
DKK 435 million, against a net reversal of DKK 73 million in
the fourth quarter of 2020. The increase in impairment
charges was attributable to charges against
individual
customer exposures made as a result of the corona crisis
and to somewhat higher
impairments due to updated
macroeconomic scenarios.
Danske Bank / Interim report – first quarter 2021 13/64
Large Corporates & Institutions
The coronavirus pandemic continued to affect societies in the first quarter of 2021, and we remain committed to supporting
customers in managing the impact of the crisis, as evidenced by the substantial credit facilities provided last year. However,
although most societies remain in lockdown, the advancement of vaccination programmes and continued monetary and fiscal
support helped drive improved economic sentiment, and we are working with our customers to prepare for a post-pandemic
operating environment.
The positive sentiment contributed to high customer activity across our business areas, and we supported customers with advisory
services and execution in a number of landmark transactions across loan, debt and equity capital markets. Among many successful
transactions executed during the quarter, we are proud to have supported insurance company Tryg as joint Global Coordinator and
Joint Bookrunner in a DKK 37 billion rights issue – the largest ever ECM capital raising transaction in the Nordic countries – which
also emphasised our number one ranking in Q1 Nordic ECM League Tables.
Sustainable financing continued to be in high demand, and we supported issuers and investors in a substantial number of
transactions, affirming our position as the leading Nordic bank within sustainable financing. The successful H&M 500 million EUR
Sustainability-Linked Bond, which was 7.6 times oversubscribed at final books, illustrates the significant investor interest and the
growth potential in this market. In order to support the transition to a low-carbon economy, we also introduced new sustainability
targets for Asset Management with the goal that investors will be able to increase investments in funds promoting environmental
or social aspects to DKK 400 billion, up from around DKK 230 billion at the end of March 2021.
Large Corporates & Institutions
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse trans. before impairments
of which loans in General Banking
Allowance account, loans (incl. credit institutions)
Deposits, excluding repo deposits
of which deposits in General Banking
Covered bonds issued
Allocated capital (average)
Net interest income as % p.a. of loans and deposits
Profit before loan impairment charges as % p.a. of allocated capital
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
Total income
(DKK millions)
General Banking
Markets
of which xVA
Asset Management
of which performance fees
Investment Banking & Securities (IBS)
Total income
Q1
2021
1,216
1,599
1,102
1
3,918
1,851
2,067
69
Q1
2020
1,143
1,347
-154
-
2,336
1,812
523
2,328
1,998
-1,804
259,102
233,641
3,989
448,560
407,243
21,663
44,565
279,283
240,872
6,292
332,673
280,690
22,954
42,893
0.71
18.6
17.9
47.2
2,506
0.80
4.9
-16.8
77.6
2,505
1,564
1,190
94
554
24
610
1,467
222
-344
495
9
151
Index
21/20
106
119
-
-
168
102
-
3
-
93
97
63
135
145
94
104
-
-
-
-
100
107
-
-
112
267
-
Q4
2020
1,267
2,176
750
-1
4,191
2,119
2,072
703
Index
Q1/Q4
Full year
2020
96
73
147
-
93
87
100
10
5,034
5,911
3,485
6
14,437
7,672
6,764
4,619
1,368
146
2,146
271,359
225,067
4,557
433,090
378,939
22,728
43,486
0.76
19.1
12.6
50.6
2,553
1,598
904
143
1,133
628
557
95
104
88
104
107
95
102
-
-
-
-
98
98
132
66
49
4
110
271,359
225,067
4,557
433,090
378,939
22,728
44,825
0.79
15.1
4.8
53.1
2,553
6,322
4,345
309
2,555
640
1,214
3,918
2,336
168
4,191
93
14,437
*The xVA acronym covers Credit (CVA), Debit (DVA), Funding (FVA) and Collateral (ColVA) Valuation Adjustments to the fair value of the derivatives portfolio.
Danske Bank has a centralised xVA desk responsible for quantifying, managing and hedging xVA risks. The PnL result of the xVA desk is thus the combined
effect of the net xVA position, and funding and collateral costs of the trading book.
Danske Bank / Interim report – first quarter 2021 14/64
Assets under management
(DKK millions)
Institutional clients
Retail clients
477,037
294,909
387,268
244,424
123
121
464,890
288,207
103
102
464,890
288,207
Total assets under management1
771,946
631,692
122
753,097
103
753,097
First quarter 2021 vs fourth quarter 2020
Profit before tax increased from the level in the fourth quarter
of 2020 as a result of lower loan impairment charges and
lower operating expenses.
Total income declined as fee income in the fourth quarter of
2020 was positively impacted by a seasonal increase in
performance fees in Asset Management.
Net interest income declined slightly as a result of lower
income from deposits, as margins declined to reflect the
lower value of surplus deposits.
Net trading income increased as a result of a seasonal
increase in income at Markets in the first quarter and higher
trading income in Equities.
Overall credit quality remained strong. During the first
quarter of 2021, the general rating trend was slightly
positive, as reflected in the lowest quarterly loan impairment
charges since 2018. In 2020, credit deterioration was
observed in the shipping, oil & gas portfolio. We actively
reduced net oil-related exposure (excluding oil majors) by
45% during 2020.
1. Includes assets under management from Group entities.
First quarter 2021vs first quarter 2020
Profit before tax in the first quarter of 2021 increased to
DKK 1,998 million (Q1 2020: a loss of DKK 1,804 million).
High customer activity during the quarter combined with
supportive market conditions led to the increase in total
income of DKK 1,582 million and an improvement on all main
income lines from the level in the same period last year.
Net interest income increased from the level in the same
period last year despite lower lending volumes. In order to
support customers in managing the impact of the corona
crisis, we committed substantial credit facilities towards the
end of the first quarter and during the second quarter of last
year. As the economic outlook has improved, these facilities
are now mostly undrawn, contributing to lower lending
volumes but also still to higher net interest income, albeit at
lower margins. Income from deposits declined from the level
in the first quarter of 2020 as the impact of the more than
DKK 100 billion increase in volumes was countered by lower
deposit margins.
Net fee income increased significantly from the level in the
first quarter of 2020 as we supported customers in utilising
attractive market pricing to raise financing across loan, debt
and equity capital markets. Activity on the capital markets
was high, and we affirmed our position as the leading
in the Nordic market.
investment bank and adviser
Sustainable bonds remained
in high demand, and we
managed to end the first quarter in the top ten among global
green bond arrangers.
in Asset
Rising asset prices and positive net sales
Management
in assets under
management, which also contributed to the overall increase
in net fee income.
led to a 22% increase
Net trading income improved significantly from the first
quarter of 2020, reflecting improved market conditions.
Operating expenses increased 2% from the level in the same
period last year, driven mainly by higher provisions for
performance-based compensation.
Loan impairments in the first quarter of 2021 amounted to a
net charge of DKK 69 million, a notable decrease relative to
the past eight quarters. This mainly reflected
lower
impairment charges against oil- and gas-related exposures,
but also that credit quality continued to be strong.
Danske Bank / Interim report – first quarter 2021 15/64
Danica Pension
The financial markets saw considerable turbulence in the first quarter of 2021, which affected our customers’ returns on their
pension savings but also Danica Pension’s result. The deployment of vaccines and the gradual reopening of societies brought
economic progress and reasonable price increases in the equity markets. However, rising interest rates led to negative yields on
many bonds. Despite the turbulence, many of our customers received moderately positive returns on their pension savings in the
first quarter, just as Danica Pension profited from the developments, especially in the equity markets.
Danica Pension aims to ensure that its investments are CO2 neutral by 2050. In the first quarter of 2021, Danica Pension set new
sub-targets for investments focusing on reducing CO2 intensity in key sectors towards 2025. These include the energy, supply,
transportation, steel and cement sectors. Danica Pension’s ambition is to reduce CO2 emissions in these key sectors by between
15% and 35% relative to 2019 levels.
For many people, the coronavirus pandemic is a challenge to mental as well as physical health, and in the first quarter, Danica
Pension launched a new health package. Customers now have quick and easy access to online consultations with doctors,
psychologists and dieticians.
Danica Pension
(DKK millions)
Result, life insurance
Result, health and accident insurance
Return on investments, shareholders' equity etc.
Net income before tax in Danica Pension1
Included within Group Treasury2
Net income from insurance business
Premiums, insurance contracts
Premiums, investment contracts
Provisions, insurance contracts
Provisions, investment contracts
Allocated capital (average)
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff
Asset under management
Life insurance
Health and accident insurance
Total1
1Figures are for the Danica Group.
Index
21/20
Q4
2020
Index
Q1/Q4
Full year
2020
Q1
2021
784
-290
-
494
-3
491
Q1
2020
453
-274
-157
22
77
99
173
106
-
-
-
-
569
-84
-76
409
-59
350
8,599
649
8,142
401
427,885
32,317
384,333
21,917
106
162
111
147
7,708
375
428,736
29,525
138
-
-
2,517
-643
-78
121
1,797
5
-127
140
1,669
112
173
100
109
28,958
1,292
428,736
29,525
13,834
13,244
104
14,102
98
13,735
14.2
191
821
3.0
189
795
-
-
-
9.9
191
817
-
-
-
12.2
191
817
449,037
16,483
386,567
16,102
116
102
447,783
16,822
100
98
447,783
16,822
465,520
402,669
116
464,605
100
464,605
2 Includes the difference between the actual return on the investment of shareholders’ equity (net of interest on subordinated debt) and the sum of interest on allocated capital and allocated capital
and shareholder costs. Special allotments are also included (page 174 of Annual Report 2020 provides further information).
First quarter 2021 vs first quarter 2020
Net income from insurance business increased to DKK 491
million (Q1 2020: DKK 99 million) due primarily to a higher
result from the life insurance business, which benefited
significantly from the increasing investment result and higher
fees on assets under management. Further, the first quarter
of 2020 was significantly impacted by the corona crisis.
The result from the life insurance business increased 73%
due to positive investment results on life insurance products
where Danica Pension has the investment risk and an
from higher assets under
increase
management.
fees resulting
in
The result from the health and accident business decreased
to a loss of DKK 290 million (Q1 2020: a loss of DKK 274
million). The investment result increased from the first
quarter of 2020, but was offset by increased provisions for
pension yield tax of DKK 200 million.
The return on investment allocated to shareholders’ equity
etc. increased DKK 157 million from the level in the first
quarter of 2020, driven mainly by better investment results
on
to
shareholders’ equity.
investment assets and
liabilities allocated
Total premiums increased 8%, driven mainly by an increase
in single premiums.
Assets under management increased DKK 63 billion, due
mainly to the positive developments in the financial markets
after the first quarter of 2020.
Danske Bank / Interim report – first quarter 2021 16/64
First quarter 2021 vs fourth quarter 2020
Net income from insurance business increased DKK 141
million from the level in the fourth quarter of 2020, due
mainly to an improved result from the life insurance business
following the positive investment result.
The result from the life insurance business increased 38%
due to
insurance
products where Danica Pension has the investment risk and
higher fees from an increase in assets under management.
investment results on
improved
life
The result from the health and accident business decreased
DKK 206 million, despite a stable underlying business. The
development was due mainly to a lower investment result in
2021. Both the first quarter of 2021 and the fourth quarter
of 2020 were affected by provisions for pension yield tax of
DKK 200 million.
The return on investment allocated to shareholders’ equity
etc. increased DKK 76 million. The investment results on
investment assets and liabilities allocated to shareholders’
equity were at around the same level as in the fourth quarter
of 2020. However, the fourth quarter of 2020 was affected
by a provision of DKK 135 million.
Premiums increased 14%, driven mainly by an increase in
single premiums.
Assets under management increased DKK 1 billion, due
mainly to the positive developments in the financial markets
in 2021.
Danske Bank / Interim report – first quarter 2021 17/64
Northern Ireland
The commercial environment continues to be dominated by the impact of lockdown measures across the UK. However, restrictions
on movement and activity are currently being eased, reflecting the progress on vaccination and case numbers. As the economy
starts to recover, we move forward with growing optimism around the key role that Danske Bank will play in the economic recovery
across Northern Ireland. In the first quarter of 2021, investment support requests from medium-sized and large business custom-
ers increased steadily, and the housing market remained robust with healthy demand from prospective buyers. We aim to be the
bank that is going to ‘Help Northern Ireland Grow Again’, supported by a marketing campaign and the establishment of a growth
fund. As the largest bank in Northern Ireland, we have announced the creation of a ‘Helping Northern Ireland Grow Again’ fund for
medium-sized businesses. The GBP 500 million fund is in place for new and existing customers, and new customers will also benefit
from a favourable fee package.
In a challenging environment, we continue to execute our strategic growth opportunities while tightly managing costs. Our vision is
to be recognised as the best bank for customers, colleagues, partners and society. Supporting our customers and looking after our
colleagues remain a priority. We have a leading digitalisation and green approach with customers as strong advocates. For col-
leagues, the bank continues to lead the way on the diversity agenda, recently launching a race equality network within the business
to complement our well-established and recognised gender diversity, disability and LGBT networks.
Northern Ireland
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions before impairments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)*
Net interest income as % p.a. of loans and deposits
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
* Allocated capital equals the legal entity’s capital.
Q1
2021
Q1
2020
Index
21/20
Q4
2020
Index
Q1/Q4
Full year
2020
331
60
-20
3
374
275
99
-7
106
375
83
52
4
515
300
215
165
49
56,743
964
92,432
6,516
51,218
819
70,075
6,512
0.91
6.5
73.5
1,345
1.19
3.0
58.3
1,334
88
72
-
75
73
92
46
-
216
111
118
132
100
101
324
66
6
4
400
307
93
83
10
52,179
890
84,158
6,210
0.93
0.6
76.8
1,353
102
91
-
75
94
90
106
-
-
109
108
110
105
99
1,359
264
98
16
1,736
1,212
524
378
146
52,179
890
84,158
6,269
1.02
2.3
69.8
1,353
Danske Bank / Interim report – first quarter 2021 18/64
First quarter 2021 vs fourth quarter 2020
Profit before tax increased to DKK 106 million, driven by
lower loan impairments and growth of 6% in profit before
impairments.
Net interest income increased 2% due to higher lending and
deposits, whereas non-interest income was lower quarter-
on-quarter given the impact of renewed lockdown measures
post-Christmas.
Operating expenses decreased to DKK 275 million (Q4
2020: DKK 307 million).
In respect of the balance sheet, we saw the same pattern as
described for the year-on-year movements in lending and
deposits, although the deposit growth rate slowed in the first
quarter of 2021.
First quarter 2021 vs first quarter 2020
Profit before tax increased to DKK 106 million, driven by
lower loan impairment charges, with the pre-impairments
performance dominated by the impact of corona-related
restrictions on movement and activity.
Net interest income was affected by higher lending and
deposits, but due to the sharp decline in UK interest rates
since March last year, net interest income decreased to
DKK 331 million (Q1 2020: DKK 375 million).
Net fee income decreased to DKK 60 million (Q1 2020:
DKK 83 million), reflecting very low activity levels since the
turn of the year as a result of coronavirus-related lockdown
measures. Net trading income and other income were
similarly
income also
reflected adverse mark-to-market movements on our bond
portfolio.
impacted, although net trading
Operating expenses were 8% lower, reflecting the positive
impact of ongoing cost reduction initiatives alongside lower
activity.
Net loan impairment charges for the quarter were driven by
an improved economic outlook, leading to no increase in
provisions.
Higher lending balances were due largely to the volume of UK
government-guaranteed corona-related business support
loans alongside a relatively buoyant housing market. While
deposit growth rates slowed in the first quarter of 2021,
many personal and business customers continued to pay off
debt and hold liquidity as reflected in the year-on-year uplift.
Danske Bank / Interim report – first quarter 2021 19/64
Non-core
Non-core mainly includes a legacy portfolio of liquidity facilities for conduits as well as a Lithuanian portfolio of commercial loans.
The winding-up of the Non-core portfolios is proceeding according to plan. Total lending stood at DKK 2.6 billion at the end of March
2021, less than half the amount at the end of the first quarter of 2020, which led to lower capital requirements for the Group. Profit
before tax for the first quarter of 2021 amounted to DKK 20 million, against a negative DKK 254 million in the first quarter of 2020.
Non-core
(DKK millions)
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions before impairments*
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)
Net interest income as % p.a. of loans and deposits
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
Loan impairment charges
(DKK millions)
Non-core banking**
Non-core conduits etc.
Total
Q1
2021
-5
31
-35
-55
20
2,628
810
2,197
1,092
Q1
2020
-35
126
-161
93
-254
6,732
954
1,542
1,850
0.58
7.3
-
29
0.86
-54.9
-
83
-102
47
-55
13
80
93
Index
21/20
14
25
22
-
-
39
85
142
59
35
-
59
-
Q4
2020
-128
84
-212
-98
-113
3,083
771
2,146
1,253
0.53
-36.1
-65.6
32
-100
1
-98
Index
Q1/Q4
Full year
2020
4
37
17
56
-
85
105
102
87
91
102
-
56
-215
293
-508
88
-596
3,083
771
2,146
1,473
0.96
-40.5
-136.3
32
-27
116
88
* Loans, excluding reverse transactions before impairments includes loans held for sale in Lithuania.
** Non-core banking encompasses the Group’s activities in Lithuania and Non-core Ireland.
First quarter 2021 vs first quarter 2020
The Non-core unit posted a profit before tax of DKK 20
million, against a loss of DKK 254 million in the first quarter
of 2020. The improvement in the result was due mainly to the
sale of a Latvian portfolio of commercial loans held by the
Lithuanian branch and the corresponding net reversal of loan
impairment charges in Lithuania as well as to a decrease in
operating expenses. In the first quarter of 2020, operating
expenses were affected by losses related to the final exit from
Estonia.
At the end of March 2021, total lending amounted to
DKK 2.6 billion. The sale of most of the Baltic loan portfolios
resulted in a reduction of total lending in Non-core to less
than half the amount at the end of the first quarter of 2020,
which led to lower capital requirements for the Group.
First quarter 2021 vs fourth quarter 2020
Profit before tax amounted to DKK 20 million, against a loss
of DKK 113 million in the fourth quarter of 2020. The
improvement in the result was due primarily to an increase
in total income and a decline in operating expenses.
The increase in total income was due to the fourth quarter of
2020 being affected by losses related to the sale of Baltic
portfolios.
The decline in operating expenses was the result of a one-off
Ireland, which affected
provision for
operating expenses in the fourth quarter of 2020.
issues
legacy
in
Danske Bank / Interim report – first quarter 2021 20/64
Group Functions
Group Functions includes Group Treasury, Technology & Services and other Group functions. The activities of Group Functions
encompass the pricing of funding, allocation of funding costs for lending and deposit activities to the business units and the
investment of shareholders’ equity. In addition, this area includes other central Group Functions. The operating expenses related to
these units are allocated to the business units. Further, Group Functions includes eliminations.
Group Functions
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Impairment charges, other intangible assets*
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
Q1
2021
Q1
2020
Index
21/20
Q4
2020
Index
Q1/Q4
Full year
2020
24
-8
34
-4
46
509
-
-463
1
91
-5
82
-12
155
744
-
-589
7
-464
-596
195
-175
116
-600
-305
315
195
-802
-464
-596
26
-
41
-
30
68
-
79
14
78
-
-
59
75
78
-53
-12
135
-70
-
572
379
-951
1
-951
-65
-34
116
-969
-951
-
67
25
6
-
89
-
49
100
-260
-37
139
-131
-289
2,048
379
-2,716
8
49
-2,723
-
-
100
62
-754
94
550
-2,614
49
-2,723
First quarter 2021 vs first quarter 2020
Profit before tax increased to a loss of DKK 464 million (Q1
2020: a loss of DKK 596 million) due primarily to lower
operating expenses, which were partly offset by a decrease in
net interest income and net trading income.
First quarter 2021 vs fourth quarter 2020
The loss before tax in Group Functions in the first quarter of
2021 declined from the level in the fourth quarter of 2020.
The decrease in the loss was due primarily to lower operating
expenses.
Net interest income decreased to DKK 24 million (Q1 2020:
DKK 91 million) due primarily to lower interest expenses for
elimination as a result of redemption of equity-accounted
additional tier 1 capital in 2020.
Net trading income decreased to DKK 34 million in the first
quarter of 2021 from DKK 82 million in the first quarter of
2020. A gain of DKK 227 million on the sale of shares in the
Group’s private equity portfolio had a positive effect on net
trading income, but it was offset by a decrease resulting from
the elimination of changes in the value of own shares, which
performed better than last year.
Operating expenses fell 32% to DKK 509 million. The fall
mainly reflects a decrease in costs relating to the Estonia
case. A one-off investment of DKK 122 million to ensure good
working-from-home conditions had a partly offsetting effect.
Net interest income increased to DKK 24 million (Q4 2020:
a loss of DKK 53 million) driven by an increase in allocated
liquidity costs following a number of corrective actions to
reduce deposit compensation to the business units. This was
partially offset by an increase in interest expenses on
corporate back tax.
Net trading income decreased to DKK 34 million (Q4 2020:
DKK 135 million). A gain of DKK 227 million on the sale of
shares in the Group’s private equity portfolio had a positive
effect on net trading income, but it was offset by a decrease
resulting from the elimination of changes in the value of own
shares, which performed better than last year.
Operating expenses fell to DKK 509 million (Q4 2020:
lower costs for compliance
DKK 572 million) due to
remediation and the Estonia case as well as
lower
transformation costs. A one-off investment of DKK 122
million to ensure good working-from-home conditions had a
partly offsetting effect.
Danske Bank / Interim report – first quarter 2021 21/64
Definition of alternative performance measures
Danske Bank’s management believes that the alternative performance measures (APMs) used in the Management’s report provide valuable information to
readers of the financial statements. The APMs provide a more consistent basis for comparing the results of financial periods and for assessing the perfor-
mance of the Group and each individual business unit. They are also an important aspect of the way in which Danske Bank’s management defines operating
targets and monitors performance.
Throughout the Management’s report, performance is assessed on the basis of the financial highlights and segment reporting, which represent the financial
information regularly provided to management. The differences between the financial highlights and the IFRS financial statements relate to certain changes
in the presentation. Net profit is the same in the financial highlights and in the IFRS income statement. Note G3 to the financial statements describes the
differences between the financial highlights and the IFRS financial statements, and each line item in the financial highlights is reconciled with the consolidated
financial statements prepared under IFRS.
Definitions of additional ratios presented on page 3 and in other sections of the Management’s report:
Ratios and key figures
Dividend per share (DKK)
Return on average shareholders’ equity (% p.a.)
Net interest income as % p.a. of loans and deposits
Definition
The dividend per share proposed in the Annual report and paid to shareholders in the subsequent
year. Accordingly, for 2020, it is the dividend to be paid in 2021. For 2019, no dividend was paid in
2020.
Net profit as disclosed in the financial highlights divided by the average of the quarterly average
shareholders’ equity (beginning and end of each quarter) within the year. Net profit and sharehold-
ers’ equity are stated as if the equity-accounted additional tier 1 capital was classified as a liability.
In the numerator, net profit is reduced by interest expenses of DKK 115 million (full-year 2020:
DKK 551 million). The denominator represents equity, excluding additional tier 1 capital and other
non-controlling interests equal to a reduction in the average of the quarterly average of equity of
DKK 9,477 million (2020: 13,526 million) compared to a simple average of total equity (beginning
and the end of the period).
Net interest income in the financial highlights divided by the daily average of the sum of loans and
deposits. If the ratio was calculated applying the sum of loans and deposits end of period, the ratio
for Q1 2021 would be 0.71% (full-year 2020: 0.73%) due to the daily average of the sum of loans
and deposits being DKK 35.6 billion (2020: DKK 124.8 billion) lower than calculating the ratio by
applying the end of period sum of loans and deposits. The purpose of the ratio is to show if the growth
in net interest income follows the growth in loans and deposits. The daily average is a more faithful
representation of the growth in loans and deposits.
Cost/income ratio (C/I), (%)
Operating expenses, impairment charges on goodwill and impairment charges other intangible as-
sets divided by total income. All amounts are from the financial highlights.
C/I, excluding impairment on intangible assets (%)
Operating expenses divided by total income. All amounts are from the financial highlights.
Book value per share
Shareholders’ equity (that is, excluding equity-accounted additional tier 1 capital) divided by the
number of shares outstanding at the end of the period.
Loan impairment charges as % of net credit exposure
Allowance account as % of net credit exposure
This ratio is calculated on the basis of loan impairment charges and loans and guarantees in core
segments. The numerator is the loan impairment charges of DKK 497 million (full-year 2020: DKK
7,001 million) from the financial highlights and annualised. The denominator is the sum of Loans at
amortised cost of DKK 1,022.7 billion (2020: DKK 1,022.3 billion), Loans at fair value of DKK 816.3
billion (2020: DKK 802.6 billion) and guarantees of DKK 71.7 billion (2020: DKK 68.7 billion) at the
beginning of the year, as disclosed in the column “Lending activities – core” in the “Breakdown of
credit exposure” table in the notes to the financial statements. The ratio is calculated for each busi-
ness unit.
This ratio is calculated on the basis of the allowance account and loans and guarantees in core
segments. The numerator is the allowance account of DKK 22.5 billion (2020: DKK 22.6 billion) at
the end of the period, as disclosed in the “Allowance account in core activities broken down by seg-
ment” table in the notes to the financial statements. The denominator is the sum of Loans at amor-
tised cost of DKK 1,025.5 billion, Loans at fair value of DKK 804.7 billion, and guarantees of DKK
77.4 billion, at the end of the period, as disclosed in the column “Lending activities –core” in the
“Breakdown of credit exposure” table in the notes to the financial statements. The ratio is calculated
for each business unit.
Danske Bank / Interim report – first quarter 2021 22/64
Market shares of lending and deposits
Market shares are based on data from central banks at the time of reporting. Comparative infor-
mation is updated on the basis of the latest available data, for example Annual Report 2020 in-
cluded November 2020 data for Finland and Norway as December 2020 data was not available at
the time of publication of Annual Report 2020. Subsequently, in Interim report – first quarter 2021,
the comparative data for market shares in Finland and Norway was updated with December 2020
data.
Danske Bank / Interim report – first nine months 2020 23/63
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
24
25
26
27
29
30
Note G1: Significant accounting policies and estimates
Note G2: Changes in accounting policies,
33
financial highlights and segment reporting
35
Note G3: Business segments
38
Note G4: Income
Note G5: Loan impairment charges and reconciliation of total allowance account 39
40
Note G6: Issued bonds, subordinated debt and additional tier 1 capital
41
Note G7: Other assets and other liabilities
41
Note G8: Foreign currency translation reserve
42
Note G9: Guarantees, commitments and contingent liabilities
44
Note G10: Assets provided or received as collateral
45
Note G11: Fair value information for financial instruments
49
Risk Management
49
Breakdown of credit exposure
50
Credit exposure from core lending activities
Credit exposure from Non-core lending activities
58
Counterparty credit risk and credit risk from trading and investment securities 59
59
Bond portfolio
Income statement – Danske Bank Group
Danske Bank / Interim report – first quarter 2021 24/64
Note
(DKK millions)
G4
G4
G4
G4
G4
Interest income calculated using the effective interest method
Other interest income
Interest expense
Net interest income
Fee income*
Fee expenses
Net trading income or loss*
Other income**
Net premiums
Net insurance benefits
Operating expenses
Profit before loan impairment charges
Loan impairment charges
G5
Profit before tax
Tax
Net profit
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Net profit
Earnings per share (DKK)
Diluted earnings per share (DKK)
Proposed dividend per share (DKK)
* Comparative information has been restated as described in note G2(a).
**The income statement is condensed compared to the Annual Report 2020. Note G4(c) includes further information.
Q1
2020
Full year
2020
Q1
2021
5,414
9,483
8,340
6,557
4,660
1,494
7,712
1,505
8,485
15,473
7,456
4,496
443
4,054
914
6,258
12,079
12,070
6,267
4,457
1,460
-23,088
1,396
7,998
-14,906
7,795
2,681
4,344
-1,663
-374
3,139
-1,289
3,025
115
-1,484
195
3,139
-1,289
3.5
3.5
-
-1.7
-1.7
-
23,219
41,133
36,234
28,118
17,025
5,760
21,962
4,360
28,795
48,284
32,822
13,393
7,089
6,304
1,715
4,589
4,038
551
4,589
4.7
4.7
2.0
Statement of comprehensive income – Danske Bank Group
Danske Bank / Interim report – first quarter 2021 25/64
(DKK millions)
Net profit
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit pension plans
Tax
Items that will not be reclassified to profit or loss
Items that are or may be reclassified subsequently to profit or loss
Translation of units outside Denmark
Hedging of units outside Denmark
Unrealised value adjustments of bonds at fair value (OCI)
Realised value adjustments of bonds at fair value (OCI)
Tax
Items that are or may be reclassified subsequently to profit or loss
Total other comprehensive income
Total comprehensive income
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Total comprehensive income
Q1
2021
Q1
2020
Full year
2020
3,139
-1,289
4,589
286
-33
253
1,319
-912
-182
4
54
283
537
184
-90
94
-5,699
3,313
-400
-11
403
-2,395
-2,300
304
-38
266
-1,902
1,224
264
-12
-70
-496
-230
3,676
-3,590
4,359
3,561
115
-3,784
195
3,676
-3,590
3,808
551
4,359
Balance sheet – Danske Bank Group
Note
(DKK millions)
Assets
Cash in hand and demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts*
Assets under insurance contracts*
Intangible assets
Tax assets
Other assets
Danske Bank / Interim report – first quarter 2021 26/64
31 March
2021
31 December
2020
31 March
2020
312,347
92,428
652,544
302,638
1,027,304
1,017,053
84,891
532,470
8,800
3,908
38,519
320,702
81,428
682,948
296,769
1,024,607
1,023,323
82,795
545,708
8,785
5,202
36,964
127,708
140,530
706,546
292,797
997,490
1,084,623
68,731
527,969
9,097
5,111
47,089
G7
G6
G6
G7
G6
G6
G8
G6
Total assets
4,072,903
4,109,231
4,007,691
Liabilities
Due to credit institutions and central banks
Trading portfolio liabilities
Deposits
Issued bonds at fair value
Issued bonds at amortised cost
Deposits under pooled schemes and unit-linked investment contracts*
Liabilities under insurance contracts*
Tax liabilities
Other liabilities
Non-preferred senior bonds
Subordinated debt
Total liabilities
Equity
Share capital
Foreign currency translation reserve
Reserve for bonds at fair value (OCI)
Retained earnings
Proposed dividends*
Shareholders of Danske Bank A/S (the Parent Company)
Additional tier 1 capital holders
Total equity
Total liabilities and equity
214,945
419,884
1,383,053
784,834
235,858
86,263
574,696
1,874
54,096
108,641
38,253
211,182
499,334
1,333,781
784,027
245,573
82,905
591,930
1,821
51,291
106,371
32,337
274,462
603,017
1,127,523
767,172
247,757
69,201
565,202
2,179
53,485
98,709
31,968
3,902,397
3,940,552
3,840,676
8,622
-643
177
153,735
-
161,890
8,615
8,622
-1,050
354
150,521
1,724
160,171
8,508
8,622
-2,758
-309
147,032
-
152,587
14,428
170,505
168,679
167,015
4,072,903
4,109,231
4,007,691
* A portfolio of unit-linked contracts of DKK 31 billion was reclassified from investment contracts to insurance contracts in Annual Report 2020. The comparative information at 31
March 2020 has been restated above.
Danske Bank / Interim report – first quarter 2021 27/64
Statement of capital – Danske Bank Group
Changes in equity
(DKK millions)
Total equity as at 1 January 2021
Net profit
Other comprehensive income
Remeasurement of defined benefit pension plans
Translation of units outside Denmark
Hedging of units outside Denmark
Unrealised value adjustments
Realised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Paid interest on additional tier 1 capital
Dividends paid
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Tax
Shareholders of Danske Bank A/S (the Parent Company)
Foreign
currency
translation
reserve
Reserve for
bonds at fair
value (OCI)
Retained
earnings
Proposed
dividends
Additional
tier 1
capital
Total
Total
-1,050
-
354
-
150,521
3,025
1,724
-
160,171
3,025
8,508
115
168,679
3,139
Share
capital
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,319
-912
-
-
-
407
407
-
-
-
-
-
-
-
-
-182
4
-
-177
286
-
-
-
-
21
307
-177
3,332
-
-
-
-
-
-
-
-
286
1,319
-912
-182
4
21
537
-
-
-
-
-
-
-
286
1,319
-912
-182
4
21
537
3,561
115
3,676
-
-
-
-
-
-
16
-6,063
5,946
-18
-
-1,724
-
-
-
-
-1,708
-6,063
5,946
-18
-35
-
-
28
-
-35
-1,708
-6,063
5,974
-18
Total equity as at 31 March 2021
8,622
-643
177 153,735
- 161,890
8,615 170,505
Total equity as at 1 January 2020
Net profit
Other comprehensive income
Remeasurement of defined benefit pension plans
Translation of units outside Denmark
Hedging of units outside Denmark
Unrealised value adjustments
Realised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Paid interest on additional tier 1 capital
Proposed dividends reversed*
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Tax
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
102 140,590
-1,484
-
7,329 156,271
-1,484
-
14,237 170,508
-1,289
195
-372
-
-
-5,699
3,313
-
-
-
-
-
-
-400
-11
-
184
-
-
-
-
313
497
-2,386
-411
-2,386
-411
-987
-
-
-
-
-
-
-
-
184
-5,699
3,313
-400
-11
313
-2,300
-
-
-
-
-
-
-
184
-5,699
3,313
-400
-11
313
-2,300
-3,784
195
-3,590
-
-
-
-
-
-
-
-
-
-
-
7,329
-10,225
10,291
34
-
-7,329
-
-
-
-
-
-10,225
10,291
34
-33
-
29
-
-
-33
-
-10,196
10,291
34
Total equity as at 31 March 2020
8,622
-2,758
-309 147,032
- 152,587
14,428 167,015
*For 2019, no dividends were paid in 2020. The previously proposed dividends have been reversed to Retained earnings in 2020. See note G1(a) in Annual Report 2020 for further information
Statement of capital – Danske Bank Group
(DKK millions)
Share capital (DKK)
Number of shares
Number of shares outstanding
Average number of shares outstanding for the period
Average number of shares outstanding, including dilutive shares, for the period
Total capital and total capital ratio
(DKK millions)
Total equity
Revaluation of domicile property at fair value
Tax effect of revaluation of domicile property at fair value
Total equity calculated in accordance with the rules of the Danish FSA
Additional tier 1 capital instruments included in total equity
Accrued interest on additional tier 1 capital instruments
Common equity tier 1 capital instruments
Adjustment to eligible capital instruments
IFRS 9 reversal due to transitional rules
Prudent valuation
Prudential filters
Expected/proposed dividends*
Intangible assets of banking operations
Deferred tax on intangible assets
Deferred tax assets that rely on future profitability, excluding temporary differences
Defined benefit pension plan assets
Statutory deduction for insurance subsidiaries
Common equity tier 1 capital
Additional tier 1 capital instruments
Tier 1 capital
Tier 2 capital instruments
Total capital
Total risk exposure amount
Common equity tier 1 capital ratio (%)
Tier 1 capital ratio (%)
Total capital ratio (%)
Danske Bank / Interim report – first quarter 2021 28/64
31 March 2021 31 December 2020
8,621,846,210
862,184,621
853,368,415
853,841,408
853,993,941
8,621,846,210
862,184,621
853,649,376
853,138,154
853,470,424
31 March 2021 31 December 2020
170,505
175
-17
170,663
-8,442
-173
162,048
-85
1,925
-1,032
-162
-1,884
-5,400
214
-326
-2,448
-8,307
144,542
17,730
162,271
24,608
186,879
797,739
18.1%
20.3%
23.4%
168,679
176
-17
168,836
-8,415
-93
160,329
-75
2,551
-690
-147
-1,724
-5,354
204
-168
-2,206
-8,992
143,727
17,282
161,009
19,108
180,117
784,184
18.3%
20.5%
23.0%
Total capital and the total risk exposure amount are calculated in accordance with the rules applicable under the Capital Requirements Regulation (CRR),
taking transitional rules into account as stipulated by the Danish Financial Supervisory Authority.
In terms of the transitional arrangements for the impact of IFRS 9 on regulatory capital, the Group applies the so-called dynamic approach in accordance
with the CRR.
The Internal Capital Adequacy Assessment Report provides more details about the Group’s solvency need. The report is available at danskebank.com/in-
vestorrelations/reports and is not covered by the independent auditor’s review.
Cash flow statement – Danske Bank Group
(DKK millions)
Cash flow from operations
Profit before tax
Tax paid
Adjustment for non-cash operating items
Total
Changes in operating capital
Amounts due to/from credit institutions and central banks
Trading portfolio
Acquisition/sale of own shares and additional tier 1 capital
Investment securities
Loans at amortised cost and fair value
Deposits
Issued bonds at amortised cost and fair value
Assets/liabilities under insurance contracts
Other assets/liabilities
Cash flow from operations
Cash flow from investing activities
Acquisition/sale of businesses
Acquisition of intangible assets
Acquisition of tangible assets
Sale of tangible assets
Cash flow from investing activities
Cash flow from financing activities
Issue of subordinated debt
Redemption of subordinated debt
Issue of non-preferred senior bonds
Dividends paid
Redemption of equity accounted additional tier 1 capital
Paid interest on equity accounted additional tier 1 capital
Principal portion of lessee lease payments
Cash flow from financing activities
Cash and cash equivalents as at 1 January
Foreign currency translation
Change in cash and cash equivalents
Cash and cash equivalents, end of period
Cash and cash equivalents, end of period
Cash in hand
Demand deposits with central banks
Amounts due from credit institutions and central banks within three months
Total
Danske Bank / Interim report – first quarter 2021 29/64
Q1
2021
4,054
-438
-3
3,613
529
-49,046
-89
-5,869
3,131
49,272
-6,638
-3,996
3,223
Q1
2020
Full Year
2020
-1,663
-1,795
5,601
2,143
121,923
-60,410
95
-7,924
63,602
-13,202
-42,309
-3,666
-819
6,304
-4,315
12,993
14,982
59,794
-140,495
-83
-11,896
95,039
193,055
-33,550
5,323
4,337
-5,870
59,433
186,506
-
-191
-76
4
-263
5,577
-
-
-1,708
-
-35
-165
3,669
-
-188
-105
5
-288
-
-
10,037
-
-
-33
-181
5
-872
-408
12
-1,263
3,721
-2,180
23,610
-
-5,600
-625
-653
9,823
18,273
400,889
1,874
-2,464
199,608
-2,730
68,968
199,608
-2,235
203,516
400,299
265,847
400,889
5,928
306,419
87,952
5,128
122,580
138,139
6,131
314,572
80,186
400,299
265,847
400,889
Danske Bank / Interim report – first quarter 2021 30/64
Notes – Danske Bank Group
G1. Significant accounting policies and estimates
(a) General
The report has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Dan ish disclosure require-
ments for listed financial companies. The report is condensed and should be read in conjunction with the Group’s Annual Report 2020.
On 1 January 2021, the Group implemented the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Interest Rate Benchmark Reform, phase 2)
and IFRS 16 (Covid-19 Related Rent Concessions). The Group has changed the presentation in the income statement of indirect fees earned when cus-
tomers are granted, refinance or prepay Danish mortgage loans. Further information on the changes to accounting policies and presentation in 2021
can be found in note G2(a). Except for these changes, the Group has not changed its significant accounting policies from those applied in Annual Report
2020. Annual Report 2020 provides a full description of the significant accounting policies.
For changes in the Group’s financial highlights and segment reporting, see note G2(b).
Financial statement figures are stated in Danish kroner and whole millions, unless otherwise stated. As a result, rounding discrepancies may occur
because totals have been rounded off and the underlying decimals are not presented to financial statement users.
(b) Significant accounting estimates and judgements
The preparation of financial information requires, in some cases, the use of judgements and estimates by management. This includes judgements made
when applying accounting policies. The most significant judgements made when applying accounting policies relate to the classification of financial assets
and financial liabilities under IFRS 9, especially related to the business model assessment, and the SPPI test (further explained in note G15 of the Annual
Report 2020) and the designation of financial liabilities at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch
(further explained in note G16 of the Annual Report 2020). An overview of the classification and measurement basis for financial instruments can be
found in in note G1(c) of the Annual Report 2020.
The determination of the carrying amounts of some assets and liabilities requires the estimation of the effects of uncertain future events on those assets
and liabilities. The estimates are based on premises that management finds reasonable but which are inherently uncertain and unpredictable. The prem-
ises may be incomplete, unexpected future events or situations may occur, and other parties may arrive at other estimated values. In view of the inherent
uncertainties and the high level of subjectivity and judgement involved in the recognition and measurement of the items listed below, it is possible that
the outcomes in the next financial year could differ from those on which management’s estimates are based.
Measurement of expected credit losses on loans, financial guarantees and loan commitments, and bonds measured at amortised cost or fair value
through other comprehensive income
The three-stage expected credit loss impairment model in IFRS 9 depends on whether the credit risk has increased significantly since initial recognition.
If the credit risk has not increased significantly, the impairment charge equals the expected credit losses resulting from default events that are possible
within the next 12 months (stage 1). If the credit risk has increased significantly, the loan is more than 30 days past due, or the loan is in default or
otherwise impaired, the impairment charge equals the lifetime expected credit losses (stages 2 and 3). In determining the impairment for expected credit
losses, management exercises judgement and uses estimates and assumptions as explained below.
The expected credit losses are calculated for all individual facilities as a function of probability of default (PD), exposure at default (EAD) and loss giv en
default (LGD) and incorporate forward-looking information. The estimation of expected credit losses involves forecasting future economic conditions over
a number of years. Such forecasts are subject to management judgement and those judgements may be sources of measurement uncertainty that have
significant risk of resulting in a material adjustment to a carrying amount in future periods. The incorporation of forward -looking elements reflects the
expectations of the Group’s senior management and involves the creation of scenarios (base case, upside and downside), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on
the expected credit losses.
The forward-looking information is based on a three-year forecast period converging to steady state in year seven. The base case is an extension of the
Group’s official view of the Nordic economies (the Nordic Outlook report). At 31 March 2021, the base case scenario reflec ts a recovery later in 2021.
To fully capture the downside risk, the downside scenario used at 31 March 2021 is the severe recession scenario applied in the Group’s ICAAP pro-
cesses and is similar in nature to regulatory stress tests. The severe recession scenario reflects negative growth and falling property prices for a longer
period. At 31 December 2020, the down-side scenario reflected a W-shaped trend in the light of the corona crisis with the economies being back on
track in the second or third quarter of 2021. The change of the downside scenario has been made in order to capture the risk of prolonged lockdowns
due to new coronavirus variants and in order for the ECL calculation to include potential downside risks due to the elevated asset prices across the
Nordics. Information on the macroeconomic parameters in the base case and downside scenarios can be found in the risk management notes.
Danske Bank / Interim report – first quarter 2021 31/64
Notes – Danske Bank Group
(b) Significant accounting estimates continued
With the new suite of scenarios, the base case scenario enters with a probability of 75% (31 December 2020: 60%), the upside scenario with a proba-
bility of 10% (31 December 2020: 15%) and the downside scenario with a probability of 15% (31 December 2020: 25%). On the basis of these assess-
ments, the allowance account as at 31 March 2021 amounted to DKK 23.3 billion (31 December 2020: DKK 23.3 billion). If the base case scenario was
assigned a probability of 100%, the allowance account would decrease DKK 1.1 billion (31 December 2020: 0.4 billion). Compared to the base case
scenario, the allowance account would increase DKK 7.3 billion (31 December 2020: DKK 1.7 billion), if the downside scenario was assigned a probability
of 100%. The increase reflects primarily the transfer of exposures from stage 1 to stage 2 and increased expected credit losses within stage 2. If instead
the upside scenario was assigned a probability of 100 %, the allowance account would decrease DKK 0.4 billion (31 December 2020: DKK 0.4 billion)
compared to the base case scenario. However, note that the applied scenarios differ from the scenarios used at 31 December 2020, and the changes in
weighting and sensitivities from end of 2020 to end of the first quarter 2021 are therefore not directly comparable, especially due to the downside
scenario being a severe downside scenario at 31 March 2021 to fully capture the downside risks. Further, it shall be noted that the expected credit
losses in the individual scenarios does not represent expected credit loss (ECL) forecasts.
Management applies judgement when determining the need for post-model adjustments. As at 31 March 2021, the post-model adjustments amounted
to DKK 6.5 billion (31 December 2020: DKK 6.4 billion) and continue to include the immediate risks arising from the corona crisis due to the continued
significant uncertainty related to the magnitude of the pandemic, the effectiveness of the roll-out of the vaccine programmes and to the extent to which
governments will continue to support the economies. On the types of risks covered by post-model adjustments, more information can be found in the risk
management notes.
Further information on the Group’s accounting treatment of the impacts on expected credit losses from the corona crisis can be found on pages 82-83
of Annual Report 2020.
Note G15 of the Annual Report 2020 and the section on credit risk in the risk management notes provide more details on expected credit losses. As at
31 March 2021, financial assets covered by the expected credit loss model accounted for about 52% of total assets (31 December 2020: 52%).
Fair value measurement of financial instruments
At the end of March 2021, no unusual challenges in obtaining reliable pricing apart from insignificant parts of the portfolio remained. The majority of
valuation techniques continues to employ only observable market data, and there has been no significant increase in financial instruments measured on
the basis of valuation techniques that are based on one or more significant unobservable inputs. The latter continues to include only unlisted shares,
certain bonds and some long-dated derivatives for which there is no active market. On the derivatives portfolio, the Group makes fair value adjustments
to cover changes in counterparty risk (CVA and DVA) and to cover expected funding costs (FVA and ColVA) on derivatives, bid-offer spreads on the net
open position of the portfolio of assets and liabilities with offsetting market risk recognised at mid-market prices, and model risk on level 3 derivatives.
As at 31 March 2021, the adjustments totalled DKK 1.1 billion (31 December 2020: DKK 1.6 billion), including the adjustment for credit risk on deriva-
tives that are credit impaired. Note G11 of this report and note G33(a) of the Annual Report 2020 provides more details on the fair value measurement
of financial instruments.
The Group uses derivatives to hedge the fixed interest rate on some financial assets and liabilities, thus converting the fix ed interest rates on the financial
instruments to variable interest rates by the use of swaps. The ongoing Interest Rate Benchmark Reform will replace existing benchmark interbank
offered rates (IBORs) with alternative risk-free rates. There is currently uncertainty as to the timing and the methods of transition of different IBORs and
whether some existing benchmarks will continue to be supported. As a result of these developments, accounting judgement is in volved in determining
whether certain hedge accounting relationships that hedge the interest rate risk due to changes in IBORs continue to qualify for hedge accounting. EUR
and USD denominated swaps cleared on a CCP have been converted to ESTR and SOFR discounting respectively, and the conversion had no significant
impact on the Group’s hedge accounting values. Following IASB’s project ‘Interest Rate Benchmark Reform, phase I’ for the assessment of effectiveness
of such hedges, it is assumed that the interest rate benchmark is not altered as a result of the reform. For further information, see note G12(d) of the
Annual Report 2020.
Danske Bank / Interim report – first quarter 2021 32/64
Notes – Danske Bank Group
(b) Significant accounting estimates continued
Measurement of goodwill
Goodwill is tested for impairment once a year or more frequently if indications of impairment exist. Impairment testing requires management to estimate
the present value of future cash flows. A number of factors affect the value of such cash flows, including discount rates, changes in the economic outlook,
customer behaviour and competition. At 31 March 2021, goodwill amounted to DKK 6.1 billion (31 December 2020: DKK 6.1 billion).
In connection with the quarterly reporting, management performs an impairment review to assess whether there are indications that goodwill might be
impaired. This includes a review of declines in income, increase in loan impairment charges, decline in the market value of a ssets under management,
major restructurings, macroeconomic developments etc. Since the outbreak of the coronavirus pandemic, the assessment of whether indications of
impairment exists has been considered at a more detailed level than usual. This assessment has been performed as a high level update of the 2020 test.
Despite taking into account the expected economic impacts from the second wave of lockdowns to contain the coronavirus pandemic, which were initiated
late 2020 and continued in the first quarter of 2021, it was concluded that no indications of impairment at the end of March 2021 were noted.
The goodwill in Danica Pension of DKK 1.6 billion (31 December 2020: DKK 1.6 billion) is highly sensitive to changes in solvency capital requirements,
growth in the terminal period and the discount rate.
The remaining goodwill mainly consists of DKK 2.1 billion (31 December 2020: DKK 2.1 billion) in Markets, DKK 1.8 billion (31 December 2020: DKK
1.8 billion) in Asset Management and DKK 0.5 billion (31 December 2020: DKK 0.5 billion) in General Banking (all part of the business segment Large
Corporates & Institutions) showed significant amounts of excess value in the impairment tests in 2020.
Note G19 of the Annual Report 2020 provides more information about impairment testing and sensitivity to changes in assumptions.
Measurement of liabilities under insurance contracts
Liabilities under insurance contracts are measured at the present value of expected benefits for each insurance contract. The measurement is based on
actuarial computations that rely on estimates of a number of variables, including mortality and disability rates, and on the discount rate. The future
mortality rates are based on the Danish FSA’s benchmark, while other variables are estimated based on data from the Group’s o wn portfolio of insurance
contracts. Note G18 and the risk management notes of the Annual Report 2020 provide more information on the measurement of insurance liabilities.
and sensitivity to changes in assumptions.
Danske Bank / Interim report – first quarter 2021 33/64
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting
(a) Changes in accounting policies
On 1 January 2021, the Group implemented the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Interest Rate Benchmark Reform, phase 2)
and IFRS 16 (Covid-19 Related Rent Concessions). The implementation of the amendments to IFRSs had no impact on the financial statements. The
Group has changed the presentation in the income statement of indirect fees earned when customers are granted, refinance or prepay Danish mortgage
loans. Comparative information in the income statement has been restated to reflect the change in presentation. The sections below explain in further
details the changes to accounting policies and presentation implemented.
Interest Rate Benchmark Reform – phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The amendments cover the effects on the financial statements when old interest rate benchmarks are altered or replaced by alternative benchmark
rates as a result of the benchmark reform.
The amendments introduce a practical expedient to account for a change to the basis for determination of the contractual cash flows at the date on which
interest rate benchmarks are altered or replaced. Under the practical expedient, a change to the determination of the contractual cash flows is applied
prospectively by altering the effective interest rate, i.e. not leading to a modification gain or loss recognised in the income statement. To be applicable for
the practical expedient, a change must meet two conditions: (a) the change is a direct consequence of the reform and (b) the new basis for determining
the contractual cash flows is economically equivalent to the previous basis.
The amendments further introduce reliefs from existing hedge accounting requirements. The reliefs include that hedge accounting would not discontinue
solely due to the benchmark reform and that, for the retrospective effectiveness test for fair value hedges under IAS 39, the cumulative fair value changes
of the hedged item and the hedging instrument may be reset to zero to minimise the risk that a hedge will fail the retrospective effectiveness test when
the benchmark transitions to an alternative benchmark. The amendments further require that the hedging relationships and docu mentations are
amended to reflect changes in the hedged item, the hedging instrument and the hedged risk (which do not represent a discontin uation of the exiting
hedge).
IFRS 7 introduces further disclosure requirements. The disclosures relate to how the transition to alternative rates is managed, the progress on the
transition and the risks arising from financial assets and financial liabilities due to the reform.
The implementation is applied retrospectively without restatement of prior periods. As the transition to alternative benchmark rates for financial assets
and financial liabilities measured at amortised cost has not yet taken place, the implementation of the amendments had no impact on shareholders’ equity
at 1 January 2021. Following the reliefs from the existing hedge accounting requirements, the Group expects that existing hedging relationships will
continue to qualify for hedge accounting. The added disclosures on the transition to alternative rates will be included in Annual Report 2021.
Covid-19 Related Rent Concessions (amendments to IFRS 16)
The amendment introduces a practical expedient under which a lessee may elect not to assess whether a COVID-19-related rent concession meets the
definition of a modification. Danske Bank Group has not been granted any concessions, and the amendment has no impact on the financial statements.
Change in the presentation of indirect fees earned on Danish mortgage loans
The Group’s Danish mortgage loans are granted through Realkredit Danmark and funded by issued listed mortgage bonds with matching terms, both
measured at fair value through profit or loss. When customers are granted, refinance or prepay such loans, the Group earns di rect fees as well as indirect
fees with the latter being charged as a discount or premium to the quoted price on the bonds funding the specific loan. In the income statement, the
indirect fees are now included within Fee income to align with the presentation of the direct fees. Previously, the indirect fees were included within Net
trading income or loss. The change in presentation has increased Fee income and decreased Net trading income or loss by DKK 214 million in the first
quarter of 2021. Comparative information has been restated, leading to a reclassification to Fee income from Net trading inco me or loss of DKK 228
million in the first quarter of 2020 and DKK 590 million for full year 2020.
Danske Bank / Interim report – first quarter 2021 34/64
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
(b) Changes in financial highlights and segment reporting
From 1 January 2021, the presentation in the financial highlights and segment reporting has been changed to reflect the new organisation that was an-
nounced on 25 August 2020, see note G3 for further information on the new organisation.
In the financial highlights, earnings in the business unit Danica Pension is from 1 January 2021 presented as Net income from insurance business due to
Danica Pension being a separate business unit. This increases transparency and simplicity in the income statement part of the financial highlights, as Danica
Pension’s business model is very different from the business model of the other commercial activities within the Group. A description of the previous presen-
tation of Danica Pension in the financial highlights can be found on page 89 in Annual Report 2020. The financial highlights 2020 are further restated to
reflect the change in the presentation of indirect fees earned on Danish mortgage loans, see section (a) of this note.
The table below shows the impact on the financial highlights for the first quarter of 2021. The change in the presentation of Danica Pension does not
affect the presentation in the IFRS income statement. Note G3 shows the segment reporting for the new business segments.
Financial highlights - first quarter 2020
Changed presentation
(DKK millions)
Net interest income
Net fee income
Net trading income or loss
Net income from insurance business
Other income
Total income
Operating expenses
Goodwill impairment charges
Impairment charges other intangible assets
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, non-core
Profit before tax
Financial
Highlights
Q1 2020
Danica
Pension
Indirect fees,
Danish
mortgage loans
Adjusted
Financial
Highlights
5,479
3,673
291
-
163
9,606
6,764
-
-
2,842
4,251
-1,409
-254
-1,663
80
-661
79
99
23
-379
-379
-
-
-
228
-228
5,560
3,240
141
99
186
9,227
6,385
-
-
2,842
4,251
-1,409
-254
-1,663
Further, a portfolio of unit-linked contracts of DKK 31 billion was reclassified from investment contracts to insurance contracts in Annual Report 2020.
The comparative information in the balance sheet at 31 March 2020 has been restated.
Danske Bank / Interim report – first quarter 2021 35/64
Notes – Danske Bank Group
G3. Business segments
(a) Business model and business segmentation
From 1 January 2021, the presentation in the financial highlights and segment reporting has been changed to reflect the new organisation that was an-
nounced on 25 August 2020. The aim of the redesigned organisation is to reduce complexity, increase efficiency and become even more competitive for our
customers. The Group’s commercial activities is organised in four reporting business units:
Personal & Business Customers, which serves personal customers and small and medium-sized business customers across all Nordic markets
Large Corporates & Institutions, which serves large corporates and institutional customers across all Nordic markets
Danica Pension
Northern Ireland
Besides the four commercial business units, the Group’s reportable segments under IFRS 8 continue to include Non-core and Group functions (previously
called ‘Other activities’). The comparative information has been restated to reflect the new organisation.
Business segments Q1 2021
(DKK millions)
Net interest income
Net fee income
Net trading income
Netincome from insurance
business
Other income
Net premiums
Net insurance benefits
Personal &
Business
Customers
Large Cor-
porates &
Institutions
3,879
1,750
150
-
196
-
-
1,216
1,599
1,102
-
1
-
-
Total income
Operating expenses
5,975
3,638
3,918
1,851
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
2,337
435
1,903
-
2,067
69
1,998
-
Profit before tax
1,903
1,998
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
1,515,257
255,128
541,545 3,501,647
-
-
Danica
Northern
Ireland
Group
Non-core
Functions Eliminations
Financial
highlights
Reclassifi-
cation
IFRS
financial
statements
-
-
-
491
-
-
-
491
-
491
-
491
-
491
331
60
-20
-
3
-
-
374
275
99
-7
106
-
106
-
-
-
-
-
-
-
-
-
-
-
-
20
20
24
-8
162
-
132
-
-
310
550
-240
1
-241
-
-
-
-128
-
-136
-
-
-264
-41
-223
-
-223
-
5,450
3,402
1,266
491
195
-
-
10,805
6,273
4,531
497
4,034
20
1,107
-236
6,446
-491
1,310
8,485
15,473
1,148
1,183
-35
-55
20
-20
6,557
3,166
7,712
-
1,505
8,485
15,473
11,952
7,456
4,496
443
4,054
-
-241
-223
4,054
-
4,054
-
644,404
-
55,779
54,844
-
32,621
-
- 3,927,789
-
1,913
-30,912 1,827,873
-6,427,114 2,243,116
1,913
-
1,810 1,829,683
103 2,243,220
-
-1,913
Total assets
2,056,802 3,756,775 644,404
110,623
1,913 3,960,410 -6,458,026 4,072,903
- 4,072,903
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
696,439
448,560
1,285,687 3,263,013
45,203
-
74,676
-
-
630,348
14,056
-
92,432
11,569
6,622
-
-
1,896
- 3,936,557
21,332
-
-
2,538
-9,673 1,229,654
-6,448,353 2,678,821
161,890
2,538
-
-
2,197 1,231,851
341 2,679,162
161,890
-
-
-2,538
Total liabilities and equity
2,056,802 3,756,775 644,404
110,623
2,538 3,959,786 -6,458,026 4,072,903
- 4,072,903
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
10.4
60.9
17.9
47.2
14.2
-
6.5
73.5
-
-
-4.4
177.4
6,853
2,506
821
1,345
29
10,423
-
-
-
10.1
58.1
21,978
-
-
-
10.1
62.4
21,978
Notes – Danske Bank Group
Danske Bank / Interim report – first quarter 2021 36/64
G3. Business segments continued
Business segments Q1 2020
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance
business
Other income
Net premiums
Net insurance benefits
Personal &
Business
Customers
Large Cor-
porates &
Institutions
3,951
1,815
162
-
194
-
-
1,143
1,347
-154
-
-
-
-
Total income
Operating expenses
6,122
3,528
2,336
1,812
Profit before loan
impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
2,594
1,751
843
-
843
523
2,328
-1,804
-
-1,804
1,456,843
273,011
453,973 3,658,962
-
-
Danica
Northern
Ireland
Group
Non-core
Functions Eliminations
Financial
highlights1
Reclassifi-
cation1
IFRS
financial
statements2
-
-
-
99
-
-
-
99
-
99
-
99
-
99
375
83
52
-
4
-
-
515
300
215
165
49
-
49
-
-
-
-
-
-
-
-
-
-
-
-
-254
-254
91
-5
-137
-
112
-
-
62
784
-722
7
-730
-
-730
-1
-
218
-
-124
-
-
93
-40
134
-
134
-
5,560
3,240
141
99
186
-
-
9,227
6,385
2,842
4,251
-1,409
-254
708
-244
-23,229
-99
1,210
7,998
-14,906
1,250
1,411
-161
93
-254
254
6,267
2,997
-23,088
-
1,396
7,998
-14,906
10,476
7,795
2,681
4,344
-1,663
-
134
-1,663
-
-1,663
-
633,921
-
50,399
36,312
-
34,495
-
- 3,493,295
-
6,168
-32,903 1,781,846
-6,056,785 2,219,677
6,168
-
4,878 1,786,724
1,290 2,220,967
-
-6,168
Total assets
1,910,816 3,931,973 633,921
86,711
6,168 3,527,790 -6,089,688 4,007,691
- 4,007,691
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
602,048
332,673
1,238,260 3,554,919
44,381
-
70,508
-
-
620,616
13,305
-
70,075
10,094
6,542
-
-
3,208
- 3,510,406
17,851
-
-
2,492
-12,754
995,249
-6,076,934 2,857,362
152,587
2,492
-
-
1,542
996,791
950 2,858,312
152,587
-
-
-2,492
Total liabilities and equity
1,910,816 3,931,973 633,921
86,711
2,492 3,531,466 -6,089,688 4,007,691
- 4,007,691
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
4.8
57.6
-16.8
77.6
3.0
-
3.0
58.3
-
-
-14.7
-
6,824
2,505
795
1,334
83
10,492
-
-
-
-4.3
69.2
22,032
-
-
-
-4.3
74.4
22,032
1 Comparative information has been restated, as described in the section ‘Changes in financial highlights and segment reporting ’ of note G2(b).
2 Comparative information has been restated, as described in the section ‘Changes in accounting policies’ of note G2(a).
Danske Bank / Interim report – first quarter 2021 37/64
Notes – Danske Bank Group
G3. Business model and business segmentation continued
(b) Reconciliation of the financial highlights and segment reporting to the IFRS financial statements
The ‘Reclassification’ column in the tables above shows the reconciliation between the presentation in the financial highlights and segment reporting and
the presentation in the IFRS financial statements. The policies for the reclassifications between the financial highlights and the IFRS financial statements
are disclosed on page 89 in Annual Report 2020, however, with the presentation of earnings from Danica Pension being changed from 1 January 2021,
see note G2(b) of this report for an explanation. The decomposition of the reclassification between the IFRS income statement and Financial highlights is
shown in the tables below.
Reclassification Q1 2021
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Reclassification Q1 2020
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
IFRS financial
statements
Operating leases
and impairment
charges
Markets, Invest-
ment Banking &
Securities and
Group Treasury
Danica
Pension
Non-core
Total
reclassification
Financial
highlights
6,557
3,166
7,712
-
1,505
8,485
15,473
11,952
7,456
4,496
443
4,054
-
4,054
-
-
-
-
-870
-
-
-870
-870
-
-
-
-
-
-244
3
239
-
2
-
-
-
-
-
-
-
-
-
-856
234
-6,685
491
-452
-8,485
-15,473
-282
-282
-
-
-
-
-
-6
-1
-
-
11
-
-
5
-31
35
55
-20
20
-
-1,107
236
-6,446
491
-1,310
-8,485
-15,473
-1,148
-1,183
35
55
-20
20
-
5,450
3,402
1,266
491
195
-
-
10,805
6,273
4,531
497
4,034
20
4,054
IFRS financial
statements1
Operating leases
and impairment
charges
Markets, Invest-
ment Banking &
Securities and
Group Treasury
Danica
Pension2
Non-core
Total
reclassification2
Financial
highlights2
6,267
2,997
-23,088
-
1,396
7,998
-14,906
10,476
7,795
2,681
4,344
-1,663
-
-1,663
-
-
-
-
-953
-
-
-953
-953
-
-
-
-
-
44
-23
-60
-
39
-
-
-
-
-
-
-
-
-
-737
268
23,236
99
-295
-7,998
14,906
-332
-332
-
-
-
-
-
-15
-2
54
-
-2
-
-
35
-126
161
-93
254
-254
-
-708
244
23,229
99
-1,210
-7,998
14,906
-1,250
-1,411
161
-93
254
-254
5,560
3,240
141
99
186
-
-
9,227
6,385
2,842
4,251
-1,409
-254
-
-1,663
1 Comparative information has been restated, as described in the section ‘Changes in accounting policies’ of note G2(a).
2 Comparative information has been restated, as described in the section ‘Changes in financial highlights and segment reporting ’ of note G2(b).
Danske Bank / Interim report – first quarter 2021 38/64
Notes – Danske Bank Group
G4. Income
(a) Interest income and interest expense
Negative interest income during the period ending March 2021 amounted to DKK 426 million (31 March 2020: DKK 612 million). Negative interest
expenses amounted to DKK 854 million (31 March 2020: DKK 654 million). In the income statement, negative interest income is recognised as interest
expenses and negative interest expenses are recognised as interest income.
(b) Fee income
Note G6 of the Annual Report 2020 provides additional information on the Group’s accounting policy for fee income, including the description by fee type.
Fee income Q1 2021
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Fee income Q1 2020
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Financial
highlights
- net fee income
Reclassifica
tions
1,333
764
766
538
3,402
39
-36
140
-379
-236
Financial
highlights
- net fee income
Reclassifica
tions
1,293
799
808
341
3,240
-95
-8
143
-283
-244
IFRS
- net fee
income
1,373
729
906
158
3,166
IFRS
- net fee
income
1,198
790
950
58
2,997
Fee expense
1,084
333
76
-
1,494
Fee expense
1,066
328
66
-
1,460
IFRS
- gross fee
income
2,457
1,062
982
158
4,660
IFRS
- gross
fee income
2,263
1,118
1,017
58
4,457
1 Comparative information has been restated, as described in the section ‘Changes in financial highlights and segment reporting ’ of note G2(b).
2 Comparative information has been restated, as described in the section ‘Changes in accounting policies’ of note G2(a).
(c) Other income
Other income amounted to DKK 1,505 million for the three months ending 31 March 2021 (31 March 2020: DKK 1,396 million). Other income includes
primarily income from lease assets, investment property and real estate brokerage. Further, it includes the line items Gain and loss on sale of disposal
groups and Income from holdings in associates that were presented separately on the face of the income statement in Annual Report 2020.
Danske Bank / Interim report – first quarter 2021 39/64
Notes – Danske Bank Group
G5. Loan impairment charges and reconciliation of total allowance account
Loan impairment charges include impairment charges for expected credit losses on loans, lease receivables, bonds at amortised cost and fair value
through other comprehensive income, certain loan commitments and financial guarantee contracts as well as fair value adjustments of the credit risk on
loans measured at fair value.
Loan impairment charges
(DKK millions)
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs charged directly to income statement
Received on claims previously written off
Interest income, effective interest method
Total
Reconciliation of total allowance account
(DKK millions)
ECL allowance account as at 1 January 2020
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
ECL allowance account as at 31 December 2020
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
31 March 2021
31 March 2020
1,311
-3,300
951
1,593
-54
-58
443
1,401
-1,687
4,666
131
-102
-65
4,344
Stage 1
Stage 2
Stage 3
Total
1,316
1,065
-119
-22
543
-292
-194
-1
-22
-8
2,267
785
-74
-9
196
-188
-798
-
15
-22
5,963
-1,007
757
-1,002
1,862
-1,328
2,282
-6
-7
-56
7,459
-769
219
-410
403
-842
751
4
39
10
14,033
-57
-639
1,024
2,246
-3,641
2,277
-1,070
-467
-90
21,313
-
-
-
4,651
-5,260
4,366
-1,077
-496
-154
13,617
23,342
-15
-145
419
712
-2,270
998
587
220
148
-
-
-
1,311
-3,300
951
591
273
136
ECL allowance account as at 31 March 2021
2,171
6,864
14,269
23,304
The movements on the allowance account are determined by comparing the classification and amount in the balance sheet at the beginning and the end
of the period. For further information on the decomposition of the allowance account on facilities in stages 1-3 under IFRS 9, see the notes on credit risk.
Notes – Danske Bank Group
G6. Issued bonds, subordinated debt and additional tier 1 capital
Issued bonds at fair value
(DKK millions)
Bonds issued by Realkredit Danmark (covered bonds)
Commercial papers and certificates of deposits
Issued bonds at fair value, total
Issued bonds at amortised cost
(DKK millions)
Commercial papers and certificates of deposits
Preferred senior bonds
Covered bonds
Issued bonds at amortised cost, total
Non-preferred senior bonds
Danske Bank / Interim report – first quarter 2021 40/64
31 March 31 December
2020
2021
771,138
13,695
775,844
8,183
784,834
784,027
31 March 31 December
2020
2021
10,587
56,819
168,452
14,184
61,344
170,044
235,858
245,573
108,641
106,371
Further information on issued bonds at fair value through profit or loss can be found in note G16 of the Annual Report 2020. The issuance and redemption of
bonds (including commercial papers and certificates of deposits at fair value) during the year are presented in the tables below.
Nominal value
(DKK millions)
Commercial papers and certificate of deposits
Preferred senior bonds
Covered bonds
Non-preferred senior bonds
1 January
2021
22,515
63,352
168,445
105,028
Issued
Redeemed
13,398
992
8,062
-
12,120
7,794
8,860
-
Foreign cur-
rency
translation
697
1,174
-40
3,221
31 March
2021
24,490
57,724
167,608
108,249
Other issued bonds
359,340
22,452
28,774
5,052
358,071
Nominal value
(DKK millions)
Commercial papers and certificate of deposits
Preferred senior bonds
Covered bonds
Non-preferred senior bonds
1 January
2020
10,821
75,280
176,489
86,891
Issued
Redeemed
42,906
19,920
31,420
23,706
30,474
28,411
38,780
-
Foreign
currency 31 December
2020
translation
-738
-3,437
-684
-5,569
22,515
63,352
168,445
105,028
Other issued bonds
349,481
117,952
97,665
-10,428
359,340
Subordinated debt and additional tier 1 capital
As at 31 March 2021, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 38,127 million (31
December 2020: DKK 32,137 million) and the nominal value of equity accounted additional tier 1 capital to DKK 8,578 million (31 December 2020: DKK
8,579 million). During the three months ended 31 March 2021, the Group issued DKK 5,577 million of tier 2 capital. During 2020, the Group redeemed EUR
750 million (DKK 5,600 million) of additional tier 1 capital accounted for as equity and issued DKK 3,721 million and redeemed DKK 2,180 million of tier 2
capital.
For the additional tier 1 capital, Danske Bank A/S may, at its sole discretion, omit interest payments to bondholders. Any interest payments are paid out of
distributable items, which primarily consist of retained earnings in Danske Bank A/S and Danske Bank Group (see section 5.4.3 of Risk Management 2020
for further information). As at 31 March 2021, distributable items for Danske Bank A/S amounted to DKK 128.0 billion (31 December 2020: DKK 123.9
billion). The additional tier 1 capital will be temporarily written down or converted into a variable number of ordinary shares, depending on the terms of each
issued bond, if the common equity tier 1 capital ratio falls below 7% for Danske Bank A/S or Danske Bank Group. As at 31 March 2021 the common equity
tier 1 capital ratio was 20.8% (31 December 2020: 21.0%) for Danske Bank A/S. The ratios for the Danske Bank Group are disclosed in the Statement of
capital.
Danske Bank / Interim report – first quarter 2021 41/64
Notes – Danske Bank Group
G7. Other assets and Other liabilities
Other assets amounted to DKK 38,519 million (31 December 2020: DKK 36,964 million), including accrued interest and commission due of DKK 4,157
million (31 December 2020: DKK 3,607 million), holdings in associates of DKK 204 million (31 December 2020: DKK 209 million), investment property of
DKK 2,382 million (31 December 2020: DKK 2,256 million), tangible assets of DKK 8,615 million (31 December 2020: DKK 8,547 million) and right-of-use
lease assets of DKK 4,443 million (31 December 2020: DKK 4,819 million), consisting of domicile property of DKK 3,588 million (31 December 2020: DKK
3,938 million) and other tangible assets of DKK 855 million (31 December 2020: DKK 881 million). Further, it includes assets held for sale as defined in IFRS
5 consisting of loans held for sale of DKK 9 million (31 December 2020: DKK 416 million) and other assets held for sale of DKK 302 million (31 December
2020: DKK 293 million).
Other liabilities amounted to DKK 54,096 million (31 December 2020: DKK 51,291 million), including accrued interest and commissions due of DKK 6,519
million (31 December 2020: DKK 6,676 million), lease liabilities of DKK 4,398 million (31 December 2020: 4,761 million), other staff commitments of DKK
2,010 million (31 December 2020: DKK 3,022 million). Further, other liabilities include provisions for customer remediations of DKK 773 million (31 De-
cember 2020: DKK 804 million), provisions for restructuring costs of DKK 686 million (31 December 2020: DKK 830 million) and the provision of DKK 1.5
billion (31 December 2020: DKK 1.5 billion) for the donation of the estimated gross income from the non-resident portfolio at the Estonian branch. Any
confiscated or disgorged gross income will be deducted from the donation.
G8. Foreign currency translation reserve
The Group has granted loans to its branches in Sweden, Norway and Finland in the currency of the foreign unit for a total of DKK 35,681 million (31 December
2020: DKK 34,612 million). The loans are part of the net investment in those units and the foreign currency gains/losses on these loans are recognised in
Other comprehensive income. The funding of the loans is partly done in DKK in order to create a so-called structural FX hedge positions in accordance with
banking regulations, i.e. to reduce the impact on capital ratios resulting from changes in the risk exposure amount due to changes in currency rates. This
strategy of partly hedging the sensitivity to capital ratios from volatility in foreign currency rates, increases the volatility in Other comprehensive income and
the Foreign currency translation reserve in equity under IFRS since it decreases the hedge of the currency risk on the net investments in those units. As at
31 March 2021, the structural FX hedge position totalled DKK 33,618 million (31 December 2020: DKK 31,625 million) and a gain of DKK 432 million has
been recognised in Other comprehensive income during the first quarter of 2021, primarily due to appreciation of NOK against DKK throughout the first
quarter of 2021. During the first quarter of 2020, a loss of DKK 2,271 million related to the structural FX hedge position was recognised in Other compre-
hensive income due to a significant weakening of NOK and to a lesser degree a weakening of SEK against DKK throughout the first quarter of 2020.
Danske Bank / Interim report – first quarter 2021 42/64
Notes – Danske Bank Group
G9. Guarantees, commitments and contingent liabilities
Contingent liabilities consist of possible liabilities arising from past events. The existence of such liabilities will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the Group’s control. Contingent liabilities that can, but are not likely to, result in
an outflow of economic resources are disclosed.
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. If an instrument is likely to result in a payment obligation, a liability is
recognised under Other liabilities corresponding to the present value of expected payments.
(a) Guarantees
(DKK millions)
Financial guarantees
Other guarantees
Total
(b) Commitments
(DKK millions)
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
Total
31 March 31 December
2020
2021
6,533
71,044
6,708
65,108
77,577
71,816
31 March 31 December
2020
2021
268,655
196,876
167
276,413
198,830
18,995
465,698
494,239
In addition to credit exposure from lending activities, loan offers made and uncommitted lines of credit granted by the Group amounted to DKK 255 billion
(31 December 2020: DKK 242 billion). These items are included in the calculation of the total risk exposure amount in accordance with the CRR.
(c) Regulatory and legal proceedings
Estonia matter
Danske Bank remains in dialogue with various authorities regarding the terminated non-resident portfolio at the Bank’s Estonian branch. This includes crimi-
nal and regulatory investigations by authorities in Estonia, Denmark, France and the United States. The Bank continues to cooperate with all authorities.
In 2018, the Estonian Office of the Prosecutor General opened a criminal investigation into former employees of the Estonian branch.
In November 2018, Danske Bank was preliminary charged by the Danish State Prosecutor for Serious Economic and International Crime (“SØIK”) with vio-
lating the Danish AML Act on four counts all relating to the Estonian branch in the period from 1 February 2007 to the end of January 2016. In October 2020,
SØIK added violation of the Danish Financial Business Act for governance and control failures in the period from 1 February 2007 to the end of 2017 to the
preliminary charges.
In February 2019, Danske Bank was placed under formal investigation by an investigating judge of the Tribunal de Grande Instance de Paris in the context of
an on-going French criminal investigation and on the grounds of money laundering suspicions relating to certain transactions in the terminated portfolio of
non-resident customers of the Bank’s Estonian branch, amounting to around DKK 160 million and performed between 2007 and 2014. The Bank has posted
bail in the amount of DKK 80 million.
In December 2020, Danske Bank was informed by the U.S. Department of Treasury’s Office of Foreign Assets Control (“OFAC”) that it had decided to close
its investigation of Danske Bank in relation to the Estonia case with no action. OFAC is the U.S. authority responsible for civil enforcement of U.S. sanctions.
The decision does not preclude OFAC from taking future enforcement action should new or additional information warrant renewed attention.
The Bank is reporting to, responding to and cooperating with various authorities, including SØIK, the U.S. Department of Justice (DOJ) and the U.S. Securities
and Exchange Commission (SEC), relating to the Bank’s Estonian branch. The internal investigation work planned by the Bank was completed and the findings
were reported to relevant authorities in 2020. The Bank continues to fully cooperate and will provide the authorities with further information if and when
requested. The overall timing of the authorities’ investigations remains unknown and is not within the Bank’s control. It is not yet possible to reliably estimate
the timing, form of resolution, or amount of potential settlement or fines, which could be material
Based on orders from the Danish FSA, Danske Bank’s solvency need has been increased in 2018 by a Pillar II add-on of in total DKK 10 billion to ensure
adequate capital coverage of the increased compliance and reputational risks in relation to the Estonian AML matter.
On 9 January 2019, an action was filed in the United States District Court for the Southern District of New York by an alleged holder o f Danske Bank’s
American Depositary Receipts, representing its ordinary shares, against the Bank and certain of its officers and fo rmer officers and/or directors. The
complaint alleges that the defendants violated Section 10(b) and Section 20(a) of the Securities Exchange Act of 1934 by, amon g other things, making
false and misleading statements and/or failing to disclose adverse information regarding the Bank’s business and operations in relation to AML matters
relating to the Bank’s Estonian branch and related matters.
Danske Bank / Interim report – first quarter 2021 43/64
Notes – Danske Bank Group
G9. Guarantees, commitments and contingent liabilities continued
The complaint seeks unspecified damages on behalf of a putative class of purchasers of the Bank’s American Depositary Receipts between 9 January
2014 and 29 April 2019. On 24 August 2020, the Court granted the motion and dismissed all claims against the Bank on three independent grounds.
On 23 September 2020, the plaintiffs filed an appeal of this ruling to the Second Circuit. The Bank has opposed that appeal, and a decision is expected in
the second half of 2021.The Bank intends to defend itself against these claims. The timing of the completion of the lawsuit and the outcome are uncertain.
On 3 March 2019, a court case was initiated against Danske Bank and Thomas F. Borgen for approval of a class action led by a newly formed association
with the aim to represent former and current shareholders in a liability action relating to the Estonian AML matter. On 21 January 2021, the court
dismissed the case because it did not fulfil the criteria for being approved as a class action. The association has appealed this decision. The appeal will
not be decided until late 2021 at the earliest. In March 2019 (152), October 2019 (60), January 2020 (9), March 2020 (38), September 2020 (55),
and February 2021 (15) in total 329 separate cases were initiated against the Bank with a total claim amount of approximately DKK 8.2 billion. On 27
December 2019 (63) and 4 September 2020 (30), two separate claims were filed by 93 investors against the Bank with a total claim amount of approx-
imately DKK 1.7 billion. On 2 September 2020, 20 separate claims were filed by 20 investors against the Bank with a total claim amount of approximately
DKK 1.1 billion. On 18 September 2020, a separate claim was filed by 201 investors against the Bank with a total claim amount of approximately DKK
2.1 billion. On 18 September 2020, one case was filed against the Bank and Thomas F. Borgen by two investors with a total claim amount of DKK 10
million. These court actions relate to alleged violations in the Bank’s branch in Estonia of the rules on prevention of money laundering and/or alleged
failure to timely inform the market of such violations (and in one claim, also market manipulation). Of the 329 cases filed in the period from March 2019
to February 2021, 208 have been referred to the Eastern High Court. The remaining cases are currently pending or stayed before the Copenhagen City
Court. The Bank intends to defend itself against these claims. The timing of completion of any such lawsuits (pending or threatening) and their outcome
are uncertain.
On 20 February 2020 and 12 March 2021, two cases were initiated against Thomas F. Borgen by 76 institutional investors, and funded by the litigation
funder Deminor Recovery Services. The total claim amount is approximately DKK 3.2 billion. Danske Bank has received procedural notifications in respect
of both cases. Under Danish law, the purpose of a procedural notification is to make a formal reservation of rights to bring a potential cla im against the
notified party in the future.
Other
Owing to its business volume, Danske Bank is continually a party to various other lawsuits and disputes and has an ongoing di alogue with public authori-
ties, such as the Danish FSA on other matters. In general, Danske Bank does not expect the outcomes of any of these other pending lawsuits and disputes
or its dialogue with public authorities to have any material effect on its financial position. Provisions for litigations are included in Other liabilities, see
note G7.
(d) Further explanation
A limited number of employees are employed under terms which, if they are dismissed before reaching their normal retirement a ge, grant them a sever-
ance and/or pension payment in excess of their entitlement under ordinary terms of employment. As the sponsoring employer, the Group is also liable
for the pension obligations of a number of company pension funds.
The Group participates in the Danish Guarantee Fund and the Danish Resolution Fund. The funds’ capital must amount to at leas t 0.8% and 1%, respec-
tively, of the covered deposits of all Danish credit institutions by 31 December 2024. The Danish Guarantee Fund is currently fully funded, but if the fund
subsequently does not have sufficient means to make the required payments, extraordinary contributions of up to 0.5% of the individual institution’s
covered deposits may be required. Extraordinary contributions above this percentage require the consent of the Danish FSA. The first contribution to the
Danish Resolution Fund was made in December 2015. Danske Bank A/S and Realkredit Danmark A/S make contributions to the Resolution Fund on the
basis of their size and risk relative to other credit institutions in Denmark. The contribution to the Danish Resolution Fund is recognised as operating
expenses.
If the Resolution Fund does not have sufficient means to make the required payments, extraordinary contributions of up to three time s the latest annual
contributions may be required. In addition, Danish banks participate in the Danish Restructuring Fund, which reimburses creditors if the final dividend is
lower than the interim dividend in respect of banks that were in distress before 1 June 2015. Similarly, Danish banks have ma de payment commitments
(totalling DKK 1 billion) to cover losses incurred by the Danish Restructuring Fund for the withdrawal of distressed banks from data centres etc. Payments
to the Danish Restructuring Fund are calculated on the basis of the individual credit institution’s share of covered deposits relative to o ther credit insti-
tutions in Denmark. However, each institution’s contribution to the Danish Restructuring Fund may not exceed 0.2% of its covered deposits.
The Group is a member of deposit guarantee schemes and other compensation schemes in Norway, the UK and Luxembourg. As in Denmark, the contri-
butions to the schemes in these countries are annual contributions combined with extraordinary contributions if the means of the schemes are not
sufficient to cover the required payments.
Danske Bank A/S is taxed jointly with all Danish entities of Danske Bank Group and is jointly and severally liable with these for payment of Danish corpo-
ration tax and withholding tax, etc.
Danske Bank A/S is registered jointly with all significant Danish entities of Danske Bank Group for financial services employer tax and VAT, for which
Danske Bank A/S and the entities are jointly and severally liable.
Danske Bank / Interim report – first quarter 2021 44/64
Notes – Danske Bank Group
G10. Assets provided or received as collateral
As at 31 March 2021, the Group had deposited securities (including bonds issued by the Group) worth DKK 33.5 billion as collateral with Danish and
international clearing centres and other institutions (31 December 2020: DKK 36.7 billion).
As at 31 March 2021, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 78.8 billion as collateral for deriv-
atives transactions (31 December 2020: DKK 104.0 billion).
As at 31 March 2021, the Group had registered assets (including bonds and shares issued by the Group) under insurance contracts and unit-linked
investment contracts worth DKK 472.8 billion (31 December 2020: DKK 473.5 billion) as collateral for policyholders’ savings of DKK 460.0 billion (31
December 2020: DKK 458.1 billion).
As at 31 March 2021, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 815.3 billion
(31 December 2020: DKK 827.1 billion) as collateral for bonds issued by Realkredit Danmark. Similarly, the Group had registered loans and other assets
worth DKK 324.2 billion (31 December 2020: DKK 326.5 billion) as collateral for covered bonds issued under Danish, Finnish and Swedish law.
The table below shows assets provided as collateral for liabilities or contingent liabilities. Assets provided as collateral under repo transactions are
shown separately whereas the types explained above are included in the column ‘Other’.
(DKK millions)
Repo
Other
Total
Repo
Other
Total
31 March 2021
31 December 2020
Due from credit institutions
Trading and investment securities
Loans at fair value
Loans at amortised cost
Assets under insurance and
unit-linked investment contracts
Other assets
Total
Own issued bonds
-
257,466
-
-
-
-
29,526
74,254
804,706
336,256
391,104
66
29,526
331,720
804,706
336,256
391,104
66
-
237,453
-
-
-
-
28,886
80,062
816,284
360,511
370,176
52
28,886
317,515
816,284
360,511
370,176
52
257,466
25,197
1,635,912
87,967
1,893,379
113,163
237,453
19,556
1,655,971
93,992
1,893,424
113,548
Total, including own issued bonds
282,663
1,723,879
2,006,542
257,009
1,749,963
2,006,972
Securities provided as collateral under agreements that entitle the counterparty to sell the securities or provide them as collateral for other loans
amounted to DKK 257.5 billion as at 31 March 2021 (31 December 2020: DKK 237.5 billion).
As at 31 March 2021, the Group had received securities worth DKK 319.4 billion (31 December 2020: DKK 309.8 billion) as collateral for reverse repo
transactions, securities lending, derivatives transactions and other transactions entered into on the standard terms for such transactions. As the party
receiving the collateral, the Group is entitled in most cases to sell the securities or provide the securities as collateral for other loans in exchange for
returning similar securities to the counterparty at the expiry of the transactions. As at 31 March 2021, the Group had sold securities or provided secu-
rities as collateral worth DKK 133.9 billion (31 December 2020: DKK 132.3 billion).
The Group also receives many other types of assets as collateral in connection with its ordinary lending activities. The Group has not received the own-
ership of these assets. The risk management notes of the Annual Report 2020 provide more details on assets received as collateral in connection with
ordinary lending activities.
Danske Bank / Interim report – first quarter 2021 45/64
Notes – Danske Bank Group
G11. Fair value information for financial instruments
Financial instruments are recognised in the balance sheet at fair value or amortised cost.
(DKK millions)
Financial assets
Cash in hand and demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Loans held for sale
31 March 2021
Fair value
Amortised cost
31 December 2020
Fair value
Amortised cost
-
60,869
652,544
169,160
-
1,017,053
84,891
502,946
-
312,347
31,559
-
133,478
1,027,304
-
-
-
9
-
52,402
682,948
165,141
-
1,023,323
82,795
521,245
-
320,702
29,026
-
131,628
1,024,607
-
-
-
416
Total
2,487,463
1,504,696
2,527,854
1,506,379
Financial liabilities
Due to credit institutions and central banks
Trading portfolio liabilities
Deposits
Issued bonds at fair value
Issued bonds at amortised cost
Deposits under pooled schemes and unit-linked investment contracts
Liabilities in disposal groups held for sale
Non-preferred senior bonds
Subordinated debt
Loan commitments and guarantees
114,263
419,884
158,225
784,834
-
86,263
-
-
-
-
100,682
-
1,224,828
-
235,858
-
7
108,641
38,253
3,173
92,873
499,334
150,844
784,027
-
82,905
-
-
-
-
118,309
-
1,182,937
-
245,573
-
47
106,371
32,337
2,724
Total
1,563,468
1,711,443
1,609,983
1,688,298
Investment securities at fair value includes bonds measured at fair value through other comprehensive income, see the table on bonds in the Risk ma-
nagement notes. All other financial assets in the column ‘Fair value’ are mandatorily measured at fair value through profit or loss under IFRS 9. Except
for trading portfolio liabilities, all other financial liabilities are measured at fair value through profit or loss using the fair value option.
Financial instruments at fair value
Note G33(a) of the Annual Report 2020 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 valued substantially on the basis of non-observable input are recognised in the Non-observable input category. This category
covers instruments such as unlisted shares, some unlisted bonds and a very limited portion of the derivatives portfolio.
If, at the balance sheet date, a financial instrument's classification differs from its classification at the beginning of the year, the classification of the
instrument changes. Changes are considered to have taken place at the balance sheet date. Developments in the financial markets have resulted in re-
classification between the categories. Some bonds have become illiquid and have therefore been moved from the Quoted prices to the Observable input
category, while other bonds have become liquid and have been moved from the Observable input to the Quoted prices category. The amounts transferred
are insignificant.
Financial instruments at amortised cost
Note G33(b) in Annual Report 2020 provides information on the difference between the carrying amount and the fair value of financial instruments rec-
ognised at amortised cost. No significant change to this difference has occurred during the first three months of 2021.
Danske Bank / Interim report – first quarter 2021 46/64
Notes – Danske Bank Group
G11. Fair value information for financial instruments continued
(DKK millions)
31 March 2021
Financial assets
Due from credit institutions and central banks
Derivatives
Trading portfolio bonds
Trading portfolio shares
Investment securities, bonds
Investment securities, shares
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts, bonds
Assets under insurance contracts, shares
Assets under insurance contracts, derivatives
Quoted prices
Observable input
Non-observable
input
Total
-
4,444
308,297
14,515
150,398
31
-
84,891
182,473
129,492
145
60,869
307,940
14,868
-
17,788
-
1,017,053
-
24,018
2,227
118,717
-
2,402
-
78
-
943
-
-
6,839
36,601
2,434
60,869
314,786
323,165
14,593
168,186
974
1,017,053
84,891
213,330
168,320
121,296
Total
874,686
1,563,480
49,297
2,487,463
Financial liabilities
Due to credit institutions and central banks
Derivatives
Obligations to repurchase securities
Deposits
Issued bonds at fair value
Deposits under pooled schemes and unit-linked investment contracts
-
4,374
131,593
-
784,834
-
114,263
278,662
2,267
158,225
-
86,263
-
2,960
28
-
-
-
114,263
285,996
133,888
158,225
784,834
86,263
Total
920,801
639,680
2,988
1,563,468
Danske Bank / Interim report – first quarter 2021 47/64
Notes – Danske Bank Group
G11. Fair value information for financial instruments continued
(DKK millions)
31 December 2020
Financial assets
Due from credit institutions and central banks
Derivatives
Trading portfolio bonds
Trading portfolio shares
Investment securities, bonds
Investment securities, shares
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts, bonds
Assets under insurance contracts, shares
Assets under insurance contracts, derivatives
Quoted prices
Observable
input
Non-observable
input
Total
-
2,021
275,717
15,595
144,208
-
-
82,795
189,486
120,021
-
52,402
373,998
11,296
-
20,598
-
1,023,323
-
25,198
2,122
138,734
-
3,547
-
775
-
335
-
-
7,438
35,026
3,220
52,402
379,566
287,013
16,370
164,806
335
1,023,323
82,795
222,122
157,169
141,954
Total
829,843
1,647,670
50,341
2,527,854
Financial liabilities
Due to credit institutions and central banks
Derivatives
Obligations to repurchase securities
Deposits
Issued bonds at fair value
Deposits under pooled schemes and unit-linked investment contracts
-
1,620
131,193
-
784,027
-
92,873
361,681
1,048
150,844
-
82,905
-
3,684
108
-
-
-
92,873
366,985
132,349
150,844
784,027
82,905
Total
916,840
689,351
3,792
1,609,983
Danske Bank / Interim report – first quarter 2021 48/64
Notes – Danske Bank Group
G11. Fair value information for financial instruments continued
Financial instruments valued on the basis of non-observable input
The tables below shows financial instruments valued on the basis of non-observable input.
(DKK millions)
31 March 2021
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
31 December 2020
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
Sensitivity (change in fair value)
Gains/losses for the period
Carrying amount
Increase
Decrease
Realised
Unrealised
36,601
993
6,839
1,876
35,026
1,002
7,438
3,083
-
99
99
-
-
100
106
-
-
99
99
-
-
100
106
-
281
-96
8
-
411
200
235
-
2,023
-4
45
-1,250
-1,276
-39
-236
489
For unlisted shares allocated to insurance contract policyholders, the policyholders assume most of the risk on the shares. Therefore, changes in the fair
value of those shares will only to a limited extent affect the Group’s net profit. The Group’s remaining portfolio of unlisted shares consists primarily of
banking-related investments and holdings in private equity funds. The sensitivity of the fair value measurement to changes in the uno bservable input
disclosed in the table is calculated as a 10% increase or 10 % decrease in fair value. Under current market conditions, a 10 % decrease in the fair value
is considered to be below a possible alternative estimate of the fair value at the end of the period. The unrealised adjustments in the three month period
ended 31 March 2021 were attributable to various unlisted shares.
The estimated fair value of illiquid bonds depends significantly on the estimated credit spread. In the table, the sensitivity of the fair value measurement
to changes in non-observable input is calculated as a 50bps widening or narrowing of the credit spread.
A substantial number of derivatives valued 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. Changing one or more of the non-observable inputs to reflect reasonable, possible alternative
assumptions would not change the fair value of the derivatives significantly above what is already covered by the reserve related to fair value adjustment
for model risk.
Shares, bonds and derivatives valued on the basis of non-observable input
Reconciliation from beginning to end of period
31 March 2021
31 December 2020
(DKK millions)
Shares
Bonds
Derivatives
Shares
Bonds
Derivatives
Fair value at 1 January
Value adjustment through profit or loss
Acquisitions
Sale and redemption
Transferred from quoted prices and observable input
Transferred to quoted prices and observable input
36,028
2,204
2,326
-2,964
-
-
7,438
53
53
-705
-
-
3,083
-1,250
-121
211
-
-47
41,223
-704
7,198
-9,620
-511
-1,558
4,099
-1
4,076
-1,572
836
-
2,480
489
-274
-522
1,618
-708
Fair value end of period
37,594
6,839
1,876
36,028
7,438
3,083
The value adjustment through profit or loss is recognised under Net trading income or loss. The transfer of derivatives to the Observable input category
consists primarily of maturity reductions, implying that the yield curves have become observable.
Danske Bank / Interim report – first quarter 2021 49/64
Notes – Danske Bank Group
Risk Management
The consolidated financial statements for 2020 provide a detailed description of the Group’s risk management practices.
Breakdown of credit exposure
Lending activities
Total
Core
Non-core
Counterparty
credit risk
Trading and
investment
securities
Customer-
funded
investments
(DKK billions)
31 March 2021
Balance sheet items
Demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Loans held for sale
Off-balance-sheet items
Guarantees
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
Total
31 December 2020
Balance sheet items
Demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Loans held for sale
Off-balance-sheet items
Guarantees
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
306.4
92.4
652.5
302.6
1,027.3
1,017.1
84.9
532.5
-
77.6
268.7
196.9
0.2
306.4
31.6
-
-
1,025.5
804.7
-
-
-
77.4
267.1
196.9
-
4,559.0
2,709.5
314.6
81.4
682.9
296.8
1,024.6
1,023.3
82.8
545.7
0.4
71.8
276.4
198.8
19.0
314.6
28.9
-
-
1,022.7
816.3
-
-
-
71.7
274.9
198.8
-
-
-
-
-
1.8
-
-
-
-
0.1
1.6
-
-
3.6
-
0.1
-
-
1.9
-
-
-
0.4
0.2
1.5
-
-
4.1
-
60.9
314.8
-
-
212.3
-
-
-
-
-
-
-
-
-
337.8
302.6
-
-
-
-
-
-
-
-
0.2
-
-
-
-
-
-
84.9
532.5
-
-
-
-
-
588.0
640.6
617.4
-
52.4
379.6
-
-
207.0
-
-
-
-
-
-
-
-
-
303.4
296.8
-
-
-
-
-
-
-
-
0.2
-
-
-
-
-
-
82.8
545.7
-
-
-
-
18.8
639.0
600.3
647.3
Total
4,618.6
2,727.9
In addition to credit exposure from lending activities, Danske Bank had made uncommitted loan offers and granted uncommitted lines of credit of DKK
255 billion at 31 March 2021 (31 December 2020: DKK 242 billion). These items are included in the calculation of the total risk exposure amount in
accordance with the Capital Requirements Directive.
Danske Bank / Interim report – first quarter 2021 50/64
Notes – Danske Bank Group
Credit exposure
Credit exposure from core lending activities
Credit exposure from lending activities in the Group’s core banking business includes loans, amounts due from credit institutions and central banks,
guarantees and irrevocable loan commitments. The exposure is measured net of expected credit losses and includes repo loans at amortised cost. For
reporting purposes, all collateral values are net of haircuts and capped at the exposure amount. The credit exposure from Non-core lending activities is
disclosed further on in these notes.
For details about the Group’s credit risk management and the use of information on expected credit losses for risk management purposes, see Risk
Management 2020.
Credit portfolio in core activities broken down by rating category and stages
The table below breaks down the credit exposure by rating categories and stages. Further information on classification of cus tomers can be found on
page 181 in Annual report 2020.
31 March 2021
(DKK billions)
PD level
Upper
Lower
Gross exposure
Stage 1 Stage 2 Stage 3
Expected credit loss
Stage 1 Stage 2 Stage 3
Net exposure
Stage 1 Stage 2 Stage 3
Net exposure, ex collatera
Stage 1 Stage 2 Stage 3
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
0.01
-
0.03
0.01
0.06
0.03
0.14
0.06
0.31
0.14
0.63
0.31
1.90
0.63
1.90
7.98
7.98 25.70
25.70 99.99
100.00 100.00
280.2
207.1
550.7
582.1
482.7
293.5
135.4
20.6
1.5
0.5
0.1
0.1
0.4
1.1
2.6
6.2
16.1
35.1
34.4
10.0
24.0
0.2
-
-
0.1
0.4
0.3
0.3
1.1
1.0
1.0
25.3
17.8
-
-
0.1
0.2
0.3
0.4
0.6
0.5
-
-
-
-
-
-
-
0.1
0.3
1.0
2.5
1.4
1.6
-
-
-
0.1
-
-
-
-
-
-
5.3
8.0
280.2
207.1
550.6
582.0
482.4
293.1
134.8
20.1
1.6
0.5
0.1
0.1
0.4
1.1
2.6
6.1
15.8
34.1
31.9
8.7
22.4
0.2
-
-
-
0.4
0.3
0.3
1.1
1.0
1.0
19.9
9.8
260.0
83.4
248.3
245.7
157.7
103.7
43.1
5.8
0.3
0.2
-
-
0.1
0.3
0.8
2.1
4.2
9.1
10.5
0.3
11.0
0.1
-
-
-
0.1
-
-
0.3
0.3
0.1
2.7
1.9
2,554.5
130.1
47.4
2.2
6.9
13.4
2,552.3
123.3
33.9
1,148.1
38.4
5.2
31 December 2020
(DKK billions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
PD level
Net exposure, ex collateral
Lower Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Expected credit loss
Gross exposure
Net exposure
Upper
-
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
99.99
100.00 100.00
270.7
239.9
536.8
574.9
501.2
282.4
131.8
20.2
1.3
1.0
0.1
0.1
0.4
0.8
2.0
7.4
19.1
40.9
35.3
10.2
25.1
0.2
-
-
-
0.4
0.3
1.6
1.0
0.7
1.0
25.8
18.0
-
-
0.1
0.2
0.4
0.4
0.7
0.4
-
-
-
-
-
-
-
0.1
0.3
1.0
2.6
1.1
2.4
-
-
-
-
-
-
-
-
-
-
5.1
7.9
270.7
239.8
536.7
574.7
500.8
281.9
131.1
19.7
1.3
1.0
0.1
0.1
0.4
0.8
2.0
7.3
18.8
40.0
32.7
9.0
22.7
0.2
-
-
-
0.4
0.3
1.6
1.0
0.7
1.0
20.7
10.1
252.4
119.2
234.9
241.9
166.9
96.8
38.5
5.2
0.3
0.5
-
-
0.1
0.2
0.6
2.8
5.9
13.0
10.1
0.6
10.9
0.1
-
-
-
0.1
-
0.5
0.2
0.1
0.1
3.8
2.2
2,560.2
141.4
48.9
2.3
7.4
12.9
2,558.0
134.0
35.9
1,156.6
44.3
7.0
Danske Bank / Interim report – first quarter 2021 51/64
Notes – Danske Bank Group
Credit exposure continued
Credit portfolio in core activities broken down by industry (NACE) and stages
The table below breaks down credit exposure by industry. The industry segmentation is based on the classification principles of the Statistical Classifi-
cation of Economic Activities in the European Community (NACE) standard that has been adapted to the Group’s business risk approach used for the
active management of the credit portfolio.
31 March 2021
(DKK billions)
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Public institutions
Financials
Agriculture
Automotive
Capital goods
Commercial property
Construction and building materials
Consumer goods
Hotels, restaurants and leisure
Metals and mining
Other commercials
Pharma and medical devices
Private housing co-ops and non-
profit associations
Pulp, paper and chemicals
Retailing
Services
Shipping, oil and gas
Social services
Telecom and media
Transportation
Utilities and infrastructure
Personal customers
352.0
118.0
56.2
28.8
69.2
302.2
45.5
63.4
9.4
11.5
14.0
51.3
201.9
36.5
21.2
62.5
35.1
26.4
21.1
12.1
56.4
959.6
0.3
1.9
8.0
1.9
6.4
10.1
4.0
4.7
4.4
0.5
1.3
0.2
4.2
1.1
3.6
3.6
5.4
0.8
0.5
3.5
4.1
59.6
-
0.3
6.5
0.9
1.9
6.3
1.9
1.6
2.1
0.1
0.1
0.1
2.0
0.6
2.4
1.2
6.7
1.3
0.2
1.0
0.1
9.9
-
-
0.1
-
0.1
0.6
-
-
-
-
-
-
0.1
-
-
0.1
0.1
-
-
-
-
0.9
-
0.1
0.9
0.2
0.5
1.1
0.3
0.2
0.2
-
-
-
0.1
-
0.2
0.2
0.4
0.1
-
0.2
0.1
2.2
-
0.2
1.5
0.2
0.7
1.2
0.6
0.5
0.5
-
-
-
0.3
0.2
0.9
0.6
2.4
0.3
0.1
0.1
-
3.2
352.0
118.0
56.1
28.8
69.2
301.7
45.4
63.4
9.4
11.5
14.0
51.2
201.9
36.5
21.1
62.4
35.0
26.4
21.1
12.1
56.4
958.7
0.3
1.8
7.1
1.7
6.0
9.0
3.7
4.5
4.2
0.5
1.3
0.2
4.0
1.1
3.4
3.5
5.0
0.7
0.5
3.4
4.0
57.4
-
0.1
5.0
0.7
1.3
5.1
1.4
1.1
1.7
0.1
0.1
0.1
1.8
0.4
1.5
0.6
4.3
1.0
0.1
0.8
-
6.7
348.0
103.3
13.5
21.4
60.5
59.0
32.6
44.3
2.8
9.1
9.7
48.1
33.0
24.9
11.6
51.1
19.0
10.3
19.1
5.7
41.5
179.7
-
1.1
1.1
1.0
5.2
0.9
1.7
2.7
1.4
0.2
0.3
0.1
1.0
0.3
2.4
2.3
2.4
0.4
0.3
1.8
3.5
8.5
-
-
0.5
0.3
0.7
0.4
0.6
0.1
0.4
-
-
-
0.2
0.1
0.7
0.2
-
0.5
-
0.2
-
0.4
Total
2,554.5
130.1
47.4
2.2
6.9
13.4
2,552.3
123.3
33.9
1,148.1
38.4
5.3
As at 31 March 2021, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 23.8 billion (31 December
2020: DKK 23.3 billion) and expected credit losses of DKK 2.2 billion (31 December 2020: DKK 2.4 billion). Those exposures represent the majority of
the exposures in stage 3 within the Shipping, oil and gas industry at the end of March 2021.
For the Hotels, restaurants and leisure industry, the gross exposure within stage 2 increased by DKK 1.3 billion from the end of 2020 to 31 March 2021
while the expected credit losses remained unchanged. This is primarily due to an increase in collateral of DKK 0.8 billion bu t also due to the transfer of
exposures from stage 1 to stage 2 improving the overall average credit quality within stage 2.
Danske Bank / Interim report – first quarter 2021 52/64
Notes – Danske Bank Group
Credit exposure continued
31 December 2020
(DKK billions)
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Public institutions
Financials
Agriculture
Automotive
Capital goods
Commercial property
Construction and building materials
Consumer goods
Hotels, restaurants and leisure
Metals and mining
Other commercials
Pharma and medical devices
Private housing co-ops. and non-profit
associations
Pulp, paper and chemicals
Retailing
Services
Shipping, oil and gas
Social services
Telecom and media
Transportation
Utilities and infrastructure
Personal customers
363.8
126.1
58.7
27.5
68.6
312.8
43.6
62.2
11.4
12.7
22.1
47.2
203.2
38.1
20.5
57.4
33.5
26.0
20.3
11.4
64.2
928.9
-
1.8
7.7
3.2
7.0
11.5
5.1
4.3
3.1
0.6
1.1
2.6
3.6
1.6
4.1
3.8
6.0
0.9
0.6
3.3
4.2
65.6
-
0.3
6.7
0.5
2.1
7.1
2.0
2.0
1.7
0.1
0.1
0.2
2.0
0.6
2.5
1.6
6.6
1.2
0.2
1.0
0.1
10.2
-
0.1
0.1
-
-
0.6
-
-
-
-
0.1
-
0.1
-
-
0.1
0.1
-
-
-
-
0.9
-
0.1
0.9
0.2
0.5
0.9
0.3
0.3
0.2
-
-
-
0.3
-
0.2
0.2
0.7
0.1
-
0.2
-
2.2
-
0.2
1.4
0.1
0.7
1.1
0.6
0.5
0.4
-
-
-
0.2
0.2
1.0
0.6
2.1
0.3
0.1
0.1
-
3.1
363.8
126.1
58.6
27.5
68.5
312.1
43.6
62.2
11.4
12.7
22.0
47.2
203.1
38.1
20.5
57.3
33.4
26.0
20.3
11.4
64.2
928.0
-
1.7
6.8
2.9
6.5
10.6
4.8
4.0
2.9
0.6
1.1
2.5
3.4
1.5
3.8
3.6
5.2
0.8
0.6
3.0
4.2
63.4
-
0.1
5.3
0.5
1.4
5.9
1.4
1.5
1.3
0.1
-
0.2
1.7
0.4
1.5
1.0
4.5
0.9
0.1
0.9
-
7.2
359.5
111.8
12.9
20.2
59.9
68.2
31.2
42.5
2.9
10.3
20.4
43.7
33.2
27.3
10.8
46.5
17.6
9.6
18.3
5.1
45.5
159.1
-
1.0
0.8
1.6
5.6
1.0
2.0
2.7
0.9
0.3
0.3
1.8
0.8
0.4
2.8
2.0
1.8
0.4
0.3
1.8
3.6
12.3
-
0.1
0.6
0.2
0.7
0.7
0.6
0.4
0.5
-
-
-
0.2
0.1
0.7
0.5
0.2
0.5
-
0.1
-
0.7
Total
2,560.2
141.4
48.8
2.3
7.4
12.9 2,558.0
134.0
35.9
1,156.6
44.3
7.0
Collateral
The Group uses a number of measures to mitigate credit risk, including collateral, guarantees and covenants. The main method is obtaining collateral. In
Annual Report 2020, a table showing collateral by type (after haircut) is included. The mitigating effect from collateral at the end of March 2021 can be
found as the difference between the columns ‘Net exposure’ and ‘Net exposure, ex collateral’ and amounted to DKK 1,517.8 billion at 31 March 2021
(31 December 2020: DKK 1,520.0 billion).
The Group uses guarantee schemes offered by the governments in our markets to mitigate the economic consequences of the corona crisis. The out-
standing amount of loans originated under such guarantee schemes was DKK 6.1 billion (31 December 2020: DKK 5.0 billion) with the guarantees
covering DKK 5.0 billion of the loans (31 December 2020: DKK 4.2 billion). A large part of the guarantees relates to Northern Ireland.
Danske Bank / Interim report – first quarter 2021 53/64
Notes – Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
31 March 2021
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
(DKK billions)
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Personal & Business
Customers
Personal Customers
Denmark
Personal Customers
Nordic
Business Customers
Asset Finance
Other
544.9
29.2
4.9
0.8
1.5
2.4
544.1
27.7
2.4
76.7
4.0
0.1
393.1
656.1
47.1
5.1
22.7
35.2
13.6
0.3
4.2
22.3
1.5
0.1
Total
1,646.4
101.1
33.0
Large Corporates &
Institutions
590.1
23.0
11.1
Northern Ireland
Group Functions
90.8
227.2
5.9
0.2
3.3
-
0.1
0.9
0.1
-
1.8
0.2
0.1
-
0.5
2.9
0.4
-
5.3
1.4
0.2
-
0.5
5.6
0.3
-
393.0
655.3
47.1
5.1
22.2
32.3
13.3
0.3
3.8
16.8
1.2
0.1
98.3
168.0
16.1
0.9
3.5
10.1
3.0
0.2
8.8
1,644.6
95.8
24.2
360.0
20.7
3.9
589.8
21.6
7.2
506.9
16.6
0.8
90.7
-
227.1
5.7
0.2
2.5
54.8
-
226.4
1.0
0.1
0.3
2.7
0.2
-
3.3
1.5
0.4
-
Total
2,554.5
130.1
47.4
2.2
6.9
13.4
2,552.3
123.3
33.9
1,148.1
38.4
5.2
31 December 2020
(DKK billions)
Personal & Business
Customers
Personal Customers
Denmark
Personal Customers
Nordic
Business Customers
Asset Finance
Group Functions
Gross exposure
Expected credit loss
Net exposure
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Stage 1
Stage 2
Stage 3
Net exposure, ex collateral
Stage 1
Stage 2
Stage 3
545.5
34.0
5.3
0.8
1.6
2.3
544.6
32.4
3.1
69.6
6.6
0.4
375.3
664.6
45.8
4.8
24.9
35.8
13.8
0.3
4.4
22.6
1.5
0.1
Total
1,635.9
108.9
34.0
Large Corporates &
Institutions
Northern Ireland
Group Functions
588.3
25.6
11.6
83.1
253.0
6.9
0.1
3.1
-
0.1
1.0
0.1
-
1.9
0.2
0.1
-
0.6
2.8
0.4
-
5.4
1.8
0.2
-
0.5
5.4
0.3
-
375.2
663.6
45.7
4.8
24.3
33.0
13.4
0.3
3.9
17.3
1.2
0.1
90.6
180.3
15.6
0.9
4.7
10.0
2.8
0.2
8.5
1,633.9
103.5
25.5
357.0
24.3
3.7
588.1
23.7
7.9
497.7
18.4
0.6
83.0
-
253.0
6.7
0.1
2.4
49.6
1.5
-
252.3
-
0.3
3.5
0.2
-
4.4
2.2
0.4
-
Total
2,560.3
141.5
48.8
2.3
7.4
12.9
2,558.0
134.0
35.9
1,156.6
44.3
7.0
From 1 January 2021, the business segmentation was changed. Further information can be found in note G3(a).
Danske Bank / Interim report – first quarter 2021 54/64
Notes – Danske Bank Group
Credit exposure continued
Exposures subject to forbearance measures
The Group’s forbearance practices is described on page 188 in Annual Report 2020.
During the corona crisis, the Group has granted concessions to assist customers affected by the crisis. Such concessions repr esent an increase in gross
exposure of around DKK 36 billion, of which around DKK 12 billion (net of expected credit losses) is considered forbearance measures, see note G1(b)
section ‘Accounting treatment of the impacts on expected credit losses from the corona crisis’ in Annual report 2020 for the definition of when such
concessions are considered to be a forbearance measure. At the end of 2020, such concessions represented an increase in gross exposure of DKK 44
billion, of which around DKK 6 billion (net of expected credit losses) was considered forbearance measures. The concessions considered forbearance
measures relate primarily to Personal customers and the industries Shipping, oil and gas, Hotels, restaurants and leisure, Consumer goods and Retailing.
In our Nordic markets, such concessions are made on a voluntary basis, while in Northern Ireland, the Bank was selected by the UK Government to
provide concessions through the UK government-backed lending schemes.
Exposures subject to forbearance measures
(DKK millions)
Active forbearance
Under probation
Total
31 March 2021
31 December 2020
Performing Non-performing1
Performing
Non-performing1
9,542
16,048
25,590
10,293
-
10,293
11,973
14,962
10,481
-
26,934
10,481
1These loans are part of the total non-performing loan amount. For more details, see the “Non-performing loans in core activities” table.
Danske Bank / Interim report – first quarter 2021 55/64
Notes – Danske Bank Group
Credit exposure continued
Non-performing loans
The Group defines non-performing loans as stage 3 exposures. However, for non-retail exposures with one or more non-performing loans, the entire
amount of the customer’s exposure is considered to be non-performing. For retail exposures, only impaired facilities are included in non-performing loans.
The Group excludes exposures in stage 3 with no impairment charges or where the allowance account is considered immaterial to the gross exposure.
The impact of corona crisis on total gross NPL exposures was limited in the first quarter of 2021.
The table below shows the reconciliation as at 31 March 2021 between the gross exposure in stage 3 and gross non-performing loans.
31 March 2021
31 December 2020
Non-default
Default
Total Non-default
Default
29.6
12.7
16.9
5.2
11.7
17.8
3.7
14.0
8.0
6.0
47.4
16.5
30.9
13.2
17.7
30.8
13.6
17.2
5.1
12.1
18.0
3.4
14.6
7.9
6.7
Total
48.8
17.0
31.8
12.9
18.8
Non-performing loan bridge
(DKK billions)
Gross exposure in stage 3
None or an immaterial allowance account
Gross non-performing loans
Expected credit loss
Net non-performing loans
Non-performing loans in core activities
(DKK millions)
Total non-performing loans
- portion from customers in default*
Coverage ratio (default) (%)
Coverage ratio (non-default) (%)
Coverage ratio (total non-performing loans) (%)
Non-performing loans as a percentage of total gross exposure (%)
1Part of which is also shown in the ”Exposures subject to forbearance measures” table.
Allowance account in core activities
(DKK millions)
ECL allowance account as at 1 January 2020
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
31 March
2021
31 December
2020
17,712
6,047
18,842
6,698
99
67
84
1.1
100
54
75
1.2
Stage 1
Stage 2
Stage 3
Total
1,306
1,063
-117
-22
542
-289
-193
-1
-22
-4
5,908
-1,006
754
-984
1,860
-1,307
2,268
-6
-7
-42
13,237
-57
-636
1,006
2,105
-3,584
2,209
-1,069
-396
40
20,451
-
-
-
4,507
-5,180
4,283
-1,076
-425
-6
ECL allowance account as at 31 December 2020
2,263
7,438
12,853
22,554
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
ECL allowance account as at 31 March 2021
784
-74
-9
196
-188
-794
-
15
-22
-768
219
-401
403
-840
757
-4
39
18
-15
-145
410
712
-2,106
961
587
187
3
-
-
-
1,311
-3,135
924
583
241
-1
2,170
6,860
13,447
22,477
Notes – Danske Bank Group
Credit exposure continued
Allowance account in core activities broken down by segment
(DKK millions)
ECL allowance account as at 1 January 2020
ECL on new assets
ECL on assets derecognised
Impact on remeasurement of ECL (incl. change in models)
Write-offs debited to allowance account
Foreign currency translation
Other changes
Danske Bank / Interim report – first quarter 2021 56/64
Personal &
Business
Customers
Large Corpo-
rates &
Institutions
Northern
Ireland
Group
Functions
Allowance
account
Total
14,771
2,399
-3,043
1,807
-160
14
-14
4,942
1,990
-2,031
2,122
-865
-388
8
730
108
-103
354
-51
-48
-1
990
160
-122
-39
-9
58
-1
8
10
-3
1
-
-2
1
15
2
-2
2
-
-
-
20,451
4,507
-5,180
4,283
-1,076
-425
-6
22,554
1,311
-3,135
924
583
241
-1
ECL allowance account as at 31 December 2020
15,773
5,777
ECL on new assets
ECL on assets derecognised
Impact on remeasurement of ECL (incl. change in models)
Write-offs debited to allowance account
Foreign currency translation
Other changes
658
-991
768
-251
17
-44
491
-2,019
192
843
165
44
ECL allowance account as at 31 March 2021
15,930
5,493
1,036
17
22,477
The method used for calculating expected credit losses is described in detail in note G15 of the Annual Report 2020.
Macroeconomic scenarios
The incorporation of forward-looking elements reflects the expectations of the Group’s senior management and involves the creation of scenarios (base
case, upside and downside scenarios), including an assessment of the probability for each scenario. The purpose of using multiple scenarios is to model
the non-linear impact of assumptions about macroeconomic factors on the expected credit losses.
The forward-looking information is based on a three-year forecast period converging to steady state in year seven. The base case is an extension of the
Group’s official view of the Nordic economies (the Nordic Outlook report). At 31 March 2021, the base case scenario reflects a recovery later in 2021.
To fully capture the downside risk, the downside scenario is the severe recession scenario applied in the Group’s ICAAP processes and is similar in
nature to regulatory stress tests. The severe recession scenario reflects negative growth and falling property prices for a longer period. At 31 December
2020, the downside scenario reflected a W-shaped trend in the light of the corona crisis with the economies being back on track in the second or third
quarter of 2021. The change of the downside scenario has been made in order to capture the risk of prolonged lockdowns due to new coronavirus variants
and in order for the ECL calculation to include potential downside risks due to the elevated asset prices across the Nordics.
Forecasts are produced for the coming three years. After this period, the outlook returns to a steady-state level after a further four years. The macroe-
conomic parameters in the base case and downside scenario entering into the ECL calculation for the forecast horizon as an average across the Group’s
core markets are included below.
31 March 2021
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base case
2022
2021
2023
Downside
2022
2021
3.0
4.5
6.1
1.4
4.6
3.9
-0.1
0.2
3.0
4.2
5.2
1.4
3.7
2.3
0.0
0.4
1.9
2.6
5.0
1.5
2.3
2.2
0.1
0.5
-4.2
-6.3
8.9
-0.2
-2.7
-13.1
-0.6
-1.1
-1.5
-2.3
9.9
-0.7
-0.7
-8.3
-0.6
-0.5
2023
0.3
0.5
10.4
-0.1
-0.6
-1.5
-0.6
-0.7
The upside scenario represents a slightly better outlook than the base case scenario across the macroeconomic parameters.
Danske Bank / Interim report – first quarter 2021 57/64
Notes – Danske Bank Group
Credit exposure continued
At 31 December 2020, the following base case and downside scenarios were used:
31 December 2020
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base case
2022
2021
2023
2021
Downside
2022
2023
3.3
4.1
6.1
1.5
4.7
2.7
0.0
0.3
2.1
3.1
5.5
1.6
1.8
2.6
0.1
0.6
1.8
2.5
5.1
1.6
1.7
2.9
-0.2
0.7
-1.2
-1.7
7.4
0.7
0.6
-4.1
-0.1
0.1
2.7
4.8
6.6
1.4
1.9
2.6
0.0
0.4
2.3
3.6
5.9
1.4
1.8
2.9
0.2
0.7
The base case scenario enters with a probability of 75% (31 December 2020: 60%), the upside scenario with a probability of 10% (31 December 2020:
15%) and the downside scenario with a probability of 15% (31 December 2020: 25%). On the basis of these assessments, the allowance account as at
31 March 2021 amounted to DKK 22.5 billion (31 December 2020: 22.6 billion). If the base case scenario was assigned a probability of 100%, the
allowance account would decrease DKK 1.1 billion (31 December 2020: 0.4 billion). Compared to the base case scenario, the allowance account would
increase DKK 7.3 billion (31 December 2020: 1.7 billion), if the downside scenario was assigned a probability of 100%. The increase reflects primarily
the transfer of exposures from stage 1 to stage 2 and increased expected credit losses within stage 2. If instead the upside scena rio was assigned a
probability of 100%, the allowance account would decrease by DKK 0.4 billion (31 December 2020: 0.4 billion) compared to the base case scenario.
However, note that the applied scenarios differ from the scenarios used at 31 December 2020, and the changes in weighting and sensitivities from end
of 2020 to end of the first quarter 2021 are therefore not directly comparable, especially due to the downside scenario being a severe downside scenario
at 31 March 2021 to fully capture the downside risks. Further, it should be noted that the expected credit losses in the individual scenarios (i.e. without
the weighting) do not represent forecasts of expected credit losses (ECL).
Post-model adjustments
Management applies judgement when determining the need for post-model adjustments. At 31 March 2021, the post-model adjustments amounted to
DKK 6.5 billion (31 December 2020: 6.4 billion). The post-model adjustments primarily relate to the following types of risks:
specific macroeconomic risks on certain industries not fully captured by the expected credit loss model, for instance the A griculture industry for
such industries, supplementary calculations are made in order to ensure sufficient impairment coverage). This also includes post-model adjust-
ments to capture the immediate risks arising from the corona crisis
non-linear downside risk, for instance on the property market in Copenhagen and other high growth areas [for which the macroeconomic forecasts
used in the models are based on the property market as a whole]
portfolios where the credit risk assessment process has identified an underestimation of the expected credit losses
upcoming model changes that will impact the expected credit loss model
Following the significant impact on the expected credit losses from post-model adjustments, the table below provides more information about the adjust-
ments.
Post-model adjustments by type and mostly impacted industries
(DKK billion)
Specific macroeconomic risks
Agriculture
Commercial Property
Personal customers
Others
Specific macroeconomic risks, total
of which corona crisis related
Process related
Upcoming model changes
Total
31 March
2021
31-December
2020
0.8
1.5
1.1
0.3
3.7
1.9
1.9
0.9
6.5
0.8
1.6
1.1
0.4
3.9
2.0
1.8
0.6
6.4
Further information on the post-model adjustments relating to the corona crisis can be found on page 196 in Annual Report 2020.
31 March 2021
(DKK millions)
Non-core banking
Personal customers
Commercial customers
Public Institutions
Non-core conduits etc.
31 December 2020
(DKK millions)
Non-core banking
Personal customers
Commercial customers
Public Institutions
Non-core conduits etc.
Danske Bank / Interim report – first quarter 2021 58/64
Notes – Danske Bank Group
Credit exposure from Non-core lending activities
Credit portfolio in non-core activities broken down by industry (NACE) and stages
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
743
19
549
175
2,742
35
2
31
3
-
59
-
58
-
815
1
-
1
-
-
1
4
-
4
-
-
4
41
-
41
-
784
742
19
549
175
2,742
825
3,485
31
2
27
3
-
31
17
-
17
-
31
344
17
174
152
263
48
607
10
-
8
2
-
10
3
-
3
-
31
34
Total
3,485
35
873
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
1,285
24
1,033
227
2,603
74
2
69
4
-
259
-
259
-
778
4
-
4
-
-
4
21
-
21
-
-
226
-
226
-
686
1,281
24
1,029
227
2,603
53
2
48
4
-
33
-
33
-
92
588
23
403
162
256
21
912
3,884
53
125
844
18
-
16
3
-
18
-
-
-
-
-
-
Total
3,887
74
1,037
Credit portfolio in non-core activities broken down by rating category and stages
31 March 2021
(DKK millions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
31 December 2020
(DKK millions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
PD level
Net exposure, ex collateral
Lower Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Expected credit loss
Gross exposure
Net exposure
Upper
-
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
99.99
100.00 100.00
464
1,088
1,251
381
123
65
33
32
-
40
8
-
5
7
6
5
3
2
5
-
2
-
-
3
5
4
4
2
1
1
-
31
823
-
-
-
-
-
-
-
-
-
-
-
3,485
35
873
1
-
-
-
-
-
-
-
4
-
-
-
4
-
-
-
-
-
-
-
3
-
30
792
464
1,088
1,251
381
123
65
32
32
-
40
8
-
5
7
6
5
3
2
1
-
2
-
-
3
5
4
4
2
1
-2
-
1
31
6
262
117
208
20
1
2
-5
-
-2
-1
-
5
2
3
-
-
-
-
-
-
-
825
3,485
31
48
607
10
-
3
-
-
-
-
-
-
-
-
31
34
PD level
Net exposure, ex collateral
Lower Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Expected credit loss
Gross exposure
Net exposure
Upper
-
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
0.01
0.03
0.06
0.14
0.31
0.63
1.90
7.98
25.70
99.99
100.00 100.00
432
1,189
1,205
322
210
107
160
32
2
38
190
-
12
7
3
8
4
8
18
2
2
9
-
8
5
2
6
3
5
28
-
28
952
3,887
74
1,037
-
-
-
-
-
1
2
-
-
-
-
4
-
-
-
-
-
-
1
18
2
-
-
-
-
-
-
-
-
-
30
-
27
854
432
1,189
1,205
322
210
106
158
32
2
38
190
-
12
7
3
8
4
7
1
-
2
9
-
8
5
2
6
3
5
-2
-
1
98
-
403
125
168
11
16
21
-7
-
-7
114
21
912
3,884
53
125
844
-
12
2
1
-1
-
-
-1
-
-
6
18
-
-
-
-
-
-
-
-
-
-
-
-
Notes – Danske Bank Group
Counterparty credit risk and credit exposure from trading and investment securities
(DKK billions)
Counterparty credit risk
Derivatives with positive fair value
Reverse transactions and other loans at fair value1
Credit exposure from other trading and investment securities
Bonds
Shares
Other unutilised commitments2
Total
Danske Bank / Interim report – first quarter 2021 59/64
31 March 31 December
2020
2021
314.8
273.2
624.8
15.6
0.2
379.6
259.4
583.4
16.7
0.2
1,228.6
1,239.3
1 Reverse transactions and other loans at fair value included as counterparty credit risk are loans at the trading units of Large Corporates & Institutions. These loans consist of reverse transactions
of DKK 272.0 billion (31 December 2020: DKK 256.7 billion), of which DKK 60.0 billion relates to credit institutions and central banks (31 December 2020: DKK 50.0 billion), and other primarily
short-term loans of DKK 1.2 billion ((31 December 2020: DKK 2.8 billion), of which DKK 0.8 billion (31 December 2020: DKK 2.4 billion) relates to credit institutions and central banks.
2 Other unutilised commitments comprise private equity investment commitments and other obligations.
Derivatives with positive fair value
(DKK millions)
Derivatives with positive fair value before netting
Netting (under accounting rules)
Carrying amount
Netting (under capital adequacy rules)
Net current exposure
Collateral
Net amount
Derivatives with positive fair value after netting for accounting purposes:
Interest rate contracts
Currency contracts
Other contracts
31 March
2021
31 December
2020
715,807
401,021
314,786
223,910
90,876
65,745
25,131
214,618
99,293
875
880,479
500,913
379,566
269,964
109,601
78,835
30,767
258,318
119,925
1,323
314,786
379,566
Total
Bond portfolio
(DKK millions)
31 March 2021
Held for trading (FVPL)
Managed at fair value
Held to collect and sell
Held to collect
Total
31 December 2020
Held for trading (FVPL)
Managed at fair value
Held to collect and sell
Held to collect
Total
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
220,288
15,462
18,864
33,747
2,475
925
4,523
3,706
28,871
24,710
79,870
86,603
56,181
1,560
10,258
7,526
5,082
605
9,565
1,765
10,267
1,599
245
131
Total
323,165
44,860
123,325
133,478
288,361
11,629
220,054
75,525
17,017
12,242
624,828
197,777
19,084
15,272
31,836
1,920
929
3,469
1,671
19,285
22,851
82,299
88,742
53,729
1,964
8,641
7,633
5,712
630
5,899
1,746
8,591
2,576
1,192
-
287,014
48,034
116,772
131,629
263,969
7,990
213,177
71,967
13,987
12,358
583,448
At 31 March 2021, the Group had an additional bond portfolio, including bond-based unit trust certificates, worth DKK 213,330 million (31 December
2020: DKK 222,122 million) recognised as assets under insurance contracts and thus not included in the table above. The section on insurance risk in
Annual Report 2020 provides more information. For bonds classified as hold-to-collect, fair value exceeded amortised cost as at 31 March 2021 and
31 December 2020, see note G11.
Danske Bank / Interim report – first quarter 2021 60/64
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
31 March 2021
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
Total
31 December 2020
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
Total
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
106,749
78,916
4,182
6,046
13,383
2,914
11,881
-
12,348
3,860
3,610
54
5,542
8,096
29,354
1,427
-
-
-
-
-
2,664
-
16
5,272
2,577
-
-
-
-
4
-
461
637
219,869
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
185
-
75,525
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,226
12,798
-
1
272
-
762
3
-
-
-
16
718
1
221
2,330
4,356
340
2,326
10
-
364
237
1,530
16
1
-
7
226
177
-
322
Total
328,948
158,796
6,748
21,170
16,057
2,915
12,533
5,508
17,216
3,879
3,611
54
5,549
8,342
30,249
1,889
1,364
288,361
11,629
220,054
75,525
17,017
12,242
624,828
80,654
91,397
2,955
3,681
13,457
3,921
11,693
-
7,964
2,187
4,357
249
5,347
4,987
30,316
803
-
-
-
-
-
1,876
-
-
4,404
999
-
-
-
-
4
-
299
409
213,177
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,096
10,693
-
1
466
-
751
3
-
-
-
15
711
1
249
2,968
3,977
1,489
1,657
15
2
27
75
1,432
59
4
-
56
176
181
-
239
296,800
167,341
5,540
16,031
15,348
3,925
12,186
4,479
11,147
2,249
4,361
249
5,402
5,182
31,208
1,103
897
263,969
7,990
213,177
71,967
13,987
12,358
583,448
Danske Bank / Interim report – first quarter 2021 61/64
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
31 March 2021
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub-inv. grade or unrated
Total
31 December 2020
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub-inv. grade or unrated
Total
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
239,601
12,034
21,750
3,840
-
5,317
-
1,456
1,273
3,089
-
-
-
-
11,244
16
369
-
-
-
-
-
-
-
-
-
-
-
219,381
-
-
-
-
641
-
-
32
-
-
-
-
-
75,510
-
15
-
-
-
-
-
-
-
-
-
-
-
16,406
51
167
-
-
371
-
-
-
-
-
-
-
22
417
9
2,664
166
74
3,051
467
1,804
2,151
492
292
343
27
285
Total
562,560
12,109
24,966
4,006
74
9,381
467
3,261
3,455
3,581
292
343
27
307
288,361
11,629
220,054
75,525
17,017
12,242
624,828
221,354
11,293
16,457
3,102
-
3,700
-
2,408
1,628
4,027
-
-
-
-
7,522
-
468
-
-
-
-
-
-
-
-
-
-
-
212,971
-
-
-
-
174
-
-
32
-
-
-
-
-
71,928
-
39
-
-
-
-
-
-
-
-
-
-
-
13,344
66
176
-
-
378
-
-
-
-
-
-
-
24
1,387
157
1,819
364
110
3,142
290
940
1,953
677
393
927
31
168
528,506
11,516
18,959
3,466
110
7,394
290
3,348
3,613
4,704
393
927
31
192
263,969
7,990
213,177
71,967
13,987
12,359
583,448
Danske Bank / Interim report – first quarter 2021 62/64
Statement by the management
The Board of Directors and the Executive Leadership Team (the management) have considered and approved Interim report – first
quarter 2021 of the Danske Bank Group.
The interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU.
Furthermore, the interim report has been prepared in accordance 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 assets, liabilities, total equity and financial
position at 31 March 2021 and of the results of the Group’s operations and the consolidated cash flows for the period starting on
1 January 2021 and ending on 31 March 2021. Moreover, in our opinion, the management’s report includes a fair review of
developments in the Group’s operations and financial position and describes the significant risks and uncertainty factors that may
affect the Group.
Copenhagen, 28 April 2021
Executive Leadership Team
Carsten Rasch Egeriis
CEO
Berit Behring
Karsten Breum
Stephan Engels
Glenn Söderholm
Philippe Vollot
Frans Woelders
Board of Directors
Karsten Dybvad
Chairman
Jan Thorsgaard Nielsen
Vice Chairman
Carol Sergeant
Vice Chairman
Martin Blessing
Lars-Erik Brenøe
Raija-Leena Hankonen
Bente Avnung Landsnes
Bente Bang
Elected by the employees
Kirsten Ebbe Brich
Elected by the employees
Thorbjørn Lundholm Dahl
Elected by the employees
Charlotte Hoffmann
Elected by the employees
Danske Bank / Interim report – first quarter 2021 63/64
Independent auditors’ review report
To the shareholders of Danske Bank A/S
Independent auditors’ review report on the consolidated interim financial statements
We have reviewed the consolidated interim financial statements of Danske Bank A/S for the financial period 1 January to 31 March
2021, pp. 24-61 which comprise the income statement, statement of comprehensive income, balance sheet, statement of capital,
cash flow statement and notes.
Management’s responsibility for the consolidated interim financial statements
Management is responsible for the preparation of the consolidated interim financial statements in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU and Danish disclosure requirements for listed financial companies, and for such internal
control as Management determines is necessary to enable the preparation of consolidated interim financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express a conclusion on the consolidated interim financial statements. We conducted our review in
accordance with the International Standard on Engagements to Review Interim Financial Information Performed by the Independent
Auditor of the Entity and additional requirements under Danish audit regulation. This requires that we express a conclusion about
whether anything has come to our attention that causes us to believe that the consolidated interim financial statements, taken as
a whole, have not been prepared, in all material respects, in accordance with the applicable financial reporting framework. This also
requires us to comply with relevant ethical requirements.
A review of financial statements in accordance with the International Standard on Engagements to Review Interim Financial Information
Performed by the Independent Auditor of the Entity is a limited assurance engagement. The auditor performs procedures primarily consisting
of inquiries of management and others within the entity, as appropriate, and applying analytical procedures, and evaluates the evidence
obtained.
A review is substantially less in scope than an audit performed in accordance with International Standards on Auditing. Accordingly, we do
not express an audit opinion on these consolidated interim financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial statements
for the financial period 1 January to 31 March 2021 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 entities.
Emphasis of matter
We draw attention to note G9 to the consolidated interim financial statements that includes a description of the contingent liability
regarding the uncertainty as to the outcome of the investigations by the authorities in Estonia, Denmark, France and the USA into
the terminated non-resident portfolio at Danske Bank’s Estonian Branch.
We agree to the accounting treatment of this matter in the consolidated interim financial statements, and accordingly our
conclusion is not modified.
Copenhagen, 28 April 2021
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No. 33 96 35 56
Kasper Bruhn Udam
State-Authorised
Public Accountant
Identification No
(MNE) mne29421
Jens Ringbæk
State-Authorised
Public Accountant
Identification No
(MNE) mne27735
Supplementary information
Danske Bank / Interim report – first quarter 2021 64/64
Financial calendar
23 July 2021
29 October 2021
Contacts
Stephan Engels
Chief Financial Officer
Claus Ingar Jensen
Head of Investor Relations
Links
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Danske Bank’s financial statements are available online at danskebank.com/Reports.