Assets
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Revenue
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The full data:
Management's report
Financial statements
Financial highlights - Danske Bank Group
Executive summary
Financial review
Personal & Business Customers
Large Corporates & Institutions
Danica Pension
Northern Ireland
Non-core
Group Functions
3
4
6
12
14
17
19
21
22
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
Statements
Statement by the management
Supplementary information
25
26
27
28
30
31
64
65
Danske Bank / Interim report – first nine month 2021 3/65
Q2
2021
Index
Q3/Q2
Q3
2020
Index
21/20
Full year
2020
16,498
9,700
3,111
1,576
623
31,509
18,874
-
12,635
587
12,048
23
12,071
2,805
16,703
8,573
3,253
1,319
497
30,347
19,332
-
11,014
6,287
4,727
-483
4,244
1,105
99
113
96
119
125
104
98
-
115
9
255
-
284
254
Q3
2021
5,533
3,106
820
594
166
5,515
3,193
1,025
491
262
10,218
6,104
-
10,486
6,497
-
4,114
-151
4,265
6
4,270
936
3,989
240
3,750
-3
3,747
955
100
97
80
121
63
97
94
-
103
-
114
-
114
98
5,577
2,618
1,357
422
189
10,161
6,310
-
3,851
1,018
2,833
-37
2,795
692
99
119
60
141
88
101
97
-
107
-
151
-
153
135
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
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
Q1-Q3
2021
Q1-Q3
2020
Index
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
9,266
3,139
295
3,334
2,792
119
2,103
159
4,589
Attributable to additional tier 1 etc.
349
433
81
117
117
100
117
100
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*
296,950
220,822
273,081
301,693
1,801,353 1,801,438
674,422
300,304
541,185
4,541
131,371
608,253
304,698
542,718
2,184
147,953
109
73
296,950
220,822
335,557
236,761
100 1,801,353 1,809,805
612,527
304,812
532,154
1,783
141,634
608,253
304,698
542,718
2,184
147,953
90
101
100
48
113
88
93
273,081
301,693
100 1,801,438
674,422
300,304
541,185
4,541
131,371
99
100
102
122
104
109
73
345,938
257,883
100 1,838,126
682,945
296,769
545,708
2,797
139,064
90
101
100
48
113
Total assets
3,924,931 4,028,035
97 3,924,931 3,975,032
99 4,028,035
97 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
101,714
242,940
109,384
240,209
1,154,717 1,128,720
772,670
368,553
499,121
581,741
4,331
122,068
35,014
8,690
157,534
761,742
346,020
368,269
581,618
2,456
149,901
39,306
8,606
167,641
101,714
242,940
93
111,438
267,557
101
102 1,154,717 1,197,910
760,452
338,123
373,364
573,849
2,504
137,838
38,836
8,548
164,613
761,742
346,020
368,269
581,618
2,456
149,901
39,306
8,606
167,641
99
94
74
100
57
123
112
99
106
91
109,384
240,209
91
96 1,128,720
772,670
368,553
499,121
581,741
4,331
122,068
35,014
8,690
157,534
100
102
99
101
98
109
101
101
102
93
125,267
223,973
101
102 1,193,173
775,844
360,127
499,331
591,930
2,975
135,596
32,337
8,508
160,171
99
94
74
100
57
123
112
99
106
Total liabilities and equity
3,924,931 4,028,035
97 3,924,931 3,975,032
99 4,028,035
97 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)**
-
10.4
7.3
0.73
59.9
59.9
23.4
18.1
108.5
197
22,027
-
3.2
2.3
0.77
63.7
63.7
23.3
18.2
86.1
185
22,582
-
3.8
7.7
0.74
59.7
59.7
23.4
18.1
108.5
197
22,027
-
3.1
6.6
0.73
62.0
62.0
23.3
18.0
110.4
193
21,926
-
-
-
-
-
-
-
-
-
-
100
-
2.3
5.1
0.75
62.1
62.1
23.3
18.2
86.1
185
22,582
-
-
-
-
-
-
-
-
-
-
98
2.0
4.7
2.6
0.76
66.0
65.1
23.0
18.3
100.7
188
22,376
98
*The financial highlights have been restated as explained in note G2(b). The financial highlights represent alternative performance measures that are non-IFRS measures. Note G3 provides an explanation of differ-
ences in the presentation between IFRS and the financial highlights. For a description of the alternative performance measures (APM) used and definition of ratios, see Definition of APM on page 23.
**The number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
Executive summary
Danske Bank celebrated its 150-year anniversary in October
2021. Founded in Copenhagen in 1871, when Denmark was
fast evolving from an agrarian economy into a modern,
industrialised nation, Danske Bank has throughout its history
assumed the role of a provider of financial advice and
solutions that have enabled our customers to make a
successful transition to new times and new opportunities.
This is exactly the approach we also have today when we
engage with customers to help them transform changes in
the digital space and the green transition into commercial or
personal opportunities.
Being there for our customers is as important today as it has
always been, especially with the development we have seen
across the world over the past couple of years. Overall, the
recovery following the pandemic is evident in all the Nordic
economies with strong
labour markets and consumer
spending, albeit with some inflation fears and scarcity of
labour being reported. The Danish economy has essentially
fully recovered from the corona crisis, and the focus has
shifted to mitigating the risk of overheating. The labour
market is back to pre-crisis levels, with unemployment at a
low level and consumer spending fully up to speed again. Even
though the economy is doing well, the government support
packages have been and are still contributing to subdued
credit demand in the banking sector in Denmark. The Danish
government and Finance Denmark have entered into a new
declaration of intent, under which businesses gradually
return to market-based financing, with banks offering
creditworthy and viable businesses loans on reasonable
terms. This will enable businesses to settle the debt to the
Danish tax authorities that they have accumulated, and the
change in financing is likely to generate more bank lending
from the first half of 2022, thus supporting our income
streams.
Despite the subdued credit demand in the banking sector in
Denmark, Danske Bank’s diversified business model
continues to prove valuable. We have been able to further
utilise our platform and strengthen our market position for
capital markets-related activities during the first nine months
on the back of a sustainable and strong pipeline. Moreover,
our efforts to capitalise on the opportunities for increased
investment activity provided by market conditions are paying
off. This growing momentum comes on top of a more stable
development in other income streams, which drives total
income above the level of the same period last year. This,
combined with low impairment charges as a result of strong
credit quality and lower expenses, also led to a higher net
profit for the first nine months of 2021 than in the year-
earlier period.
Danske Bank posted a net profit of DKK 9.3 billion for the first
nine months of 2021, against DKK 3.1 billion for the same
period in 2020. The return on shareholders’ equity was
7.3%, against 2.3% in the first nine months of 2020.
Danske Bank / Interim report – first nine month 2021 4/65
Updating 2023 ambitions
Two years ago, we set out an ambitious plan; today, we
confirm that our business model will allow for a sustainable
return on shareholders’ equity of 9-10% through-the-cycle
and for 8.5-9% in 2023. With recent progress, we are
further strengthening our position to deliver long-term
sustainable value creation. Through our transformation
efforts, we have gained more clarity on our challenges – and
while risks still exist, we are diligently executing on our plans.
focus and continuous
As a result of our dedicated
prioritisation of strengthening our foundation, we are now
well-positioned in terms of reaching our profitability potential,
however, after a thorough business review, we are extending
the timeline for reaching a more normalised compliance cost
level to 2025 to allow us to prudently improve the resilience
of Danske Bank.
Our roadmap for delivering a total income level of around
DKK 43.5 billion and a cost level of around DKK 23.5 billion
in 2023 builds on our strong position and solid momentum
within Large Corporates & Institutions and our business
customers segment, as well as our efforts to enhance
digitalisation and tech industrialisation across the Group. In
the short term, regaining momentum in relation to personal
customers in Denmark is key, and something we need to do
while also building the future retail bank across the Nordic
countries and capitalising on our momentum in the MidCorp
segment. We will leverage our market-leading position for
Large Corporates & Institutions and capitalise on the growing
activity shift from conventional balance sheet
lending
towards capital markets activity, including the transition to
green products, which our strong franchise has allowed us to
capitalise on and which will support more robust and capital-
light income generation going forward.
Throughout this journey, it will be a priority to structurally
bring down costs in a sustainable way and enhance capital
efficiency without compromising the commercial momentum
and income opportunities.
Financials
Total income was up 4% from the same period last year. The
increase was driven mainly by a strong performance in our
capital markets activities on the back of good customer
activity, and we continued to support customers with
advisory services and capital.
During the first nine months of 2021, we saw a flow into in-
vestments and the desired effect of our repricing initiatives
in Denmark for both personal customers and the business
segment. However, continuing margin pressure across the
Nordic countries and lending product mix effects more than
offset the repricing initiatives, keeping net interest income at
a relatively stable level.
In the first nine months of 2021, we saw high net fee income
generated by good customer activity and higher AuM in
Asset Management. Continually strong activity in both debt
and equity capital markets, which our leading platform has
enabled us to capitalise on, further supported net fee income.
We therefore reaffirmed our number one position as the
Danske Bank / Interim report – first nine month 2021 5/65
At Large Corporates &
improved the
customer experience and lifted capital efficiency for instance
by increasing the productivity of the capital we deploy.
Institutions, we
Within sustainable finance, we continued to see high demand
for our services, resulting in a substantial number of
transactions and affirming our position as the leading Nordic
Bank within sustainable finance. For the first nine months, we
arranged sustainable bonds in the amount of USD 10 billion
for our customers.
In terms of our compliance agenda , we continue d to make
strong progress, especially within ‘Know your Customer’
(KYC) remediation. We have now reviewed more than 99% of
the targeted customer remediation population and are on
track for completion at our subsidiaries and for remaining
customers, and we are now moving into a more ‘business-as-
usual’ operating model. Furthermore, we have invested
in sustainability, effectiveness and customer
heavily
experience in relation to how we perform KYC. In addition to
the milestones reached in KYC remediation and controls, we
have also achieved significant progress in our ongoing
monitoring
controls/frameworks
screening
development.
and
Outlook for 2021
We maintain our expectation of a net profit of more than
DKK 12 billion in 2021.
We expect total income in 2021 to be higher than the level
last year, including the gain from the sale of Aiia.
Underlying expenses are expected to be lower than DKK 24.5
billion. Total expenses are expected to be slightly more than
DKK 25 billion, including tax-related one-off items of DKK 0.7
billion, of which DKK 0.2 billion will be recognised in
the second half of the year.
Loan impairments are expected to be no more than DKK 0.75
billion, given a better-than-expected macroeconomic
recovery and overall improved credit quality.
The outlook is subject to uncertainty and depends on
economic conditions,
packages.
including government support
leading Nordic bank in terms of supported volumes in the first
nine months of 2021 within debt capital markets and
continued to capture market shares from our competitors
within equity capital markets business.
Net trading income declined in the first nine months of 2021
from the level in the same period last year. This was a
reflection of higher trading income in the second and third
quarters of last year amid volatile markets and higher
customer activity, as well as of less income momentum
towards the end of the second quarter this year.
Danica Pension saw good momentum during the first nine
months of 2021, driven by good performance
in the
underlying business as well as higher returns on
investments.
We continued to see a downward trend in costs in the first
nine months of 2021, driven by cost initiatives launched
during the past year, and operating expenses were lower than
in the same period last year. As planned, our AML and
compliance costs were lower as well, ensuring that we
remain on the right trajectory.
Credit quality remained strong, and we continued to see more
normalised impairment levels than in the first nine months of
2020. We saw a low level of actual credit deterioration in the
first nine months of 2021, also for corona-affected and oil-
related portfolios. These portfolios also benefited from
model-driven reversals made as a result of better-than-
expected macroeconomic
In 2020,
impairments were affected by both exposure to the oil and
gas industry and a significant change in the macroeconomic
scenarios used to calculate expected credit losses following
the outbreak of the pandemic. We have already made
sufficient impairment charges for pandemic-related tail risks,
however, it remains to be seen how both the rolling off of
government support packages and tapering from the central
banks, including the timing of these, might affect those
businesses at which earnings are still catching up. Overall, we
remain confident with our current management buffers.
developments.
Capital and funding
Our capital position remained strong with a total capital ratio
of 23.4% and a CET1 capital ratio of 18.1%.
In the first nine months of 2021, the Group issued covered
bonds of DKK 24.7 billion, senior debt of DKK 16.7 billion,
non-preferred senior debt of DKK 4.4 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 55.9
billion.
Enhancing our commercial progress
We continued our execution of the Better Bank plan by
improving the customer experience. For personal and
business customers, we improved the customer experience
by leveraging our digital solutions and advisory services
launching a new value
specialisation, for example by
proposition for mass affluent customers in the Personal
Customers segment across all markets. Furthermore, we
enhanced our affordability assessment for credit decision-
making for personal customers in Denmark, leading to a
smoother credit process and improved “time to yes”.
Financial review
First nine months 2021 vs first nine months 2020
Net profit increased to DKK 9,266 million (Q1-Q3 2020:
DKK 3,139 million) due to a significant decrease in loan
impairment charges achieved on the basis of strong credit
quality combined with an increase in income driven by higher
net fee income and net income from insurance business.
Income
Net interest income stood at DKK 16,498 million (Q1-Q3
2020: DKK 16,703 million). Net interest income saw a
positive impact from the deposit repricing initiatives at
Personal & Business Customers Denmark that were
implemented at the beginning of 2021. Continuing margin
pressure across the Nordic countries and lending product
mix effects, however, more than offset the effect of the
repricing
income at a
relatively stable level. At Large Corporates & Institutions, we
saw higher activity-driven net interest income and higher net
interest income from undrawn committed credit facilities,
just as the repricing of deposits in the third quarter had a
positive effect.
initiatives, keeping net
interest
Net fee income increased to DKK 9,700 million (Q1-Q3
2020: DKK 8,573 million). The strong activity in both debt
and equity capital markets we have seen in the past quarters
continued, and our leading platform has enabled us to
capitalise on this trend. Assets under management
increased from the level in the first nine months of 2020,
which also had a positive impact on net fee income.
Net trading income decreased to DKK 3,111 million (Q1-Q3
2020: DKK 3,253 million). The decrease was due to high
trading income in the second and third quarters of 2020
amid volatile markets and high customer activity but also less
income momentum towards the end of the second quarter of
2021. A gain of DKK 227 million on the sale of VISA shares
in the Group’s private equity portfolio had a positive effect on
net trading income.
from
income
insurance business amounted
Net
to
DKK 1,576 million (Q1-Q3 2020: DKK 1,319 million).
Income from insurance business had strong tailwind from
higher returns on investments, and the underlying business
within health and accident insurance is improving. Some of
the effect was offset by a provision of DKK 267 million related
to pension yield tax and an accounting correction of DKK 250
million related to brokerage fees.
Other income amounted to DKK 623 million (Q1-Q3 2020:
DKK 497 million) due partly to our real estate agency home
seeing good activity on the housing market.
Expenses
Operating expenses decreased to DKK 18,874 million (Q1-
Q3 2020: DKK 19,332 million) and thus continued the
downward trend into the first nine months of 2021. The
decrease mainly reflects lower costs for transformation and
consultancy but also our constant focus on lowering the cost
base. As planned, our AML and compliance costs were lower
Danske Bank / Interim report – first nine month 2021 6/65
as well, ensuring that we remain on the right trajectory.
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.
Loan impairments
Loan impairment charges in core activities were low in the
first nine months of 2021, amounting to DKK 587 million
(Q1-Q3 2020: DKK 6,287 million).
Impairments mainly reflected credit deterioration relating to
individual customers, primarily in segments hit by the
lockdown of societies in parts of 2021. The full effect of the
corona crisis is, however, still uncertain and depends on
possible changes in consumer spending patterns, upcoming
payment of postponed VAT, the decrease
in savings
accumulated during the crisis and the further risk of
lockdowns due to new variants of the corona virus.
Impairments were still at a significantly lower level than in the
first nine months of 2020.
Personal & Business Customers accounted for the main part
of the loan impairment charges made in the first nine months
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 nine
months of 2020, and on a quarterly basis, impairments were
further down due to improving credit quality for individual
customers.
At Large Corporates & Institutions, loan impairment charges
fell significantly in the first nine months of 2021 from the
level in the first nine months 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.
Loan impairment charges
Q1-Q3 2021
Q1-Q3 2020
(DKK millions)
Charges
% of net
credit
exposure1
% of net
credit
exposure1
Charges
Personal & Busi-
ness Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Total core
454
0.04
2,069
0.18
230
-96
-2
587
0.10
-0.25
-0.05
3,916
295
7
1.91
0.72
0.17
0.04
6,287
0.45
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 nine month 2021 7/65
Third quarter 2021 vs second quarter 2021
Net profit increased to DKK 3,334 million (Q2 2021:
DKK 2,792 million), due mainly to a net reversal of loan
impairment charges in the third quarter and lower operating
expenses.
Net interest income increased to DKK 5,533 million (Q2
2021: DKK 5,515 million). The repricing of deposits, an
improved interest rate environment and an increase in the
number of interest days were partly offset by margin
pressure in the personal customer and large corporates
segments.
income continued
Net fee
its strong performance but
decreased somewhat to DKK 3,106 million (Q2 2021:
DKK 3,193 million). Net fee income was, however, still
significantly higher than in the third quarter of last year.
Net trading income decreased to DKK 820 million (Q2 2021:
1,025 million). More challenging market making conditions
for Large Corporates & Institutions and a seasonal decline in
in trading
customer activity affected the development
income.
Net income from insurance business amounted to DKK 594
million (Q2 2021: DKK 491 million). The increase was due
insurance
mainly to higher
products, but the result was negatively affected by an
accounting correction of DKK 250 million.
investment results for
life
Operating expenses amounted to DKK 6,104 million (Q2
2021: DKK 6,497 million), a decrease of 6% from the level in
the second quarter. The decrease was driven primarily by
lower staff costs. In the second quarter, we recognised a
provision of DKK 350 million related to the VAT case in
Sweden following a ruling by the European Court of Justice.
Loan impairment charges were down further due to model-
driven reversals as a result of better-than-expected
macroeconomic developments. Loan impairments amounted
to a net reversal of DKK 151 million (Q2 2021: a charge of
DKK 240 million). Impairment charges relating to individual
customer exposures subject
to credit deterioration
amounted to DKK 44 million. Personal & Business
Customers accounted for a reversal of DKK 96 million (Q2
2021: a charge of DKK 116 million), with the decrease being
driven by overall improvements in credit quality. Large
Corporates & Institutions accounted for a net reversal of
DKK 22 million (Q2 2021: a charge of DKK 183 million), a
decrease
to overall
improvements in credit quality, and impairments remained at
a significantly lower level than in the third quarter of 2020.
the second quarter due
from
in Northern
In the second quarter of 2021, the Danish Financial
Supervisory Authority (the Danish FSA) conducted an
inspection of impairment charges made by the Danske Bank
Ireland (the Northern Bank
Group’s unit
subsidiary) against
loans to business customers. The
purpose of the inspection was to assess whether the unit had
made adequate impairment charges at 31 December 2020,
including in the light of the adverse effects of the corona crisis
on the local and international economies. The Danish FSA
also examined whether the loans were placed in the correct
stages in accordance with the impairment rules. The Danish
FSA assessed that Danske Bank’s guidelines on staging of
loans were generally satisfactory. A few errors had been
made in calculations, but the Danish FSA found that the
impairment charges made against the selected loans with
objective evidence of credit impairment were generally
adequate and necessary.
Lending and deposits
Lending amounted to DKK 1,801 billion, a decrease of 2%
from the level at the end of 2020. 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. The decline in lending at
Large Corporates & Institutions was due to customers
drawing less on a substantial number of the credit facilities
committed last year in order to support customers in
managing the impact of the corona crisis in step with the
improvement of the economic outlook.
Deposits amounted to DKK 1,155 billion, down 3% from 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 38.8 billion. Lending to personal
customers accounted for DKK 11.8 billion of this amount.
lending, excluding repo
Our market share of lending decreased in Denmark, Finland,
Norway and Sweden. In Denmark, our market share of
lending, excluding repo loans, decreased to 24.8% at the end
of September 2021 (end-2020: 25.6%).
Our personal banking activities do not have the desired
momentum, but we are confident that we have the ability to
implement initiatives that will enable us to work in a more
efficient and simple way, thereby improving our market
position.
In Denmark, our market share of deposits decreased to
28.9% at the end of September 2021 (end-2020: 30.2%). In
Sweden, our market share of deposits increased, whereas in
Finland, our market share of deposits was lower than at the
end of 2020. In Norway, the market share of deposits was on
par with the level at end-2020.
Credit exposure and credit quality
Credit exposure from lending activities in core segments
decreased to DKK 2,629 billion (end-2020: DKK 2,728
billion), as higher activity among personal customers in
Norway was more than offset by lower activity among
personal customers in Denmark in particular and at Large
Corporates & Institutions, combined with lower deposits with
central banks.
Credit quality remained strong in the first nine months 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. Large
Corporates & Institutions has actively reduced its net oil-
related exposure (excluding oil majors) by 51% since the end
of 2019.
in
Total net non-performing loans (NPL) decreased slightly from
the level at the end of 2020, driven mainly by a lower level of
NPL
transportation, agriculture and hotels,
restaurants and leisure industries, offsetting higher NPL in
the Personal Customers segment driven by the introduction
of a new Loss Given Default (LGD) model.
the
The NPL coverage ratio increased to 83.4% from 75.2% at
the end of 2020 due to higher collateral to cover NPLs.
The risk management notes on pp. 51-63 provide more
information about non-performing loans.
Non-performing loans (NPL) in core segments
(DKK millions)
Gross NPL
NPL allowance account
Net NPL
30 Sep.
2021
31 Dec.
2020
31,552
12,876
31,776
12,934
18,676
18,842
Collateral (after haircut)
16,122 14,567
NPL coverage ratio (%)
NPL coverage ratio of which is in default (%)
NPL as a percentage of total gross exposure (%)
83.4
99.8
75.2
100.0
1.2 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 Sep. 2021
Accum.
impairm.
charges
% of net
credit
exposure1
31 Dec. 2020
Accum.
impairm.
charges
% of net
credit
exposure1
15,956
1.02
15,773
1.01
5,360
898
14
1.89
1.52
0.28
5,777
990
15
1.84
1.87
0.31
1.15
Total
22,228
1.16
22,554
1 Relating to lending activities in core segments.
Danske Bank / Interim report – first nine month 2021 8/65
Capital ratios and requirements
At the end of September 2021, the total capital ratio was
23.4%, and the CET1 capital ratio was 18.1%, against
23.0% and 18.3%, respectively, at the end of 2020. The
movement in the capital ratios during the first nine months 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 0.4 percentage
points increase in the total capital ratio.
During the first nine months of 2021, the total REA increased
approximately DKK 33 billion, due mainly to
further
implementation of EBA guidelines.
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 September 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 September 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 Sep. 21
Fully
phased-in*
18.1
23.4
13.1
0.1
2.5
3.0
12.4
17.9
23.2
13.9
0.9
2.5
3.0
12.4
Total capital requirement
18.0
18.7
Excess capital
CET 1 capital
Total capital
5.0
5.4
4.0
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
September 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. In September 2021,
the Swedish FSA also decided to increase the countercyclical
buffer rate to 1.0%, effective as of 29 September 2022. This
will increase the Group’s CBR by 0.8 percentage points.
Consequently, the fully phased-in countercyclical buffer
requirement will be 0.9%, bringing the fully phased-in CET1
requirement to 13.9%.
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 September 2021, the point-in-time requirement
including the CBR was equivalent to DKK 248 billion,
corresponding to 35.9% of the REA adjusted for Realkredit
Danmark. Taking the deduction of capital and debt buffer
requirements in Realkredit Danmark into account, MREL
eligible liabilities amounted to DKK 286 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 September 2021, the subordination
requirement was equivalent
to DKK 212 billion.
Subordinated MREL-eligible liabilities stood at DKK 256
billion.
Leverage ratio
A minimum
leverage ratio requirement of 3% was
implemented in the second quarter of 2021 with the
adoption of Capital Requirements Regulation II (CRR II). At the
end of September 2021, the Group’s leverage ratio was
4.8% under both the transitional rules and 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.
Danske Bank / Interim report – first nine month 2021 9/65
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 remains committed to returning
excess capital to shareholders.
Funding and liquidity
Market attention is gradually shifting away from the impact
of the corona pandemic to traditional themes such as
inflation and central bank monetary policies. Following post-
summer constructive demand for debt issuance, Danske
Bank decided to issue senior bonds for USD 2 billion in the
Rule 144A format.
By the end of September 2021, the Group had issued
covered bonds of DKK 24.7 billion, senior debt of DKK 16.7
billion, non-preferred senior debt of DKK 4.4 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 55.9 billion.
Our strategy of securing more funding directly in our main
lending currencies, including NOK and SEK, remains in place,
but we will also utilise central bank facilities to obtain funding
in the most cost-efficient manner.
We plan for regular issues in the EUR benchmark format in
covered bonds, senior and non-preferred senior bonds as
well as issues in the domestic USD market for senior and
non-preferred senior bonds in the Rule 144A format. The
benchmark issues are expected to be supplemented by
private 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
formats will depend on balance-sheet growth and
redemptions on the one side and our capital targets on the
other. Any issuance 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
beyond 12 months. At the end of September 2021, our
liquidity coverage ratio stood at 161% (31 December 2020:
154%), with an LCR reserve of DKK 664 billion (31
December 2020: DKK 710 billion).
The requirement for the net stable funding ratio forms an
integral part of our funding planning, and we are already
comfortably adhering to the requirement.
At 30 September 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 359 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 September 2021, Danske Bank was in
compliance with all threshold values. A separate report is
available at danskebank.com/ir.
Realkredit Danmark also complies with all threshold values.
New regulation
In December 2017, the Basel Committee on Banking Super-
vision (BCBS) published the final and revised standards for
REA calculations (Basel IV). Due to the corona crisis, the
BCBS has delayed the implementation of the Basel IV stand-
ards from 2022 to 2023. This has also delayed the process
for implementation of the standards in the EU. The EU Com-
mission thus published a legislative proposal for implement-
ing the Basel IV on 27 October 2021.
The Group is currently reviewing the recent EU Commission
proposal on Basel IV and will return with guidance in Annual
Report 2021. However, the objective of our capital planning
is to ensure that the Group maintains compliance with regu-
latory capital requirements both in the short term and in the
long term and in a severe downturn scenario. This includes
taking into account future regulatory requirements. As to the
impact of Basel IV, the REA increases due to the Group’s im-
plementation of the EBA guidelines have resulted in a signifi-
cant decrease of the expected impact. Our capital planning
takes into account the expected impact of the initial EU imple-
mentation of Basel IV. The estimated Basel IV impact is still
subject to significant uncertainty as to the final EU implemen-
tation of Basel IV as well as future balance sheet develop-
ments.
As part of the European Banking Authority’s (EBA) roadmap
to enhance internal models used to calculate credit risk,
Danske Bank has started implementing the revised set of
EBA guidelines and technical standards. For the first nine
months of 2021, we saw the REA increase by around
DKK 18 billion due to the EBA roadmap. We expect further
increases in the fourth quarter of 2021 of a smaller magni-
tude as for the third quarter of 2021, all else equal. Going for-
ward, we do not expect any significant impact from the EBA
Guidelines.
Danske Bank / Interim report – first nine month 2021 10/65
Credit ratings
The credit ratings of the Danske Bank Group from Fitch
Ratings, Moody’s Investors Service and S&P Global are
unchanged from the ratings published in Interim report – first
half 2021.
Danske Bank’s credit ratings,
Fitch
Moody’s
S&P
Counterparty rating
A+
A1/P-1
A+/A-1
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+
ESG ratings
On 28 September 2021, MSCI upgraded Danske Bank to
BBB from BB due to an improvement in the score related to
Social factors and an improvement in the score related to
Governance factors.
ESG rating agency
30 Sep. 2021
31 Dec. 2020
Score at
Score at
CDP Worldwide, UK
ISS ESG, USA
MSCI ESG Ratings, USA
B
C Prime
BBB
B
C+ Prime
BB
Sustainalytics, USA
Medium Risk
High Risk
Vigeo Eiris, France
64
64
Estonia case
The internal investigation at Danske Bank was completed in
the fourth quarter of 2020, and Danske Bank has reported
the findings to the relevant authorities investigating Danske
Bank. We continue to fully cooperate and will provide the au-
thorities with further information if and when requested. The
overall timing of the authorities’ investigations remains un-
known and is not within Danske Bank’s control.
Update on the debt collection case
At 8 October 2021, we had reviewed 99.9% 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
originally identified. The review has shown that actual
overcollection has taken place for approximately 7,000 of
these customers.
The customer cases yet to be reviewed, approximately 240,
require additional quality assurance due to their complexity,
and we expect to have resolved these cases well before the
end of the year.
Danske Bank / Interim report – first nine month 2021 11/65
As we have communicated on an ongoing bases, our
investigation of the data errors originally identified has also
uncovered a number of potential additional issues that we
are still investigating, which means that the number of
customers who are expected to be eligible for compensation
is increasing. We will continue to update affected customers
and other stakeholders on our progress on the debt
collection matter.
It is not considered necessary to make any additional
provisions.
Danske Bank merges MobilePay with other mobile payment
providers
At the end of June 2021, Danske Bank A/S announced that
it had 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. The merger is conditional on approval by the
relevant authorities, including the European Commission.
Final approval
in the first half of 2022.
Consequently, the expected one-off gain of approximately
DKK 400-500 million is not included in our current outlook
for the full year.
is expected
Private banking activities in Luxembourg
On 1 July, we announced that Danske Bank had 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 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 ap-
proval is expected in the first quarter of 2022.
The sale of shares in Aiia
On 7 September, Mastercard entered into an agreement to
buy fintech company Aiia. As part of the transaction, Danske
Bank A/S has agreed to sell its shares in Aiia to Mastercard.
The sale is expected to result in a one-off gain for Danske
Bank A/S of approximately DKK 150 million. The sale is con-
ditional on approval by the relevant authorities, which is ex-
pected by the end of 2021.
Danske Bank / Interim report – first nine month 2021 12/65
Personal & Business Customers
The gradual reopening of societies after the coronavirus pandemic lockdown gave rise to increased activity among our personal
customers. However, among our business customers, subdued activity still lingers, and we have not yet seen credit demand return
to pre-pandemic levels.
The first nine months of 2021 saw an increase in profit before tax, which was up DKK 2,116 million from the same period last year,
due primarily to lower loan impairment charges.
Personal & Business Customers
(DKK millions)
Q1-Q3
2021
Q1-Q3
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
11,755
4,805
496
614
17,670
10,832
6,838
454
12,108
4,666
422
538
17,734
11,397
6,337
2,069
97
103
118
114
100
95
108
22
Q3
2021
3,988
1,538
184
202
5,913
3,544
2,368
-96
Q2
2021
Index
Q3/Q2
Q3
2020
Index
21/20
Full year
2020
3,887
1,516
162
216
5,782
3,650
2,132
116
103
101
114
94
102
97
111
-
4,079
1,392
138
176
5,785
3,837
1,948
599
98
110
133
115
102
92
122
-
16,018
6,080
575
702
23,375
15,716
7,659
1,996
Profit before tax
6,383
4,267
150
2,464
2,016
122
1,349
183
5,663
Loans, excluding reverse transactions before im-
pairments
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
14,206
693,548
1,522,000 1,503,063
14,221
666,763
1,042,506 1,045,482
69,269
74,150
14,206
693,548
101 1,522,000 1,528,944
100
14,434
702,466
104
100 1,042,506 1,045,691
75,292
107
74,136
98
99
100 1,503,063
14,221
666,763
100 1,045,482
68,104
98
101 1,532,786
100
13,957
685,609
104
100 1,058,209
68,929
109
Net interest income as % p.a. of loans and depos-
its
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*
*Number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
12.2
8.2
64.3
6,870
12.3
11.5
61.3
6,669
0.76
0.71
97
- 12.8 11.3
- 13.3 10.7
- 59.9 63.1
6,669 6,826
- 0.72 0.71
- 0.75
-
0.75
- 11.4
- 7.9
- 66.3
6,870
98
-
11.1
- 8.2
67.2
-
6,913
97
Assets under management
(DKK millions)
Assets under custody
681,626 544,708
125 681,626 672,649
101 544,708
125 596,467
Fact Book Q3 2021 provides financial highlights at customer type level for Personal & Business Customers. Fact Book Q3 2021 is available at danskebank.com/ir.
In the first nine months of 2021, the focus at Personal &
Business Customers was on continuing the execution of the
Better Bank plan and releasing the potential of the new com-
mercial organisation. The main areas of focus were scalabil-
ity and faster time to market through improvement of the cus-
tomer experience achieved by leveraging our digital solutions
and advisory services specialisation.
In the third quarter of 2021, we launched a new value propo-
sition for mass affluent customers in the Personal Custom-
ers segment across all markets. The offer consists of access
to wealth management advice from a specialised asset ad-
viser, the 360o digital wealth planning tool and a wealth plan.
The offering combines strong digital solutions with advisory
services to release the customers’ financial potential.
In Denmark, we continued our efforts to be the preferred bank
for homeowners with two important deliverables. The FlexLife
fixed–rate mortgage loan provided by Realkredit Danmark
passed DKK 20 billion in loan agreements. We also began the
journey of improving our digital self-service solutions in the
mortgage credit area by enabling customers to initiate re-
mortgaging calculations at rd.dk. Furthermore, we adjusted
the criteria for assessing the amount available for consump-
tion when a decrease occurs in connection with customers
taking out a loan for a home purchase or for home improve-
ments. We are moving towards a more individual approach,
which is part of ensuring the best possible customer experi-
ence.
We also took yet another step towards making day-to-day
banking easy by introducing a new feature in Danske Mobile
Banking that allows the customer to split a payment into dif-
ferent consumption items in the spending overview to get a
more accurate picture. Furthermore, we introduced payment
Danske Bank / Interim report – first nine month 2021 13/65
with the Dankort card via Apple Pay, which had previously
only accepted Mastercard and Visa cards.
In both Sweden and Denmark, another digital offering accel-
erated. Our investment app June experienced high growth in
the first nine months of 2021. June is investments made
easy, providing customers as well as non-customers with a
digital self-service solution. The growth was further acceler-
ated by the repricing of deposits, which created a flow into our
package products.
Across the Nordic countries, partnerships continue to be a
key driver of growth. And in the third quarter, we successfully
entered into a new partnership with members of the Norwe-
gian Journalists' Association. In Finland, we extended our
agreement with Akava.
In the third quarter of 2021, we continued to accelerate our
ability to serve our business customers remotely across all
markets, partly driven by increased customer demand as a
result of the pandemic.
We are thus moving forward by leveraging our high satisfac-
tion rates within digital solutions, securing scalability and a
better customer experience.
Going forward, we will further focus on expanding and lever-
aging our strong digital solutions for our business customers,
making sure that customers are empowered through self-
service options via our core customer platform District. We
will strengthen the customer relationship, for instance advi-
sory services within the sustainability area, which continues
to be a top strategic priority and in high demand from custom-
ers.
In Denmark, we have experienced an acceleration within
green financing, and Realkredit Danmark lending in the form
of green mortgage loans for properties in Denmark has now
passed the DKK 10 billion mark. In 2019, Realkredit
in
Danmark was the first mortgage credit
Denmark to offer green financing of environmentally friendly
properties.
institution
First nine months 2021 vs first nine months 2020
Profit before tax amounted to DKK 6,383 million, (Q1-Q3
2020: DKK 4,267 million), mainly as a result of a decrease in
loan impairment charges.
Third quarter 2021 vs second quarter 2021
Profit before tax in the third quarter amounted to DKK 2,464
million, an increase of DKK 448 million, due primarily to a net
reversal of loan impairment charges.
Net interest income decreased 3% 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 stood at DKK 4,805 million, an increase of
3% (Q1-Q3 2020: DKK 4,666 million). This was driven by an
increase in investment activity and growth in assets under
management. Some of the effect was somewhat countered
by lower income from a distribution agreement at Banking
Finland.
Net trading income increased to DKK 496 million (Q1-Q3
2020: DKK 422 million) due to higher foreign exchange
activity in line with the reopening of the societies in which we
operate.
Other income amounted to DKK 614 million (Q1-Q3 2020:
DKK 538 million). The increase was due primarily to our real
estate agency home seeing good activity in the housing
market in the first nine months of 2021.
Operating expenses decreased 5% as a result of lower costs
in relation to the Better Bank transformation.
Loan impairment charges amounted to DKK 454 million (Q1-
Q3 2020: DKK 2,069 million), and
impairments thus
continued the trend from the second quarter of 2021 and
returned to a more normal level. The impairment charges for
the first nine months of 2021 were driven mainly by charges
against individual customer exposures made as a result of
the corona crisis as well as model adjustments.
Net interest income amounted to DKK 3,988 million (Q2
2021: DKK 3,887 million), an increase of 3%, which was
driven by the repricing of deposits.
Net fee income was flat from the preceding quarter, and the
high level of activity seen in the second quarter thus
continued into the third.
Operating expenses were on par with expenses in the second
quarter of 2021.
The third quarter saw loan impairment reversals of DKK 96
million (Q2 2021: a charge of DKK 116 million). The
decrease in impairment charges was attributable to fewer
charges against individual customer exposures made as a
result of the corona crisis and reversals due to an overall
strengthening of credit quality.
Lending volumes were on par with volumes in the second
quarter of 2021 as the need for credit facilities continued to
be at a low level among business customers, who were
generally helped by government support packages. For
personal customers, we saw a slight increase.
Deposit volumes decreased across all markets. For personal
customers in Denmark, the development was driven largely
by repricing. We assisted our customers with advisory
services to discuss alternative possibilities for investing
excess liquidity.
Danske Bank / Interim report – first nine month 2021 14/65
Large Corporates & Institutions
Economic activity improved during the first nine months of 2021 as societies gradually opened up, which translated into high
customer activity within capital markets advisory services and strong growth in demand for sustainable finance and investment
solutions. We continued to work alongside our customers to help them adjust to the post-pandemic operating environment and to
the sustainability transition. This led to a continued number one position among Nordic banks within both debt and equity capital
markets transactions in terms of volumes supported in the first nine months of 2021– ensuring record-high fee income from our
capital markets activities.
The first nine months of 2021 saw an increase in profit before tax, which was up DKK 4,123 million from the same period last year
and amounted to DKK 4,900 million due to significantly lower loan impairment charges and higher income.
Large Corporates & Institutions
(DKK millions)
Q1-Q3
2021
Q1-Q3
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
3,553
4,720
2,417
2
3,767
3,735
2,735
8
10,692
5,562
10,246
5,553
5,129
230
4,693
3,916
94
126
88
25
104
100
109
6
Q3
2021
1,161
1,499
565
-
3,225
1,811
1,414
-22
Q2
2021
1,177
1,621
749
1
3,548
1,900
1,648
183
Index
Q3/Q2
99
92
75
-
91
95
86
-
Q3
2020
1,319
1,165
1,101
-
3,585
1,861
1,724
399
Index Full year
2020
21/20
88
129
51
-
90
97
82
-
5,034
5,911
3,485
6
14,437
7,672
6,764
4,619
Profit before tax
4,900
777
-
1,436
1,465
98
1,325
108
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*
3,974
244,046 262,505
220,608 227,626
5,357
376,909 389,150
330,126 333,554
22,204
45,275
26,862
44,156
3,974
93 244,046 240,407
97 220,608 218,520
74
4,197
97 376,909 403,958
99 330,126 358,474
21,682
45,003
26,862
42,916
121
98
102 262,505
101 227,626
95
5,357
93 389,150
92 333,554
22,204
45,159
124
95
93 271,359
97 225,067
74
4,557
97 433,090
99 378,939
22,728
44,825
121
95
0.72
0.80
-
0.76
0.69
-
0.78
-
0.79
15.5
14.8
52.0
2,716
13.8
2.3
54.2
2,618
-
-
-
104
13.2
13.4
56.2
2,716
14.6
13.0
53.6
2,565
-
-
-
106
15.3
11.7
51.9
2,618
-
-
-
104
15.1
4.8
53.1
2,553
* Number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
Total income
(DKK millions)
General Banking
Markets
of which xVA*
Asset Management
of which performance fees
Investment Banking & Securities (IBS)
4,647
2,904
54
1,741
80
1,399
4,725
3,441
166
1,423
12
657
98
84
33
122
-
213
1,535
685
-40
637
25
368
1,549
1,029
-
550
31
421
99
67
-
116
81
87
1,638
1,265
314
470
1
212
94
54
-
136
-
174
6,322
4,345
309
2,555
640
1,214
Total income
10,692
10,246
104
3,225
3,548
91
3,585
90
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
478,051 437,409
313,311 272,518
109 478,051 481,278
115 313,311 307,797
99 437,409
102 272,518
109 464,890
115 288,207
Total assets under management*
791,362 709,926
111 791,362 789,075
100 709,926
111 753,097
* Includes assets under management from Group entities.
Danske Bank / Interim report – first nine month 2021 15/65
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
among
the Nordic banks within arranging of both
sustainability-linked loans and sustainable bonds in terms of
volumes supported. In the first nine months of 2021, we
arranged sustainable bonds in the amount of USD 10 billion
for our customers, which is more than we have ever arranged
in a full year. As a part of our 2023 ambitions, we aim to
reach DKK 400 billion in funds that promote environmental
and/or social characteristics and ensure good governance
(Article 8 funds) and DKK 150 billion in financial products
with a sustainable investment objective (Article 9 funds). To
promote customer investment in sustainable products, we
now have six index funds labelled as Article 9 and more than
90 ESG funds labelled as either Article 8 or Article 9.
Furthermore, we have re-certified 63 of our funds for the
LuxFLAG ESG-label and remain the fund manager in Europe
that has the largest number of LuxFLAG ESG-labelled funds.
Following the
launch of our new agile development
organisation and the reorganising of our business units
earlier in the year, we continued our efforts in the third
quarter to improve the customer experience and lift capital
efficiency at Large Corporates & Institutions in order to
contribute to the Group’s overall return ambition.
During the third quarter, for the 6th year, Kantar Prospera
reaffirmed Danske Bank as the bank achieving the highest
customer satisfaction within foreign exchange services in the
Nordic market. Combined with our number one positions
within Cash Management and Trade Finance, this underpins
the strength of and high customer satisfaction with our day-
to-day corporate banking offering. It is our ambition to
continuously improve our services and help customers make
their work day easy. As a result, earlier in the year, we merged
our Transaction Banking and Foreign Exchange business to
create an even more holistic offering for Nordic treasury
teams. We also continued to develop District – our financial
platform helping corporates and institutions get a full
overview of their finances across banks and borders.
In order to grow capital-light services, we have invested in
building a strong capital markets advisory offering across the
Nordic markets with a heightened focus on advice relating to
the sustainability transition. As customers continued to
utilise the positive market sentiment to raise capital in the
financial markets also during the third quarter, we reaffirmed
our number one position as the leading Nordic bank in terms
of supported volumes in the first nine months of 2021 across
both debt and equity capital markets. The improved operating
environment, however, also led customers to draw less on
their credit facilities. This illustrates the value of our
diversified business model, as higher net fee
income
compensated for lower net interest income.
Danske Bank / Interim report – first nine month 2021 16/65
Third quarter 2021 vs second quarter 2021
Profit before tax declined slightly to DKK 1,436 million (Q2
2021: DKK 1,465 million) as a result of lower income.
Net interest income was broadly unchanged from the second
quarter, as higher deposit margins, following the repricing of
deposits in July, mitigated the effects of lower activity-driven
net interest income and lower net interest income from
lending.
Net fee income amounted to DKK 1,499 million (Q2 2021:
DKK 1,621 million), a decline from the high level in the second
quarter, when performance was very strong in Investment
Banking & Securities. Net fee income was, however, still
significantly higher than in the same quarter last year, as
performance remained strong across capital markets and in
Asset Management.
Net trading income amounted to DKK 565 million (Q2 2021:
DKK 749 million), reflecting a
income
momentum, especially in Rates & Credit, but also a seasonal
decline in customer activity during the summer.
level of
lower
Reversals of loan impairments amounted to DKK 22 million
in the third quarter, against charges of DKK 183 million in the
second quarter of 2021. The reversal in the third quarter of
2021 related primarily to impairments against individual
exposures, but all effects are very small compared with those
of previous periods.
First nine months 2021vs first nine months 2020
Profit before tax increased to DKK 4,900 million (Q1-Q3
2020: DKK 777 million), as a result of significantly lower loan
impairment charges and higher income.
Net interest income decreased to DKK 3,553 million (Q1-Q3
2020: DKK 3,767), due mainly to lower income from
deposits, as the significant increase in volumes lowered the
value of surplus deposits. Deposits have been repriced with
effect from the third quarter to reflect the reduced funding
value, and this has improved the margin and lifted net interest
income by DKK 46 million from the second quarter of 2021,
when taking the volume effect into consideration.
Higher activity-driven net interest income and higher net
interest income from undrawn committed credit facilities
more than compensated for the decline in net interest
income from lending from the level in the same period last
year.
Lending volumes declined 7% from the level in the first nine
months 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 facilities provided last year are beginning to
roll off. The impact on net interest income has, however, been
partly mitigated by higher lending margins, as the facilities
provided last year on average had lower margins.
Net fee income increased to DKK 4,720 million (Q1-Q3
2020: DKK 3,735 million), reflecting record-high fee income
from capital markets activities and increased assets under
management. Assets under management increased 11%
from the level in the first nine months of 2020, driven by
rising asset prices. During the first nine months of 2021,
Asset Management realised positive net sales in the retail
segment for the fourth consecutive quarter, whereas there
was a net outflow in the institutional segment.
Net trading income declined 12% from the level in the first
nine months of 2020, reflecting both that trading income was
high in the second and third quarters of 2020 amid volatile
markets and high customer activity, but also that there was
a lower level of income momentum towards the end of the
second quarter of 2021.
Operating expenses were broadly unchanged from the level
in the same period last year, as lower underlying expenses
almost compensated for higher accrued performance-based
compensation.
Overall credit quality remained strong. During the first nine
months of 2021, the general rating trend was slightly
positive, and loan impairment charges amounted to a net
charge of DKK 230 million, a notable decrease from the level
in the first nine months of 2020 (Q1-Q3 2020: DKK 3,916
million). Since the fourth quarter of 2019, we have actively
reduced net oil-related exposure (excluding oil majors) by
51%.
Danske Bank / Interim report – first nine month 2021 17/65
Danica Pension
There was cause for enthusiasm for our customers in the first nine months of 2021, as they achieved high returns. In fact, our
return was at the top of the market. However, the end of the third quarter was also characterised by uncertainty and nervousness
in the financial markets. 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. The inflow of new customers and the increase in assets under management will help
support Danica Pension and the Group’s ambitions for the future.
Danica Pension generated a solid financial result in the first nine months of 2021, delivering good returns to both our customers
and to the Group. Profit was up 19% from the level in the same period last year due to improved health and accident business, good
investments results and a healthy underlying business that is growing rapidly.
Danica Pension
(DKK millions)
Q1-Q3
2021
Q1-Q3
2020
Index
21/20
Q3
2021
Q2
2021
Index
Q3/Q2
Q3
2020
Index
21/20
Full year
2020
Result, life insurance
Result, health and accident insurance
Return on investments, shareholders' equity etc.
1,863
-202
-26
1,948
-559
-2
96
36
-
Net income before tax in Danica Pension1
1,635
1,388
118
Included within Group Treasury2
-59
-68
87
Net income from insurance business
1,576
1,319
119
550
160
-94
616
-22
594
528
-72
68
104
-
-
670
-259
84
82
-
-
2,517
-643
-78
524
118
496
124
1,797
-33
67
-74
30
-127
491
121
422
141
1,669
Premiums, insurance contracts
Premiums, investment contracts
Provisions, insurance contracts
Provisions, investment contracts
27,201
3,627
21,249
917
441,804
35,775
412,767
26,322
128
-
107
136
9,369
1,582
9,233
1,396
441,804
35,775
437,847
34,731
101
113
101
103
6,647
251
412,767
26,322
141
-
107
136
28,958
1,292
428,736
29,525
Allocated capital (average)
13,121
13,611
96
12,411
13,133
95
14,344
87
13,735
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff3
16.0 12.9
222 184
963 815
-
-
-
19.1
222
963
15.0
215
859
-
-
-
11.8
184
815
-
-
-
12.2
191
817
Asset under management
Life insurance
Health and accident insurance
Total1
1 Figures are for the Danica Group.
465,430
17,362
424,372
16,665
110
104
465,430
17,362
463,722
17,079
100
102
424,372
16,665
110
104
447,783
16,822
482,792 441,037
109 482,792 480,802
100 441,037
109 464,605
2 Includes the difference between the actual return on the investment of shareholders’ equity (net of interest on subordinated debt) and the sum of interest on allocated capital and allocated capital
and shareholder costs. Special allotments are also included (page 174 of Annual Report 2020 provides further information).
3 Number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
Danica Pension delivered strong returns to our customers,
and assets under management increased 9% as a result of
the favourable trend in the financial markets.
Danica Pension saw an increase in growth in premiums of
39% 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. An example of Danica
Pension’s strong position is a new five-year agreement with
“Pension for Selvstændige”, entered into in the third quarter
of 2021 and continuing a partnership that has already lasted
for more than 30 years.
As part of our health solutions, Danica Pension launched a
new health package at the beginning of the year, which gives
customers 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
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 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.
Danske Bank / Interim report – first nine month 2021 18/65
Third quarter 2021 vs second quarter 2021
Net income from insurance business increased to DKK 594
million (Q2 2021: DKK 491 million). Compared with second-
quarter results, the result of the life insurance business
increased and the loss in the health and accident business
decreased. The return on
to
shareholders’ equity declined in the third quarter.
investments allocated
The result of the life insurance business increased 4% but
was negatively affected by an accounting correction of
DKK 250 million. The increase was driven mainly by higher
investment results on life insurance products where Danica
Pension has the investment risk. In the third quarter, Danica
Pension 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 third quarter. The underlying business
improved, and the investment result was higher.
The return on investments allocated to shareholders’ equity
etc. decreased DKK 162 million as a result of lower returns
on assets allocated to shareholders’ equity.
Total premiums increased 3%, driven mainly by an increase
in single premiums due to an inflow of new business
customers.
Assets under management increased DKK 2 billion, due
mainly to the positive developments in the financial markets.
First nine months 2021 vs first nine months 2020
Danica Pension saw good momentum during the first nine
months of 2021, a momentum that was driven by good
performance in the underlying business as well as higher
returns on investments.
from
income
insurance business
Net
to
DKK 1,576 million (Q1-Q3 2020: DKK 1,319 million), due
primarily to a better result for the health and accident
business.
increased
The result of the life insurance business decreased to
DKK 1,863 million (Q1-Q3 2020: DKK 1,948 million).
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 have
had a positive impact on the result in 2021. In the first nine
months 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. An accounting correction of
DKK 250 million had a negative effect on the result.
The result of the health and accident business improved to a
loss of DKK 202 million (Q1-Q3 2020: a loss of DKK 559
million). The underlying business has improved, and the
investment result increased considerably from the level in
the first nine months of 2020, but this was offset by a
provision for pension yield tax of DKK 267 million (Q1-Q3
2020: DKK 135 million).
The return on investments allocated to shareholders’ equity
etc. decreased DKK 24 million from the level in the first nine
months of 2020, mainly because of lower investment results
on
to
shareholders’ equity.
investment assets and
liabilities allocated
Total premiums increased 39%, driven mainly by an increase
in single premiums due to an inflow of new business
customers.
Assets under management increased DKK 42 billion, due
mainly to the positive developments in the financial markets.
Danske Bank / Interim report – first nine month 2021 19/65
Northern Ireland
In 2021, we continue forward with growing optimism, ensuring that Danske Bank is playing a key role in the economic recovery
across Northern Ireland.
The first nine months 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.
Q1-Q3
2021
Q1-Q3
2020
Index
21/20
Q3
2021
Q2
2021
Index
Q3/Q2
Q3
2020
Index Full year
2020
21/20
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
996
201
-13
9
1,193
937
257
-96
1,035
198
91
13
1,336
905
431
295
96
102
-
69
89
104
60
-
334
72
-13
3
395
367
29
-31
60
331
69
21
3
424
294
129
-57
187
Profit before tax
353
136
260
Loans, excluding reverse transactions before impair-
ments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)1
57,365
857
99,665
6,724
54,122
883
81,360
6,289
106
97
122
107
57,365
857
99,665
6,936
58,364
911
99,772
6,715
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 staff2
1.06
0.87
2.9
7.0
78.5
67.7
1,289 1,347
0.85
3.5
92.9
1,289
0.86
11.1
69.3
1,324
96
1 Allocated capital equals the legal entity’s capital.
2 Number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
101
104
-
100
93
125
22
54
32
98
94
100
103
97
332
64
13
4
414
310
103
43
101
113
-
75
95
118
28
-
1,359
264
98
16
1,736
1,212
524
378
60
100
146
54,122
883
81,360
6,172
0.99
3.9
74.9
1,347
106
97
122
112
52,179
890
84,158
6,269
1.02
2.3
69.8
1,353
96
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.
Earlier this year, we became one of the first banks in the UK
to reintroduce a 95% loan-to-value mortgage product. We
have followed this up by launching the UK’s first mortgage
product to be certified as carbon neutral by the Carbon Trust.
To achieve carbon neutrality, we have committed to keep re-
ducing our carbon footprint and, working with specialists Cli-
mateCare, to offset any remaining emissions by investing in
environmental projects. We have also increased our maxi-
mum mortgage term from 30 to 35 years to support custom-
ers, particularly first-time buyers as they seek to secure their
first home.
Small business lending, excluding government-backed sup-
port loans, was up 4% year-on-year and is approaching pre-
pandemic levels. Lending to larger businesses is more sub-
dued, as many organisations continue to carry excess liquid-
ity and delay growth plans to 2022.
Digital banking trends continue to accelerate in Northern Ire-
land. Digital channel logons increased 10% year-on-year at
around 6 million logons per month, with payments from wear-
able technologies 54% higher than in the same period last
year.
Looking forward, our focus will remain on working hard to im-
prove service levels and ensure we are making banking eas-
ier for our customers across all channels.
Danske Bank / Interim report – first nine month 2021 20/65
Third quarter 2021 vs second quarter 2021
Profit before tax decreased to DKK 60 million (Q2 2021:
DKK 187 million), driven by higher loan impairment reversals
in the second quarter and increased costs for Group supplied
services.
Net interest income increased to DKK 334 million (Q2 2021:
DKK 331 million) and net fee income increased to DKK 72
million (Q2 2021: DKK 69 million), reflecting continued
improvement in commercial activity.
Net trading income was negative in the third quarter due to
adverse mark-to-market movements on the bond portfolio
given expectation of rising UK interest rates.
Operating expenses increased to DKK 367 million (Q2 2021:
DKK 294 million), reflecting increased costs for Group
supplied services, principly compliance related.
Lending activity remains subdued with many personal and
business customers continuing to pay off debt and holding
additional liquidity.
First nine months 2021 vs first nine months 2020
Profit before tax increased to DKK 353 million (Q1-Q3 2020:
DKK 136 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 lending increased 6% and deposits saw an increase of
22%, net interest income decreased to DKK 996 million (Q1-
Q3 2020: DKK 1,035 million), reflecting a sharp decline in
UK interest rates that was offset by ongoing pricing actions.
Net fee income grew 2% to DKK 201 million (Q1-Q3 2020:
DKK 198 million) including the benefit of pricing actions and
despite low activity levels in the first half of the year.
income and other
Net trading
income were similarly
impacted, although net trading income also reflects the
impact of improving UK interest rate expectations on the
bond portfolio.
Operating expenses were 4% higher at DKK 937 million (Q1-
Q3 2020: DKK 905 million), reflecting the increased costs
for Group supplied services, principally compliance, that was
partially offset by ongoing local cost reduction initiatives.
Net loan impairment reversals for the first nine months were
driven by an improved economic outlook, leading to a
decrease in impairment charges for future losses.
Customer lending activity remains subdued aside from public
sector balances with many personal and business
customers continuing to pay off debt and holding additional
liquidity, as reflected in deposit growth rates.
Danske Bank / Interim report – first nine month 2021 21/65
Non-core
Non-core includes mainly 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 2.4 billion at the end of September 2021,
less than half the amount at the end of September 2020, which led to lower capital requirements for the Group. Profit before tax in
the first nine months of 2021 amounted to DKK 23 million, against a negative DKK 483 million in the first nine months of 2020.
Q1-Q3
2021
Q1-Q3
2020
Index
21/20
Q3
2021
Q2
2021
Index
Q3/Q2
Q3
2020
Index Full year
2020
21/20
Non-core
(DKK millions)
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
22
82
-60
-83
23
-87
209
-296
187
-483
Loans, excluding reverse transactions before impair-
ments1
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)
2,429
814
2,128
918
5,441
962
2,109
1,547
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 staff2
1.09
0.56
-41.6
3.3
372.7
-240.2
25 50
Loan impairment charges
(DKK millions)
Non-core banking3
Non-core conduits etc.
Total
-130
47
72
115
-83
187
-
39
20
-
-
45
85
101
59
50
-
41
-
19
44
-25
12
-37
116
64
24
-
-215
293
-508
88
-
-596
22
28
-6
-11
6
4
24
-19
-17
-3
2,429
814
2,128
809
2,475
793
2,169
856
0.10
3.0
127.3
25
0.40
-1.4
600.0
25
-
117
32
65
-
98
103
98
95
100
5,441
962
2,109
1,377
1.57
-10.7
231.6
50
45
85
101
59
50
79
-
-
3,083
771
2,146
1,473
0.96
-40.5
-136.3
32
-27
116
88
-11
-
-11
-17
-
-17
65
-
65
-14
27
12
1 Comparative figures for loans, excluding reverse transactions before impairments, include loans held for sale in Lithuania.
2 Number of full-time-equivalent staff has increased somewhat due to a change in calculation methods from August 2021.
3 Non-core banking encompasses the Group’s activities in Lithuania and Non-core Ireland.
Third quarter 2021 vs second quarter 2021
The Non-core unit posted a profit before tax of DKK 6 million
(Q2 2021: a loss of DKK 3 million). The increase was due
primarily to an increase in total income, which was partly
offset by lower loan impairment reversals and an increase in
operating expenses.
In terms of the Group’s private equity investments, the
portfolio has been split into a core portfolio and a non-core
portfolio, with the core portfolio representing strategic
investments. The non-core portfolio has been transferred to
the Non-core unit.
First nine months 2021 vs first nine months 2020
Profit before tax amounted to DKK 23 million (Q1-Q3 2020:
a loss of DKK 483 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 result for
the first nine months of 2020 was affected by losses related
to the final exit from Estonia.
After the sale of the Latvian portfolio of commercial loans
previously held by the Lithuanian branch, the only portfolio
remaining at the Lithuanian branch
is a portfolio of
commercial loans to local customers, for which amortisation
is accelerated further.
At the end of September 2021, total lending amounted to
DKK 2.4 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 September 2020, which
led to lower capital requirements for the Group.
Danske Bank / Interim report – first nine month 2021 22/65
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.
Q1-Q3
2021
Q1-Q3
2020
Index
21/20
Q3
2021
Q2
2021
Index
Q3/Q2
Q3
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
195
-26
211
-2
378
1,543
-
-1,165
-2
-206
-26
4
-61
-289
1,476
-
-1,765
7
Profit before tax
-1,163
-1,772
Profit before tax
(DKK millions)
Group Treasury*
Own shares and issues
Additional tier 1 capital
Group support functions*
Total Group Functions
280
-68
350
-1,725
-689
128
434
-1,645
-
100
-
3
-
105
-
66
-
66
-
-
81
105
50
-4
84
-39
91
382
-
-291
-2
120
-13
92
41
241
652
-
-411
-2
42
31
91
-
38
59
-
71
100
-153
-4
105
8
-44
301
-
-346
-23
-290
-409
71
-322
-
100
80
-
-
127
-
84
9
90
-260
-37
139
-131
-289
2,048
379
-2,716
8
-2,723
-2
27
118
-432
88
80
117
-694
-
34
101
62
-166
36
117
-309
1
75
101
140
-754
94
550
-2,614
-1,163
-1,772
66
-290
-409
71
-322
90
-2,723
* Profit before tax for Group Functions and Group support functions for the second quarter of 2021 has been restated to reflect private equity investments
in Group Treasury. From the third quarter, private equity investments are split into a core and a non-core part. The core part is included in Group Treasury.
First nine months 2021 vs first nine months 2020
Profit before tax increased to a loss of DKK 1,163 million
(Q1-Q3 2020: a loss of DKK 1,772 million). The improvement
was due primarily to increases in net interest income and net
trading income.
Net interest income stood at DKK 195 million (Q1-Q3 2020:
a loss of DKK 206 million), due primarily to an increase in
allocated liquidity costs at Group Treasury’s Internal Bank
following a number of corrective actions to reduce internal
deposit compensation to the business units.
Net trading income increased to DKK 211 million (Q1-Q3
2020: DKK 4 million), driven by developments in unrealised
market value adjustments on interest rate hedges subject to
fair value accounting and higher income from core private
equity investments.
Third quarter 2021 vs second quarter 2021
Group Functions posted a loss of DKK 290 million in the third
quarter of 2021 (Q2 2021: a loss of DKK 409 million). The
improved result was due primarily to a decrease in operating
expenses, which was partly offset by a decrease in total
income.
Net interest income decreased to DKK 50 million (Q2 2021:
DKK 120 million), due primarily to an increase in central bank
funding costs in connection with the Group’s borrowings
from the European Central Bank’s targeted longer-term
refinancing operations.
Net trading income decreased to DKK 84 million (Q2 2021:
DKK 92 million) due primarily to lower returns on fixed
income portfolios.
Operating expenses decreased to DKK 382 million (Q2
2021: DKK 652 million). The second quarter of 2021 was
affected by a provision relating to the VAT case in Sweden of
DKK 350 million.
Danske Bank / Interim report – first nine months 2021 23/65
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 349 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 8,994 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 Q3 2021
would be 0.74% (full-year 2020: 0.73%) due to the daily average of the sum of loans and deposits being
DKK 55.6 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 587 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 22.2 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 999.3 billion
(2020: DKK 1,022.7 billion), Loans at fair value of DKK 803.4 billion (DKK 816.3 billion), and guarantees
of DKK 76.2 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 nine months 2021 24/65
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
Note G4: Income
39
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
43
Note G8: Foreign currency translation reserve
43
Note G9: Guarantees, commitments and contingent liabilities
46
Note G10: Assets provided or received as collateral
47
Note G11: Fair value information for financial instruments
50
Note G12: Group holdings and undertakings
Risk Management
51
Breakdown of credit exposure
51
Credit exposure from core lending activities
52
60
Credit exposure from Non-core lending activities
Counterparty credit risk and credit risk from trading and investment securities 61
61
Bond portfolio
Danske Bank / Interim report – first nine months 2021 25/65
Income statement – Danske Bank Group
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)
Q1-Q3
2021
16,336
28,874
24,868
20,342
13,318
4,507
23,185
4,087
27,114
48,221
22,743
12,575
504
12,071
2,805
9,266
8,917
349
9,266
10.4
10.4
-
Q1-Q3
2020
17,729
31,144
28,064
20,809
11,948
4,039
5,979
3,361
21,075
24,794
23,621
10,718
6,474
4,244
1,105
3,139
2,706
433
3,139
3.2
3.2
-
Q3
2021
5,482
9,559
8,316
6,725
4,268
1,452
4,313
1,214
9,404
12,930
7,433
4,109
-161
4,270
936
Q3
2020
5,753
8,845
7,634
6,965
3,848
1,467
9,311
1,590
6,631
15,288
7,763
3,826
1,031
2,795
692
3,334
2,103
3,217
117
3,334
3.8
3.8
-
1,986
117
2,103
2.3
2.3
-
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
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 nine months 2021 26/65
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
Q1-Q3
2021
Q1-Q3
2020
Q3
2021
Q3
2020
Full year
2020
9,266
3,139
3,334
2,103
4,589
331
21
352
959
-674
-303
2
72
56
408
9,674
9,325
349
9,674
64
7
70
-4,312
2,483
176
-12
165
-1,500
-1,430
1,709
1,276
433
1,709
-162
110
-52
-202
126
-100
-3
39
-140
-192
-326
109
-217
-732
406
126
3
19
-178
-395
304
-38
266
-1,902
1,224
264
-12
-70
-496
-230
3,142
1,708
4,359
3,025
117
3,142
1,591
117
1,708
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 nine months 2021 27/65
30 September
2021
31 December 30 September
2020
2020
274,689
52,192
608,256
305,039
1,000,876
999,831
89,869
542,718
8,722
2,966
39,773
320,702
81,428
682,948
296,769
1,024,607
1,023,323
82,795
545,708
8,785
5,202
36,964
239,388
77,243
674,426
300,304
999,157
1,068,430
77,208
541,185
9,105
4,507
37,082
G7
G6
G6
G7
G6
G6
G8
G6
Total assets
3,924,931
4,109,231
4,028,035
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
220,408
368,271
1,281,091
779,016
222,098
90,361
581,618
1,890
57,976
106,648
39,306
211,182
499,334
1,333,781
784,027
245,573
82,905
591,930
1,821
51,291
106,371
32,337
201,320
499,128
1,280,880
780,400
252,152
78,054
581,741
2,038
42,413
108,671
35,014
3,748,683
3,940,552
3,861,811
8,622
-765
62
159,723
-
167,642
8,606
8,622
-1,050
354
150,521
1,724
160,171
8,508
8,622
-2,201
267
150,847
-
157,534
8,690
176,248
168,679
166,224
3,924,931
4,109,231
4,028,035
* 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
September 2020 has been restated above.
Danske Bank / Interim report – first nine months 2021 28/65
Statement of capital – Danske Bank Group
Changes in equity
(DKK millions)
Total equity as at 1 January 2021
Net profit
Other comprehensive income
Remeasurement of defined benefit pension plans
Translation of units outside Denmark
Hedging of units outside Denmark
Unrealised value adjustments
Realised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Paid interest on additional tier 1 capital
Dividends paid
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Tax
Shareholders of Danske Bank A/S (the Parent Company)
Foreign
currency
translation
reserve
Reserve
for bonds
at fair value
(OCI)
Retained
earnings
Proposed
dividends
Additional
tier 1
capital
Total
Total
-1,050
-
354
-
150,521
8,917
1,724
-
160,171
8,917
8,508
349
168,679
9,266
Share
capital
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
959
-674
-
-
-
285
285
-
-
-
-
-
-
-
-
-303
2
9
-292
-292
-
-
-
-
-
331
-
-
-
-
84
415
9,332
-
16
-15,514
15,376
-8
-
-
-
-
-
-
-
-
331
959
-674
-303
2
93
408
-
-
-
-
-
-
-
331
959
-674
-303
2
93
408
9,325
349
9,674
-
-1,724
-
-
-
-
-1,708
-15,514
15,376
-8
-268
-
-
17
-
-268
-1,708
-15,514
15,393
-8
Total equity as at 30 September 2021
8,622
-765
62
159,723
-
167,642
8,606
176,248
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
-
-
-4,312
2,483
-
-
-
-1,829
102
-
140,590
2,706
7,329
-
156,271
2,706
14,237
433
170,508
3,139
-
-
-
176
-12
-
165
64
-
-
-
-
171
235
-
-
-
-
-
-
-
-
64
-4,312
2,483
176
-12
171
-1,430
-
-
-
-
-
-
-
64
-4,312
2,483
176
-12
171
-1,430
1,276
433
1,709
-1,829
165
2,941
-
-
-
-
-
-
-
-
-
-
-
-
-
7,329
-5
-24,484
24,450
26
-
-7,329
-
-
-
-
-
-
-5
-24,484
24,450
26
-427
-
-5,596
-
42
-
-427
-
-5,600
-24,484
24,492
26
Total equity as at 30 September 2020
8,622
-2,201
267
150,847
-
157,534
8,690
166,224
*For 2019, no dividends were paid in 2020. The previously proposed dividends have been reversed to Retained earnings in 2020. See note G1(a) in Annual Report 2020 for further information.
Statement of capital – Danske Bank Group
(DKK millions)
Share capital (DKK)
Number of shares
Number of shares outstanding
Average number of shares outstanding for the period
Average number of shares outstanding, including dilutive shares, for the period
Total capital and total capital ratio
(DKK millions)
Total equity
Revaluation of domicile property at fair value
Tax effect of revaluation of domicile property at fair value
Total equity calculated in accordance with the rules of the Danish FSA
Additional tier 1 capital instruments included in total equity
Accrued interest on additional tier 1 capital instruments
Common equity tier 1 capital instruments
Adjustment to eligible capital instruments
IFRS 9 reversal due to transitional rules
Prudent valuation
Prudential filters
Expected/proposed dividends
Intangible assets of banking operations
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 nine months 2021 29/65
30 September 2021 31 December 2020
8,621,846,210
862,184,621
853,105,055
853,380,483
854,002,422
8,621,846,210
862,184,621
853,649,376
853,138,154
853,470,424
30 September 2021 31 December 2020
176,248
174
-17
176,404
-8,431
-175
167,798
-131
1,790
-944
-156
-5,560
-4,946
-56
114
-221
-2,541
-7,341
147,807
22,638
170,445
20,859
191,303
817,631
18.1%
20.8%
23.4%
168,679
176
-17
168,836
-8,415
-93
160,329
-75
2,551
-690
-147
-1,724
-5,354
-
204
-168
-2,206
-8,992
143,727
17,282
161,009
19,108
180,117
784,184
18.3%
20.5%
23.0%
Total capital and the total risk exposure amount are calculated in accordance with the rules applicable under the Capital Requirements Regulation (CRR),
taking transitional rules into account as stipulated by the Danish Financial Supervisory Authority.
In terms of the transitional arrangements for the impact of IFRS 9 on regulatory capital, the Group applies the so-called dynamic approach in accordance
with the CRR.
The Internal Capital Adequacy Assessment Report provides more details about the Group’s solvency need. The report is available at danskebank.com/in-
vestorrelations/reports.
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
Redemption 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 nine months 2021 30/65
Q1-Q3
2021
12,071
-469
2,373
Q1-Q3
2020
4,244
-2,981
9,625
Full Year
2020
6,304
-4,315
12,993
13,975
10,888
14,982
9,062
-56,370
-121
-8,270
46,721
-52,690
-26,251
-7,322
3,031
49,895
-132,179
8
-15,431
75,998
140,154
-28,298
-343
-1,621
59,794
-140,495
-83
-11,896
95,039
193,055
-33,550
5,323
4,337
-78,235
99,071
186,506
-
-549
-233
8
-774
10,102
-3,718
4,352
-6,309
-1,708
-
-267
-497
5
-711
-265
9
-962
3,721
-
23,610
-
-
-5,600
-427
-484
5
-872
-408
12
-1,263
3,721
-2,180
23,610
-
-
-5,600
-625
-653
1,955
20,820
18,273
400,889
1,641
-77,054
199,608
-3,185
118,929
199,608
-2,235
203,516
325,476
315,352
400,889
6,847
267,843
50,786
5,530
233,857
75,965
6,131
314,572
80,186
325,476
315,352
400,889
Danske Bank / Interim report – first nine months 2021 31/65
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 Annual Report
2020. Annual Report 2020 provides a full description of the significant accounting policies.
For changes in the Group’s financial highlights and segment reporting, see note G2(b).
Financial statement figures are stated in Danish kroner and whole millions, unless otherwise stated. As a result, rounding discrepancies may occur
because totals have been rounded off and the underlying decimals are not presented to financial statement users. The interim report for the first nine
months of 2021 has not been audited or reviewed.
(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 giv en
default (LGD) and incorporate forward-looking information. The estimation of expected credit losses involves forecasting future economic conditions over
a number of years. Such forecasts are subject to management judgement and those judgements may be sources of measurement uncertainty that have
significant risk of resulting in a material adjustment to a carrying amount in future periods. The incorporation of forward-looking elements reflects the
expectations of the Group’s senior management and involves the creation of scenarios (base case, upside and downside), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on
the expected credit losses.
The forward-looking information is based on a three-year forecast period converging to steady state in year seven. The base case is an extension of the
Group’s official view of the Nordic economies (the Nordic Outlook report). At 30 September 2021, the base case scenario reflects a recovery later in
2021. To fully capture the downside risk, the downside scenario used at 30 September 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 a nd falling property prices
for a longer period. At 31 December 2020, the down-side scenario reflected a W-shaped trend in the light of the corona crisis with the economies being
back on track in the second or third quarter of 2021. The change of the downside scenario has been made in order to capture the risk of prolonged
lockdowns due to new coronavirus variants and in order for the ECL calculation to include potential downside risks due to the elevated asset prices
across the Nordics. Information on the macroeconomic parameters in the base case and downside scenarios can be found in the risk management notes.
Danske Bank / Interim report – first nine months 2021 32/65
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 September 2021 amounted to DKK 23.1 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 1.3 billion (31 December 2020: 0.4 billion). Compared to the base case
scenario, the allowance account would increase DKK 9.1 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 0.3 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 nine months 2021 are therefore not directly comparable, especially due to the downside
scenario being a severe downside scenario at 30 September 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 September 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 b e 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 September 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 September 2021, no unusual challenges in obtaining reliable pricing apart from insignificant parts of the portfolio remained. The majority
of valuation techniques continues to employ only observable market data, and there has been no significant increase in financial instruments measured
on the basis of valuation techniques that are based on one or more significant unobservable inputs. The latter continue s 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 September 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 meas-
urement of financial instruments.
The Group uses derivatives to hedge the fixed interest rate on some financial assets and liabilities, thus converting the fix ed interest rates on the financial
instruments to variable interest rates by the use of swaps. The ongoing Interest Rate Benchmark Reform will replace existing benchmark interbank
offered rates (IBORs) with alternative risk-free rates. There is currently uncertainty as to the timing and the methods of transition of different IBORs and
whether some existing benchmarks will continue to be supported. As a result of these developments, accounting judgement is in volved in determining
whether certain hedge accounting relationships that hedge the interest rate risk due to changes in IBORs continue to qualify for hedge accounting. EUR
and USD denominated swaps cleared on a CCP have been converted to ESTR and SOFR discounting respectively, and the conversion had no significant
impact on the Group’s hedge accounting values. Following IASB’s project ‘Interest Rate Benchmark Reform, phase I’ for the assessment of effectiveness
of such hedges, it is assumed that the interest rate benchmark is not altered as a result of the reform. For further information, see note G1 1(d) of the
Annual Report 2020.
Danske Bank / Interim report – first nine months 2021 33/65
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 September 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 decline in income, increase in loan impairment charges, decline in the market value of assets under management,
major restructurings, macroeconomic developments etc. Since the outbreak of the coronavirus pandemic, the assessment of wheth er 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 for parts of the first nine months of 2021, it was concluded that no indications of impairment at the end of September 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 o wn portfolio of insurance
contracts. Note G18 and the risk management notes of the Annual Report 2020 provide more information on the measurement of insurance liabilities
and sensitivity to changes in assumptions.
Danske Bank / Interim report – first nine months 2021 34/65
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting
(a) Changes in accounting policies
On 1 January 2021, the Group implemented the amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (Interest Rate Benchmark Reform, phase 2)
and IFRS 16 (Covid-19 Related Rent Concessions). The implementation of the amendments to IFRSs had no impact on the financial statements. The
Group has changed the presentation in the income statement of indirect fees earned when customers are granted, refinance or prepay Danish mortgage
loans. Comparative information in the income statement has been restated to reflect the change in presentation. The sections below explain in further
details the changes to accounting policies and presentation implemented.
Interest Rate Benchmark Reform – phase 2 (amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16)
The amendments cover the effects on the financial statements when old interest rate benchmarks are altered or replaced by alternative benchmark
rates as a result of the benchmark reform.
The amendments introduce a practical expedient to account for a change to the basis for determination of the contractual cash flows at the date on which
interest rate benchmarks are altered or replaced. Under the practical expedient, a change to the determination of the contractual cash flows is applied
prospectively by altering the effective interest rate, i.e. not leading to a modification gain or loss recognised in the income statement. To be applicable for
the practical expedient, a change must meet two conditions: (a) the change is a direct consequence of the reform and (b) the new basis for determining
the contractual cash flows is economically equivalent to the previous basis.
The amendments further introduce reliefs from existing hedge accounting requirements. The reliefs include that hedge accounting would not discontinue
solely due to the benchmark reform and that, for the retrospective effectiveness test for fair value hedges under IAS 39, the cumulative fair value changes
of the hedged item and the hedging instrument may be reset to zero to minimise the risk that a hedge will fail the retrospective effectiveness test when
the benchmark transitions to an alternative benchmark. The amendments further require that the hedging relationships and docu mentations are
amended to reflect changes in the hedged item, the hedging instrument and the hedged risk (which do not represent a discontin uation of the exiting
hedge).
IFRS 7 introduces further disclosure requirements. The disclosures relate to how the transition to alternative rates is managed, the progress on the
transition and the risks arising from financial assets and financial liabilities due to the reform. 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 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 o ur
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 match ing 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 411 million in the first
nine months of 2021. Comparative information has been restated, leading to a reclassification to Fee income from Net trading income or loss of DKK
450 million in the first nine months of 2020 and DKK 590 million for full year 2020.
Danske Bank / Interim report – first nine months 2021 35/65
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 nine months 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 nine months 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 nine months
2020
Danica Pension
Indirect fees,
Danish
mortgage loans
Adjusted
financial
highlights
16,498
10,680
3,763
-
482
31,423
20,409
11,014
6,287
4,727
-483
4,244
206
-2,557
-60
1,319
15
-1,077
-1,077
-
-
-
-
-
-
450
-450
-
-
-
-
-
-
-
-
-
16,703
8,573
3,253
1,319
497
30,347
19,332
11,014
6,287
4,727
-483
4,244
Danske Bank / Interim report – first nine months 2021 36/65
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 nine months 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
11,755
4,805
496
3,553
4,720
2,417
-
614
-
-
-
2
-
-
Total income
Operating expenses
17,670
10,832
10,692
5,562
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
6,838
454
6,383
-
5,129
230
4,900
-
Northern
Danica
Ireland Non-core
Group
Functions
Elimina-
tions
Financial
highlights
Reclassifi-
cation
-
-
-
1,576
-
-
-
1,576
-
1,576
-
1,576
-
996
201
-13
-
9
-
-
1,193
937
257
-96
353
-
353
-
-
-
-
-
-
-
-
-
-
-
-
23
23
197
66
300
-
1,628
-
-
2,192
1,705
487
-2
488
-
-3
-92
-89
-
-1,630
-
-
-1,814
-162
-1,652
-
-1,652
-
16,498
9,700
3,111
1,576
623
-
-
31,509
18,874
12,635
587
12,048
23
488
-1,652
12,071
3,844
-889
20,074
-1,576
3,464
27,114
48,221
3,810
3,870
-60
-83
23
-23
-
IFRS
financial
statements
20,342
8,811
23,185
-
4,087
27,114
48,221
35,318
22,743
12,575
504
12,071
-
12,071
Profit before tax
6,383
4,900
1,576
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
1,507,794
240,090
529,804 3,118,398
-
-
-
654,241
-
56,508
62,069
-
28,074
-
- 3,919,938
-
2,184
-31,112 1,801,353
-6,163,056 2,121,394
2,184
-
Total assets
2,037,597 3,358,487 654,241
118,577
2,184 3,948,012 -6,194,168 3,924,931
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
693,548
376,909
1,270,819 2,938,617
42,961
-
73,230
-
-
641,927
12,315
-
99,665
12,419
6,494
-
-
1,522
- 3,913,575
32,642
-
-
2,456
-16,927 1,154,717
-6,177,241 2,600,116
167,642
2,456
-
-
Total liabilities and equity
2,037,597 3,358,487 654,241
118,577
2,456 3,947,739 -6,194,168 3,924,931
1,616 1,802,969
568 2,121,962
-
- 3,924,931
-2,184
2,128 1,156,845
328 2,600,445
167,642
-
- 3,924,931
-
-2,456
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
11.5
61.3
14.8
52.0
16.0
-
7.0
78.5
-
-
2.1
77.8
6,669
2,716
963
1,289
25
10,364
-
-
-
9.8
59.9
22,027
-
-
-
9.8
64.4
22,027
Notes – Danske Bank Group
Danske Bank / Interim report – first nine months 2021 37/65
G3. Business segments continued
Business segments first nine months 2020
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance
business
Other income
Net premiums
Net insurance benefits
Personal &
Business
Customers
Large Cor-
porates &
Institutions
12,108
4,666
422
3,767
3,735
2,735
-
538
-
-
-
8
-
-
Total income
Operating expenses
17,734
11,397
10,246
5,553
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
6,337
2,069
4,267
-
4,693
3,916
777
-
Northern
Danica
Ireland Non-core
Group
Functions
Elimina-
tions
Financial
highlights1
Reclassifi-
cation1
IFRS
financial
statements2
-
-
-
1,319
-
-
-
1,319
-
1,319
-
1,319
-
1,035
198
91
-
13
-
-
1,336
905
431
295
136
-
136
-
-
-
-
-
-
-
-
-
-
-
-
-483
-203
-27
-125
-
329
-
-
-26
1,598
-1,624
7
-1,631
-
-3
1
129
-
-390
-
-
-263
-122
-141
-
-141
-
16,703
8,573
3,253
1,319
497
-
-
30,347
19,332
11,014
6,287
4,727
-483
4,106
-664
2,725
-1,319
2,864
21,075
24,794
3,992
4,289
-296
187
-483
483
20,809
7,909
5,979
-
3,361
21,075
24,794
34,339
23,621
10,718
6,474
4,244
-
-483
-1,631
-141
4,244
-
4,244
Profit before tax
4,267
777
1,319
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
1,488,842
257,159
515,139 3,728,099
-
-
-
652,841
-
53,238
44,403
-
35,432
-
- 3,802,759
-
4,541
-33,234 1,801,438
-6,521,186 2,222,056
4,541
-
2,458
2,083
-4,541
1,803,896
2,224,139
-
Total assets
2,003,981 3,985,259 652,841
97,641
4,541 3,838,191 -6,554,419 4,028,035
- 4,028,035
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
666,763
389,150
1,268,994 3,552,024
44,084
-
68,225
-
-
639,045
13,796
-
81,360
10,186
6,095
-
-
1,388
- 3,811,679
25,334
-
-
4,331
-9,942 1,128,720
-6,544,478 2,737,450
157,534
4,331
-
-
2,109
2,222
-
-4,331
1,130,829
2,739,672
157,534
-
Total liabilities and equity
2,003,981 3,985,259 652,841
97,641
4,331 3,838,402 -6,554,419 4,028,035
- 4,028,035
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
8.2
64.3
2.3
54.2
12.9
-
2.9
67.7
-
-
-8.0
-
6,870
2,618
815
1,347
50
10,882
-
-
-
3.6
63.7
22,582
-
-
-
3.6
68.8
22,582
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 nine months 2021 38/65
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. Net income from insurance business is presented before elimination of intra-group transactions. The
decomposition of the reclassification between the IFRS income statement and Financial highlights is shown in the tables below.
Reclassification first nine months 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 nine months 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
20,342
8,811
23,185
-
4,087
27,114
48,221
35,318
22,743
12,575
504
12,071
-
12,071
-
-
-
-
-2,880
-
-
-2,880
-2,880
-
-
-
-
-
-1,362
82
1,321
-
-41
-
-
-
-
-
-
-
-
-
-2,465
808
-21,384
1,576
-548
-27,114
-48,221
-907
-907
-
-
-
-
-
-17
-1
-11
-
6
-
-
-22
-82
60
83
-23
23
-
-3,844
889
-20,074
1,576
-3,464
-27,114
-48,221
-3,810
-3,870
60
83
-23
23
16,498
9,700
3,111
1,576
623
-
-
31,509
18,874
12,635
587
12,048
23
-
12,071
IFRS financial
statements1
Operating leases
and impairment
charges
Markets, Invest-
ment Banking &
Securities and
Group Treasury
Danica
Pension2
Non-core
Total
reclassification2
Financial
highlights2
20,809
7,909
5,979
-
3,361
21,075
24,794
34,339
23,621
10,718
6,474
4,244
-
4,244
-
-
-
-
-3,126
-
-
-3,126
-3,126
-
-
-
-
-
-1,569
24
1,493
-
52
-
-
-
-
-
-
-
-
-
-2,489
644
-4,274
1,319
128
-21,075
-24,794
-953
-953
-
-
-
-
-
-48
-3
55
-
83
-
-
87
-209
296
-187
483
-483
-
-4,106
664
-2,725
1,319
-2,864
-21,075
-24,794
-3,992
-4,289
296
-187
483
-483
-
16,703
8,573
3,253
1,319
497
-
-
30,347
19,332
11,014
6,287
4,727
-483
4,244
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 nine months 2021 39/65
Notes – Danske Bank Group
G4. Income
(a) Interest income and interest expense
Negative interest income during the period ending September 2021 amounted to DKK 1,171 million (30 September 2020: DKK 1,449 million). Negative
interest expenses amounted to DKK 2,721 million (30 September 2020: DKK 2,004 million). In the income statement, negative interest income is recog-
nised 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 nine months 2021
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Financial
highlights
- net fee income
Reclassifica-
tions
4,044
2,359
1,896
1,402
9,700
-318
-60
513
-1,025
-889
Fee income first nine months 2020
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Financial
highlights
- net fee income1
Reclassifica
tions1
3,644
2,034
2,008
888
8,573
-252
-88
387
-712
-664
IFRS
- net fee
income
3,725
2,300
2,409
377
8,811
IFRS
- net fee
income2
3,392
1,945
2,396
176
7,909
Fee expense
3,435
992
81
-
4,507
Fee expense
2,921
931
188
-
4,039
IFRS
- gross fee
income
7,160
3,291
2,490
377
13,318
IFRS
- gross fee
income2
6,313
2,876
2,584
176
11,948
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 4,087 million for the nine months ending 30 September 2021 (30 September 2020: DKK 3,361 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 nine months 2021 40/65
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 September 2021
30 September
2021
30 September
2020
3,083
-5,913
1,548
2,188
-220
-182
504
3,776
-3,486
5,164
1,545
-314
-212
6,474
Stage 1
Stage 2
Stage 3
Total
1,316
1,065
-119
-22
543
-292
-194
-1
-22
-8
2,267
1,541
-140
-123
433
-491
-1,019
3
13
-188
2,297
5,963
-1,007
757
-1,002
1,862
-1,328
2,282
-6
-7
-56
7,459
-1,438
514
-853
1,014
-1,321
1,122
8
32
130
6,667
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
-104
-374
976
1,636
-4,101
1,445
608
220
173
-
-
-
3,083
-5,913
1,548
619
264
115
14,095
23,059
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 nine months 2021 41/65
30 September 31 December
2020
2021
761,742
17,274
775,844
8,183
779,016
784,027
30 September 31 December
2020
2021
5,716
56,282
160,100
14,184
61,344
170,044
222,098
245,573
106,648
106,371
Further information on issued bonds at fair value through profit or loss can be found in note G16 of the Annual Report 2020. The issuance and redemption of
bonds (including commercial papers and certificates of deposits at fair value) during the year are presented in the tables below.
Nominal value
(DKK millions)
Commercial papers and certificate of deposits
Preferred senior bonds
Covered bonds
Non-preferred senior bonds
1 January
2021
22,515
63,352
168,445
105,028
Issued
Redeemed
31,907
16,742
24,704
4,371
36,113
24,715
27,916
6,308
Foreign
currency 30 September
2021
translation
621
2,468
800
3,608
18,929
57,846
166,033
106,700
Other issued bonds
359,340
77,724
95,053
7,497
349,507
Nominal value
(DKK millions)
Commercial papers and certificate of deposits
Preferred senior bonds
Covered bonds
Non-preferred senior bonds
1 January
2020
10,821
75,280
176,489
86,891
Issued
Redeemed
42,906
19,920
31,420
23,706
30,474
28,411
38,780
-
Foreign
currency 31 December
2020
translation
-738
-3,437
-684
-5,569
22,515
63,352
168,445
105,028
Other issued bonds
349,481
117,952
97,665
-10,428
359,340
Subordinated debt and additional tier 1 capital
As at 30 September 2021, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 39,351 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 nine months ended 30 September 2021, the Group issued DKK 10,102 million of tier 2 capital and liability accounted additional
tier 1 capital and redeemed DKK 3,718 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 September 2021, distributable items for Danske Bank A/S amounted to DKK 130.4 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 September 2021 the common
equity tier 1 capital ratio was 21.0% (31 December 2020: 21.0%) for Danske Bank A/S. The ratios for the Danske Bank Group are disclosed in the Statement
of capital.
Notes – Danske Bank Group
G7. Other assets and Other liabilities
Other assets and Other liabilities
(DKK millions)
Other assets
Accrued interest and commissions due
Prepayments, accruals and other amounts due
Defined benefit pension plan, net assets
Investment property
Tangible assets
Right of use lease assets
Holdings in associates
Assets held for sale
Total
Other liabilities
Sundry creditors
Accrued interest and commissions due
Defined benefit pension plans, net liabilities
Other staff commitments
Lease liabilities
Loan commitments and guarantees etc.
Reserves subject to a reimbursement obligation
Liabilities held for sale
Other provisions, including litigations
Total
Danske Bank / Interim report – first nine months 2021 42/65
30 September 31 December
2021
2020
5,008
11,486
2,883
2,284
8,548
4,192
205
5,167
3,607
14,271
2,547
2,256
8,547
4,819
209
709
39,773
36,964
36,019
5,856
450
1,950
4,171
2,789
9
6,212
520
32,852
6,676
642
3,022
4,761
2,724
9
47
558
57,976
51,291
On 1 July 2021, Danske Bank entered into a binding contract for the sale of the business activities of Danske Bank International in Luxembourg (part of the
business segment Personal & Business Customers) to Union Bancaire Privée SA. The sale includes loans and deposits with a book value of DKK 4,931 million
and DKK 6,212 million, respectively, that were classified as assets and liabilities held for sale in the third quarter of 2021. The sale is conditional on approval
by the relevant authorities. Final approval is expected in the first quarter of 2022. 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.
Assets held for sale also includes lease assets (where the Group acts as lessor) put up for sale at the end of the lease and properties taken over by the Group
under non-performing loan agreements.
At the end of 2020, assets held for sale included of a portfolio of loans to commercial customers in Latvia of DKK 416 million. The sale settled in the first
quarter of 2021.
In the table above showing the decomposition of Other liabilities, the line item Sundry creditors included provisions for customer remediation of DKK 672
million (31 December 2020: DKK 804 million), provisions for restructuring costs of DKK 432 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.
Danske Bank / Interim report – first nine months 2021 43/65
Notes – Danske Bank Group
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 35,510 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 September 2021, the structural FX hedge position totalled DKK 39,200 million (31 December 2020: DKK 31,625 million) and a gain of DKK 245 million
has been recognised in Other comprehensive income during the first nine months of 2021, primarily due to appreciation of NOK against DKK throughout the
first nine months of 2021. During the first nine months of 2020, a loss of DKK 1,495 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 nine months of 2020.
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 September 31 December
2020
2021
5,908
70,307
6,708
65,108
76,215
71,816
30 September 31 December
2020
2021
246,183
205,289
16,504
276,413
198,830
18,995
467,976
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 227 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.
Danske Bank / Interim report – first nine months 2021 44/65
Notes – Danske Bank Group
G9. Guarantees, commitments and contingent liabilities continued
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 allege d holder of Danske Bank’s
American Depositary Receipts, representing its ordinary shares, against the Bank and certain of its officers and former officers and/or directors. The
complaint alleged 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. 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. On 25 August 2021, the Second
Circuit unanimously affirmed the dismissal with prejudice of this action.
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 Q4 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). A total of 200 cases have been referred to the Eastern High Court, while the
remaining cases are stayed or pending before the Copenhagen City Court. The Bank is defending itself against these claims. The timing of completion of
any such lawsuits (pending or threatening) and their outcome are uncertain.
On 20 February 2020 and 12 March 2021, two cases were initiated against Thomas F. Borgen by 76 institutional investors, and funded by the litigation
funder Deminor Recovery Services. The total claim amount is approximately DKK 3.2 billion. Danske Bank has received procedural notifications in respect
of both cases. Under Danish law, the purpose of a procedural notification is to make a formal reservation of rights to bring a potential claim against the
notified party. Claimants have notified Danske Bank that a claim may be issued in the near future, however the Bank has not received any claim as of
today. The main hearing was scheduled to be held in September 2021, but following a procedural error by Borgen’s counsel, a default judgement was
issued on 14 September 2021 and the main hearing postponed to Q3 2022.
On 5 August 2021, an action was filed in the United States District Court for the Eastern District of New York by approximately 500 plaintiffs, comprising
U.S. military members and U.S. civilians who allegedly were killed or wounded while serving in Afghanistan between 2011 and 2 016 and their families,
against the Bank and Danske Markets, Inc., as well as various branches of Deutsche Bank and Standard Chartered Bank and two money remitters Placid
Express and Wall Street Exchange. Plaintiffs claim that the defendant banks and money remitters all egedly aided and abetted a terrorist syndicate that
sponsored violence in Afghanistan, in violation of the Anti-Terrorism Act, through the facilitation of certain transactions that allegedly allowed funds to
ultimately be transferred to the terrorist organisations. The complaint seeks unspecified punitive and compensatory damages. The Bank is defending
against these claims. The timing of the completion of the lawsuit and the outcome are uncertain.
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.
Danske Bank / Interim report – first nine months 2021 45/65
Notes – Danske Bank Group
G9. Guarantees, commitments and contingent liabilities continued
(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 nine months 2021 46/65
Notes – Danske Bank Group
G10. Assets provided or received as collateral
As at 30 September 2021, the Group had deposited securities (including bonds issued by the Group) worth DKK 42.9 billion as collateral with Danish
and international clearing centres and other institutions (31 December 2020: DKK 36.7 billion).
As at 30 September 2021, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 70.8 billion as collateral for
derivatives transactions (31 December 2020: DKK 104.0 billion).
As at 30 September 2021, the Group had registered assets (including bonds and shares issued by the Group) under insurance contracts and unit-linked
investment contracts worth DKK 491.6 billion (31 December 2020: DKK 473.5 billion) as collateral for policyholders’ savings of DKK 477.4 billion (31
December 2020: DKK 458.1 billion).
As at 30 September 2021, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 812.5
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 324.5 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 September 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
-
244,576
-
-
-
-
27,517
77,399
803,376
335,976
411,015
31
27,517
321,975
803,376
335,976
411,015
31
-
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
244,576
30,608
1,655,313
86,441
1,899,889
117,048
237,453
19,556
1,655,971
93,992
1,893,424
113,548
Total, including own issued bonds
275,184
1,741,753
2,016,937
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 244.6 billion as at 30 September 2021 (31 December 2020: DKK 237.5 billion).
As at 30 September 2021, the Group had received securities worth DKK 264.3 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 September 2021, the Group had sold securities or provided
securities as collateral worth DKK 118.6 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 nine months 2021 47/65
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 September 2021
Fair value
Amortised cost
31 December 2020
Fair value
Amortised cost
-
24,225
608,256
162,393
-
999,831
89,869
514,006
-
274,689
27,967
-
142,646
1,000,876
-
-
-
4,931
-
52,402
682,948
165,141
-
1,023,323
82,795
521,245
-
320,702
29,026
-
131,628
1,024,607
-
-
-
416
Total
2,398,578
1,451,110
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 held for sale
Non-preferred senior bonds
Subordinated debt
Loan commitments and guarantees
133,450
368,271
139,147
779,016
-
90,361
-
-
-
-
86,958
-
1,141,944
-
222,098
-
6,212
106,648
39,306
2,789
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
1,510,246
1,605,955
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 nine months of 2021.
Danske Bank / Interim report – first nine months 2021 48/65
Notes – Danske Bank Group
G11. Fair value information for financial instruments continued
(DKK millions)
30 September 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
-
7,193
300,863
18,330
142,906
-
-
89,869
190,368
143,021
-
24,225
266,081
12,473
-
18,940
-
999,831
-
20,080
4,963
105,631
-
3,124
-
191
-
547
-
-
6,930
40,737
2,276
Total
24,225
276,398
313,336
18,521
161,846
547
999,831
89,869
217,378
188,721
107,907
Total
892,549
1,452,224
53,805
2,398,578
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
-
6,811
117,459
-
779,016
-
133,450
239,371
1,010
139,147
-
90,361
-
3,537
84
-
-
-
133,450
249,719
118,553
139,147
779,016
90,361
903,286
603,339
3,621
1,510,246
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 nine months 2021 49/65
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 September 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
40,737
654
6,930
1,863
35,026
1,002
7,438
3,083
-
65
113
-
-
100
106
-
-
65
113
-
-
100
106
-
2,656
54
64
-
411
200
235
-
5,393
-8
115
-992
-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 nine month period
ended 30 September 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 September 2021
31 December 2020
(DKK millions)
Shares
Bonds
Derivatives
Shares
Bonds
Derivatives
Fair value at 1 January
Value adjustment through profit or loss
Acquisitions
Sale and redemption
Transferred from quoted prices and observable input
Transferred to quoted prices and observable input
36,028
8,095
4,225
-6,680
-
-277
7,438
179
776
-1,463
-
-
3,083
-992
-146
209
-25
-265
41,223
-704
7,198
-9,620
-511
-1,558
4,099
-1
4,076
-1,572
836
-
2,480
489
-274
-522
1,618
-708
Fair value end of period
41,391
6,930
1,863
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 nine months 2021 50/65
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 Norway 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 first half of 2022. After the merger, Danske Bank will own 25% of the new parent company, Vipps AS.
Danske Bank / Interim report – first nine months 2021 51/65
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 September 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
267.8
52.2
608.3
305.0
1,000.9
999.8
89.9
542.7
4.9
76.2
246.2
205.3
16.5
267.8
28.0
-
-
999.3
803.4
-
-
4.9
76.2
244.6
205.3
-
4,415.7
2,629.5
314.6
81.4
682.9
296.8
1,024.6
1,023.3
82.8
545.7
0.4
71.8
276.4
198.8
19.0
314.6
28.9
-
-
1,022.7
816.3
-
-
-
71.7
274.9
198.8
-
-
-
-
0.3
1.6
-
-
-
-
-
1.6
-
-
3.5
-
0.1
-
-
1.9
-
-
-
0.4
0.2
1.5
-
-
4.1
-
24.2
276.4
-
-
196.5
-
-
-
-
-
-
-
-
-
331.9
304.7
-
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
89.9
542.7
-
-
-
-
16.4
497.1
636.6
649.0
-
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
227 billion at 30 September 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 nine months 2021 52/65
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 September 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
236.9
205.1
554.5
588.2
467.5
280.9
111.8
18.4
0.5
0.3
-
0.4
0.6
2.3
3.6
9.2
12.2
44.6
36.2
4.4
21.4
0.1
-
0.5
1.5
2.3
2.2
1.3
1.3
0.4
0.1
27.0
15.9
-
-
0.1
0.1
0.2
0.4
0.8
0.5
-
-
0.1
-
-
-
-
-
0.1
1.3
2.4
1.3
1.5
-
-
-
0.2
-
-
-
0.1
0.1
-
5.3
7.5
236.9
205.1
554.4
588.0
467.3
280.5
111.0
17.9
0.5
0.3
-
0.4
0.6
2.3
3.6
9.2
12.1
43.4
33.8
3.1
19.9
0.1
-
0.5
1.3
2.3
2.2
1.3
1.2
0.3
0.1
21.8
8.4
217.1
78.9
248.5
246.7
143.1
98.0
32.1
3.6
0.1
0.1
0.1
0.2
0.2
1.2
1.2
4.6
5.0
14.1
10.2
-
8.8
-
-
-
-
-
-
-
-
-
-
3.9
0.5
2,464.1
135.1
52.6
2.3
6.7
13.3
2,461.8
128.4
39.3
1,068.0
45.5
4.4
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 8.4 billion from the end of 2020 to September 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 because the
majority of the exposure transferred to stage 3 is covered by collateral.
Danske Bank / Interim report – first nine months 2021 53/65
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 September 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
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
312.9
106.1
60.6
28.6
71.5
293.0
46.7
65.5
7.6
11.7
14.6
38.2
207.7
33.8
23.8
56.5
30.3
25.5
21.5
12.9
59.3
935.8
0.7
2.9
5.4
1.7
7.1
15.4
4.5
4.0
6.4
0.5
1.0
5.5
3.6
1.4
3.0
3.0
4.1
0.8
0.5
3.2
4.3
56.1
-
0.4
5.3
0.6
1.9
5.9
2.0
1.3
2.0
0.1
0.2
-
1.3
0.4
2.4
1.1
7.2
1.0
0.2
0.6
-
18.6
-
0.1
0.3
-
-
0.5
-
-
-
-
0.1
-
0.1
-
-
0.1
0.1
-
-
-
-
0.8
-
0.1
0.8
0.1
0.4
1.5
0.3
0.2
0.2
-
-
0.1
0.1
-
0.1
0.2
0.3
0.1
-
0.2
0.1
1.8
-
0.2
1.3
0.1
0.7
1.2
0.7
0.4
0.5
-
0.1
-
0.3
0.2
0.8
0.4
2.6
0.3
0.1
0.1
-
3.2
312.9
106.1
60.3
28.6
71.4
292.5
46.6
65.5
7.6
11.7
14.5
38.2
207.6
33.8
23.8
56.4
30.2
25.5
21.5
12.9
59.3
935.0
0.7
2.8
4.6
1.6
6.7
13.9
4.2
3.8
6.2
0.4
1.0
5.4
3.5
1.3
2.8
2.9
3.8
0.7
0.5
3.0
4.2
54.3
-
0.2
4.0
0.4
1.2
4.7
1.3
1.0
1.5
0.1
-
-
1.0
0.3
1.6
0.7
4.6
0.7
0.1
0.5
-
15.4
309.0
92.2
14.9
21.3
63.4
59.0
32.7
47.9
2.6
9.1
10.3
35.4
36.2
22.7
14.2
45.3
15.8
9.5
19.6
6.1
40.5
160.2
0.3
1.6
1.1
0.8
5.8
0.7
2.0
2.6
1.3
0.2
0.2
4.6
0.4
0.2
2.0
1.7
2.1
0.3
0.3
1.3
4.1
11.8
-
0.2
0.2
0.2
0.5
0.3
0.5
0.2
0.2
-
-
-
-
-
0.6
0.2
-
0.4
-
0.1
-
0.7
Total
2,464.1
135.1
52.6
2.3
6.7
13.3
2,461.8
128.4
39.3
1,068.0
45.5
4.4
As at 30 September 2021, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 20.3 billion (31 December
2020: DKK 23.3 billion) and expected credit losses of DKK 2.0 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 September 2021.
For the Hotels, restaurants and leisure industry, the gross exposure within stage 2 increased by DKK 3.3 billion from the end of 2020 to 30 September
2021 while the expected credit losses remained unchanged. This is primarily due to an increase in collateral of DKK 2.9 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 nine months 2021 54/65
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 September 2021 can
be found as the difference between the columns ‘Net exposure’ and ‘Net exposure, ex collateral’ and amounted to DKK 1,511.6 billion at 30 September
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 4.9 billion (31 December 2020: DKK 5.0 billion) with the guarantees
covering DKK 4.0 billion of the loans (31 December 2020: DKK 4.2 billion). A large part of the guarantees relates to Northern Ireland.
Danske Bank / Interim report – first nine months 2021 55/65
Notes – Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
30 September 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
Large Corporates &
Institutions
Northern Ireland
Group Functions
Total
31 December 2020
(DKK billions)
Personal & Business
Customers
Personal Customers
Denmark
Personal Customers
Nordic
Business Customers
Asset Finance
Group Functions
Total
1,625.0
103.2
38.9
526.9
21.0
12.9
0.7
1.3
2.3
526.2
19.6
10.6
60.3
3.1
0.4
388.9
654.9
50.1
4.2
27.9
41.3
12.8
0.2
4.9
19.6
1.4
0.1
504.9
26.4
10.9
99.0
235.3
5.4
0.1
2.7
-
0.2
1.1
-
-
2.0
0.2
0.1
-
0.4
3.2
0.4
-
5.3
1.2
0.1
-
0.6
5.4
0.3
-
388.8
653.8
50.0
4.2
27.5
38.1
12.4
0.2
4.2
14.2
1.1
-
97.5
168.6
18.5
0.9
7.7
10.5
2.5
0.1
8.6
1,623.0
97.8
30.2
345.7
23.9
3.9
504.7
25.2
7.0
425.1
20.5
0.7
98.9
-
235.2
5.3
0.1
2.1
62.9
1.0
-
234.3
-
0.3
2.1
0.1
-
3.0
1.2
0.2
-
2,464.1
135.1
52.6
2.3
6.7
13.3
2,461.8
128.4
39.3
1,068.0
45.5
4.4
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 nine months 2021 56/65
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 19 billion, of which around DKK 12 billion (net of expected credit losses) is considered forbearance measures, see note G1(b)
section ‘Accounting treatment of the impacts on expected credit losses from the corona crisis’ in Annual report 2020 for the definition of when such
concessions are considered to be a forbearance measure. At the end of 2020, such concessions represented an increase in gross exposure of DKK 44
billion, of which around DKK 6 billion (net of expected credit losses) was considered forbearance measures. The concessions considered forbearance
measures relate primarily to Personal customers and the industries Shipping, oil and gas, Hotels, restaurants and leisure, Consumer goods and Retailing.
In our Nordic markets, such concessions are made on a voluntary basis, while in Northern Ireland, the Bank was selected by the UK Government to
provide concessions through the UK government-backed lending schemes.
Exposures subject to forbearance measures
(DKK millions)
Active forbearance
Under probation
Total
30 September 2021
31 December 2020
Performing Non-performing*
Performing
Non-performing*
10,738
11,212
21,951
9,844
-
9,844
11,973
14,962
10,481
-
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 nine months 2021 57/65
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 nine months of 2021.
The table below shows the reconciliation as at 30 September 2021 between the gross exposure in stage 3 and gross non-performing loans.
30 September 2021
31 December 2020
Non-default
Default
Total Non-default
Default
36.7
18.7
18.0
5.4
12.6
15.9
2.3
13.6
7.5
6.1
52.6
21.0
31.6
12.9
18.7
30.8
13.6
17.2
5.1
12.1
18.0
3.4
14.6
7.9
6.7
Total
48.8
17.0
31.8
12.9
18.8
Non-performing loan bridge
(DKK billions)
Gross exposure in stage 3
None or an immaterial allowance account
Gross non-performing loans
Expected credit loss
Net non-performing loans
Non-performing loans in core activities
(DKK millions)
Total non-performing loans
- portion from customers in default*
Coverage ratio (default) (%)
Coverage ratio (non-default) (%)
Coverage ratio (total non-performing loans) (%)
Non-performing loans as a percentage of total gross exposure (%)
*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 September
2021
31 December
2020
18,676
6,110
18,842
6,698
100
68
83
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
ECL allowance account as at 30 September 2021
1,540
-140
-123
432
-488
-1,016
-3
13
-182
-1,437
514
-844
1,014
-1,313
1,122
-8
32
147
-104
-374
967
1,636
-3,901
1,380
608
177
25
-
-
-
3,082
-5,702
1,485
597
222
-10
2,297
6,665
13,267
22,228
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
1,839
-2,436
1,217
-451
5
9
1,010
-3,033
388
1,069
167
-18
ECL allowance account as at 30 September 2021
15,956
5,360
Danske Bank / Interim report – first nine months 2021 58/65
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
233
-230
-121
-21
49
-
898
8
10
-3
1
-
-2
1
15
1
-3
1
-
-
-1
20,451
4,507
-5,180
4,283
-1,076
-425
-6
22,554
3,082
-5,702
1,485
597
222
-10
14
22,228
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 September 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 Decem-
ber 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 September 2021
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base-case
2022
2021
2023
Downside
2022
2021
3.3
4.5
6.0
1.8
3.9
8.9
0.0
0.7
3.4
4.4
5.2
1.3
4.6
2.1
0.2
1.0
1.8
2.6
5.0
1.6
2.0
2.3
0.2
1.1
-4.2
-6.3
8.9
-0.2
-2.7
-13.1
-0.6
-1.1
-1.5
-2.2
9.9
-0.7
-0.7
-8.3
-0.6
-1.1
2023
0.3
0.5
10.4
-0.1
-0.6
-1.5
-0.6
-0.7
The upside scenario represents a slightly better outlook than the base case scenario across the macroeconomic parameters.
Danske Bank / Interim report – first nine months 2021 59/65
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 September 2021 amounted to DKK 22.2 billion (31 December 2020: 22.6 billion). If the base case scenario was assigned a probability of 100%, the
allowance account would decrease DKK 1.3 billion (31 December 2020: 0.4 billion). Compared to the base case scenario, the allowance account would
increase DKK 9.1 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 0.3 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 nine months 2021 are therefore not directly comparable, especially due to the downside scenario being a severe downside
scenario at 30 September 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 September 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 A griculture industry for
such industries, supplement ary calculations are made in order to ensure sufficient impairment coverage. This also includes post-model adjust-
ments to capture the immediate risks arising from the corona crisis
non-linear downside risk, for instance on the property market in Copenhagen and other high growth areas for which the macroeconomic forecasts
used in the models are based on the property market as a whole
portfolios where the credit risk assessment process has identified an underestimation of the expected credit losses
upcoming model changes that will impact the expected credit loss model
Following the significant impact on the expected credit losses from post-model adjustments, the table below provides more information about the adjust-
ments.
Post-model adjustments by type and mostly impacted industries
(DKK billion)
Specific macroeconomic risks
Agriculture
Commercial Property
Personal customers
Others
Specific macroeconomic risks, total
of which corona crisis related
Process related
Upcoming model changes
Total
30 September
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 September 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 nine months 2021 60/65
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
435
18
309
108
2,712
19
1
16
2
-
34
9
26
-
822
-
-
-
-
-
-
3
-
3
-
-
3
34
9
25
-
794
434
18
308
108
2,711
828
3,146
17
1
14
2
-
17
-
-
-
-
28
192
17
75
100
262
29
454
4
-
2
2
-
4
-
-
-
-
20
20
Total
3,146
19
857
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 September 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
577
1,130
1,164
154
39
50
8
2
-
22
1
-
5
4
1
2
2
-
3
-
2
-
-
5
3
1
1
1
-
1
-
35
810
3,146
19
857
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3
-
-
-
-
577
- 1,130
1,164
-
154
-
39
-
50
-
8
-
2
1
-
-
22
22
1
806
-
5
4
1
2
2
-
-
-
2
-
-
5
3
1
1
1
-
-
-
14
4
123
247
59
26
-
-
-
-
-
-
-
-
2
2
1
-
-
-
-
-
-
-
-
5
1
1
-
-
-
-
-
12
1
3
828 3,146
17
29
454
4
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
-
-
-
-
-
-
-
-
-
-
-
-
Danske Bank / Interim report – first nine months 2021 61/65
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
30 September 31 December
2020
2021
276.4
220.7
617.8
19.1
0.1
379.6
259.4
583.4
16.7
0.2
1,134.1
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 219.3 billion (31 December 2020: DKK 256.7 billion), of which DKK 23.1 billion relates to credit institutions and central banks (31 December 2020: DKK 50.0 billion), and other primarily
short-term loans of DKK 1.4 billion (31 December 2020: DKK 2.8 billion), of which DKK 1.1 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 September
2021
31 December
2020
661,019
384,621
276,398
197,270
79,128
55,499
23,630
197,967
77,251
1,180
880,479
500,913
379,566
269,964
109,601
78,835
30,767
258,318
119,925
1,323
276,398
379,566
Total
Bond portfolio
(DKK millions)
30 September 2021
Held-for-trading (FVPL)
Managed at fair value (FVPL)
Held to collect and sell (FVOCI)
Held to collect (AMC)
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
221,989
9,903
17,831
42,567
4,818
925
5,021
4,737
17,025
25,162
71,942
86,059
55,790
1,195
10,226
7,526
Other
covered
bonds
5,999
522
16,562
1,758
Corporate
bonds
7,714
2,321
237
-
Total
313,336
40,027
121,818
142,646
Total
292,289
15,501
200,189
74,736
24,841
10,272
617,828
31 December 2020
Held-for-trading (FVPL)
Managed at fair value (FVPL)
Held to collect and sell (FVOCI)
Held to collect (AMC)
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
Total
263,969
7,990
213,177
71,967
13,987
12,358
583,448
At 30 September 2021, the Group had an additional bond portfolio, including bond-based unit trust certificates, worth DKK 217,378 million (31 Decem-
ber 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 September 2021
and 31 December 2020, see note G11.
Danske Bank / Interim report – first nine months 2021 62/65
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
30 September 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
90,351
85,260
4,625
5,599
17,493
3,913
17,695
10,823
3,086
3,848
42
5,394
5,542
36,805
1,491
321
-
-
-
-
3,910
-
16
5,601
2,446
-
-
-
-
6
-
2,400
1,122
200,189
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,736
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,971
19,754
-
1
461
-
687
3
-
-
-
28
1,701
1
233
2,850
3,167
271
1,735
15
-
140
93
867
20
1
-
93
367
142
-
511
Total
293,390
163,163
6,867
27,088
21,418
3,914
18,311
5,694
14,823
3,109
3,849
42
5,487
5,943
38,648
3,892
2,188
292,289
15,501
200,189
74,736
24,841
10,272
617,828
80,654
91,397
2,955
3,681
13,457
3,921
11,693
-
7,964
2,187
4,357
249
5,347
4,987
30,316
803
-
-
-
-
-
1,876
-
-
4,404
999
-
-
-
-
4
-
299
409
213,177
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,967
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,096
10,693
-
1
466
-
751
3
-
-
-
15
711
1
249
2,968
3,977
1,489
1,657
15
2
27
75
1,432
59
4
-
56
176
181
-
239
296,800
167,341
5,540
16,031
15,348
3,925
12,186
4,479
11,147
2,249
4,361
249
5,402
5,182
31,208
1,102
897
263,969
7,990
213,177
71,967
13,987
12,358
583,448
Danske Bank / Interim report – first nine months 2021 63/65
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
30 September 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
237,626
12,876
25,009
5,538
305
5,017
-
2,029
1,490
2,400
-
-
-
-
13,699
16
1,787
-
-
-
-
-
-
-
-
-
-
-
199,309
-
-
-
-
877
-
-
2
-
-
-
-
-
74,622
-
114
-
-
-
-
-
-
-
-
-
-
-
23,309
20
22
-
-
1,486
-
-
-
-
-
-
-
3
576
11
1,703
162
17
2,499
1,065
1,007
1,574
555
268
533
23
278
Total
549,141
12,922
28,635
5,700
323
9,879
1,065
3,036
3,067
2,955
268
533
23
281
292,289
15,501
200,189
74,736
24,841
10,272
617,828
221,354
11,293
16,457
3,102
-
3,700
-
2,408
1,628
4,027
-
-
-
-
7,522
-
468
-
-
-
-
-
-
-
-
-
-
-
212,971
-
-
-
-
174
-
-
32
-
-
-
-
-
71,928
-
39
-
-
-
-
-
-
-
-
-
-
-
13,344
66
176
-
-
378
-
-
-
-
-
-
-
24
1,387
157
1,819
364
110
3,142
290
940
1,953
677
393
927
31
168
528,506
11,516
18,959
3,466
110
7,394
290
3,348
3,613
4,704
393
927
31
192
263,969
7,990
213,177
71,967
13,987
12,359
583,448
Danske Bank / Interim report – first nine month 2021 64/65
Statement by the management
The Board of Directors and the Executive Leadership Team (the management) have considered and approved Interim report – first
nine months 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. Furthermore, the interim report has been prepared in accordance with Danish disclosure requirements for
interim reports of listed financial institutions.
In our opinion, the interim financial statements give a true and fair view of the Group’s assets, liabilities, total equity and financial
position at 30 September 2021 and of the results of the Group’s operations and the consolidated cash flows for the period starting
on 1 January 2021 and ending on 30 September 2021. Moreover, in our opinion, the management’s report includes a fair review
of developments in the Group’s operations and financial position and describes the significant risks and uncertainty factors that
may affect the Group.
Copenhagen, 29 October 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
Supplementary information
Danske Bank / Interim report – first nine month 2021 65/65
Financial calendar
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
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Danske Bank’s financial statements are available online at danskebank.com/Reports.