Assets
| Type | Time | Amount | Unit |
|---|
Revenue
| Type | Start date | End date | Amount | Unit |
|---|
XML
See the xml submitted here:
No XML document available for this report.
Separator
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
7
13
15
17
19
21
22
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
25
26
27
28
30
31
70
71
72
Danske Bank / Interim report – first half 2021 3/72
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
First half
2021
First half
Index
2020 21/20
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
10,965
6,595
2,291
982
457
21,291
12,770
-
8,521
737
7,783
17
7,801
1,869
11,127
5,956
1,897
897
309
20,185
13,022
-
7,163
5,269
1,894
-446
1,449
413
5,932
1,036
99
111
121
109
148
105
98
-
119
14
-
-
-
-
-
Q2
2021
5,515
3,193
1,025
491
262
10,486
6,497
-
3,989
240
3,750
-3
3,747
955
Q1
Index
2021 Q2/Q1
Q2
Index
2020 21/20
Full year
2020
5,450
3,402
1,266
491
195
10,805
6,273
-
4,531
497
4,034
20
4,054
914
101
94
81
100
134
97
104
-
88
48
93
-
92
104
5,567
2,715
1,755
799
123
10,959
6,638
-
4,321
1,018
3,304
-192
3,112
787
99
118
58
61
213
96
98
-
92
24
113
2
120
121
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
2,792
3,139
89
2,325
120
4,589
Attributable to additional tier 1 etc.
231
316
73
117
115
102
121
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*
335,557
236,761
257,975
336,669
1,809,805 1,822,545
655,578
298,758
554,604
4,815
130,659
612,527
304,812
532,154
1,783
141,634
335,557
236,761
130
336,606
276,908
70
99 1,809,805 1,827,873
652,541
93
302,638
102
532,470
96
1,913
37
141,952
108
612,527
304,812
532,154
1,783
141,634
100
257,975
336,669
86
99 1,822,545
655,578
94
298,758
101
554,604
100
4,815
93
130,659
100
130
345,938
257,883
70
99 1,838,126
682,945
93
296,769
102
545,708
96
2,797
37
139,064
108
Total assets
3,975,032 4,061,603
98 3,975,032 4,072,903
98 4,061,603
98 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
111,438
267,557
94,876
297,949
1,197,910 1,092,735
749,168
373,196
541,912
591,689
2,712
121,076
31,790
8,573
155,927
760,452
338,123
373,364
573,849
2,504
137,838
38,836
8,548
164,613
117
90
111,438
267,557
111,284
250,403
110 1,197,910 1,229,654
771,138
102
358,195
91
419,881
69
574,696
97
2,538
92
146,355
114
38,253
122
8,615
100
161,890
106
760,452
338,123
373,364
573,849
2,504
137,838
38,836
8,548
164,613
100
107
94,876
297,949
97 1,092,735
749,168
99
373,196
94
541,912
89
591,689
100
2,712
99
121,076
94
31,790
102
8,573
99
155,927
102
117
90
125,267
223,973
110 1,193,173
775,844
102
360,127
91
499,331
69
591,930
97
2,975
92
135,596
114
32,337
122
8,508
100
160,171
106
Total liabilities and equity
3,975,032 4,061,603
98 3,975,032 4,072,903
98 4,061,603
98 4,109,231
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)
-
6.7
7.0
0.72
60.0
60.0
23.3
18.0
110.4
193.0
21,926
-
0.8
0.9
0.79
64.5
64.5
22.1
17.6
88.3
182.9
22,191
-
3.1
6.6
0.73
62.0
62.0
23.3
18.0
110.4
193.0
21,926
-
3.5
7.5
0.72
58.1
58.1
23.4
18.1
118.7
189.7
21,978
-
100
-
2.6
5.7
0.77
60.6
60.6
22.1
17.6
88.3
182.9
22,191
2.0
4.7
2.6
0.76
66.0
65.1
23.0
18.3
100.7
187.6
22,376
-
99
99
*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 differences 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 23.
Executive summary
In the first half of 2021, we saw a gradual reopening of the
Nordic societies as the vaccines were being rolled out. As a
result of this, we saw a recovery in the economies, with labour
markets improving faster than in previous crises, and
consumer spending also approached or even exceeded
normal levels. The continuing rebound of economic activity in
Denmark as well as in the other Nordic countries is likely to
have a positive effect on customer activity and credit demand
for the rest of the year, allowing for a favourable operating
environment. While there are grounds
for optimism
regarding the ongoing economic recovery, it is too early to
conclude on the macroeconomic
implications of the
coronavirus pandemic. In particular, it remains to be seen
how both the rolling off of government support packages and
tapering from the central banks, and the timing of these,
might affect businesses in the most impacted sectors and
the overall economies.
As a result of economic developments, we saw a more
normalised level of impairments than was the case in the first
half of 2020. This, combined with higher income and lower
expenses, led to Danske Bank posting a net profit of DKK 5.9
billion for the first half of 2021, against DKK 1.0 billion for the
same period in 2020.
The return on shareholders’ equity was 7.0%, against 0.9%
in the first half of 2020. The result is a clear improvement,
however, we still need to work determinedly in order to fulfil
our financial ambitions.
Better Bank
We have a strong foundation for becoming a better bank for
all of our stakeholders and are seeing good momentum with
compliance and costs, for instance, but we are also making
good progress on
further execution on all planned
commercial initiatives across our markets.
Part of our work to become a better bank entails a strong
focus on simplifying our business and refocusing our efforts
on the Nordic markets, where we continue to aim to dedicate
more attention and resources to our core segments. As part
of these efforts, on 1 July 2021, we announced the sale of our
business activities in Luxembourg, which will simplify our
footprint and allow us to focus more on serving and
developing solutions for the Nordic markets. Moreover, to
further strengthen product development and innovation and
thereby provide a market-leading customer experience
within payment solutions, on 30 June 2021, Dansk Bank
announced the merger of MobilePay with mobile payment
providers Vipps in Norway and Pivo in Finland.
In our efforts to take our compliance function to the next level,
we are making good progress with our Financial Crime
Prevention plan and have upgraded our compliance-related
IT systems and processes significantly. We recently
confirmed to the Danish FSA that we have achieved the
milestone of updating our Know Your Customer information
for a significant part of our personal, business,
large
corporate and institutional customer base. We remain
focused on completing still outstanding due diligence work for
Danske Bank / Interim report – first half 2021 4/72
is scheduled to be
selected subsidiaries. This work
completed between end-2021 and 2023. As part of these
compliance IT efforts, Danske Bank successfully developed
and deployed a first solution that will allow customers to
submit their personal information through a digital channel.
Another key achievement was the successful embedding of
an automated review capability. Alongside the manual review
capabilities that we maintain, this automated solution
supports us
information and
customers’ use of our products and services.
in assessing customer
On the sustainability journey, we continued to take a leading
role within sustainable finance, supported by our customers’
strong positioning in the sustainability transition. Strong
customer demand led to a new, ambitious 2023 target of
providing DKK 300 billion in sustainable finance. During the
first half of the year, we supported issuers and investors in a
substantial number of transactions, affirming our position as
a leading Nordic bank within sustainable finance. Activity was
high across business areas, and we are proud to be ranked
number one among the Nordic banks within both issuance of
sustainability-linked loans and sustainable bonds. In the first
half of 2021, we were dedicated to this focus and will remain
so. As a part of this, the Danske Bank structuring and
arranging of
International
the successful Swedish
Development Agency guaranteed social bond issue is a good
example of how banks can contribute to developing the
sustainable bond market, as this is the first example in the
world of a guarantee being provided to a business issuing
social bonds sold to private investors. For Personal &
Business Customers, we launched a number of initiatives to
promote the sustainable development for the benefit of our
customers, including an attractive car loan offer in Denmark
for both electric cars and plug-in hybrid cars.
We made good progress with our customer journeys by
digitalising processes and ensuring better adoption of
already launched digital solutions. For example, in Sweden,
95% of mortgage applications now run through a digital flow,
and in Denmark, our recent improvements to our ‘Click-to-
remortgage’ process for personal customers allow for more
efficient processes and additional calculation options. In
addition, we recently launched a new digital car loan process
in Norway, for which we have seen solid results in terms of
generating more volume, thus underlining the positive effect
of digitalising our customer journeys. These results are
important elements in supporting our digital transformation,
and we will continue to build on them in our planned further
digitalisation
initiatives to ensure we capture the full
potential.
Customer satisfaction
Our efforts to strengthen customer journeys and offerings at
Large Corporates & Institutions continued to support high
customer satisfaction in this segment. In Denmark, we are
seeing a stable trend, ranking as number one, and we are also
ranked number one in the Nordic countries overall. Customer
satisfaction in the SME segment also remained strong, as
in all
among small businesses, we rank number two
Danske Bank / Interim report – first half 2021 5/72
launched during the past year, and the level of underlying ex-
penses is improving, despite primarily tax-related one-off
items in the period.
Credit quality remained strong, as we saw a low level of actual
credit deterioration and have made sufficient impairment
charges against key exposures impacted by the coronavirus
pandemic. We continue to see more normalised impairment
levels than in the first half of 2020, and on a quarterly basis,
further down due to model-driven
impairments were
reversals
better-than-expected
a
macroeconomic developments.
result
as
of
Capital, funding and regulation
Our capital position remained strong with a total capital ratio
of 23.3% and a CET1 capital ratio of 18.0%.
On 22 June 2021, the Danish Systemic Risk Council recom-
mended an increase in the counter-cyclical buffer in Denmark
from the current 0% to 1% effective from 30 September
2022 as per the normal one-year transition period. The Dan-
ish Ministry of Industry, Business and Financial Affairs has
announced that the recommendation will be followed.
In the first half of 2021, the Group issued covered bonds in
the amount of DKK 18.1 billion, senior debt of DKK 2 billion,
non-preferred (green) senior debt of DKK 3.7 billion, tier 2
capital of DKK 5.6 billion and additional tier 1 capital of DKK
4.5 billion, bringing total long-term wholesale funding to DKK
33.9 billion.
Credit ratings
On 11 June 2021, Fitch Ratings revised their outlook on
Danske Bank A/S’s long-term issuer rating to Stable from
Negative. On 13 July 2021, Moody’s upgraded Danske
Bank’s non-preferred senior debt rating to Baa2 from Baa3
and revised the outlook on Danske Bank’s A2 deposit rating
to Stable from Negative.
Outlook for 2021
The outlook has been updated. As stated in company an-
nouncement no. 7 of 8 July 2021, we now expect a net profit
of more than DKK 12 billion. The upward revision is based on
lower-than-expected loan impairment charges due to a
faster-than-anticipated macroeconomic recovery as well as
higher customer activity. In addition, we expect a gain from
the sale of the business activities in Luxembourg that will,
however, be offset by a number of provisions for additional
tax-related one-off items in the second half of the year.
We expect total income in 2021 to be higher, including the
gain from the sale of the business activities in Luxembourg
and higher customer activity.
Underlying operating expenses are expected to be lower than
DKK 24.5 billion. Total expenses are expected to be no more
than DKK 25 billion, including additional tax-related one-off
items in the second half of the year of around DKK 0.2 billion.
countries, and saw an increase in satisfaction scores in
almost all countries, except in Sweden where levels were
stable
from the end of 2020. Among medium-sized
businesses, we rank number two in Norway and Sweden. The
overall development in the personal customer segment
continues to have our attention, as we see a slightly
decreasing trend.
Financials
In the first half of 2021, total income was up 5% from the
same period last year. This was driven mainly by a strong per-
formance of our capital markets offerings, as customer activ-
ity increased and we continued to support customers with
their capital needs, combined with a rebound in trading in-
come as a result of solid customer activity.
Lending was down in the first half of 2021 from the level at
the end of 2020. The decrease was due primarily to a decline
in lending at Large Corporates & Institutions as customers
are drawing less on credit facilities. At Personal & Business
Customers Nordic, we saw an increase in lending, particu-
larly at Personal Customers Norway.
Deposit volumes maintained an elevated level both at Per-
sonal & Business Customers and at Large Corporates & In-
stitutions. At Large Corporate & Institutions, deposit vol-
umes increased significantly.
In the first half of 2021, net interest income benefited from
the deposit repricing at the beginning of 2021, however, the
positive effect was more than offset by the elevated deposit
surplus and margin pressure across the Nordic countries.
Net fee income increased in the first half of 2021 from the
level in same period last year due to higher customer activity,
especially within our capital markets activities, where we
continued to support and assist our customers, including
with their sustainability transition. This means that our capi-
tal markets offerings are delivering, and large corporate cus-
tomers in particular have raised funding from capital mar-
kets instead of bank lending, which is sustaining the strong
level of fee income. We are proud to have been chosen for a
large number of landmark transactions – ensuring Danske
Bank a number one position as the leading Nordic bank in
terms of supported volumes in the first half of 2021 across
both debt and equity capital markets. Furthermore, Asset
Management realised positive net sales in the retail segment
for the third consecutive quarter.
Net trading income performed better than in the same period
last year due to improving market conditions for Large
Corporates & Institutions.
In our insurance business, we saw a significant growth in
premiums as well as an inflow of new large customers, which
shows that we have a strong position in the market.
Furthermore, more normalised market conditions have given
customers good returns and strengthened the result, despite
a tax-related one-off item in the period.
We saw lower expenses in the first half of 2021 than in the
same period last year, driven by lower transformation costs.
Costs continue the downward trend driven by cost initiatives
Danske Bank / Interim report – first half 2021 6/72
Impairment charges are now expected to be no more than
DKK 1.5 billion, due primarily to
lower model-driven
impairment charges as a result of a better-than-expected
macroeconomic recovery and overall improved credit quality.
We maintain our ambition for a return on shareholders’
equity of 9-10% in 2023.
The outlook is subject to uncertainty and depends on
economic conditions,
including government support
packages.
Financial review
First half 2021 vs first half 2020
Net profit increased to DKK 5,932 million (H1 2020:
DKK 1,036 million) due
loan
impairment charges and a 5% increase in income driven by
higher net fee income and net trading income.
to significantly
lower
Income
Net interest income stood at DKK 10,965 million (H1 2020:
DKK 11,127 million). Net interest income was positively
impacted by the deposit repricing initiatives at Personal &
Business Customers Denmark that were implemented at the
beginning of 2021. The positive effect was, however, more
than offset by an elevated deposit surplus and overall margin
pressure across the Nordic countries as well as a lower
funding value of deposits across all markets.
Net fee income rose 11% to DKK 6,595 million (H1 2020:
DKK 5,956 million), driven by high customer activity in the
large corporate
capital markets, as particularly our
customers raised funding from capital markets instead of via
bank lending, which is sustaining the strong level of fee
income. Assets under management increased from the level
in the first half of 2020, which also had a positive impact on
net fee income.
Net trading income increased to DKK 2,291 million (H1
2020: DKK 1,897 million). The increase was due to improved
market conditions for Large Corporates & Institutions and
positive value adjustments of the derivatives portfolio. A gain
of DKK 227 million on the sale of VISA shares in the Group’s
private equity portfolio also contributed to the increase in net
trading income.
Net income from insurance business amounted to DKK 982
million (H1 2020: DKK 897 million). The increase was due to
positive market conditions, which also benefited our
customers. The increase in income also reflects significant
growth in premiums as well as an inflow of new large
customers, which shows that we have a strong position in the
market. Additionally, the underlying business within health
and accident insurance is improving, however, some of this
effect was offset by a provision of DKK 200 million related to
pension yield tax.
Other income amounted to DKK 457 million (H1 2020:
DKK 309 million) due to our real estate agency home seeing
high activity on the housing market.
Danske Bank / Interim report – first half 2021 7/72
Loan impairments
Loan impairment charges in core activities were low in the
first half of 2021 and amounted to DKK 737 million (H1
2020: DKK 5,269 million).
Impairments mainly reflected a credit deterioration of
individual customer exposures of DKK 450 million, relating
primarily to segments hit by the lockdown of societies in most
of 2021. The full effect of the corona crisis is, however, still
uncertain and depends on the phase-out of government
support packages, the
finalisation of the roll-out of
vaccinations and the risk of virus variants causing further
lockdowns. Impairments were still at a significantly lower
level than in the first half of 2020.
At 30 June 2021, Danske Bank had ensured compliance
with the Danish FSA orders regarding impairments received
on 13 April 2021 in light of the corona crisis. Danske Bank
now complies with all Danish FSA orders regarding
impairments.
In May 2021, the Danish FSA conducted an inspection of the
impairment charges made by Danske Bank’s branch in Swe-
den against loans to its business customers. The FSA as-
sessed that our guidelines for staging of loans were generally
satisfactory. Furthermore, the FSA assessed that the impair-
ment charges made against the loans with objective evidence
of credit impairment that were reviewed by the FSA, including
the management overlays, were adequate.
Personal & Business Customers accounted for the main part
of the loan impairment charges made in the first half of 2021,
which were made against individual customer exposures as
a result of the corona crisis, for instance in the hotel,
restaurants and leisure segments. We continue to see more
normalised impairment levels than in the first half of 2020,
and on a quarterly basis, impairments were further down due
to model-driven reversals as a result of better-than-expected
macroeconomic developments.
At Large Corporates & Institutions, loan impairment charges
fell significantly in the first half of 2021 from the level in the
first half of 2020 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.
Expenses
Operating expenses decreased to DKK 12,770 million (H1
2020: DKK 13,022 million) and thus continued the
downward trend into the first half of 2021. The decrease
mainly reflects
transformation and
consultancy but also our constant focus on lowering the cost
base. Provisions totalling DKK 500 million related to the VAT
case in Sweden, following a ruling by the European Court of
Justice, and a one-off investment of DKK 122 million to
ensure good working-from-home conditions had a partly
offsetting effect.
lower costs
for
Loan impairment charges
First half 2021
First half 2020
(DKK millions)
Charges
% of net
credit
exposure1
% of net
credit
exposure1
Charges
Personal & Business
Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Total core
550
0.07
1,470
0.19
252
-65
-
737
0.16
-0.25
-
3,517
252
30
0.08
5,269
2.57
0.93
1.07
0.56
1 Defined as net credit exposure from lending activities in core segments,
excluding exposures related to credit institutions and central banks and loan
commitments.
Danske Bank / Interim report – first half 2021 8/72
Second quarter 2021 vs first quarter 2021
Net profit decreased to DKK 2,792 million (Q1 2021:
DKK 3,139 million), due mainly to lower income and higher
operating expenses in the second quarter.
Net interest income increased DKK 65 million to DKK 5,515
million from the level in the first quarter. An improved
interest rate environment and an increase in the number of
interest days was partly offset by margin pressure in the
personal customer segment.
Net fee income decreased to DKK 3,193 million (Q1 2021:
DKK 3,402 million). The decline was due mainly to
seasonality in the refinancing activity at Realkredit Danmark,
against high activity in the first quarter.
Net trading income decreased to DKK 1,025 million from
DKK 1,266 million in the first quarter. The first quarter
benefited from seasonal increases in income at Markets and
higher net trading income in Equities. Further, a gain of
DKK 227 million from the sale of VISA shares was
recognised in the first quarter.
Net income from insurance business amounted to DKK 491
million (Q1 2021: DKK 491 million). However, the second
quarter saw lower income from the life insurance business,
while
income from the health and accident business
remained stable when taking the provision for pension yield
tax of DKK 200 million that was recognised in the first
quarter of 2021 into account.
Other income amounted to DKK 262 million (Q1 2021:
DKK 195 million).
Operating expenses amounted to DKK 6,497 million, an
increase of 4% from the level in the first quarter. The
increase was due mainly to a provision of DKK 350 million
related to the VAT case in Sweden following a ruling by the
European Court of Justice, higher staff costs and higher
consultancy costs due to our Better Ways of Working
transformation project. In the first quarter, we recognised a
provision of DKK 122 million to ensure good working-from-
home conditions and DKK 150 million related to the VAT
case in Sweden.
Loan impairment charges were further down due to model-
driven reversals as a result of better-than-expected
macroeconomic developments. Loan impairments amounted
(Q1 2021: DKK 497 million).
to DKK 240 million
Impairments relating to
individual customer exposures
subject to credit deterioration amounted to DKK 50 million.
Personal & Business Customers accounted for DKK 116
million (Q1 2021: DKK 435 million), with the decrease being
due to overall
in credit quality. Large
Corporates & Institutions customers accounted for DKK
183 million (Q1 2021: DKK 69 million), an increase from the
first quarter that was due to model changes and individual
impairments were still at a
customer exposures, but
significantly lower level than in the second quarter of 2020.
improvements
Lending and deposits
Lending amounted to DKK 1,810 billion, a decrease of 2%
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 last year 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 Personal Customers Denmark, as customers
repaid bank loans faster and switched to mortgage loans.
Deposits amounted to DKK 1,198 billion, on par with the level
at the end of 2020. Deposits continued to be affected by low
consumer spending, direct government support
to
customers and business customers having secured backup
liquidity.
In Denmark, new gross
loans,
amounted to DKK 41.9 billion. Lending to personal
customers accounted for DKK 28.7 billion of this amount.
lending, excluding repo
Our market share of lending (at end-May 2021) decreased in
Denmark, Finland and Sweden, while it was stable in Norway.
In Denmark, our market share of lending, excluding repo
loans, decreased to 25.0% at the end of May 2021 (end-
2020: 25.6%).
The momentum in our personal banking activities is not at the
desired level, but we are confident that we have the ability to
implement initiatives that will enable us to work more
efficiently and simply, thereby improving our market position.
In Denmark, our market share of deposits increased to
30.7% at the end of May 2021 (end-2020: 30.2%), due
primarily to a higher market share in the personal customers
segment. Our market share of deposits was lower in Finland,
Sweden and Norway than at the end of 2020.
Credit exposure and credit quality
Credit exposure from lending activities in core segments
decreased to DKK 2,691 billion (end-2020: DKK 2,728
billion), as lower bank and mortgage lending to primarily
business customers was more than offset by higher
exposure to personal customers.
Credit quality remained solid in the first half of 2021,
supported by a slightly positive rating trend. However, we
remain vigilant for any possible deterioration as the
uncertainty associated with the corona crisis remains high.
Large Corporates & Institutions has actively reduced its net
oil-related exposure (excluding oil majors) by 50% since the
end of 2019.
Total net non-performing loans (NPL) saw a decrease from
the level at the end of 2020, driven mainly by a lower level of
NPL in the transportation, agriculture and capital goods
industries, offsetting higher NPL in the Personal Customers
segment that was driven by the introduction of a new Loss
Given Default (LGD) model.
Danske Bank / Interim report – first half 2021 9/72
The NPL coverage ratio increased to 86.6% from 75.2% at
the end of 2020 due to higher collateral in respect of NPLs.
The risk management notes on pp. 50-62 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)
30 June
2021
31 Dec.
2020
31,258
12,707
31,776
12,934
18,550 18,842
16,593 14,567
NPL coverage ratio (%)
NPL coverage ratio of which is in default (%)
NPL as a percentage of total gross exposure (%)
86.6
99.8
1.2
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).
Allowance account
by business units
(DKK millions)
Personal & Business
Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
30 June 2021
Accum.
impairm.
charges
% of net
credit
exposure1
31 Dec. 2020
Accum.
impairm.
charges
% of net
credit
exposure1
16,041
1.02
15,773
1.01
5,504
965
15
1.94
1.63
0.32
5,777
990
15
1.84
1.87
0.31
Total
22,526
1.18
22,554
1.17
1 Relating to lending activities in core segments.
Capital ratios and requirements
At the end of June 2021, the total capital ratio was 23.3%,
and the CET1 capital ratio was 18.0%, against 23.0% and
18.3%, respectively, at the end of 2020. The movement in
the capital ratios during the first half of 2021 was driven
mainly by an increase in the total REA, which was partly
countered by the realised net profit and a decline in the
capital deduction for Danica Pension. The total capital ratio
was further affected by the issuing of an additional tier 1
capital instrument in May 2021 combined with net issues of
tier 2 capital, resulting in a 0.3 percentage points increase in
the total capital ratio.
During the first half of 2021, the total REA increased
approximately DKK 32 billion, due mainly to increased REA
for credit and market risk. The rise in credit risk REA was
related to further implemention of EBA guidelines, while high
volatility in the financial markets led to an increase in market
risk.
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 June 2021, the Group’s solvency need ratio was
12.4%, a slight decrease of 0.2 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 June 2021, the Group’s
combined capital buffer requirement was 5.6%.
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
30 June
2021
Fully
phased-in*
18.0
23.3
13.1
0.1
2.5
3.0
12.4
17.8
23.0
13.7
0.7
2.5
3.0
12.4
Total capital requirement
18.0
18.6
Excess capital
CET 1 capital
Total capital
4.9
5.3
4.1
4.5
* 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 June
2021.
In June 2021, the Danish Minister for Industry, Business and
Financial affairs reactivated the countercyclical buffer at
1.0% from 30 September 2022, while the Norwegian
Ministry of Finance raised their national buffer requirement
to 1.5%, effective from 30 June 2022. This will increase the
Group’s CBR by 0.6 percentage points. Consequently, the
fully phased-in countercyclical buffer requirement will be
0.7%, bringing the fully phased-in CET1 requirement to
13.7%.
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 June 2021, the requirement was equivalent to
Danske Bank / Interim report – first half 2021 10/72
DKK 212 billion and DKK 251 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 275 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 June 2021, the subordination requirement was
equivalent to DKK 213 billion. Subordinated MREL-eligible
liabilities stood at DKK 244 billion.
Leverage ratio
leverage ratio requirement of 3% was
A minimum
implemented in the second quarter of 2021 with the
adoption of Capital Requirements Regulation II (CRR II). At the
end of June 2021, the Group’s leverage ratio was 4.7% under
the transitional rules and 4.6% under the fully-phased in
rules.
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
The markets expect a return to more normal economic con-
ditions following the coronavirus pandemic as vaccinations
continue to be rolled out. We utilised the market stability to
make our first additional tier 1 capital issue since the second
quarter of 2018.
During the first half of 2021, the Group issued covered bonds
of DKK 18.1 billion, senior debt of DKK 2 billion, non-
preferred (green) senior debt of DKK 3.7 billion, tier 2 capital
of DKK 5.6 billion and additional tier 1 capital of DKK 4.5
billion, bringing total
funding to
DKK 33.9 billion.
long-term wholesale
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 half of 2021, our li-
quidity coverage ratio stood at 155% (31 December 2020:
154%), with an LCR reserve of DKK 702 billion (31 Decem-
ber 2020: DKK 710 billion).
The requirement for the net stable funding ratio (NSFR)
forms an integral part of our funding planning. As at end-June
2021, the Group’s NSFR was 129.9%.
At 30 June 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 358
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 June 2021, Danske Bank was in compliance
with all threshold values. A separate report is available at
danskebank.com/ir.
Danske Bank / Interim report – first half 2021 11/72
EBA guidelines and technical standards. For the first half of
2021, we saw the REA increase by around DKK 35 billion
due to the EBA roadmap. 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 June 2021, the Danish implementation of the EU covered
bonds package was adopted by the Danish parliament. The
rules include a requirement for a cover pool liquidity buffer
and stipulate eligible cover pool assets. Further, a new
requirement
level of cover pool
overcollateralisation is introduced. On the basis of the
adopted legislation, the new rules are expected to have a
limited impact on the Group. The new rules will apply from the
second quarter of 2022.
for a minimum
Credit ratings
On 11 June 2021, Fitch Ratings (Fitch) revised the outlook on
Danske Bank A/S's long-term issuer rating to Stable from
Negative, while affirming Danske Bank's long-term issuer
rating at ‘A’ and short-term issuer rating at ‘F1’.
The outlook revision reflects Danske Bank’s resilient asset
quality and profitability, and solid capital ratios, which provide
a sizeable buffer to absorb any potential fines from ongoing
regulatory investigations.
Fitch, Moody’s Investors Serivce (Moody’s) and S&P Global
(S&P) all now have Stable outlooks on Danske Bank. The
Stable outlooks incorporate the economic uncertainties
relating to the fallout from the corona crisis and the financial
uncertainties relating to the Estonia case.
On 13 July 2021, Moody’s revised the outlook on Danske
Bank’s deposit rating to Stable from Negative, while affirming
Danske Bank’s long-term deposit rating at ‘A2’ and the short-
term deposit rating at ‘P-1’.
At the same time, Moody’s upgraded its rating of Danske
Bank’s non-preferred senior debt to ‘Baa2’ from ‘Baa3’ to
better capture the risk characteristics of the debt class and
as a result of the implementation of revised bank rating
methodology.
Danske Bank’s credit ratings,
Fitch
Moody’s
S&P
Realkredit Danmark also complies with all threshold values.
Counterparty rating
A+
A1/P-1
A+/A-1
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 half 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
Deposits
A+/F1
A2/Stable*/P-1
Senior debt
A+/F1
A3/P-2
Issuer rating
A/F1
A3/P-2
Outlook
Stable
Stable
A/A-1
A/A-1
Stable
Non-preferred
senior debt
Tier 2
AT1
*Revised 13 July 2021
A
BBB+
BBB-
Baa2
BBB+
-
-
BBB
BB+
Danske Bank / Interim report – first half 2021 12/72
originally identified. The review has shown that actual
overcollection has taken place for 6,300 of these customers.
The customer cases yet to be reviewed, approximately
5,600, require additional quality assurance due to their
complexity, and we expect to have resolved these cases well
before the end of the year. During our investigation of the data
errors originally identified, we have unfortunately become
aware of a number of potential additional issues that we are
investigating, which means that the number of
still
customers who are expected to be eligible for compensation
is increasing. We expect that this work will extend into 2022.
It is not considered necessary to make any additional
provisions.
Danske Bank merges MobilePay with other mobile payment
providers
On 30 June 2021, Danske Bank A/S announced that it has
entered into an agreement with OP Financial Group in Finland
and the consortium of banks behind Vipps in Norway to
merge the three mobile payment providers MobilePay, Vipps
and Pivo. By bringing a number of well-known brands into the
ownership of a joint company, we will be strongly positioned
in the market and ensure that we have the necessary scale
to continue rapid growth. We are also open for dialogue with
other leading banks and platforms. It is especially important
for us that MobilePay’s close cooperation with the other Dan-
ish banks can continue. The potential participation of other
banks will further underpin the ambition to create a strong
European player in the payment area.
The new company will be one of the largest bank-owned digi-
tal wallets in Europe, serving 11 million users and over
330,000 shops and web shops. Danske Bank will own 25%
of the new company. The merger is conditional on approval by
the relevant authorities, including the European Commission.
Final approval is expected in the second half of 2021 or in
early 2022, hence the expected one-off gain of approximately
DKK 400-500 million is not included in our current outlook
for the full year.
Private banking activities in Luxembourg
On 1 July, we announced that Danske Bank has entered into
an agreement with Union Bancaire Privée, UBP SA, on the
sale of the business activities of Danske Bank International
S.A. in Luxembourg. The decision reflects Danske Bank’s
strategy of focusing on the core Nordic markets.
The sale is expected to result in a one-off gain for Danske
Bank of approximately DKK 250 million and is conditional on
approval by the relevant authorities. Final approval is ex-
pected in the second half of 2021.
Covered bonds issued by Realkredit Danmark are rated
‘AAA’ (Stable outlook) by Fitch, S&P and Scope Ratings.
Covered bonds issued by Danske Bank A/S are rated ‘AAA’
(Stable outlook) by both Fitch and S&P.
Covered bonds issued by Danske Mortgage Bank Plc are
rated ‘Aaa’ by Moody’s.
Covered bonds issued by Danske Hypotek AB are rated ‘AAA’
(Stable outlook) by S&P and Nordic Credit Rating.
ESG ratings
Danske Bank currently focuses on the following ESG rating
agencies reflecting investor priorities.
ESG rating agency
CDP Worldwide, UK
Score at
Score at
30 June 2021
31 Dec. 2020
B
B
ISS ESG, USA
C Prime
C+ Prime
MSCI ESG Ratings, USA
BB
BB
Sustainalytics, USA
Medium Risk
High Risk
Vigeo Eiris, France
64
64
On 10 June 2021, ISS ESG downgraded Danske Bank to C
Prime from C+ Prime, due primarily to announced staff
redundancies that impact its assessment of employment
security and responsible workforce restructuring.
On 24 June 2021, Sustainalytics upgraded Danske Bank’s
ESG Risk Rating to Medium Risk from High Risk. The
improved rating reflects its assessment of business ethics.
Changes to the Executive Leadership Team
On 25 May 2021, Magnus Agustsson was appointed new
Chief Risk Officer (CRO) and also member of the Executive
Leadership Team. Magnus Agustsson will join Danske Bank
on 1 December at the latest. The interim head of the Group
Risk Management organisation, George Anagnostopoulos,
will continue in this role until Magnus Agustsson takes over.
Magnus Agustsson holds an MSc in Economics from the Uni-
versity of Iceland and comes from a position as CRO of SEB
in Sweden, where he has held various positions over the past
12 years, all within risk management.
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.
Update on the debt collection case
At 1 July 2021, we had reviewed 97% of the 197,000
customer cases in our debt collection systems for which
there is a risk of overcollection as a result of the data errors
Danske Bank / Interim report – first half 2021 13/72
Personal & Business Customers
The coronavirus pandemic continued to have a significant impact on the societies that we operate in during the first half of 2021.
In the second quarter of 2021, we saw a slow re-opening of the societies, which led to a slight increase in activity among our
customers.
The first half of 2021 saw an increase in profit before tax, which was up DKK 1 billion from the same period last year due to lower
loan impairment charges and strong cost control that lowered operating expenses.
Personal & Business Customers
(DKK millions)
First half
2021
First half
2020
Index
21/20
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
7,766
3,267
312
412
8,029
3,273
285
362
11,757
7,288
11,949
7,561
4,469
550
4,388
1,470
97
100
109
114
98
96
102
37
Q2
2021
3,887
1,516
162
216
5,782
3,650
2,132
116
Q1
2021
3,879
1,750
150
196
5,975
3,638
2,337
435
Index
Q2/Q1
100
87
108
110
97
100
91
27
Q2
2020
4,078
1,459
123
168
5,827
4,033
1,795
-281
Index
21/20
Full year
2020
95
104
132
129
99
91
119
-
16,018
6,080
575
702
23,375
15,716
7,659
1,996
Profit before tax
3,919
2,919
134
2,016
1,903
106
2,076
97
5,663
Loans, excluding reverse transactions before
impairments
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
Net interest income as % p.a. of loans and de-
posits
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
Assets under management
(DKK millions)
Assets under custody
14,434
702,466
1,528,944 1,502,449
14,079
649,160
1,045,691 1,046,502
69,858
74,157
14,434
702,466
102 1,528,944 1,529,183
103
13,925
696,439
108
100 1,045,691 1,046,385
73,009
106
75,292
100 1,502,449
104
14,079
649,160
101
100 1,046,502
69,679
103
102 1,532,786
103
13,957
685,609
108
100 1,058,209
68,929
108
0.71 0.77
- 0.71 0.71
- 0.77
- 0.75
12.1 12.6
- 11.3 12.8
- 10.3
- 11.1
10.6 8.4
62.0 63.3
6,826 6,795
- 10.7 10.4
- 63.1 60.9
100 6,826 6,853
- 11.9
- 69.2
6,795
100
- 8.2
- 67.2
6,913
100
672,649 512,601
131 672,649 601,757
112 512,601
131 596,467
Fact Book Q2 2021 provides financial highlights at customer type level for Personal & Business Customers. Fact Book Q2 2021 is available at
danskebank.com/ir.
life
With the launch of our new agile development organisation,
Better Ways of Working, at the beginning of the year, we
continued our efforts to further improve the customer
experience on digital channels. A number of initiatives came
to
in the second quarter of 2021. We launched
improvements to the navigation in our ‘Click-to-remortgage’
process based on customer feedback to provide a better
overview and flow. The ‘Click-to-remortgage’ process enables
customers to see the potential savings of remortgaging their
loan and hence book a meeting with their adviser. We also
introduced a new digital tool for home loan seekers in Finland
and a digital car loan application process for personal
customers in Norway. Lastly, the navigation in our financial
platform District has been significantly improved on the basis
of feedback from more than 5,000 business customers
across our markets. District is our financial platform for
businesses, which allows them to manage their day-to-day
banking business.
We also see the benefits of the new organisational structure,
under which our commercial activities are organised, play out
in terms of improving the time to market for products and
realising synergies across our operations. As an example,
during the second quarter, we began offering Private Banking
customers in Denmark the opportunity to invest in the Global
Portfolio Solution under the name Danske Porteføljepleje
GPS. The Global Portfolio Solution combines a number of the
latest investment tools and aims to create more robust
portfolios for our customers. The solution was previously
available only to institutional clients.
Danske Bank / Interim report – first half 2021 14/72
lower spending
crisis,
for personal customers and
government support packages. In the first half of 2021, our
focus was on expanding our business with existing
customers to help them get the best possible products and
solutions. This has been especially successful in our Swedish
market.
Sustainability continues to be one of the top strategic priori-
ties across Personal & Business Customers. In the second
quarter of 2021, a number of initiatives were introduced to
promote a sustainable development. This includes the launch
of payment cards made out of recycled plastic for our young-
est customers who hold Pocket Money Cards. The cards
were introduced across all our markets. Following a six-
month campaign, we introduced an attractive and permanent
car loan offer in the Danish market for both electric cars and
plug-in hybrid cars to support the transition to more sustain-
able driving. In Sweden, we launched GreenFleet70 for busi-
nesses, a tool to map the environmental footprint of a busi-
ness’s car fleet and give advice on how to reduce emissions.
Finally in Finland, we launched a new service to help our cus-
tomers make more sustainable housing choices in coopera-
tion with our partner Akava. The service helps customers get
a better overview of how to improve the environmental im-
pact of their homes, for example in terms of home renova-
tions, energy class and heating.
First half 2021 vs first half 2020
Profit before tax amounted to DKK 3,919 million, an increase
of DKK 1,000 million, mainly as a result of a decrease in loan
impairment charges.
Second quarter 2021 vs first quarter 2021
in the second quarter amounted to
Profit before tax
DKK 2,016 million, an increase of DKK 113 million, due
primarily to lower impairment charges.
Net interest income was on par with the level in the first
quarter of 2021. An improved interest rate environment was
offset by margin pressure in the personal customer markets.
Net fee income decreased, mainly because of seasonality in
the refinancing activity at Realkredit Danmark, against the
high activity in the first quarter of 2021. Furthermore, we
saw lower income from a distribution agreement at Banking
Finland in the second quarter of 2021.
Operating expenses were on par with expenses in the first
quarter of 2021.
Loan impairment charges decreased to DKK 116 million (Q1
2021: DKK 435 million). The decrease in impairment
charges was attributable to fewer charges against individual
customer exposures made as a result of the corona crisis
and model adjustments.
Lending volumes were on par with volumes in the first
quarter of 2021 as the need for credit facilities continued to
be at a low level among business customers, which were
generally helped by government support packages. For
personal customers, we saw a flat development across all
markets.
Net interest income decreased 3%. This was due to margin
pressure and a challenged interest rate environment across
the Nordic countries as well as a lower funding value of
deposits across all markets. These effects were only partly
mitigated by growing volumes and repricing initiatives for
deposits.
Net fee income amounted to DKK 3,267 million, on par with
the same period last year. Underlying, we saw an increase
due to high investment activity and growth in assets under
custody. However, this was countered by lower income from
a distribution agreement at Banking Finland.
Net trading income increased to DKK 312 million due to
higher foreign exchange activity in step with the reopening of
the societies in which we operate.
Other income amounted to DKK 412 million, posting an
increase due to our real estate agency home seeing good
activity on the housing market in the first half of 2021.
Operating expenses decreased 4% due to lower costs in
relation to the Better Bank transformation.
Loan impairment charges amounted to DKK 550 million, a
decrease of 63% from the level in the same period last year
(H1 2020: DKK 1,470 million). Loan impairments were still
affected by the corona crisis, but were not impacted to the
extent seen in the first half of 2020. The impairment charges
for the first half 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, driven by Personal Customers
Nordic, due mainly to partnership agreements in Norway and
currency effects. Deposit volumes increased due to business
customers’ liquidity management as a result of the corona
Danske Bank / Interim report – first half 2021 15/72
Large Corporates & Institutions
Economic sentiment improved during the first half of 2021 as societies began to re-open and both monetary and fiscal support
remained in place. We continued to work alongside our customers to help them prepare for a post-pandemic operating environment,
which translated into high customer activity and record-high fee income from our capital markets activities.
The first half of 2021 saw an increase in profit before tax, which amounted to DKK 3,463 million, up DKK 4,011 million from the
same period last year due to significantly lower loan impairment charges and higher income.
Large Corporates & Institutions
(DKK millions)
First half First half
2020
2021
Index
21/20
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
2,392
3,220
1,852
2
7,466
3,751
3,715
252
2,448
2,570
1,635
7
6,661
3,692
2,969
3,517
98
125
113
29
112
102
125
7
Q2
2021
1,177
1,621
749
1
3,548
1,900
1,648
183
Q1
2021
1,216
1,599
1,102
1
3,918
1,851
2,067
69
Index
Q2/Q1
97
101
68
100
91
103
80
265
Q2
2020
1,306
1,223
1,789
7
4,325
1,879
2,446
1,189
Index Full year
2020
21/20
90
133
42
14
82
101
67
15
5,034
5,911
3,485
6
14,437
7,672
6,764
4,619
Profit before tax
3,463
-548
-
1,465
1,998
73
1,257
117
2,146
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 al-
located 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)
4,197
240,407 288,375
218,520 244,341
7,053
403,958 376,027
358,474 324,306
23,071
45,334
21,682
44,786
83 240,407 259,102
89 218,520 233,641
3,989
4,197
60
107 403,958 448,560
111 358,474 407,243
21,663
44,565
21,682
45,003
94
99
105
93 288,375
94 244,341
7,053
90 376,027
88 324,306
23,071
47,775
100
101
83 271,359
89 225,067
4,557
60
107 433,090
111 378,939
22,728
44,825
94
94
0.70
0.81
-
0.69
0.71
-
0.82
-
0.79
16.6
15.5
50.2
2,565
13.1
-2.4
55.4
2,528
-
-
-
101
14.6
13.0
53.6
2,565
18.6
17.9
47.2
2,506
-
-
-
102
20.5
10.5
43.4
2,528
-
-
-
101
15.1
4.8
53.1
2,553
3,113
2,218
94
1,104
55
1,031
3,087
2,176
-148
953
11
446
101
102
-
116
-
231
1,549
1,029
-
550
31
421
1,564
1,190
94
554
24
610
99
86
-
99
129
69
1,619
1,954
196
458
2
294
96
53
-
120
-
143
6,322
4,345
309
2,555
640
1,214
Total income
7,466
6,661
112
3,548
3,918
91
4,325
82
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.
Assets under management
(DKK millions)
Institutional clients
Retail clients
481,278 414,750
307,797 265,585
116 481,278 477,037
116 307,797 294,909
101 414,750
104 265,585
116 464,890
116 288,207
Total assets under management¹
789,075 680,335
116 789,075 771,946
102 680,335
116 753,097
1 Includes assets under management from Group entities.
Danske Bank / Interim report – first half 2021 16/72
committed facilities provided last year are beginning to roll
off. The impact on net interest income has been modest so
far, as lower volumes have partly been mitigated by higher
lending margins, as the facilities provided last year on
average had lower margins.
Net fee income increased 25% from the level in the first half
of 2020, reflecting record-high fee income from capital
markets activities and increased assets under management.
Assets under management increased 16% from the level in
the first half of 2020, driven by rising asset prices. During the
first half of 2021, Asset Management realised positive net
sales in the retail segment for the third consecutive quarter,
whereas there was a marginal net outflow in the institutional
segment.
Net trading income increased 13% from the first half of
2020, driven mainly by higher trading income in Equities and
positive value adjustments on the derivatives portfolio (xVA).
In the first half of 2020, value adjustments were negative.
Operating expenses increased 2% from the level in the same
period last year, driven mainly by higher provisions for
performance-based compensation.
Overall credit quality remained strong. During the first half of
2021, the general rating trend was slightly positive, and loan
impairment charges amounted to a net charge of DKK 252
million, a notable decrease from the level in the first half of
2020 (H1 2020: DKK 3,517 million). Since the fourth
quarter of 2019, we have actively reduced net oil-related
exposure (excluding oil majors) by 50%.
Second quarter 2021 vs first quarter 2021
Profit before tax decreased 27% from the level in the first
quarter of 2021, primarily as a result of a seasonal decline in
net trading income.
Net interest income declined slightly as a result of lower net
interest income from undrawn committed credit facilities
and lower income from deposits.
Net fee income remained at a high level in the second quarter,
as activity across the capital markets remained strong.
Net trading income decreased, as the first quarter of 2021
benefited from seasonal increases in income at Markets and
higher net trading income in Equities.
Operating expenses increased 3%, driven largely by higher
provisions for performance-based compensation.
Customers utilised the positive market sentiment to raise
capital in the financial markets, and we are proud to have
been chosen for a large number of landmark transactions –
ensuring Danske Bank a number one position as the leading
Nordic bank in terms of supported volumes in the first half of
2021 across both debt and equity capital markets. The
improved operating environment also led to customers
drawing less on their credit facilities, and we are starting to
see the significant committed credit facilities that we
extended during 2020 to help customers manage the impact
of the crisis roll off. Nevertheless, this illustrates the value of
having a diversified business across the Nordic markets, as
higher net fee income more than compensated for lower net
interest income.
the Nordic banks within both
Sustainable finance 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 finance. Activity was high across
business areas, and we are proud to be ranked number one
issuance of
among
sustainability-linked loans and sustainable bonds. In the first
half of 2021, we have already arranged sustainable bonds in
the amount of USD 8 billion for our customers, which is more
than we have ever arranged in a full year. Danske Bank’s
structuring and arranging of the successful Swedish
International Development Agency (SIDA) guaranteed social
bond issue is a good example of how banks can contribute to
developing the sustainable bond market, as this is the first
example in the world of a guarantee being provided to a
business issuing social bonds sold to private investors. The
SIDA guaranteed social bond issuance will focus on Africa,
Latin America and Central, South and Southeast Asia, with
the intention of contributing to improved living conditions,
health and quality of life for people living in poverty.
First half 2021vs first half 2020
Profit before tax increased to DKK 3,463 million in the first
half of 2021 (H1 2020: a loss of DKK 548 million). Customer
activity continued to be at high levels during the second
quarter of 2021, contributing to total income of DKK 7,466
million (H1 2020: DKK 6,661 million).
Net interest income decreased slightly from the level in the
same period last year, due mainly to lower net interest
income from deposits, as the significant increase in deposit
volumes lowered the value of surplus deposits, leading to
lower deposit margins. We are repricing deposits to address
the decline in deposit margins, and while there is uncertainty
about whether deposit volumes will normalise, there were
tentative signs of declining volumes towards the end of the
second quarter.
Lending volumes declined from the level in the first half of
2020. 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,
customers are drawing less on their credit facilities, and the
Danske Bank / Interim report – first half 2021 17/72
Danica Pension
The reopening of societies and roll-out of vaccines brought economic progress and reasonable price increases in the equity
markets. Furthermore, we saw significant growth in premiums as well as an inflow of new large business customers, which shows
that we have a strong position in the market.
Danica Pension generated a solid financial result in the first half of 2021, delivering good returns to both our customers but also to
the Group. Profit was up 14% from the level in the same period last year. The financial result was affected by additional provisions
for pension yield tax in the health and accident business of DKK 200 million in 2021.
Index
Q2/Q1
Q2
2020
Index
21/20
Full year
2020
Danica Pension
(DKK millions)
First half
2021
First half
2020
Index
21/20
Q2
2021
Result, life insurance
Result, health and accident insurance
Return on investments, shareholders' equity
etc.
1,312
-362
68
Net income before tax in Danica Pension¹
1,018
Included within Group Treasury²
Net income from insurance business
-36
982
1,277
-300
-85
892
5
103
-
-
114
-
897
109
528
-72
68
524
-33
491
Q1
2021
784
-290
-
67
-
-
494
106
-3
-
491
100
825
-26
71
870
-72
799
Premiums, insurance contracts
Premiums, investment contracts
Provisions, insurance contracts
Provisions, investment contracts
17,832
2,045
14,602
666
437,847
34,731
403,828
25,195
122
-
108
138
9,233
1,396
8,599
649
437,847
34,731
427,885
32,317
107
215
102
107
6,460
265
403,828
25,195
64
-
96
60
-
2,517
-643
-78
1,797
-127
61
1,669
143
-
108
138
28,958
1,292
428,736
29,525
Allocated capital (average)
13,481
13,240
102
13,133
13,834
95
13,237
99
13,735
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff
14.6
215
859
13.5
172
793
-
-
-
15.0
215
859
14.2
202
821
-
-
-
24.1
172
793
-
-
-
12.2
191
817
Asset under management
Life insurance
Health and accident insurance
463,722
17,079
411,861
16,426
113
104
463,722
17,079
449,037
16,483
103
104
411,861
16,426
113
104
447,783
16,822
Total1
480,802 428,287
112 480,802 465,520
103 428,287
112 464,605
1Figures are for the Danica Group.
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).
Danica Pension delivered strong returns to our customers,
and assets under management increased 12% as a result of
the favourable trend in the financial markets.
early involvement of health personnel will lead to less long-
term illness and ultimately have a positive effect on our health
and accident results.
Danica Pension saw an increase in growth in premiums of
30% from the level in the same period last year, reflecting our
strong position in the market and the fact that more business
customers have chosen Danica Pension. The strong position
is due to a very competitive combined value proposition that
is based on solid investment returns, a strong advisory ser-
vices platform, a leading portfolio of health solutions and our
focus on ESG and green investments.
Danica Pension aims to ensure that its investments are car-
bon neutral by 2050. In the first quarter of 2021, Danica Pen-
sion set new sub-targets for investments focusing on reduc-
ing carbon intensity in key sectors towards 2025. These in-
clude the energy, supply, transportation, steel and cement
sectors. Danica Pension’s ambition is to help reduce carbon
emissions in these key sectors by between 15% and 35%
relative to 2019 levels.
As part of our health solutions, Danica Pension launched a
new health package at the beginning of the year. Customers
now have quick and easy access to online consultations with
doctors, psychologists and dieticians. We know that early
treatment of both mental and physical issues reduces the
long-term consequences. Thus, it is our ambition that the
First half 2021 vs first half 2020
Net income from insurance business increased to DKK 982
million (H1 2020: DKK 897 million), due primarily to a slightly
higher result from the life insurance business and a better
return on investments allocated to shareholders’ equity,
which in the first half of 2020 were impacted by negative
value adjustments on the property portfolio.
The result of the life insurance business increased 3% due to
positive investment results on life insurance products where
Danica Pension has the investment risk and an increase in
fees resulting from higher assets under management. In the
first half of 2021, life insurance products where Danica
Pension has the investment risk benefited from an increase
in the interest yield curve (including the volatility adjustment)
and high returns on risky assets.
The result of the health and accident business decreased to
a loss of DKK 362 million (H1 2020: a loss of DKK 300
million), despite a stable underlying business. The investment
result increased considerably from the level in the first half of
2020, but was offset by an increase in provisions for pension
yield tax of DKK 200 million.
The return on investments allocated to shareholders’ equity
etc. increased DKK 153 million from the level in the first half
of 2020, driven mainly by better investment results on
investment assets and liabilities allocated to shareholders’
equity.
Total premiums increased 30%, driven mainly by an increase
in single premiums due to an inflow of new business
customers.
Assets under management increased DKK 53 billion, due
mainly to the positive developments in the financial markets.
Danske Bank / Interim report – first half 2021 18/72
Second quarter 2021 vs first quarter 2021
Net income from insurance business was at the same level
in the second quarter of 2021 as in the first quarter.
However, the loss in the health and accident business
decreased, and the return on investments allocated to
shareholders’ equity was positive, while we saw a decline in
income from the life insurance business.
The result of the life insurance business decreased 33%, due
mainly to lower investment results on life insurance products
where Danica Pension has the investment risk. Especially in
the first quarter, life insurance products where Danica
Pension has the investment risk benefited from an increase
in the interest yield curve (including the volatility adjustment)
and high returns on risky assets.
The result of the health and accident business improved
considerably in the second quarter, despite the underlying
business being stable. The development was due mainly to a
higher investment result in the second quarter, as the first
quarter was affected by one-off provisions for pension yield
tax of DKK 200 million.
The return on investments allocated to shareholders’ equity
etc. increased DKK 68 million on the back of positive returns
on investments.
Total premiums increased 15%, driven mainly by an increase
in single premiums due to an inflow of new business
customers.
Assets under management increased DKK 15 billion, due
mainly to the positive developments in the financial markets.
Danske Bank / Interim report – first half 2021 19/72
Northern Ireland
In 2021, we moved forward with growing optimism, ensuring that Danske Bank is playing a key role in the economic recovery across
Northern Ireland.
The first half of 2021 saw an increase in profit before tax, which was DKK 217 million higher than in the same period last year, due
to lower loan impairment charges.
101
138
81
75
104
100
114
-
1,359
264
98
16
1,736
1,212
524
378
-
146
114
108
132
109
52,179
890
84,158
6,269
1.02
2.3
69.8
1,353
97
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
First half First half
2020
2021
Index
21/20
Q2
2021
Q1
2021
Index
Q2/Q1
Q2
2020
Index
21/20
Full year
2020
662
129
-
6
798
570
228
-65
293
703
133
78
8
923
595
327
252
76
94
97
-
75
86
96
70
-
-
331
69
21
3
424
294
129
-57
331
60
-20
3
374
275
99
-7
100
115
-
100
113
107
130
-
187
106
176
327
50
26
4
408
295
113
87
26
Loans, excluding reverse transactions before impair-
ments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)*
58,364
911
99,772
6,616
51,054
842
75,467
6,348
114
108
132
104
58,364
911
99,772
6,715
56,743
964
92,432
6,516
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
0.88
8.9
71.4
1,324
1.09
2.4
64.5
1,365
0.86
11.1
69.3
1,324
0.91
6.5
73.5
1,345
97
103
95
108
103
51,054
842
75,467
6,186
0.99
1.7
72.3
1,365
98
* Allocated capital equals the legal entity’s capital.
Our strategic focus in Northern Ireland is to remain a grow-
ing, strong and risk-astute bank, consolidating our leading po-
sition in the market and growing via prudent and considered
opportunities in the rest of the UK. The business continues to
work towards becoming more efficient, geographically di-
verse and digitally orientated.
We announced the creation of a GBP 500 million ‘Helping
Northern Ireland Grow Again’ fund targeted at medium-sized
businesses. The fund is in place for both existing business
customers and businesses that are currently with other
banks but that are open to moving their banking business to
Danske Bank.
The housing market remained robust with demand from pro-
spective buyers at healthy levels. In the first quarter of this
year, we became one of the first banks in the UK to reintro-
duce a 95% loan-to-value mortgage product. In the second
quarter, we followed up with the introduction of the UK’s first
mortgage product to be certified as carbon neutral by the
Carbon Trust. To achieve carbon neutrality, we have commit-
ted to keep reducing our carbon footprint and, working with
specialists ClimateCare, to offset any remaining emissions
by investing in environmental projects.
As leaders globally, nationally and locally unite to build back
better from the pandemic, the banking sector must play its
part, and Danske Bank is fully committed to this goal across
all our markets.
Danske Bank / Interim report – first half 2021 20/72
Second quarter 2021 vs first quarter 2021
Profit before tax increased to DKK 187 million, driven by net
loan impairment reversals and growth of 30% in profit before
impairments.
Income increased 13% to DKK 424 million in the second
quarter (Q1 2021: DKK 374 million), reflecting improved
activity as lockdown measures were eased across the UK.
Operating expenses also increased to DKK 294 million (Q1
2021: DKK 275 million), including the impact of higher
activity levels.
In respect of the balance sheet, we saw the same pattern as
described for the year-on-year movements in lending and
deposits.
First half 2021 vs first half 2020
Profit before tax increased to DKK 293 million, driven by
lower loan impairment charges, with the pre-impairments
performance dominated by the impact of corona crisis-
related restrictions on movement and activity.
While both lending and deposits increased, net interest
income decreased to DKK 662 million (H1 2020: DKK 703
million), reflecting a sharp decline in UK interest rates.
Net fee income decreased to DKK 129 million (H1 2020:
DKK 133 million) given very low activity levels as a result of
corona crisis-related restrictions. Net trading income and
other income were similarly impacted, although net trading
income also reflected adverse mark-to-market movements
on our bond portfolio.
Operating expenses were 4% lower, reflecting the positive
impact of ongoing cost reduction initiatives alongside lower
activity.
Net loan impairment reversals for the half year were driven
by an improved economic outlook, leading to a decrease in
impairment charges for future losses.
Higher lending balances were due largely to the volume of UK
government-guaranteed corona-related business support
loans alongside a relatively buoyant housing market. Deposit
growth rates continued in the first half of 2021, with many
personal and business customers continuing to pay off debt
and hold additional liquidity.
Danske Bank / Interim report – first half 2021 21/72
Non-core
Non-core mainly includes a legacy portfolio of liquidity facilities as well as a portfolio of commercial loans in Lithuania. The winding-
up of the Non-core portfolios is proceeding according to plan. Total lending stood at DKK 2.5 billion at the end of June 2021, less
than half the amount at the end of June 2020, which led to lower capital requirements for the Group. Profit before tax in the first
half of 2021 amounted to DKK 17 million, against a negative DKK 446 million in the first half of 2020.
First half
2021
First half
2020
Index
21/20
Q2
2021
Q1
2021
Index
Q2/Q1
Q2
2020
Index
21/20
Full year
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 impair-
ments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)
-
54
-54
-72
17
-106
165
-271
175
-446
2,475
793
2,169
973
5,414
971
1,751
1,634
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
0.49
3.5
-
25
0.92
-54.6
-155.7
64
Loan impairment charges
(DKK millions)
Non-core banking
Non-core conduits etc.
Total
-119
47
87
88
-72
175
-
60
17
-
2
46
82
124
60
39
-215
293
-508
88
-596
3,083
771
2,146
1,473
0.96
-40.5
-136.3
32
-
33
20
-
-
46
82
124
60
39
-
53
-
4
24
-19
-17
-3
-5
31
-35
-55
20
-
77
54
31
-71
40
-110
82
-
-192
5,414
971
1,751
1,421
0.99
-54.0
-56.3
64
2,475
793
2,169
856
2,628
810
2,197
1,092
0.40
-1.4
600.0
25
0.58
7.3
-620.0
29
-17
-
-17
-102
47
-55
94
98
99
78
86
17
-
31
74
8
82
-
-
-
-27
116
88
* Comparative figures for loans, excluding reverse transactions before impairments, include loans held for sale in Lithuania.
** Non-core banking encompasses the Group’s activities in Lithuania and Non-core Ireland.
Second quarter 2021 vs first quarter 2021
The Non-core unit posted a loss before tax of DKK 3 million
(Q1 2021: DKK 20 million). The decrease was due primarily
to lower loan impairment reversals, with the effect being
partly offset by an increase in total income and a decline in
operating expenses.
These effects were due primarily to the finalisation of the sale
of the Latvian portfolio held by the Lithuanian branch.
First half 2021 vs first half 2020
Profit before tax amounted to DKK 17 million (H1 2020: a
loss of DKK 446 million). 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. Further, the first half
of 2020 was affected by losses related to the final exit from
Estonia.
On 1 April 2021, the sale of the Latvian portfolio of
commercial
loans held by the Lithuanian branch was
finalised. The only portfolio now remaining at the Lithuanian
branch
loans, for which
amortisation is accelerated further.
is a portfolio of commercial
At the end of June 2021, total lending amounted to DKK 2.5
billion. The sale of most of the Baltic loan portfolios resulted
in a reduction of total lending at Non-core to less than half the
amount at the end of June 2020, which led to lower capital
requirements for the Group.
Danske Bank / Interim report – first half 2021 22/72
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.
First half
2021
First half
2020
Index
21/20
Q2
2021
Q1
2021
Index
Q2/Q1
Q2
2020
Index
21/20
Full year
2020
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
145
-21
127
37
287
1,161
-
-874
-
-53
-21
-101
-69
-245
1,174
-
-1,419
30
Profit before tax
-874
-1,449
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
11
-95
232
-1,022
-523
92
317
-1,335
-874
-1,449
First half 2021 vs first half 2020
Profit before tax increased to a loss of DKK 874 million (H1
2020: a loss of DKK 1,449 million). The improvement was
due primarily to an increase in total income caused by higher
net trading income and higher net interest income.
Net interest income increased to DKK 145 million (H1 2020:
a loss of DKK 53 million), due primarily to an increase in
allocated liquidity costs following a number of corrective
actions to reduce deposit compensation to the business
units.
Net trading income increased to DKK 127 million (H1 2020:
a loss of DKK 101 million), driven mainly by negative market
value adjustments of our interest rate hedge positions
following a widening of the spread between DKK and EUR
rates.
Operating expenses fell 1% to DKK 1,161 million. The fall
mainly reflects a decrease in costs relating to the Estonia
case and lower depreciation of intangible assets.
-
100
-
-
-
99
-
62
-
60
-
-
73
77
60
120
-13
92
41
241
652
-
-411
-2
24
-8
34
-4
46
509
-
-463
1
-409
-464
-184
80
117
-422
195
-175
116
-600
-
163
271
-
-
128
-
89
-
88
-
-
101
70
-144
-17
-183
-57
-400
430
-
-830
23
-853
-218
-224
122
-533
-409
-464
88
-853
-
76
-
-
-
152
-
50
-
48
-260
-37
139
-131
-289
2,048
379
-2,716
8
-2,723
84
-
96
79
48
-754
94
550
-2,614
-2,723
Second quarter 2021 vs first quarter 2021
Group Functions posted a loss of DKK 409 million in the
second quarter of 2021 (Q1 2021: a loss of DKK 464
million). The improved result was due primarily to an increase
in total income, which was partly offset by an increase in
operating expenses.
Net interest income increased to DKK 120 million (Q1 2021:
DKK 24 million), driven by an increase in allocated liquidity
costs following a number of corrective actions to reduce
deposit compensation to the business units as well as the
first quarter of 2021 being affected by an interest expense
on corporate back tax.
Net trading income increased to DKK 92 million (Q1 2021:
DKK 34 million), driven primarily by an improved return on
investments allocated to shareholders’ equity etc.
Operating expenses increased to DKK 652 million (Q1 2021:
DKK 509 million), due primarily to the provision relating to
the VAT case in Sweden of DKK 350 million. Further, the first
quarter of 2021 was affected by a one-off investment of DKK
122 million to ensure good working-from-home conditions
and DKK 150 million related to the VAT case in Sweden.
Danske Bank / Interim report – first half 2021 23/72
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 performance 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
Definition
Dividend per share (DKK)
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.
Return on average shareholders’ equity (% p.a.)
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 shareholders’
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 231 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 8,779 million (2020:
13,526 million) compared to a simple average of total equity (beginning and the end of the period).
Net interest income as % p.a. of loans and deposits
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 Q2 2021
would be 0.73% (full-year 2020: 0.73%) due to the daily average of the sum of loans and deposits being
DKK 24.0 billion higher (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 assets
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
Loan impairment charges as % of net credit exposure
Allowance account as % of net credit exposure
shares outstanding at the end of the period.
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 737 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 business 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 segment” table in the notes
to the financial statements. The denominator is the sum of Loans at amortised cost of DKK 1,008.2 billion
(2020: DKK1,022.7 billion), Loans at fair value of DKK 803.0 billion (DKK 816.3 billion), and guarantees
of DKK 79.8 billion (2020: DKK 71.7 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.
Market shares of lending and deposits
Market shares are based on data from central banks at the time of reporting. Comparative information is
updated on the basis of the latest available data, for example Annual Report 2020 included November
2020 data for Finland and Norway as December 2020 data was not available at the time of publication of
Annual Report 2020. This was subsequently updated to December 2020 data in Interim report – first
quarter 2021.
Danske Bank / Interim report – first half 2021 24/72
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
25
26
27
28
30
31
Note G1: Significant accounting policies and estimates
Note G2: Changes in accounting policies,
34
financial highlights and segment reporting
36
Note G3: Business segments
39
Note G4: Income
Note G5: Loan impairment charges and reconciliation of total allowance account 40
41
Note G6: Issued bonds, subordinated debt and additional tier 1 capital
42
Note G7: Other assets and other liabilities
42
Note G8: Foreign currency translation reserve
43
Note G9: Guarantees, commitments and contingent liabilities
45
Note G10: Assets provided or received as collateral
46
Note G11: Fair value information for financial instruments
49
Note G12: Group holdings and undertakings
49
Note G13: Events after the reporting date
50
Risk Management
50
Breakdown of credit exposure
51
Credit exposure from core lending activities
Credit exposure from Non-core lending activities
59
Counterparty credit risk and credit risk from trading and investment securities 60
60
Bond portfolio
Financial statements – Danske Bank A/S
63
Income statement – Danske Bank Group
Danske Bank / Interim report – first half 2021 25/72
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)
First half
2021
First half
2020
10,854
19,314
16,551
13,617
9,051
3,055
18,873
2,873
17,710
35,292
15,310
8,466
666
7,801
1,869
11,976
22,299
20,430
13,844
8,100
2,572
-3,333
1,771
14,444
9,506
15,858
6,892
5,443
1,449
413
Q2
2021
5,440
9,831
8,211
7,060
4,391
1,561
11,160
1,368
9,225
19,819
7,854
3,970
223
3,747
955
Q2
2020
5,717
10,220
8,361
7,577
3,643
1,112
19,755
375
6,446
24,412
8,062
4,211
1,099
3,112
787
5,932
1,036
2,792
2,325
5,700
231
5,932
720
316
1,036
2,676
117
2,792
2,204
121
2,325
Full year
2020
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
6.7
6.7
-
0.8
0.8
-
3.1
3.1
-
2.6
2.6
-
4.7
4.7
2.0
* 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 concerning income line items.
Danske Bank / Interim report – first half 2021 26/72
Statement of comprehensive income – Danske Bank Group
(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
First half
2021
First half
2020
Q2
2021
Q2
2020
Full year
2020
5,932
1,036
2,792
2,325
4,589
493
-88
405
1,162
-800
-204
5
33
196
600
6,532
6,300
231
6,532
390
-102
287
-3,581
2,077
51
-15
146
-1,322
-1,035
207
-56
151
-157
112
-22
-
-21
-88
63
1
2,856
-315
316
1
2,739
117
2,856
205
-12
193
2,119
-1,236
451
-4
-257
1,073
1,266
3,590
3,469
121
3,590
304
-38
266
-1,902
1,224
264
-12
-70
-496
-230
4,359
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 half 2021 27/72
30 June
2021
31 December
2020
30 June
2020
313,404
67,817
612,529
304,812
1,009,879
998,819
89,293
532,154
8,758
3,660
33,907
320,702
81,428
682,948
296,769
1,024,607
1,023,323
82,795
545,708
8,785
5,202
36,964
221,198
82,013
655,583
298,758
1,027,472
1,094,540
75,476
554,604
8,986
4,811
38,163
G7
G6
G6
G7
G6
G6
G8
G6
Total assets
3,975,032
4,109,231
4,061,603
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
215,265
373,366
1,363,809
770,654
216,646
90,017
573,849
1,966
46,187
111,275
38,836
211,182
499,334
1,333,781
784,027
245,573
82,905
591,930
1,821
51,291
106,371
32,337
217,117
541,920
1,270,695
756,185
268,104
76,137
591,689
2,147
43,243
98,075
31,790
3,801,872
3,940,552
3,897,103
8,622
-689
157
156,523
-
164,613
8,547
8,622
-1,050
354
150,521
1,724
160,171
8,508
8,622
-1,875
138
149,043
-
155,927
8,573
173,161
168,679
164,500
3,975,032
4,109,231
4,061,603
* 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 30 June
2020 has been restated above.
Danske Bank / Interim report – first half 2021 28/72
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
-
-
1,162
-800
-
-
-
361
361
-
-
-
-
-
354
-
150,521
5,700
1,724
-
160,171
5,700
8,508
231
168,679
5,932
-
-
-
-204
5
-
-199
493
-
-
-
-
-56
437
-199
6,137
-
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-56
600
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-56
600
6,300
231
6,532
-
-
-
-
-
-
16
-11,411
11,271
-10
-
-1,724
-
-
-
-
-1,708
-11,411
11,271
-10
-233
-
-
41
-
-233
-1,708
-11,411
11,312
-10
Share
capital
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total equity as at 30 June 2021
8,622
-689
157
156,523
-
164,613
8,547
173,161
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*
Redemption of additional tier 1 capital
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Tax
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-372
-
-
-3,581
2,077
-
-
-
-1,503
-1,503
-
-
-
-
-
-
102
-
140,590
720
7,329
-
156,271
720
14,237
316
170,508
1,036
-
-
-
51
-15
-
36
36
-
-
-
-
-
-
390
-
-
-
-
44
433
1,153
-
7,329
-5
-18,851
18,805
22
-
-
-
-
-
-
-
-
390
-3,581
2,077
51
-15
44
-1,035
-
-
-
-
-
-
-
390
-3,581
2,077
51
-15
44
-1,035
-315
316
1
-
-7,329
-
-
-
-
-
-
-5
-18,851
18,805
22
-391
-
-5,596
7
-
-
-391
-
-5,600
-18,844
18,805
22
Total equity as at 30 June 2020
8,622
-1,875
138
149,043
-
155,927
8,573
164,500
*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
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
Minimum Loss Coverage for Non-Performing Exposures
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 half 2021 29/72
30 June 2021 31 December 2020
8,621,846,210
862,184,621
853,064,124
853,516,388
853,690,756
8,621,846,210
862,184,621
853,649,376
853,138,154
853,470,424
30 June 2021 31 December 2020
173,161
175
-17
173,318
-8,456
-91
164,770
-70
2,089
-1,055
-158
-3,559
-4,874
-16
98
-254
-2,611
-7,355
147,006
22,200
169,206
20,882
190,089
816,185
18.0%
20.7%
23.3%
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 half 2021 30/72
First half
2021
First half
2020
Full Year
2020
7,801
-280
888
8,409
3,955
-55,549
-99
-8,043
38,567
30,029
-41,096
-4,526
-2,049
1,449
-2,577
6,128
5,000
66,339
-70,544
-39
-13,885
22,604
129,969
-33,583
-3,813
387
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
-30,402
102,435
186,506
-
-374
-143
5
-512
10,102
-3,718
3,701
-1,708
-
-233
-331
5
-353
-218
7
-559
-
-
10,037
-
-5,600
-391
-373
5
-872
-408
12
-1,263
3,721
-2,180
23,610
-
-5,600
-625
-653
7,813
3,672
18,273
400,889
2,064
-23,101
199,608
-2,574
105,548
199,608
-2,235
203,516
379,851
302,582
400,889
6,104
307,300
66,447
5,462
215,736
81,384
6,131
314,572
80,186
379,851
302,582
400,889
Danske Bank / Interim report – first half 2021 31/72
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 Danish 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 Ann ual 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 reporting period 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 given
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 30 June 2021, the base case scenario reflects a recovery later in 2021. To
fully capture the downside risk, the downside scenario used at 30 June 2021 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 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. Infor-
mation on the macroeconomic parameters in the base case and downside scenarios can be found in the risk management notes.
Danske Bank / Interim report – first half 2021 32/72
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 30 June 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 1.2 billion (31 December 2020: 0.4 billion). Compared to the base case
scenario, the allowance account would increase DKK 8.5 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 half 2021 are therefore not directly comparable, especially due to the downside scenario
being a severe downside scenario at 30 June 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 30 June 2021, the post-model adjustments amounted to
DKK 6.0 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
30 June 2021, financial assets covered by the expected credit loss model accounted for about 53% of total assets (31 December 2020: 52%).
Fair value measurement of financial instruments
At the end of June 2021, no unusual challenges in obtaining reliable pricing apart from insignificant parts of the portfolio remain ed. 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 30 June 2021, the adjustments totalled DKK 1.1 billion (31 December 2020: DKK 1.6 billion), including the adjustment for credit risk on derivatives
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 fixed interest rates on th e 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 involved 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 G1 2(d) of the
Annual Report 2020.
Danske Bank / Interim report – first half 2021 33/72
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 30 June 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 whethe r 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 half of 2021, it was concluded that no indications of impairment at the end of June 2021 were noted.
The goodwill in Danica Pension of DKK 1.6 billion (31 December 2020: DKK 1.6 billion) is 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 own 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 half 2021 34/72
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 contrac tual 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 retrospect ive effectiveness test when
the benchmark transitions to an alternative benchmark. The amendments further require that the hedging relationships and documentations 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 prog ress on the
transition and the risks arising from financial assets and financial liabilities due to the reform. At the beginning of 2019, the Group formally established
an IBOR Transition Programme, the main objectives being to identify how the IBOR transition will affect the Group financially and operationally and to
recommend the best implementation of the transition, mitigate risks, implement changes in contractual relationships etc. On 5 March 2021, ICE Bench-
mark Administration (IBA), the administrator of LIBOR, announced its intention to cease publication of GBP, EUR, CHF, JPY, 1 week USD LIBOR and 2
month USD LIBOR immediately after 31 December 2021. The remaining USD LIBOR tenors will be published until 30 June 2023. EURIBOR, CIBOR,
STIBOR and NIBOR are expected to continue for the foreseeable future. Centrally cleared derivatives in the LIBORs which are discontinued will be transi-
tioned in large scale before year end by the CCP. Many accounts and other non-contractual facilities have already been moved from affected LIBORs into
alternative Risk Free Rates (RFR). The transition of our Loan and Derivatives exposure from LIBOR to alternative Risk Free Rates has started and will
scale up in Q3 into Q4 of this year. It is a top priority for the Group to conduct the transition in a timely and orderly manner that is transparent and fair to
our customers.
The implementation is applied retrospectively without restatement of prior periods. The implementation of the amendments had no impact on sharehold-
ers’ equity at 1 January 2021. Following the reliefs from the existing hedge accounting requirements, the Group expects that existing hedging relation-
ships 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 direct 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 th e 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 327 million in the first
half of 2021. Comparative information has been restated, leading to a reclassification to Fee income from Net trading income or loss of DKK 364 million
in the first half of 2020 and DKK 590 million for full year 2020.
Danske Bank / Interim report – first half 2021 35/72
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 half of 2020. 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 half 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
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, non-core
Profit before tax
Financial highlights
first half 2020
Danica Pension
Indirect fees, Dan-
ish mortgage loans
Adjusted financial
highlights
10,989
7,311
2,300
-
280
20,880
13,717
7,163
5,269
1,894
-446
1,449
138
-1,720
-39
897
29
-695
-695
-
-
-
364
-364
11,127
5,956
1,897
897
309
20,185
13,022
7,163
5,269
1,894
-446
1,449
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 30 June 2020 has been restated.
Danske Bank / Interim report – first half 2021 36/72
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 first half 2021
(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
7,766
3,267
312
-
412
-
-
2,392
3,220
1,852
-
2
-
-
Total income
Operating expenses
11,757
7,288
7,466
3,751
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
4,469
550
3,919
-
3,715
252
3,463
-
Profit before tax
3,919
3,463
Northern
Danica
Ireland Non-core
Group
Functions
Elimina-
tions
Financial
highlights
Reclassifi-
cation
-
-
-
982
-
-
-
982
-
982
-
982
-
982
662
129
-
-
6
-
-
798
570
228
-65
293
-
293
-
-
-
-
-
-
-
-
-
-
-
-
17
17
147
40
219
-
1,031
-
-
1,437
1,252
186
-
186
-
-2
-62
-93
-
-994
-
-
10,965
6,595
2,291
982
457
-
-
-1,150
-91
21,291
12,770
-1,059
-
-1,059
-
8,521
737
7,783
17
2,652
-599
16,581
-982
2,415
17,710
35,292
2,486
2,540
-54
-72
17
-17
IFRS
financial
statements
13,617
5,996
18,873
-
2,873
17,710
35,292
23,776
15,310
8,466
666
7,801
-
186
-1,059
7,801
-
7,801
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
1,514,509
236,226
537,271 3,276,196
-
-
-
641,751
-
57,453
61,070
-
33,103
-
- 4,096,125
-
1,783
-31,487 1,809,805
-6,448,969 2,163,445
1,783
-
1,682 1,811,487
101 2,163,546
-
-1,783
Total assets
2,051,781 3,512,423 641,751
118,523
1,783 4,129,228 -6,480,457 3,975,032
- 3,975,032
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
702,466
403,958
1,274,535 3,064,275
44,190
-
74,780
-
-
628,501
13,250
-
99,772
12,019
6,732
-
-
1,676
- 4,101,170
25,661
-
-
2,504
-9,962 1,197,910
-6,470,495 2,610,005
164,613
2,504
-
-
2,169 1,200,079
335 2,610,340
164,613
-
-
-2,504
Total liabilities and equity
2,051,781 3,512,423 641,751
118,523
2,504 4,128,507 -6,480,457 3,975,032
- 3,975,032
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
10.6
62.0
15.5
50.2
14.6
-
8.9
71.4
-
-
0.6
87.1
6,826
2,565
859
1,324
25
10,327
-
-
-
8.0
60.0
21,926
-
-
-
8.0
64.4
21,926
Notes – Danske Bank Group
Danske Bank / Interim report – first half 2021 37/72
G3. Business segments continued
Business segments first half 2020
(DKK millions)
Net interest income
Net fee income2
Net trading income2
Net income from insurance
business
Other income
Net premiums
Net insurance benefits
Personal &
Business
Customers
Large Cor-
porates &
Institutions
8,029
3,273
285
-
362
-
-
2,448
2,570
1,635
-
7
-
-
Total income
Operating expenses
11,949
7,561
6,661
3,692
Profit before loan impair-
ment 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
4,388
1,470
2,919
-
2,919
2,969
3,517
-548
-
-548
1,488,371
281,352
482,212 3,775,108
-
-
Northern
Danica
Ireland Non-core
Group
Functions
Elimina-
tions
Financial
highlights1
Reclassifi-
cation1
IFRS
financial
statements2
-
-
-
897
-
-
-
897
-
897
-
897
-
897
703
133
78
-
8
-
-
923
595
327
252
76
-
76
-
-
-
-
-
-
-
-
-
-
-
-
-446
-52
-22
-223
-
202
-
-
-95
1,257
-1,352
30
-1,383
-
-446
-1,383
-1
1
122
-
-271
-
-
-150
-83
-67
-
-67
-
-67
11,127
5,956
1,897
897
309
-
-
20,185
13,022
7,163
5,269
1,894
-446
1,449
2,717
-427
-5,229
-897
1,462
14,444
9,506
2,565
2,836
-271
175
-446
446
13,844
5,529
-3,333
-
1,771
14,444
9,506
22,750
15,858
6,892
5,443
1,449
-
-
1,449
-
664,978
-
50,212
41,799
-
35,783
-
- 3,610,633
-
4,815
-33,172 1,822,545
-6,340,488 2,234,244
4,815
-
2,249
2,566
-4,815
1,824,793
2,236,810
-
Total assets
1,970,582 4,056,460 664,978
92,011
4,815 3,646,416 -6,373,660 4,061,603
- 4,061,603
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
649,160
376,027
1,250,873 3,631,862
48,570
-
70,550
-
-
651,312
13,666
-
75,467
10,158
6,386
-
-
1,408
- 3,630,356
16,755
-
-
2,712
-9,328 1,092,735
-6,364,332 2,810,229
155,927
2,712
-
-
1,751
961
-
-2,712
1,094,486
2,811,190
155,927
-
Total liabilities and equity
1,970,582 4,056,460 664,978
92,011
2,712 3,648,519 -6,373,660 4,061,603
- 4,061,603
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
8.4
63.3
-2.4
55.4
13.5
-
2.4
64.5
-
-
-10.6
-
6,795
2,528
793
1,365
64
10,645
-
-
-
1.9
64.5
22,191
-
-
-
1.9
69.7
22,191
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 half 2021 38/72
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 first half 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 first half 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
13,617
5,996
18,873
-
2,873
17,710
35,292
23,776
15,310
8,466
666
7,801
-
7,801
-
-
-
-
-1,852
-
-
-1,852
-1,852
-
-
-
-
-
-1,005
45
960
-
-
-
-
-
-
-
-
-
-
-
-1,637
555
-17,541
982
-574
-17,710
-35,292
-634
-634
-
-
-
-
-
-10
-1
-
-
11
-
-
-
-54
54
72
-17
17
-
-2,652
599
-16,581
982
-2,415
-17,710
-35,292
-2,486
-2,540
54
72
-17
17
-
10,965
6,595
2,291
982
457
-
-
21,291
12,770
8,521
737
7,783
17
7,801
IFRS financial
statements1
Operating leases
and impairment
charges
Markets, Invest-
ment Banking &
Securities and
Group Treasury
Danica
Pension2
Non-core
Total
reclassification2
Financial
highlights2
13,844
5,529
-3,333
-
1,771
14,444
9,506
22,750
15,858
6,892
5,443
1,449
-
1,449
-
-
-
-
-2,042
-
-
-2,042
-2,042
-
-
-
-
-
-1,126
-18
1,092
-
51
-
-
-
-
-
-
-
-
-
-1,562
448
4,081
897
447
-14,444
-9,506
-628
-628
-
-
-
-
-
-30
-3
56
-
83
-
-
106
-165
271
-175
446
-446
-
-2,717
427
5,229
897
-1,462
-14,444
-9,506
-2,565
-2,836
271
-175
446
-446
11,127
5,956
1,897
897
309
-
-
20,185
13,022
7,163
5,269
1,894
-446
-
1,449
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 half 2021 39/72
Notes – Danske Bank Group
G4. Income
(a) Interest income and interest expense
Negative interest income during the period ending June 2021 amounted to DKK 812 million (30 June 2020: DKK 1,040 million). Negative interest ex-
penses amounted to DKK 1,712 million (30 June 2020: DKK 1,324 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 first half 2021
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Fee income first half 2020
(DKK millions)
Financial
highlights
- net fee income
Reclassifica-
tions
2,629
1,563
1,352
1,051
6,595
-192
-10
372
-768
-599
Financial
highlights
- net fee income1
Reclassifica-
tions1
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
2,554
1,349
1,409
644
5,956
-145
-37
267
-512
-427
IFRS
- net fee
income
2,436
1,553
1,723
284
5,996
IFRS
- net fee
income2
2,409
1,312
1,676
132
5,529
Fee expense
2,262
646
147
-
3,055
IFRS
- gross fee
income
4,698
2,199
1,870
284
9,051
IFRS
- gross
fee income2
Fee expense
1,842
606
124
-
2,572
4,251
1,917
1,800
132
8,100
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 2,873 million for the six months ending 30 June 2021 (30 June 2020: DKK 1,771 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 half 2021 40/72
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
ECL allowance account as at 30 June 2021
30 June 2021
30 June 2020
2,569
-4,779
1,464
1,662
-133
-118
666
3,239
-2,631
4,478
747
-246
-143
5,443
Stage 1
Stage 2
Stage 3
Total
1,316
1,065
-119
-22
543
-292
-194
-1
-22
-8
2,267
1,177
-122
-122
285
-372
-890
3
15
-54
2,187
5,963
-1,007
757
-1,002
1,862
-1,328
2,282
-6
-7
-56
7,459
-1,087
427
-732
769
-1,046
1,196
6
35
-5
7,022
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
-90
-305
854
1,515
-3,361
1,158
416
165
12
-
-
-
2,569
-4,779
1,464
425
215
-46
13,982
23,191
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 half 2021 41/72
30 June 31 December
2020
2021
760,452
10,201
775,844
8,183
770,654
784,027
30 June 31 December
2020
2021
9,525
49,293
157,828
14,184
61,344
170,044
216,646
245,573
111,275
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
Other issued bonds
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
19,292
1,985
18,090
3,718
25,889
16,212
24,209
-
Foreign
currency
translation
486
863
-3,407
2,277
30 June
2021
16,404
49,159
158,919
111,024
359,340
43,086
66,310
219
335,507
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 30 June 2021, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 38,982 million (31
December 2020: DKK 32,137 million) and the nominal value of equity accounted additional tier 1 capital to DKK 8,577 million (31 December 2020: DKK
8,579 million). During the six months ended 30 June 2021, the Group issued DKK 10,067 million of tier 2 capital and liability accounted additional tier 1
capital and redeemed DKK 3,672 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 30 June 2021, distributable items for Danske Bank A/S amounted to DKK 128.9 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 30 June 2021 the common equity tier
1 capital ratio was 20.7% (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 half 2021 42/72
Notes – Danske Bank Group
G7. Other assets and Other liabilities
Other assets amounted to DKK 33,907 million (31 December 2020: DKK 36,964 million), including accrued interest and commission due of DKK 3,531
million (31 December 2020: DKK 3,607 million), holdings in associates of DKK 199 million (31 December 2020: DKK 209 million), investment property of
DKK 2,397 million (31 December 2020: DKK 2,256 million), tangible assets of DKK 8,666 million (31 December 2020: DKK 8,547 million) and right-of-use
lease assets of DKK 4,326 million (31 December 2020: DKK 4,819 million), consisting of domicile property of DKK 3,498 million (31 December 2020: DKK
3,938 million) and other tangible assets of DKK 828 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 0 million (31 December 2020: DKK 416 million) and other assets held for sale of DKK 252 million (31 December
2020: DKK 293 million).
Other liabilities amounted to DKK 46,187 million (31 December 2020: DKK 51,291 million), including accrued interest and commissions due of DKK 4,425
million (31 December 2020: DKK 6,676 million), lease liabilities of DKK 4,292 million (31 December 2020: 4,761 million), other staff commitments of DKK
1,878 million (31 December 2020: DKK 3,022 million). Further, other liabilities include provisions for customer remediation of DKK 727 million (31 Decem-
ber 2020: DKK 804 million), provisions for restructuring costs of DKK 516 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 35,591 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 position 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. With
effect from 1 January 2021, the Group’s net investment in its subsidiaries Danske Hypotek AB (Sweden) and Danske Mortgage Bank Plc (Finland) has been
included in the structural FX hedge position to extend the hedge to the risk exposure amount measured by currency for EUR, NOK and SEK across the entire
Group balance sheet, although with constraints to the size of the loans to the foreign branches and the net investments in the foreign subsidiaries. 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
30 June 2021, the structural FX hedge position totalled DKK 39,748 million (31 December 2020: DKK 31,625 million) and a gain of DKK 324 million has
been recognised in Other comprehensive income during the first half of 2021, primarily due to appreciation of NOK against DKK throughout the first half of
2021. During the first half of 2020, a loss of DKK 1,198 million related to the structural FX hedge position was recognised in Other comprehensive income
due to a significant weakening of NOK against DKK throughout the first half of 2020.
Danske Bank / Interim report – first half 2021 43/72
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
30 June 31 December
2020
2021
5,963
73,789
79,753
6,708
65,108
71,816
30 June 31 December
2020
2021
269,985
195,961
17,765
483,711
276,413
198,830
18,995
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 253 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 of Danske Bank’s
American Depositary Receipts, representing its ordinary shares, against the Bank and certain of its officers and former offic ers 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, among 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 half 2021 44/72
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 Q3 2021 at the earliest. In March 2019, October 2019, January 2020, March 2020, September 2020, and February 2021 a total
of 320 separate cases were initiated and are still ongoing against the Bank with a total claim amount of approximately DKK 7.9 billion. On 27 December
2019 and 4 September 2020, two separate claims were filed by 93 investors against the Bank with a total claim amount of approximately 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 320 cases filed in the period from March 2019 to February 2021, 200
have been referred to the Eastern High Court. On 29 June 2021, the Supreme Court denied the Bank’s request for referral of the remaining cases, which
are now stayed before the Copenhagen City Court. The Bank is defending itself against these claims. The timing of completion of any such lawsuits (pend-
ing 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 claim against the
notified party in the future. The main hearing is scheduled to be held in September 2021.
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 and the Danish Tax Agency 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 half 2021 45/72
Notes – Danske Bank Group
G10. Assets provided or received as collateral
As at 30 June 2021, the Group had deposited securities (including bonds issued by the Group) worth DKK 32.8 billion as collateral with Danish and
international clearing centres and other institutions (31 December 2020: DKK 36.7 billion).
As at 30 June 2021, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 68.9 billion as collateral for derivatives
transactions (31 December 2020: DKK 104.0 billion).
As at 30 June 2021, the Group had registered assets (including bonds and shares issued by the Group) under insurance contracts and unit-linked
investment contracts worth DKK 487.9 billion (31 December 2020: DKK 473.5 billion) as collateral for policyholders’ savings of DKK 472.4 billion (31
December 2020: DKK 458.1 billion).
As at 30 June 2021, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 813.1 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 324.6 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’.
30 June 2021
31 December 2020
(DKK millions)
Repo
Other
Total
Repo
Other
Total
Due from credit institutions
Trading and investment securities
Loans at fair value
Loans at amortised cost
Assets under insurance contracts and unit-
linked investment contracts
Other assets
-
273,675
-
-
-
-
26,112
70,899
802,966
333,750
408,868
43
26,112
344,574
802,966
333,750
408,868
43
-
237,453
-
-
-
-
28,886
80,062
816,284
360,511
370,176
52
28,886
317,515
816,284
360,511
370,176
52
Total
Own issued bonds
273,675
26,509
1,642,637
83,533
1,916,312
110,042
237,453
19,556
1,655,971
93,992
1,893,424
113,548
Total, including own issued bonds
300,184
1,726,170
2,026,354
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 273.7 billion as at 30 June 2021 (31 December 2020: DKK 237.5 billion).
As at 30 June 2021, the Group had received securities worth DKK 274.2 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 30 June 2021, the Group had sold securities or provided securities
as collateral worth DKK 131.3 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 half 2021 46/72
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
30 June 2021
Fair value
Amortised cost
31 December 2020
Fair value
Amortised cost
-
39,034
612,529
165,715
-
998,819
89,293
504,220
-
313,404
28,782
-
139,097
1,009,879
-
-
-
-
-
52,402
682,948
165,141
-
1,023,323
82,795
521,245
-
320,702
29,026
-
131,628
1,024,607
-
-
-
416
Total
2,409,611
1,491,162
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
122,119
373,366
173,310
770,654
-
90,017
-
-
-
-
93,147
-
1,190,499
-
216,646
-
-
111,275
38,836
2,582
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
1,529,466
1,652,985
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 six months of 2021.
Danske Bank / Interim report – first half 2021 47/72
Notes – Danske Bank Group
G11. Fair value information for financial instruments continued
(DKK millions)
30 June 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
-
4,091
313,116
16,276
149,625
-
-
89,293
182,300
143,652
-
39,034
264,256
12,415
-
15,127
-
998,819
-
19,579
4,733
105,332
-
2,308
-
68
-
963
-
-
6,908
39,339
2,377
Total
39,034
270,655
325,531
16,344
164,752
963
998,819
89,293
208,787
187,724
107,709
Total
898,353
1,459,295
51,963
2,409,611
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
Total
(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
-
3,613
129,604
-
770,654
-
122,119
235,543
1,630
173,310
-
90,017
-
2,941
36
-
-
-
122,119
242,097
131,270
173,310
770,654
90,017
903,871
622,619
2,977
1,529,466
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 half 2021 48/72
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)
Carrying amount
Increase
Decrease
Realised
Unrealised
Sensitivity (change in fair value)
Gains/losses for the period
30 June 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
39,339
995
6,908
1,744
35,026
1,002
7,438
3,083
-
100
111
-
-
100
106
-
-
100
111
-
-
100
106
-
799
-73
10
-
411
200
235
-
4,109
3
82
-1,301
-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 six month period
ended 30 June 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
30 June 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
Fair value end of period
36,028
4,838
5,260
-5,533
-
-259
40,334
7,438
92
631
-1,253
-
-
6,908
3,083
-1,301
-150
436
-27
-297
1,744
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
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 half 2021 49/72
Notes – Danske Bank Group
G12. Group holdings and undertakings
(a) Disposal of MobilePay A/S in exchange for an interest in Vipps AS
In June 2021, Danske Bank entered into an agreement with OP Financial Group in Finland and the consortium of banks behind Vipps in No rway to merge
the three mobile payment providers MobilePay, Vipps and Pivo into one comprehensive digital wallet serving 11 million users and over 330,000 shops
and web shops.
The merger is expected to result in a one-off gain for Danske Bank of approximately DKK 400 – 500 million once it is approved by the relevant authorities.
Final approval is expected in the second half of 2021 or in early 2022. After the merger, Danske Bank will own 25% of the new parent company, Vipps
AS.
G13. Events after the reporting date
On 1 July 2021, Danske Bank entered into a binding contract for the sale of the business activities of Danske Bank International in Luxembourg to Union
Bancaire Privée SA, which includes loans and deposits with a book value of DKK 6 billion and DKK 7 billion, respectively. The sale is conditional on approval
by the relevant authorities. Final approval is expected in the second half of 2021. Once the relevant authorities have approved the deal, the expected net gain
from the sale of approximately DKK 250 million will be recognised, and the loans and deposits will be derecognised.
Danske Bank / Interim report – first half 2021 50/72
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)
30 June 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
307.3
67.8
612.5
304.8
1,009.9
998.8
89.3
532.2
-
79.8
270.0
196.0
17.8
307.3
28.8
-
-
1,008.2
803.0
-
-
-
79.8
268.4
196.0
-
4,486.1
2,691.4
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
-
-
-
-
-
1.7
-
-
-
-
-
1.6
-
-
3.3
-
0.1
-
-
1.9
-
-
-
0.4
0.2
1.5
-
-
4.1
-
39.0
270.7
-
-
195.9
-
-
-
-
-
-
-
-
-
341.9
304.8
-
-
-
-
-
-
-
-
0.2
-
-
-
-
-
-
89.3
532.2
-
-
-
-
17.6
505.5
646.8
639.1
-
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
253 billion at 30 June 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 half 2021 51/72
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.
30 June 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 collateral
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
280.7
206.5
553.4
586.9
461.8
291.0
118.8
19.7
0.9
0.4
0.1
0.1
0.6
1.6
2.7
11.6
16.1
45.7
31.3
9.0
20.6
0.1
-
0.5
1.6
2.6
2.3
1.4
1.7
1.2
0.8
25.4
16.8
-
-
0.1
0.1
0.2
0.4
0.8
0.5
-
-
0.1
-
-
-
-
0.1
0.2
1.3
2.3
1.5
1.6
-
-
-
0.2
-
-
-
-
0.1
-
5.4
7.5
280.7
206.5
553.3
586.7
461.6
290.6
118.0
19.2
0.8
0.3
-
0.1
0.6
1.5
2.7
11.5
15.9
44.5
29.0
7.5
19.0
0.1
-
0.5
1.4
2.5
2.3
1.4
1.7
1.1
0.8
20.0
9.3
260.2
81.4
249.1
244.5
146.5
105.5
36.6
3.6
0.1
0.1
-
-
0.2
0.6
0.7
6.8
7.9
16.1
9.9
-
10.2
-
-
-
-
0.1
0.1
0.1
0.2
0.1
-
3.3
0.8
2,520.1
139.4
54.3
2.2
7.0
13.3
2,517.9
132.4
41.0
1,127.6
52.5
4.8
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
For Personal customers, the gross exposure within stage 3 increased by DKK 7.5 billion from the end of 2020 to June 2021. The increase is driven by
alignment of customer staging within the Group. Expected credit losses only increased by DKK 0.1 billion in the same period b ecause the majority of the
exposure transferred to stage 3 is covered by collateral.
Danske Bank / Interim report – first half 2021 52/72
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.
30 June 2021
(DKK billions)
Public institutions
Financials
Agriculture
Automotive
Capital goods
Commercial property
Construction and building materi-
als
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
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
354.6
102.3
57.9
29.7
65.5
296.9
44.8
68.6
8.8
10.8
21.3
42.6
205.8
35.6
22.5
58.8
29.5
26.4
20.7
13.3
58.2
945.4
0.5
1.8
5.0
2.1
6.9
14.3
5.3
4.5
4.8
0.5
0.9
5.2
4.1
1.5
3.4
3.8
3.5
0.8
0.7
3.1
4.3
62.6
-
0.6
5.9
0.7
1.8
6.0
1.9
1.4
2.2
0.1
0.2
0.1
1.5
0.5
2.4
1.2
7.8
1.3
0.2
0.8
0.1
17.7
-
-
0.3
-
-
0.5
-
-
-
-
0.1
-
0.1
-
-
0.1
0.1
-
-
-
-
0.7
-
0.1
0.7
0.1
0.4
1.6
0.3
0.2
0.2
-
-
0.1
0.2
0.1
0.1
0.2
0.2
0.1
-
0.2
0.1
2.1
-
0.2
1.3
0.1
0.7
1.2
0.6
0.4
0.5
-
-
-
0.2
0.2
0.8
0.5
2.7
0.3
0.1
0.1
-
3.2
354.6
102.2
57.6
29.7
65.4
296.4
44.8
68.6
8.8
10.8
21.2
42.6
205.7
35.6
22.5
58.7
29.5
26.4
20.7
13.3
58.2
944.6
0.5
1.8
4.3
1.9
6.4
12.8
5.0
4.3
4.6
0.5
0.9
5.1
3.9
1.4
3.3
3.6
3.3
0.7
0.6
2.9
4.2
60.5
-
0.3
4.6
0.5
1.1
4.8
1.3
1.0
1.7
0.1
0.1
0.1
1.3
0.3
1.6
0.7
5.1
1.0
0.2
0.7
-
14.5
350.5
88.3
12.5
22.3
57.3
59.2
32.6
51.3
2.7
8.3
17.0
40.0
36.0
24.5
12.7
48.0
15.2
10.3
18.8
6.9
43.2
170.0
0.1
1.2
0.8
1.0
5.5
0.5
2.6
3.0
1.3
0.2
0.1
4.5
0.9
0.3
2.4
2.2
2.4
0.4
0.3
1.3
4.0
17.3
-
-
0.4
0.2
0.5
0.4
0.5
0.3
0.3
-
-
-
0.1
0.1
0.5
0.2
-
0.5
-
0.2
-
0.8
Total
2,520.1
139.4
54.3
2.2
7.0
13.3
2,517.9
132.4
41.0
1,127.6
52.5
4.8
As at 30 June 2021, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 19.5 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 June 2021.
For the Hotels, restaurants and leisure industry, the gross exposure within stage 2 increased by DKK 1.6 billion from the end of 2020 to 30 June 2021
while the expected credit losses remained unchanged. This is primarily due to an increase in collateral of DKK 1.3 billion but 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 half 2021 53/72
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 June 2021 can be
found as the difference between the columns ‘Net exposure’ and ‘Net exposure, ex collateral’ and amounted to DKK 1,506.4 billion at 30 June 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 5.3 billion (31 December 2020: DKK 5.0 billion) with the guarantees
covering DKK 4.4 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 half 2021 54/72
Notes – Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
30 June 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
539.3
24.6
13.2
0.6
1.5
2.3
538.7
23.1
10.9
72.6
6.0
0.6
390.9
662.0
49.9
5.1
30.4
40.2
13.0
0.4
3.7
21.0
1.5
0.1
Total
1,647.2
108.6
39.5
Large Corporates &
Institutions
498.5
25.2
11.7
Northern Ireland
98.6
Group Functions
275.9
5.5
0.1
3.1
-
0.1
1.1
-
-
1.8
0.3
0.1
-
0.5
3.3
0.4
-
5.7
1.2
0.1
-
0.6
5.3
0.3
-
390.8
661.0
49.8
5.1
29.9
37.0
12.6
0.4
3.1
15.7
1.2
-
98.8
173.2
18.7
1.0
10.2
11.8
2.5
0.2
8.5
1,645.3
102.9
30.9
364.3
30.8
4.1
498.2
24.0
7.6
425.2
20.7
0.7
98.5
-
275.9
5.4
0.1
2.4
63.0
-
275.1
1.0
0.1
0.2
2.4
0.2
-
3.3
1.0
0.4
-
Total
2,520.1
139.4
54.3
2.2
7.0
13.3
2,517.9
132.4
41.0
1,127.6
52.5
4.8
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 half 2021 55/72
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 18 billion, of which around DKK 16 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
30 June 2021
31 December 2020
Performing Non-performing*
Performing
Non-performing*
14,022
9,978
23,999
10,423
-
11,973
14,962
10,481
-
10,423
26,934
10,481
*These 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 half 2021 56/72
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 half of 2021.
The table below shows the reconciliation as at 30 June 2021 between the gross exposure in stage 3 and gross non-performing loans.
30 June 2021
31 December 2020
Non-default
Default
Total Non-default
Default
37.5
20.1
17.4
5.4
12.0
16.8
2.9
13.9
7.3
6.6
54.3
23.1
31.3
12.7
18.6
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 (%)
*Part 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
30 June
2021
31 December
2020
18,550
6,588
18,842
6,698
100
73
87
1.2
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
1,176
-122
-122
285
-370
-887
-3
15
-48
-1,086
427
-723
769
-1,038
1,197
-6
35
7
-90
-305
845
1,515
-3,165
1,094
416
144
12
-
-
-
2,568
-4,573
1,404
408
194
-29
ECL allowance account as at 30 June 2021
2,186
7,020
13,321
22,526
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
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
1,340
-1,767
1,085
-369
21
-42
999
-2,612
409
796
121
14
ECL allowance account as at 30 June 2021
16,041
5,504
Danske Bank / Interim report – first half 2021 57/72
Personal &
Business
Customers
Large
Corporates &
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
227
-191
-91
-20
51
-1
965
8
10
-3
1
-
-2
1
15
3
-3
-
-
-
-
20,451
4,507
-5,180
4,283
-1,076
-425
-6
22,554
2,568
-4,573
1,404
408
194
-29
15
22,526
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 30 June 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.
30 June 2021
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base-case
2022
2021
3.10
4.63
6.10
1.58
3.93
7.68
-0.08
0.64
3.28
4.53
5.25
1.23
4.55
2.13
0.03
0.89
2023
1.90
2.63
4.98
1.55
2.20
2.18
0.16
0.99
Downside
2022
2021
1.05
2.58
6.66
1.30
1.51
3.68
-0.59
-0.40
0.73
0.80
6.62
0.63
1.33
-1.88
-0.59
-0.40
2023
1.66
3.53
6.12
1.27
1.96
2.18
-0.59
-0.20
The upside scenario represents a slightly better outlook than the base case scenario across the macroeconomic parameters.
Danske Bank / Interim report – first half 2021 58/72
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
30 June 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 0.8 billion (31 December 2020: 0.4 billion). Compared to the base case scenario, the allowance account would
increase DKK 8.5 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 scenario 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 half 2021 are therefore not directly comparable, especially due to the downside scenario being a severe downside scenario at
30 June 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 30 June 2021, the post-model adjustments amounted to
DKK 6.0 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 Agriculture industry for
such industries, supplementary calculations are made in order to ensure sufficient impairment coverage. This also includes post-model adjustments
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
30 June
2021
31 December
2020
0.8
1.6
1.1
0.6
4.1
1.8
1.6
0.3
6.0
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.
30 June 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 half 2021 59/72
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
517
21
334
162
2,723
22
1
18
3
-
36
-
36
-
799
-
-
-
-
-
2
-
2
-
-
2
36
-
36
-
773
517
21
334
162
2,722
809
3,239
20
1
16
3
-
20
-
-
-
-
26
322
19
162
141
262
26
584
9
-
7
2
-
9
-
-
-
-
19
20
Total
3,240
22
835
1
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
30 June 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
582
1,054
1,223
176
97
52
16
4
-
34
2
-
3
6
2
4
2
1
2
-
2
-
-
2
4
1
2
1
-
-
-
38
786
-
-
-
-
-
-
-
-
-
-
-
3,240
22
835
1
-
-
-
-
-
-
-
2
-
-
-
2
-
-
-
-
-
-
-
-
-
37
771
582
1,054
1,223
176
96
52
16
4
-
34
2
-
3
6
2
4
2
1
-
-
2
-
-
2
4
1
2
1
-
-
-
-
15
127
224
109
37
86
-
-
-
-
-
-
809
3,239
20
26
584
-
3
2
1
3
-
-
-
-
-
-
9
-
2
2
1
2
-
-
-
-
-
11
20
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 half 2021 60/72
30 June 31 December
2020
2021
270.7
234.9
629.4
17.3
0.2
379.6
259.4
583.4
16.7
0.2
1,152.4
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 232.9 billion (31 December 2020: DKK 256.7 billion), of which DKK 37.4 billion relates to credit institutions and central banks (31 December 2020: DKK 50.0 billion), and other primarily
short-term loans of DKK 2.0 billion (31 December 2020: DKK 2.8 billion), of which DKK 1.7 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
30 June
2021
31 December
2020
655,199
384,544
270,655
190,155
80,500
59,599
880,479
500,913
379,566
269,964
109,601
78,835
20,902
30,767
201,158
68,666
831
258,318
119,925
1,323
270,655
379,566
Total
Bond portfolio
(DKK millions)
30 June 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
224,948
14,724
17,549
39,022
4,301
925
4,718
4,404
23,448
21,880
75,933
86,335
57,496
1,204
10,279
7,577
Other
covered
bonds
6,157
491
14,681
1,760
Corporate
bonds
9,181
2,126
241
-
Total
325,531
41,350
123,401
139,098
296,243
14,348
207,596
76,557
23,088
11,548
629,380
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 30 June 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 30 June 2021 and 31
December 2020, see note G11.
Danske Bank / Interim report – first half 2021 61/72
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
31 June 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
91,510
95,172
6,658
5,308
16,673
3,598
18,452
-
13,317
2,827
2,372
40
5,066
5,233
28,848
1,123
47
-
-
-
3,254
-
16
5,549
2,980
-
-
-
-
4
-
985
1,560
207,596
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76,557
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,910
18,149
-
1
401
-
723
3
-
-
-
14
1,713
1
172
2,811
4,114
272
2,087
13
-
205
120
1,169
34
6
-
41
325
148
-
205
Total
301,917
175,842
8,840
25,545
19,939
3,599
19,073
5,669
18,189
2,864
2,379
40
5,107
5,575
30,709
2,109
1,984
296,243
14,348
207,596
76,557
23,088
11,548
629,380
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 half 2021 62/72
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
30 June 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
240,515
12,821
28,492
4,781
-
4,629
-
1,843
499
1,913
-
-
-
750
13,656
18
673
-
-
-
-
-
-
-
-
-
-
-
206,901
-
-
-
-
664
-
-
32
-
-
-
-
-
76,548
-
9
-
-
-
-
-
-
-
-
-
-
-
21,504
51
35
-
-
1,498
-
-
-
-
-
-
-
-
145
9
2,300
146
43
2,497
363
1,662
2,864
507
271
512
20
209
Total
559,269
12,899
31,510
4,927
43
9,287
363
3,504
3,394
2,420
271
512
20
959
296,243
14,348
207,596
76,557
23,088
11,548
629,380
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 half 2021 63/72
Financial statements – Danske Bank A/S
The financial statements of the Parent Company, Danske Bank A/S, are prepared in accordance with the Danish Financial Business Act and the Danish
FSA’s Executive Order No. 281 of 26 March 2014 on Financial Reports for Credit Institutions and Investment Companies, etc. as amended by Executive
Order No. 707 of 1 June 2016, Executive Order No. 1043 of 5 September 2017, Executive Order No. 1441 of 3 December 2018 and Executive Order
No. 1593 of 9 November 2020. The amendments of 9 November 2020 incorporate a requirement to provide a description of policies for data ethics
applicable for annual reporting periods beginning on or after 1 January 2021.
Note G2(a) provides further information on changes in accounting policies implemented as at 1 January 2021. Except for these changes, Danske Bank
A/S has not changed its significant accounting policies from those applied in the Annual Report 2020.
The accounting policies applied are identical to the Group’s IFRS accounting principles, see note G1, with the following exce ption:
Domicile property (except right-of-use assets) is measured (revalued) at its estimated fair value through Other comprehensive income.
The estimated fair value of domicile property is determined in accordance with the Danish FSA’s Executive Order on Financial Reports for Credit Institu-
tions and Investment Companies, etc.
Holdings in subsidiaries are measured on the basis of the equity method. Net profit from these undertakings is recognised under Income from associates
and group undertakings.
The format of the Parent Company’s financial statements is not identical to the format of the consolidated financial statements in accordance with IFRS.
The table below shows the differences in net profit and shareholders’ equity between the IFRS consolidated financial statemen ts and the Parent Com-
pany’s financial statements presented in accordance with Danish FSA rules.
Danske Bank Group
Consolidated financial statement (IFRS)
Domicile properties
Tax effect
Financial statements (Danish FSA rules)
Net profit
2021
Net profit
2020
Equity
Equity
30 June 2021 31 December 2020
5,932
-6
1
5,926
1,036
-3
-
1,032
173,161
175
-17
173,318
168,679
176
-17
168,836
In 2020, ‘Domicile properties’ includes an adjustment in net profit related to investment properties previously held by Danic a Pension and included as
Assets under insurance contracts in the financial statements for Danske Bank Group. As Danske Bank occupied more than 10% of the properties, they
were accounted for as domicile property in Danske Bank Group and Danske Bank A/S. In the consolidated financial statements fo r Danske Bank Group,
domicile property is measured using the cost method, and a gain on the sale of those properties of DKK 76 million, net of tax, was recognised in the
income statement. Under the revaluation method used in the financial statements for Danske Bank A/S, there was no gain on the sale.
Income statement – Danske Bank A/S
Note
(DKK millions)
Interest income
Interest expense
Net interest income
Dividends from shares etc.
Fee and commission income
Fees and commissions paid
P1
Net interest and fee income
Value adjustments
Other operating income
Staff costs and administrative expenses
Amortisation, depreciation and impairment charges
Loan impairment charges etc.
Income from associates and group undertakings
Profit before tax
Tax
Net profit
Danske Bank / Interim report – first half 2021 64/72
First half
2021
11,940
4,908
7,032
283
7,033
1,076
13,272
1,383
864
10,306
1,494
463
3,456
6,713
787
5,926
First half
2020
13,637
6,411
7,226
118
6,349
957
12,736
814
738
10,548
1,646
4,643
3,064
516
-516
1,032
Statement of comprehensive income – Danske Bank A/S
Danske Bank / Interim report – first half 2021 65/72
(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
First half
2021
First half
2020
5,926
1,032
493
-88
405
1,162
-800
-204
5
37
200
604
6,531
6,299
231
6,531
390
-102
288
-3,581
2,077
51
-15
146
-1,322
-1,035
-2
-318
316
-2
Danske Bank / Interim report – first half 2021 66/72
30 June 31 December
2020
2021
30 June
2020
264,511
105,743
195,854
822,951
474,593
99,142
17,292
199
91,954
54,723
5,894
3,716
190
3,526
4,662
3,074
751
96
291,463
1,298
283,570
119,014
209,122
840,579
438,530
94,248
16,689
204
92,291
53,337
5,836
4,183
185
3,998
4,636
4,504
984
523
405,091
1,495
191,629
114,319
298,748
851,172
404,836
93,561
7,529
278
88,969
50,336
5,980
4,487
183
4,304
4,666
3,815
911
2,388
416,723
1,418
Balance sheet – Danske Bank A/S
Note
(DKK millions)
Assets
Cash in hand and demand deposits with central banks
Due from credit institutions and central banks
Loans and other amounts due at fair value
Loans and other amounts due at amortised costs
Bonds at fair value
Bonds at amortised cost
Shares etc.
Holdings in associates
Holdings in group undertakings
Assets under pooled schemes
Intangible assets
Land and buildings
Investment property
Domicile property
Other tangible assets
Current tax assets
Deferred tax assets
Assets held for sale
Other assets
Prepayments
P2
P2
P3
Total assets
2,437,914
2,574,837
2,541,764
Liabilities and equity
Amounts due
Due to credit institutions and central banks
Deposits and other amounts due
Deposits under pooled schemes
Issued bonds at fair value
Issued bonds at amortised cost
Current tax liabilities
Other liabilities
Deferred income
Total amounts due
Provisions for liabilities
Provisions and pensions and similar obligations
Provisions for deferred tax
Provisions for losses on guarantees
Other provisions for liabilities
Total provisions for liabilities
Subordinated debt
Subordinated debt
Equity
Share capital
Accumulated value adjustments
Equity method reserve
Retained earnings
Proposed dividends
Shareholders of Danske Bank A/S (the Parent Company)
Additional tier 1 etc.
Total equity
Total liabilities and equity
235,152
1,266,386
55,286
10,201
242,402
116
416,009
552
238,089
1,253,900
53,380
8,183
267,753
22
551,917
532
227,789
1,195,692
50,942
7,017
275,712
16
587,713
579
2,226,104
2,373,776
2,345,460
150
2
2,915
498
3,564
300
20
3,014
511
3,845
439
238
2,766
320
3,763
34,928
28,379
27,809
8,622
-524
27,159
129,513
-
164,770
8,547
8,622
-686
27,522
123,146
1,724
160,328
8,508
8,622
-1,747
23,630
125,655
-
156,160
8,573
173,318
168,836
164,733
2,437,914
2,574,837
2,541,764
Danske Bank / Interim report – first half 2021 67/72
Statement of capital – Danske Bank A/S
Change 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
Accumulated
value adjust-
ments*
Equity
method
reserve
Retained
earnings
Proposed
dividends
Additional
tier 1 capital
Total
Total
-686
-
27,522
-363
123,146
6,058
1,724
-
160,328
5,695
8,507
231
168,836
5,926
Share
capital
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,162
-800
-204
5
-
162
-
-
-
-
-
-
-
493
-
-
-
-
-51
442
162
-363
6,500
-
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-51
604
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-51
604
6,299
231
6,531
-
-
-
-
-
-
-
-
-
-
-
16
-11,411
11,271
-10
-
-1,724
-
-
-
-
-1,708
-11,411
11,271
-10
-233
-
-
41
-
-233
-1,708
-11,411
11,312
-10
Total equity as at 30 June 2021
8,622
-524
27,159
129,513
- 164,770
8,547 173,318
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
Redemption of additional tier 1 capital
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Tax
8,622
-
-260
-
26,762
-3,132
114,052
3,848
7,329
-
156,504
717
14,237
316
170,741
1,032
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-3,581
2,077
51
-15
-19
-1,487
-
-
-
-
-
-
-
390
-
-
-
-
63
452
-1,487
-3,132
4,301
-
-
-
-
-
-
-
-
390
-3,581
2,077
51
-15
44
-1,035
-
-
-
-
-
-
-
390
-3,581
2,077
51
-15
44
-1,035
-318
316
-2
-
-
-
-
-
-
-
-
-
-
-
-
-
7,329
-5
-18,851
18,805
24
-
-7,329
-
-
-
-
-
-
-5
-18,851
18,805
24
-391
-
-5,596
7
-
-
-391
-
-5,600
-18,844
18,805
24
Total equity as at 30 June 2020
8,622
-1,747
23,630
125,655
- 156,160
8,573 164,733
*Accumulated value adjustments includes foreign currency translation reserve, reserve for bonds at fair value through other c omprehensive income (FVOCI) and valuation reserve.
Notes – Danske Bank A/S
P1. Value adjustments
(DKK millions)
Loans at fair value
Bonds
Shares etc.
Currency
Derivatives
Assets under pooled schemes
Other liabilities
Total
P2. Impairment charges for loans and guarantees
Due to credit institutions and
central banks
Stage 2
Stage 1
Stage 3
Danske Bank / Interim report – first half 2021 68/72
30 June
2021
30 June
2020
-549
-954
2,413
1,000
-3,342
-17
2,833
1,383
788
633
-757
611
2,744
26
-3,232
814
Loan commitments and
guarantees
Stage 1
Stage 2
Stage 3
Total
Loans and other amounts
due at AMC
Stage 2
Stage 1
Stage 3
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
9
-1
-
-
3
-3
1
-
-1
-2
7
-
-
-
6
-3
1
-
-
-1
ECL allowance account as at 30 June 2021
10
2
1
-
-
2
-3
1
-
-1
2
3
-
-
-
5
-2
3
-
-
-
9
2
-
-
-
-
-
-
-
-
-
376
500
-54
-7
244
-138
-98
-
-10
-34
3,747
-480
336
-778
1,172
-870
1,447
11
5
-63
11,083
-21
-282
785
1,966
-2,875
1,727
-968
-421
-316
565
138
-9
-1
130
-59
-193
-
-4
-29
949
-136
234
-48
384
-154
409
-
-1
-121
550
-2
-225
49
142
-299
314
-
-14
529
17,283
-
-
-
4,044
-4,401
3,606
-957
-449
-35
2
778
4,528
10,678
537
1,514
1,043
19,092
-
-
-
-
-
-
-
-
-
517
-71
-4
144
-156
-356
-
5
-15
-478
158
-446
555
-695
723
-
19
-4
-39
-87
450
1,213
-2,992
656
523
114
-7
202
-13
-
62
-124
-131
-
2
-
-192
55
-111
101
-209
-46
-
4
-
-10
-41
111
62
-107
337
-
20
-
-
-
-
2,149
-4,288
1,186
523
164
-26
2
842
4,360
10,512
534
1,115
1,416
18,799
P3. Issued bonds at amortised cost
Issued bonds at amortised cost includes non-preferred senior bonds of DKK 111,275 million.
Notes – Danske Bank A/S
Ratios and key figures
Total capital ratio (%)
Tier 1 capital ratio (%)
Return on equity before tax (%)
Return on equity after tax (%)
Income/cost ratio (%)
Interest rate risk (%)
Foreign exchange position (%)
Foreign exchange risk (%)
Loans plus impairment charges as % of deposits
Liquidity coverage ratio (90 days) (%)
Sum of large exposures as % of CET1 capital
Impairment ratio (%)
Growth in loans (%)
Loans as % of equity
Return on assets (%)
Earnings per share1
Book value per share (DKK)
Proposed dividend per share (DKK)2
Share price end of period/earnings per share (DKK)1
Share price end of period/book value per share (DKK)
1 After the deduction of interest on equity accounted additional tier 1 capital.
2 For 2019, no dividends were paid in 2020. See note G1(a) in Annual Report 2020 for further information.
Danske Bank / Interim report – first half 2021 69/72
First half
2021
Full year
2020
First half
2020
26.7
23.8
3.9
3.5
154.7
0.8
3.2
0.0
78.3
149.6
97.9
0.1
-2.3
5.9
0.2
6.7
203.1
-
16.5
0.54
26.3
23.5
2.6
2.7
113.9
2.5
23.0
0.0
81.5
144.1
119.2
0.5
-2.4
6.2
0.2
4.6
196.7
2.0
21.7
0.51
26.3
23.7
0.3
0.6
103.1
2.6
0.3
0.0
93.7
144.1
127.9
0.3
-1.6
7.0
0.0
0.8
192.3
-
105.4
0.46
Danske Bank / Interim report – first half 2021 70/72
Statement by the management
The Board of Directors and the Executive Leadership Team (the management) have considered and approved Interim report – first
half 2021 of the Danske Bank Group.
The consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as
adopted by the EU, and the Parent Company’s interim financial statements have been prepared in accordance with the Danish
Financial Business Act. Furthermore, the interim report has been prepared in 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 and the Parent Company’s assets, liabilities,
total equity and financial position at 30 June 2021 and of the results of the Group’s and the Parent Company’s operations and the
consolidated cash flows for the period starting on 1 January 2021 and ending on 30 June 2021. Moreover, in our opinion, the
management’s report includes a fair review of developments in the Group’s and the Parent Company’s operations and financial
position and describes the significant risks and uncertainty factors that may affect the Group and the Parent Company.
Copenhagen, 23 July 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 half 2021 71/72
Independent auditors’ review report
To the shareholders of Danske Bank A/S
Independent auditors’ review report on the consolidated and parent interim financial statements
We have reviewed the consolidated and parent interim financial statements of Danske Bank A/S for the financial period 1 January
to 30 June 2021, pp. 25-69 which comprise the income statement, statement of comprehensive income, balance sheet, statement
of capital and notes, for the Group and Parent Company, respectively, as well as the consolidated cash flow statement.
Management’s responsibility for the consolidated and parent 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 the preparation
of the Parent Company’s interim financial statements in accordance with the Danish Financial Business Act and Danish disclosure
requirements for listed financial companies, and for such internal control as Management determines is necessary to enable the
preparation of the consolidated and parent 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 and parent 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 and parent 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 the consolidated and parent 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 30 June 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 companies, and that the
Parent Company’s Interim Financial Statements have not been prepared, in all material respects, in accordance with the Danish
Financial Business Act 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, 23 July 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 half 2021 72/72
Financial calendar
29 October 2021
3 February 2022
17 March 2022
29 April 2022
22 July 2022
28 October 2022
Contacts
Stephan Engels
Chief Financial Officer
Claus Ingar Jensen
Head of Investor Relations
Links
Danske Bank
Denmark
Finland
Sweden
Norway
Northern Ireland
Ireland
Realkredit Danmark
Danske Capital
Danica Pension
Interim report – first nine months 2021
Annual Report 2021
Annual general meeting
Interim report – first quarter 2022
Interim report – first half 2022
Interim report – first nine months 2022
+45 45 14 60 02
+45 45 12 84 83
danskebank.com
danskebank.dk
danskebank.fi
danskebank.se
danskebank.no
danskebank.co.uk
danskebank.ie
rd.dk
danskecapital.com
danicapension.dk
Danske Bank’s financial statements are available online at danskebank.com/Reports.