Assets
| Type | Time | Amount | Unit |
|---|
Revenue
| Type | Start date | End date | Amount | Unit |
|---|
XML
See the xml submitted here:
No XML document available for this report.
Separator
The full data:
Management's report
Financial statements
Financial highlights - Danske Bank Group
Executive summary
Strategy execution
Sustainability
Financial review
Personal Customers
Business Customers
Large Corporates & Institutions
Danica Pension
Northern Ireland
Non-core
Group Functions
Definition of alternative performance
measures
3
4
6
9
10
18
20
22
25
27
29
31
33
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
Statements
Statement by the management
Independent auditor's review report
Supplementary information
35
36
37
38
40
41
83
84
85
Danske Bank / Interim report – first half 2022 3/85
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
First half
2022
First half
2021
Index
22/21
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
of which 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
11,440
6,537
175
-38
959
19,073
12,793
491
24
6,280
426
5,854
17
5,871
1,320
10,965
6,595
2,291
982
457
21,291
12,770
359
-
8,521
737
7,783
17
7,801
1,869
4,551
5,932
Attributable to additional tier 1 etc.
86
231
104
99
8
-
210
90
100
137
-
74
58
75
100
75
71
77
37
Q2
2022
5,810
3,157
-390
-122
291
8,746
6,421
250
24
2,325
192
2,133
31
2,164
458
Q1
2022
5,630
3,379
565
84
669
10,327
6,371
240
-
3,955
234
3,721
-14
3,707
862
1,705
2,845
5
81
Index
Q2/Q1
103
93
-
-
43
85
101
104
-
59
82
57
-
58
53
60
6
Q2
2021
5,515
3,193
1,025
491
262
10,486
6,497
198
-
3,989
240
3,750
-3
3,747
955
Index
22/21
Full year
2021
105
99
-
-
111
83
99
126
-
58
80
57
-
58
48
22,049
13,525
4,126
2,088
797
42,584
25,663
687
36
16,921
348
16,573
-2
16,571
3,651
2,792
61
12,920
117
4
451
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
245,632
280,561
335,557
236,761
1,819,297 1,809,805
612,527
304,812
532,154
1,783
141,634
661,318
307,005
637,475
1,956
120,749
245,632
280,561
282,777
73
118
259,145
101 1,819,297 1,843,815
616,570
108
306,538
101
591,837
120
2,078
110
150,193
85
661,318
307,005
637,475
1,956
120,749
87
108
335,557
236,761
99 1,809,805
612,527
304,812
532,154
1,783
141,634
107
100
108
94
80
320,042
73
118
253,954
101 1,834,372
509,589
108
303,425
101
547,806
120
2,027
110
164,620
85
Total assets
4,073,992 3,975,032
102 4,073,992 4,052,954
101 3,975,032
102 3,935,834
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
102,772
217,035
111,438
267,557
1,155,841 1,197,910
760,452
338,123
373,364
573,849
2,504
137,838
38,836
8,548
164,613
697,698
307,773
590,249
659,747
2,539
129,440
39,503
-
171,394
102,772
217,035
108,268
92
81
235,731
96 1,155,841 1,176,842
738,609
92
320,386
91
477,005
158
625,953
115
2,547
101
151,184
94
38,917
102
5,736
-
171,776
104
697,698
307,773
590,249
659,747
2,539
129,440
39,503
-
171,394
111,438
95
92
267,557
98 1,197,910
760,452
94
338,123
96
373,364
124
573,849
105
2,504
100
137,838
86
38,836
102
8,548
-
164,613
100
101,786
92
81
193,391
96 1,167,638
770,661
92
355,757
91
374,958
158
588,736
115
2,529
101
164,354
94
39,321
102
5,497
-
171,207
104
Total liabilities and equity
4,073,992 3,975,032
102 4,073,992 4,052,954
101 3,975,032
102 3,935,834
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), (%)
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)
-
5.2
5.2
0.76
67.1
21.3
17.1
100.3
201
21,663
-
6.7
7.0
0.72
60.0
23.3
18.0
110.4
193
21,926
-
2.0
4.0
0.77
73.4
21.3
17.1
100.3
201
21,663
-
3.2
6.4
0.75
61.7
21.7
17.6
112.6
202
21,854
-
3.1
6.6
0.73
62.0
23.3
18.0
110.4
193
21,926
99
99
2.0
14.6
7.6
0.73
60.3
22.4
17.7
113.0
201
21,754
99
The financial highlights represent alternative performance measures that are non-IFRS measures. Note G3 provides an explanation of differences in the presentation between IFRS and the financial highlights. For a
description of the alternative performance measures used and definition of ratios, see Definition of Alternative Performance Measures on page 33.
Executive summary
The first half of 2022 was characterised by significant
geopolitical events and a more uncertain environment, as the
Russian invasion of Ukraine and the accompanying effects on
already challenged supply lines and energy prices added to
the existing inflationary pressure. This means that the
remarkable recovery seen since the reopening of economies
last year has been replaced by a weaker macroeconomic
outlook, fuelled by central bank rate hikes. We note, however,
that the Nordic economies currently experience high activity
levels and tight labour markets, which provide a solid cushion
against the impact of a generally weaker economic outlook.
Despite the uncertain macroeconomic environment, we
continued to deliver on our strategy execution and to support
customers effectively. Therefore, in the first half of 2022, we
saw commercial momentum with higher volumes, improved
market shares in key segments and resilient income streams
from core banking activities owing to our diversified and more
efficient business model. Further, our sound credit quality
and strong market position enable us to adapt to the changes
in the operating environment and continue to support
customers in navigating the uncertainties. Nevertheless, the
significant magnitude and pace of interest rate changes
during the second quarter led to difficult market conditions
for our fixed income business but also for certain investment
products at Danica Pension.
As a bank and part of the global financial system, we have a
key role in enforcing the economic pressure on Russia, and
across the organisation, we have been implementing all
required sanctions, and we have also supported our
customers in their efforts to respond to the sanctions.
Strategy execution update
We see continued progress on our strategy execution
towards becoming a better bank for all our stakeholders and
setting up the bank for beyond 2023. The focus is on our core
business with a clear aspiration to be the leading retail bank
in Denmark, a true challenger bank for retail customers in the
other Nordic countries, as well as a leading corporate and
institutional bank across the Nordic countries. As steps
towards fulfilling these aspirations, we implemented a new
commercial organisation to accelerate execution, we
continued to see improvement in customer satisfaction in
our home markets, and on 1 July, we announced that Danica
Pension had finalised the sale of its pension activities in
Norway.
During the first half of this year, we continued to deliver solid
progress on our sustainability agenda, accelerating the
integration of sustainability into our day-to-day business and
using the power of finance to create sustainable progress,
thereby progressing well with all of our sustainable finance
targets, despite challenging market conditions. Furthermore,
we were pleased to be Joint Lead Manager for a EUR 6 billion
issue, and we
20-year NextGenerationEU green bond
continued to be ranked number one among Nordic banks
according to the Bloomberg League tables for arrangers of
both sustainability-linked loans and sustainable bonds. In
Danske Bank / Interim report – first half 2022 4/85
loans
for energy
March, we started offering home
improvements with an attractive annual variable interest
rate to our personal customers in Denmark, and in June, we
joined the Partnership for Biodiversity Accounting Financials
to enable us to steer our investments and business lending in
a more biodiversity-friendly direction.
Executive Leadership Team update
Our new commercial organisation took effect in May, splitting
Personal & Business Customers into two units; Personal
Customers headed by Christian Bornfeld and Business
Customers headed by Johanna Norberg. In addition, Philippe
Vollot decided to leave Danske Bank with effect from 2 June
2022. In the Executive Leadership Team, Head of Personal
Customers Christian Bornfeld assumed responsibility for the
Financial Crime Prevention and Financial Crime Risk units,
while Chief Risk Officer Magnus Agustsson has on an interim
basis taken over the responsibility for Group Compliance.
Financials
Danske Bank posted a net profit of DKK 4.6 billion for the first
half of 2022, against DKK 5.9 billion for the same period in
2021. The return on shareholders’ equity was 5.2%, against
7.0% in the first half of 2021.
income was negatively
Our core banking activities continued to deliver good
commercial progress with solid business lending growth and
deposit repricing leading to higher net interest income. Net
fee income was resilient, as high customer activity supported
activity-related fees and everyday banking fees at Large
Corporates & Institutions, while capital markets activity was
subdued. Trading
impacted by
extraordinarily high volatility and lower liquidity in the Nordic
fixed income markets, which created a challenging operating
environment for providing market-making services that led to
negative trading income in our fixed income business at
Large Corporates & Institutions. Our currency franchise, on
the other hand, continued to see good demand from
customers.
insurance business was also
negatively affected by the financial market turmoil in the first
half of 2022, however, some of the effect was offset by the
gain of DKK 415 million on the sale of Danica Norway.
Income from
Two years into the Better Bank transformation, we have laid
the tracks for a profitable growth journey in the years ahead,
becoming even more efficient and focused in our activities.
We thus saw lower underlying costs in the first half of 2022
than in the same period last year, but total expenses are
higher, driven by elevated remediation costs related to the
debt collection case and costs related to the Estonia matter.
The number of FTEs also continued to fall and stood at
21,663 in the second quarter of 2022, against 22,582 at its
peak in the third quarter of 2020.
The deteriorating macroeconomic outlook and geopolitical
loan
uncertainty have not affected credit quality, and
impairment charges continued to be low, underpinning the
strong credit quality. However, we have updated the
macroeconomic scenarios, leading to a limited increase in
Danske Bank / Interim report – first half 2022 5/85
Outlook
On 10 July 2022, we changed the outlook for 2022 to a net
profit in the range of DKK 10-12 billion from DKK 13-15
billion as communicated earlier in the year.
For 2022, we expect full-year income from core banking
activities to be above the level in 2021, as higher net interest
income driven by good economic activity will more than offset
lower capital markets and investment-related fee income.
We expect net income from insurance business and trading
activities in the second half of 2022 to be below normalised
levels and remain subject to financial markets conditions.
On the basis of the continually elevated costs for remediation
of our legacy cases, our full-year cost guidance is around DKK
25.5 billion, while impairments are expected to be below the
normalised level.
We maintain our ambition for a return on shareholders’
equity of 8.5-9% in 2023.
The outlook is subject to uncertainty and depends on
economic conditions and does not include any effects of a
potential settlement of the Estonia matter in 2022 or from
alternative approaches to accelerate the final resolution of
the debt collection case.
model-driven loan impairments due to a worsened outlook
and continued geopolitical uncertainty. Our commercial
property exposure is managed through prudent underwriting
standards and a well-defined risk appetite with low exposure
to property development activity. Total post-model
adjustments of DKK 6.0 billion are in place to cover
macroeconomic uncertainty, with a specific post-model
adjustment of DKK 1.4 billion in place for the Commercial
Real Estate exposure at Business Customers.
Capital and funding
For the first half of 2022, our total capital position was
21.3% and our CET1 capital ratio was 17.1%.
The Group had issued covered bonds of DKK 10.6 billion,
senior debt of DKK 1.4 billion and non-preferred senior debt
of DKK 20.1 billion, bringing total long-term wholesale
funding to DKK 32.1 billion by the end of June 2022.
Dividend and Estonia matter
To ensure prudent capital management with a high degree of
flexibility in light of the Estonia matter, the general meeting on
17 March 2022 adopted the proposal for an initial dividend
payment of DKK 2 per share that was paid out in March. The
remaining DKK 5.5 per share was intended to be paid out in
three tranches following the publication of the interim reports
in 2022, subject to a decision by the Board of Directors.
Danske Bank is in continued discussions with US and Danish
authorities on the resolution of the Estonia matter.
Consequently, the Board of Directors has decided that
in
Danske Bank will not pay out dividends for 2021
connection with the announcement of the interim report for
the first half of 2022.
Danske Bank is not yet able to reliably estimate the timing,
form of resolution or amount of a potential settlement or
fines, which is likely to be material, and will not comment on
discussions with authorities.
Strategy execution
Over the course of the first half of the year, we kept up the
momentum with the execution of our transformation while
also navigating a challenging environment. Being at the mid-
point of the penultimate year of the current strategy cycle, we
see continued progress on our journey towards becoming a
better bank for all our stakeholders and setting up the bank
for beyond 2023.
We continue to strengthen our business and operating
model, underpinned by clear guiding principles: our universal
bank value proposition and service model help us contribute
to the development of the societies we are part of and meet
our customers’ needs, but we must adjust our risk profile,
simplify our business and sharpen our focus. To achieve our
ambitions, we focus on our core business with a clear
aspiration to be the leading retail bank in Denmark and a true
challenger bank for the retail segment in the other Nordic
countries, as well as a leading bank for the business,
corporate and institutional segments across the Nordic
countries.
Despite the need to drive down costs, tackle headwinds from
externalities, address legacy infrastructure and remediation
issues as well as invest in concurrent transformation, the
core banking business remains robust, and we remain
committed to our stakeholder targets and have an
unwavering belief in our potential. Despite considerable
macroeconomic uncertainty and volatility in the financial
markets during the first half of 2022, we continued to
progress towards realising our Better Bank ambitions for
2023 with good momentum and decisive action taken to
strengthen the foundation of the business.
In May, we launched our new commercial organisation, which
now encompasses dedicated business units
for both
personal customers and business customers. The new setup
enables us to become even more customer-centric and to
cater for the different priorities of each segment. It further
increases our commercial momentum by strengthening
segment-specific value chains throughout the organisation,
with the aim of accelerating the execution of our commercial
plans.
At the same time, we continued to see evidence that
customers perceive our business transformation favourably.
For instance, the satisfaction scores of personal customers
in Finland reached an all-time high in the first quarter, and the
downward trend in Sweden stopped. Satisfaction among
personal customers in key segments in Denmark is on the
rise, too. At the same time, our
large corporate and
institutional customers continue to rate our offering and
customer-centric service model highly.
The engagement of our employees continues to grow,
showing strong support for our agenda to become a Better
Bank and aim of jointly creating a positive impact. The most
recent engagement survey confirmed yet another uptick of
engagement of four percentage points from the level a year
ago to 75, and we are thus firmly on track towards our target
Danske Bank / Interim report – first half 2022 6/85
of 77 at the end of next year. The results show that our
employees care about Danske Bank becoming a great place
to work, proving to us with comfort that we are progressing
in the right direction, for example when permanently
implementing flexible ways of working as part of our
Working@Danske programme. The same applies to our work
on leadership development, a key driver of engagement, as we
continue to engage with the entire organisation to bring our
Purpose and Culture Commitments to life. We are working
directly with the various leadership groups across the
organisation on their individual and collective leadership
journeys to convert awareness to action and to increase
visibility and commitment.
During the first half of this year, we continued to deliver solid
progress with our sustainability agenda. The integration of
sustainability into our daily business is accelerating, and we
use the power of finance to create sustainable progress. Two
very concrete outcomes of this work are the launch in March
of energy improvement home loans for personal customers
in Denmark with an attractive annual variable interest rate
and our joining the Partnership for Biodiversity Accounting
Financials in June to advance the measurement of the impact
investment on nature and
of business
ecosystems.
lending and
Our commitment to protecting society and the integrity of the
financial markets also means that as a bank we have
implemented all required sanctions. Our investment in
strengthening our control environment in previous years is a
strong enabler in this regard. We continue to be guided by the
comprehensive plan we have outlined
for regulatory
compliance and the prevention of financial crime. Overall, our
Compliance under Control agenda for 2023 is past the
halfway point and on track to finish in time, as evidenced, for
example, by the solutions we have
for
transaction monitoring and trade and communication
surveillance.
implemented
The second quarter of the year was characterised by an
uncertain macroeconomic outlook, question marks
pertaining to the resilience of economic growth, and rising
volatility in the financial markets, which created a challenging
operating environment for providing market-making services.
Nevertheless, our core banking
lines show continued
commercial momentum and volume growth. The underlying
cost base improved from the level last year. This is due, for
example, to efficiency gains, which we are realising
subsequent to the agile transformation of our development
organisation. As of the second quarter of this year, the
number of software deployments has grown by more than
60% against the number of deployments two years ago, while
the number of employees in the development organisation
has gone down. However, headline costs have increased,
driven by remediation costs related to the debt collection
case and the Estonia matter.
As we are approaching the last year of the current strategy
cycle, our time horizon for planning expands. Moreover, we
will remain highly focused on executing on our current
transformation and commercial roadmaps to deliver on our
stakeholder ambitions for 2023. Our business units play a
vital role in delivering on our stakeholder ambitions, and we
took additional steps
to drive customer experience
improvement, employee engagement, our contribution to
society and the commercial momentum over the course of
the first half of the year.
Personal Customers
Since the start of our transformation journey, we have taken
considerable steps in our business in Denmark to stabilise
our position and establish a strong foundation for continued
change. We have stayed focused on the execution of
finance, attracting young
initiatives related to home
customers, the strengthening of our retail
investment
offering and sustainability, while we have also taken key steps
towards our future digital and differentiated service model.
The commercial momentum gained from these initiatives is
encouraging. And although the consideration of our brand is
still impacted by our remediation cases, we are seeing the
first signs of a turnaround to a positive trajectory. Meanwhile,
we remain focused on commercial execution in our business
in the Nordic countries, in particular on driving initiatives to
grow lending in Sweden, to further differentiate service
models and to accelerate process harmonisation across
countries. The extension of our strong partnership with
Akademikerne in Norway on the last day of the quarter will
contribute to building momentum.
Digital convenience for consumers keeps rising across
industries, fuelled by rapid technological change. We see this
trend manifest itself in the financial industry, as digital
customer journeys become more and more refined and our
competitors keep raising the bar
for the customer
experience. Therefore, our current investment in closing the
digital gaps in our internal processes and advancing key
customer journeys will be a critical enabler in the future.
Customer satisfaction among personal customers remains
under pressure, and we are working hard to retain our
strongholds within specialised advisory and digital
convenience. At the same time, we have responded by
improving our services and offerings to targeted segments
and by leveraging the sustainability opportunity, and we are
seeing green shoots in these areas.
Addressing the digital gaps and the need to strengthen value
chains end-to-end are also at the centre of our work towards
achieving a lower structural cost base and greater efficiency.
Therefore, the momentum gained in our transformed agile
development organisation is critical for us to be able to
deliver on our digital transformation as well achieve a
scalable model that fuels profitable growth. One tangible
example of our efforts is the introduction of a new feature in
Danske Mobile Banking that enables our personal and
Private Banking customers to open a Danske Konto account
directly in the Mobile Banking app. More than 14,000
customer accounts have been opened since the launch in
February. And as recently as June, the Mobile Banking app
was upgraded to allow customers to create, delete and edit
regular transfers in the app. This feature has been very high
on our customers’ wish list.
Danske Bank / Interim report – first half 2022 7/85
Towards and beyond 2023 we will continue to drive our
commercial momentum by focusing on our key commercial
priorities: regaining a leading position in the mortgage market
in Denmark, improving investment offerings and ensuring a
scalable business model in the Nordic countries, taking
Sweden as the starting point. The newly established Personal
Customers business unit provides a great basis
for
sharpening our segmentation, value propositions and
engagement model, and the possibility of sharpening the
focus and thus accelerate execution.
Business Customers
The objective of the newly established Business Customers
unit is to be the preferred bank for businesses with advanced
needs and to offer an attractive value proposition to all
businesses across the Nordic countries on the basis of a
strong digital foundation. To meet this objective, we have
identified must-win areas: growing our market share,
prioritising pricing and capital productivity and establishing a
cost-efficient service model.
Our market share across the Nordic countries has been on a
small but steady growth path throughout the year, except in
Norway, where increased competition in the large real estate
area affects our growth negatively.
in anticipation of a changing
Pricing and capital productivity improvement has been highly
prioritised, and we have repriced products and services to
align our pricing with the market. Further, we have
strengthened our pricing capabilities to enable swift
repricing
interest rate
environment. At the same time, initiatives to improve capital
use have shown great results, and we are performing above
our 2022 ambitions. In addition, efforts to increase the
intensity of our individual customer relationships, primarily
through cross sales, have also been successful, and ancillary
income has seen an increase. A concrete cross-sale example
is the launch of the GreenFleet70 car leasing solution in the
market in Denmark.
The focal point of our attention is, however, the establishment
of a new cost-efficient service model. With the new service
model, customers with more simple needs will be
empowered to use digital self-service more, while we target
our advisory services at customers with more complex
needs. To be better suited for the new service model, we have
reorganised the entire Business Customers organisation.
For instance, we have adjusted the customer portfolios of
virtually all advisers to better match the new segmentation.
The new organisation will enable us to realise our ambition of
having a digital-first approach for everyday banking products
and services while at the same time meeting the more
advanced needs of our customers. In order to be more cost
from
efficient
implementation of the service model towards harmonising
processes and ways of working within the organisation to be
more homogenous across all market areas and realise our
Better Bank ambitions. Our commitment to strengthening
our culture engagement is bearing fruit, as we see increasing
scores in our internal engagement survey for the Business
Customers area.
future, we will shift our
in the
focus
Strengthening our digital value propositions is a key enabler
for the digital-first approach. At the beginning of the year, we
therefore released Marketplace for our small business
customers in Sweden on our financial platform District.
Marketplace ensures that more than 60,000 customers are
now able to order the ten most popular products in District
digitally. We see that of the most ordered products, 16%
were ordered through Marketplace. Some 53% of all visitors
are returning, and 34% of all buyers that have bought their
first product come back and order an additional product. In
the coming quarters, the focus will be on raising the adoption
rate and preparing the launch for our customers in Denmark.
Furthermore, we have focused our Nordic commercial real
estate strategy. The strategy clearly delineates target
customer segments and market areas to optimise the
utilisation of capital, and implementation will continue in the
year to come. We have managed our risk profile in the
commercial real estate segment conservatively, seeing
relative growth in the residential segment of the market and
optimising rather than growing our exposure.
When looking ahead, we see great growth potential in the
Business Customers area, both in Denmark but also in
Sweden and Norway. We also see a need for increased
interaction and collaboration between
the Business
Customers unit and our other business units. In the months
to come, we intend to make several digital releases, such as
a digital overdraft solution, a District Light version that
targets customers with less complex needs and a mobile
solution for District. Towards 2023, our efforts will focus on
closing digitals gaps but also on launching new solutions for
our customers.
Large Corporates & Institutions
Large Corporates & Institutions is on a continuous growth
journey to lift income and profit. Despite the currently
challenging environment and turbulent times, we managed to
continue supporting our customers during the first half of
2022, while also expanding our offerings, for example within
sustainable finance and by adding and strengthening digital
value propositions.
Danske Bank / Interim report – first half 2022 8/85
During the first half of 2022, we continued to execute on our
sustainability strategy, for example by joining the Partnership
for Biodiversity Accounting Financials. It is our ambition to
integrate sustainability into everything we do – across
products and advisory services – and to use the power of
finance to support our customers with their sustainable
transition. Within
investments, we have established a
sustainable investment house view model that will be applied
across our products within responsible investments to meet
the upcoming MiFID II rule changes and
improve our
customer offering. We also continue to be ranked number
one among Nordic banks according to the Bloomberg League
tables for arrangers of both sustainability-linked loans and
sustainable bonds in terms of volumes supported.
In the first half of 2022, we repriced our corporate daily
banking services, leading to increase in margins and deposit
fees, adding to our ambitions of efficient use of capital.
Further, we have successfully repriced several corporate
everyday banking services, which has had a positive impact
on margins and on overall net
income and
contributed to strong growth in corporate everyday banking
fees. Finally, we continued to onboard new customers in
Sweden, a cornerstone in strengthening our position outside
Denmark.
interest
We also continued the work to make everyday banking easy
and safe for our customers, and in the first half of 2022, we
took a big step towards creating a digital environment around
customer offerings that are characterised by physical
documents and manual processes. We have rolled out new
digitally-born products and enhanced the functionality of
existing products. This includes, but is not limited to, the
partnership with one-point-of-contact payment solution
AltaPay, the full launch in Norway of credit intelligence
service Axeptia, the launch of District Marketplace and a new
digital self-service solution for all Swedish customers, which
is expected to be rolled out in Denmark in the second half
2022. Finally, we have accelerated the collaboration with
payroll, HR and expense management provider Zenegy.
In September 2021, we communicated our updated
commercial ambitions. We want to positively contribute to
the Group’s return on equity by
i) developing and
strengthening our position as a leading Nordic wholesale
bank,
ii)
increasing our footprint
accelerating our ESG agenda, and iii) ensuring efficient use of
capital, among other things by further developing our capital-
light business. Today, we are well on track and, despite
challenging times, remain positive in our outlook.
in Sweden,
including
We are ranked in the top two in customer satisfaction across
the Nordic countries on the basis of an aggregated ranking in
the annual reviews conducted by Prospera, the independent
market research company in the Nordic market. In 2022, we
have maintained our strong position within day-to-day
banking services as reflected in number one positions in the
Nordic aggregated Prospera
reports across cash
management, foreign exchange and interest rate swaps.
Danske Bank / Interim report – first half 2022 9/85
Sustainability
Climate change and the transition to a sustainable society
constitute one of the major and most fundamental challenges
facing our society over the coming decades. We have made a
clear commitment to being a leading bank in the Nordic
region in terms of sustainable finance, and we have already
taken – and will continue to take – significant action in pursuit
of our aspiration. Our clear goal and commitment is to
achieve climate neutrality by 2050 through scientifically
supported methodologies.
In January 2022, as the first Nordic bank to do so, we set
concrete CO2 reduction targets for selected sectors towards
2030 in relation to our lending, with the aim of achieving a
net-zero loan portfolio by 2050 or sooner. The reduction
targets were set for lending to the three most high-emitting
sectors in our portfolio: shipping, energy utilities, and oil and
gas exploration and production. Together, these sectors
account
financed
for roughly two-thirds of our total
emissions. As a bank, we are fully focused on offering our
customers the best advisory services and attractive loan
options to support the transition, and with these targets we
and our customers are making a clear commitment to
support the Paris Agreement. We will continue to report on
details and progress with these targets.
can steer our business lending and investments in a more
biodiversity-friendly direction.
We are progressing well with all of our sustainable finance
targets, despite challenging market conditions. With DKK 49
billion in arranged sustainable bonds in 2022, Danske Bank
continued to be ranked number one among Nordic arrangers
according to the Bloomberg Global League Tables for
arrangers of both sustainability-linked loans and sustainable
bonds. One example is our support of the EU’s issuing of a
EUR 6 billion green bond. The proceeds from the issue will be
invested in a greener and more resilient Europe, which will
move Europe one step closer to becoming the first climate-
neutral continent in the world.
2023 Sustainable Finance Targets
(DKK billions)
H1 2022 FY 2021
DKK 300 billion in sustainable financing
247
192
DKK 150 billion in funds that have
sustainability objectives*
DKK 50 billion invested in the green
transition by Danica Pension*
* Development reflects negative market conditions
53.4
65
33.5
33.5
In collaboration with a number of other banks, Danske Bank
in February 2022 launched a set of new guidelines for
sustainable shipping to help the industry transition to zero
emissions by 2050. Shipping plays a crucial role in world
trade, and the industry accounts for about 3% of the world’s
total CO2 emissions. Therefore, it is essential to create
solutions that can help the industry with the green transition.
We have also seen continued progress with our 2023
targets for the strategic focus areas of financial confidence
and entrepreneurship, where we now have supported 1.8
million people (up from 1.6 million at the end of 2021) with
financial literacy tools and expertise and have supported
6,881 start-ups and scale-ups (up from 6,329 at the end of
2021) with growth and impact tools and services.
In March, we launched home loans for energy improvements
for our personal customers in Denmark with an attractive
annual variable interest rate. The loan will make it even more
attractive for homeowners to take out a loan for replacing gas
or oil heating, for example, which will lead to lower energy
costs and lower CO2 emissions. The loan will also provide a
basis for further dialogue with customers about their plans
for energy improvements.
Danske Bank
for Biodiversity
joined the Partnership
Accounting Financials (PBAF) in June 2022 as the first
Nordic bank to do so. Our involvement in the partnership
enables us to measure, and in the long term set concrete
targets for, our impact on biodiversity. The biodiversity and
climate crises are closely interconnected. The health and
vitality of biodiversity and ecosystems rely on the effects of
climate change being avoided, and healthy biodiversity and
ecosystems have a crucial role to play in climate change
mitigation and in achieving the goals of the Paris Agreement.
As is the case for CO2 emissions, we need to know what our
impact is before we can set meaningful targets. The PBAF will
provide us with tools and methodology that, in the long term,
The gender balance at Danske Bank has improved at all levels
as a result of our continued focus on ensuring inclusive
processes and on tools to prevent the influence of biases and
structural and cultural barriers on the ability of the
underrepresented gender to advance. At both leadership and
senior leadership levels, the gender balance has improved
one percentage point in favour of women (for leadership
positions up from 32% to 33%, and for senior leadership
positions up from 38% to 39%).
In 2022, we updated our CO2 emission reduction targets for
our own operations from 10% to 40% by 2023 and 60% by
2030 (both against a 2019 baseline) to reflect increased
ambitions. We are continuing to work on reducing our
emissions through carbon footprint management and energy
efficiency. We are also expanding our emissions reporting to
increase transparency in scope 3, with the incorporation of
emissions from waste and working from home in 2022 and
supply chain emissions from 2023. (For more information
about our CO2 emission reduction targets, please see page
39 of our Sustainability Report 2021).
Danske Bank / Interim report – first half 2022 10/85
DKK 421 million, but also to increased sales prices on assets
in our leasing company.
Operating expenses
Operating expenses amounted to DKK 12,793 million (H1
2021: DKK 12,770 million). Underlying expenses continued
to progress according to plan, which helped mitigate elevated
remediation costs and costs related to the Estonia matter.
item
Furthermore, the Resolution fund, bank tax etc.
increased DKK 132 million as a result of the Swedish bank
tax that came into force on 1 January 2022.
Loan impairment charges
Due to strong credit quality, loan impairment charges in core
activities were low in the first half of 2022, amounting to DKK
426 million (H1 2021: DKK 737 million).
Impairments mainly reflected macroeconomic uncertainty
caused by the war in Ukraine, increased inflationary pressure
and interest rate hikes, while COVID-19-related uncertainty
decreased. Although the macroeconomic landscape remains
uncertain with low predictability, the Group observed a
in the credit quality of
positive underlying movement
individual customers across the core portfolio.
A review of post-model adjustments resulted in a new post-
model adjustment of DKK 1.4 billion for ’Global tension’ to
address idiosyncratic risks in the portfolios stemming from
rapid price increases on commodities due to the war in
Ukraine. The changes in the first half of 2022 also led to an
increase in post-model adjustments related to the property
segment and process-related risks spread across industry
portfolios and personal customers due to increasing interest
rates and higher uncertainty. The post-model adjustment
related to the oil and gas portfolio was reversed due to high
energy prices and increasing activity levels. The COVID-19-
related share of post-model adjustments was reduced in the
first half of 2022. Furthermore, Personal Customers
recognised a post-model adjustment of DKK 250 million
relating to potentially lower debt collection recovery rates.
Personal Customers accounted for the main part of the loan
impairment charges in the first half of 2022, followed by
Business Customers. The charges for both areas are the
result of the changes in macroeconomic scenarios to
account for expectations of higher inflation and interest rate
hikes as well as
increased post-model adjustments.
Impairment charges continued the trend from 2021 and
returned to more normal levels, although on a quarterly basis,
impairment charges were up due to macroeconomic
uncertainty and the risks associated with the ongoing war in
Ukraine.
Financial review
First half 2022 vs first half 2021
Net profit decreased to DKK 4,551 million (H1 2021:
DKK 5,932 million). Higher net interest income and other
income combined with lower loan impairments charges
achieved on the basis of strong credit quality could not
compensate for the effect of the market turmoil on net
trading income and net income from insurance business.
Income
Net interest income increased to DKK 11,440 million (H1
2021: DKK 10,965 million). Net interest income saw a
positive impact from higher lending volumes and deposit
margins at the Business Customers and Large Corporates &
Institutions units combined with higher UK interest rates and
related pricing action in Northern Ireland.
Net fee income decreased slightly to DKK 6,537 million (H1
2021: DKK 6,595 million). We saw good remortgaging
activity as a result of the rise in interest rate levels as well as
increasing service fees resulting from the reopening of
societies. Net fee income from everyday banking products
sustained the positive trend seen
in recent quarters.
Investment fees decreased as a consequence of the
challenged financial markets.
Net trading income decreased to DKK 175 million (H1 2021:
DKK 2,291 million). Net trading income was negatively
affected by the repricing in the fixed income markets that hit
our market-making business
in Danish and Swedish
mortgages. Furthermore, we saw losses in our Debt Capital
market business, whereas our currency franchise continued
to see good demand from customers.
Net income from insurance business amounted to a negative
DKK 38 million (H1 2021: DKK 982 million). Following the
negative market developments in the first half of 2022, the
result of the life insurance business decreased. The decrease
was driven mainly by negative valuation adjustments of
investment assets relating to life insurance products where
Danica Pension has the investment risk, with the effect being
partly offset by changes in life insurance provisions. The
result of the health and accident business also decreased
owing to a lower investment result that was caused by
negative valuation adjustments of investment assets, with
the effect being only partly offset by a decline in insurance
provisions as well as the gain of DKK 415 million on the sale
of Danica Norway. The underlying business is healthy, and in
the first half of 2022, Danica Pension saw growth in
premiums in Denmark of 6%, reflecting a strong position in
the market. Moreover, Danica Pension saw a decline in
claims in the health and accident business during the first
half of 2022. Claims have fallen 25% from the level three
years ago, and there has been a 10% increase in the number
of people who return to work from the level one year ago.
Other income amounted to DKK 959 million (H1 2021: DKK
457 million). The increase was due partly to the sale of our
activities in Luxembourg, which generated a one-off gain of
In contrast to impairment charges in the first half of 2021,
Large Corporates & Institutions saw a net loan impairment
reversal in the first half of 2022 owing to improved credit
in charges made against
quality, the resulting decline
facilities to individual customers, and a reversal of the post-
model adjustment related to the oil and gas portfolio.
The effects of the new macroeconomic scenarios were
driven primarily by rising interest rates and reinforced
inflationary pressure as a result of rapid price increases on
commodities such as energy, metals and agricultural
produce. The scenario weights from the fourth quarter of
2021 were maintained in the first half of 2022 and were as
follows: The base-case scenario has a probability of 70%
(2021: 70%), the upside scenario has a probability of 10%
(2021: 10%) and the downside scenario has a probability of
20% (2021: 20%). Base-case and upside scenarios were
updated following the macroeconomic uncertainty. A severe
recession scenario remains the Group’s downside scenario.
Loan impairment charges
First half 2022
First half 2021
(DKK millions)
Charges
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Total core
325
198
-145
38
10
426
% of net
credit
exposure1
% of net
credit
exposure1
Charges
0.07
0.06
-0.09
0.14
0.50
0.04
16
534
252
-65
-
737
0.00
0.16
0.17
-0.25
-
0.08
1 Defined as net credit exposure from lending activities in core segments,
excluding exposure related to credit institutions and central banks and loan
commitments.
DKK 1,705 million
Net profit
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 11/85
Q2 2022 vs Q1 2022
Net profit decreased to DKK 1,705 million (Q1 2022: DKK
2,845 million), due mainly to lower income.
•
•
•
•
•
•
•
Net interest income increased to DKK 5,810 million
(Q1 2022: DKK 5,630 million), due mainly to lower
margin pressure in Sweden and Norway and higher
lending volumes and deposit margins at Large
Corporates & Institutions. An increase in the number of
interest days also had a positive impact on net interest
income.
Net fee income decreased to DKK 3,157 million (Q1
2022: DKK 3,379 million), driven by lower refinancing
activity at Realkredit Danmark and as a result of
continually low customer activity in the capital markets
amid challenging market conditions.
Net trading income decreased to a negative DKK 390
million (Q1 2022: DKK 565 million). The development
was driven primarily by a substantial credit spread
widening in the Danish and Swedish markets, which
affected our market-making inventory. Secondly, we
also saw a decrease in our Debt Capital market
business.
Net income from insurance business amounted to a
negative DKK 122 million (Q1 2022: DKK 84 million)
due to lower results of the life insurance business,
mainly because of negative value adjustments of
investment assets relating to life insurance products
where Danica Pension has the investment risk. The
result of the health and accident business in Danica
Pension declined significantly in the second quarter of
2022 due to negative valuation adjustments of
investment assets. The underlying business and risk
result improved due to fewer claims. The investment
result decreased significantly, due mainly to the
negative developments
financial markets.
However, some of the effect was offset by the gain of
DKK 415 million on the sale of Danica Norway.
in the
Other income amounted to DKK 291 million (Q1 2022:
DKK 669 million). The decrease was due to the sale of
our activities in Luxembourg generating a one-off gain of
DKK 421 million in the first quarter.
Operating expenses amounted to DKK 6,421 million
(Q1 2022: DKK 6,371 million). The increase was due
primarily to remediation costs and costs related to the
Estonia matter.
Loan impairment charges for core units amounted to
DKK 192 million in the second quarter (Q1 2022: DKK
234 million). This mainly reflects macroeconomic
uncertainty associated with the war in Ukraine as well
as increasing inflationary pressure and interest rate
hikes across the markets. On the other hand, credit
quality continued to improve throughout the second
quarter, resulting in impairment reversals relating to
individual customer exposures.
Lending and deposits
Lending stood at DKK 1,819 billion (end-2021: DKK 1,834
billion). Excluding the changes in the fair value of Danish
mortage loans following the increases in interest rate levels,
lending increased 3% from the level at the end of 2021 to
DKK 1,884 billion. Mortgage lending at nominal value at
Realkredit Danmark stood at DKK 804 billion (end-2021:
DKK 808 billion).
The increase in lending at Large Corporates & Institutions
was driven partly by higher volumes in Denmark and Sweden,
reflecting our strategic ambition to grow the number of core
customer relationships in Sweden. At Business Customers,
lending in our asset finance activities was on par with the
level at the end of 2021, but lending in the commercial real
estate area decreased. At Personal Customers, lending
decreased due to a negative market value adjustment of
mortgage loans as a result of the higher interest rate level.
Bank lending to both households and businesses increased
from the end of 2021 due to higher customer activity, despite
a negative currency effect of 2%. In Denmark, we have seen
an upward trend in bank lending market shares over the past
year.
Deposits amounted to DKK 1,156 billion and were down 1%
from the level at the end of 2021. Deposits continued to be
affected by low consumer spending, direct government
support to customers and business customers having
secured backup liquidity.
loans,
In Denmark, new gross
amounted to DKK 59.1 billion. Lending to personal
customers accounted for DKK 16.8 billion of this amount.
lending, excluding repo
In Denmark, our market shares of bank lending, excluding
repo loans, to both households and corporationes, increased
by 0.46 percentage points to 19.03% and 0.24 percentage
points to 22.29%, respectively. The market share
in
Denmark, including mortgage lending, decreased, however, to
24.5% at the end of May 2022 (end-2021: 24.8%). In
Sweden, our market share of lending (at end-May 2022)
increased from 5.13% to 5.47%, driven by corporate lending,
and in Finland and Norway, we maintained our market share
of lending at the end-2021 level.
Our market shares of deposits increased in Finland from the
end-2021 level. In Denmark, our market share of deposits
decreased to 28.7% at the end of May 2022 (end-2021:
29.1%). In Sweden and Norway, our market share of deposits
was also lower than at the end of 2021.
Danske Bank / Interim report – first half 2022 12/85
Credit exposure and credit quality
Credit exposure from lending activities in core segments
decreased to DKK 2,600 billion (end-2021: DKK 2,716
billion), as higher activity among corporate and institutional
customers was more than offset by lower exposure to
personal and business customers in Denmark, as a result of
the net negative effect of fair value adjustments, and by lower
deposits with central banks. However, in local currency,
credit exposure increased among personal and business
customers in both Sweden and Norway. Credit exposure
directly related to customers in or from Russia and Ukraine
is very limited and amounted to less than DKK 0.1 billion at
30 June 2022.
Risk Management 2021, section 3, which is available at
danskebank.com/ir, provides details on Danske Bank’s credit
risks.
Credit quality
Credit quality remained strong in the first half of 2022, with
a positive underlying trend. However, we remain vigilant for
any possible deterioration related to the above-mentioned
risk.
Large Corporates & Institutions has actively reduced its net
oil-related exposure (excluding oil majors) by 55% since the
end of 2019.
Stage 3 loans in core segments
(DKK millions)
Gross exposure
Allowance account
Net exposure
Collateral (after haircut)
30 June
2022
31 Dec.
2021
34,933
9,930
46,012
12,397
25,003
33,615
22,706
30,143
Stage 3 coverage ratio (%)
81
78
The stage 3 coverage ratio is calculated as allowance account stage 3
exposures relative to gross stage 3 net of collateral (after haircuts).
Total gross credit exposure in stage 3 (non-performing loans)
was DKK 34.9 billion, corresponding to 1.3% of total gross
credit exposure. Stage 3 exposure was concentrated on
personal customers, shipping, oil and gas, commercial
property and agriculture, which combined accounted for
71% of total gross exposure in stage 3. The development in
stage 3 exposure since the end of 2021 was impacted
implementation of the new
primarily by the technical
definition of default that
is now aligned with EBA
requirements and write-offs.
Accumulated impairment charges decreased to 1.03% (end-
2021: 1.15%) of lending and guarantees due to the lower
allowance account.
Allowance account
by business units
(DKK millions)
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
30 June 2022
31 Dec. 2021
Accum.
impairm.
charges
% of credit
exposure1
5,831
9,772
3,385
760
24
0.69
1.50
0.94
1.29
0.93
Accum.
impairm.
charges
5,654
10,186
5,227
850
17
% of credit
exposure1
0.64
1.54
1.84
1.44
0.36
1.15
Total
19,772
1.03
21,935
1 Relating to lending activities in core segments.
Capital ratios and requirements
At the end of June 2022, the Group’s total capital ratio was
21.3%, and its CET1 capital ratio was 17.1%, against 22.4%
and 17.7%, respectively, at the end of 2021. The movement
in the capital ratios in the first half of 2022 was driven by an
increase in the capital deduction for Danica Pension and a
decline in the IFRS 9 add-back, which was partly countered by
realised net profit. The total capital ratio was further affected
by the redemption of additional tier 1 capital instruments of
EUR 750 million in April 2022.
During the first half of 2022, the total REA saw a slight
increase of DKK 1.5 billion. This minor movement was
attributable to increased REA for market risk associated with
the high volatility in the financial markets, partially countered
by a decrease in REA for credit risk.
Danske Bank’s capital management policies are based on the
Internal Capital Adequacy Assessment Process (ICAAP). In
this process, Danske Bank determines its solvency need
ratio. The solvency need ratio consists of the 8% minimum
capital requirement under Pillar I and an individual capital
add-on under Pillar II.
At the end of June 2022, the Group’s solvency need ratio was
11.4%, largely unchanged from the level at the end of 2021.
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 matter. The amount is covered
by common equity tier 1 (CET1) capital, as ordered by the
Danish FSA.
A combined buffer requirement (CBR) applies to financial
institutions in addition to the solvency need ratio. At the end
of June 2022, the Group’s CBR was 5.7%, a minor increase
of 0.1 percentage points from the level at the end of 2021
due to the increase of the Norwegian countercyclical buffer
rate from 1.0% to 1.5%.
Announced increases of the national countercyclical buffer
rates in Denmark, Norway and Sweden will increase the
Group’s CBR by 1.8 percentage points. Consequently, the
fully phased-in countercyclical buffer requirement will be
2.0%, bringing the fully phased-in CET1 requirement to
14.4%. This is a 0.5 percentage points increase from the
Danske Bank / Interim report – first half 2022 13/85
level at the end of 2021, which is largely driven by the
announced increase of the Danish countercyclical buffer
from 2.0% to 2.5%, effective from 31 March 2023, and the
Swedish decision to raise the countercyclical buffer rate to
2.0%, entering into force on 22 June 2023.
Capital ratios and requirements
(% of the total REA)
Capital ratios
CET1 capital ratio
Total capital ratio
Capital requirements (incl. buffers)**
CET1 requirement
- portion from countercyclical buffer
- portion from capital conservation buffer
- portion from SIFI buffer
Solvency need ratio
30 June
2022
Fully
phased-in*
17.1
21.3
12.6
0.2
2.5
3.0
11.4
16.9
21.1
14.4
2.0
2.5
3.0
11.4
Total capital requirement
17.1
18.9
Excess capital
CET1 capital
Total capital
4.5
4.3
2.5
2.2
* Based on fully phased-in rules and requirements including the fully
phased-in impact of IFRS 9.
** The total capital requirement consists of the solvency need ratio and
the combined buffer requirement. The fully phased-in countercyclical
capital buffer is based on the buffer rates announced at the end of June
2022.
The calculation of the solvency need ratio and the combined
capital buffer requirement is described in more detail in
section 6 of Risk Management 2021, which is available at
danskebank.com/ir.
Minimum requirement for own funds and eligible liabilities
On 20 December 2021, the Group received the Danish FSA’s
annual decision, effective from 1 January 2022, on the
minimum requirement for own funds and eligible liabilities
(MREL) based on data from the fourth quarter of 2020.
The requirement is set at two times the solvency need and
one time the SIFI buffer and the capital conservation buffer
(CBR). Further, the CBR must be met in addition to the MREL.
At the end of June 2022, the point-in-time requirement
including the CBR was equivalent to DKK 256 billion, or
33.9% of the REA adjusted for Realkredit Danmark. At the
end of June 2022, the backward-looking MREL, set by the
Danish FSA, was 29.6% of the REA adjusted for Realkredit
Danmark. Taking the deduction of capital and debt buffer
requirements for Realkredit Danmark into account, MREL
eligible liabilities amounted to DKK 287 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, this has meant that the Group has issued
a significant amount of non-preferred senior debt over the
past couple of years.
The Danish FSA has set the subordination requirement as
the higher of 8% of total liabilities and own funds (TLOF) and
two the times the solvency need plus one time the CBR.
At the end of June 2022, the point in time subordination
requirement was equivalent to DKK 214 billion. The
backward-looking subordination requirement at the end of
June 2022, set by the Danish FSA, was 29.7% of the REA
adjusted for Realkredit Danmark. MREL-eligible subordinated
liabilities amounted to DKK 257 billion.
Point-in-time MREL requirement and eligible funds; Q2 2022;
DKK billion (% of REA)
PS > 1y
NPS > 1y
CET1, AT1, T2
256
(33.9%)
287
(38.0%)
30
(4.0%)
97
(12.9%)
159
(21.2%)
MREL requirement
incl. CBR
MREL funds
Note: The requirement and eligible funds are adjusted for Realkredit Danmark’s
capital and debt buffer requirements
Note: The requirement and eligible funds are adjusted for Realkredit
Danmark’s capital and debt buffer requirements.
Leverage ratio
At the end of June 2022, the Group’s leverage ratio was
4.7% under both the transitional rules and the fully-phased in
rules.
Capital targets
The CET1 capital ratio target was kept at above 16% in the
short term to ensure a sufficiently prudent buffer in relation
to the capital requirement. The total capital target was kept
at above 20%. Danske Bank fully meets these capital targets.
The Board of Directors will continue to adapt the capital
targets to regulatory developments in order to ensure a
strong capital position.
Capital distribution policy
To ensure prudent capital management with a high degree of
flexibility in light of the Estonia matter, the general meeting on
17 March 2022 adopted the proposal for an initial dividend
payment of DKK 2 per share that was paid out in March. The
remaining DKK 5.5 per share was intended to be paid out in
three tranches following the publication of the interim
reports in 2022, subject to a decision by the Board of
Directors.
On 28 April 2022, the Board of Directors decided that
Danske Bank would not pay out dividends in connection with
the interim report for the first quarter of 2022, as Danske
Bank had entered into initial discussions with U.S. and Danish
authorities on the resolution of the Estonia matter. These
discussions have not been concluded, and, consequently, the
Board of Directors has decided that Danske Bank will not pay
Danske Bank / Interim report – first half 2022 14/85
out dividends for 2021 in connection with the announcement
of the interim report for the first half of 2022.
Danske Bank is not yet able to reliably estimate the timing,
form of resolution or amount of a potential settlement or
fines, which is likely to be material, and will not comment on
discussions with authorities.
Danske Bank’s general dividend policy remains unchanged,
and it is 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
During the second quarter of 2022, credit spreads widened
significantly on the back of equity and rates volatility following
high inflation prints, increasingly hawkish central banks and a
tense geopolitical situation.
At the end of June 2022, the Group had issued covered
bonds of DKK 10.6 billion, senior debt of DKK 1.4 billion and
non-preferred senior debt of DKK 20.1 billion, bringing total
long-term wholesale funding to DKK 32.1 billion.
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. Our
strategy of securing more funding directly in our main lending
currencies, including the NOK and SEK, remains in place. The
benchmark issues are expected to be supplemented by
private placements of bonds.
From time to time, we will make issues 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
bond issues in 2022.
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 June 2022, our liquidity
coverage ratio stood at 155% (31 December 2021: 164%),
with an LCR reserve of DKK 591 billion (31 December 2021:
DKK 687 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 June 2022, the total nominal value of outstanding long-
term funding, excluding equity-accounted additional tier 1
capital and debt issued by Realkredit Danmark, was DKK 367
billion (31 December 2021: DKK 381 billion).
The Supervisory Diamond
The Danish FSA has identified a number of specific risk
indicators for banks and mortgage institutions and set
threshold values with which all Danish banks must comply.
The requirements are known as the Supervisory Diamond.
At the end of June 2022, 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
As part of the EU Banking Package 2021 and in order to
implement Basel IV, the European Commission adopted
proposals in October 2021 to amend, inter alia, Regulation
(EU) No 575/2013 (CRR) and Directive 2013/36/EU (CRD).
The proposals include some adjustments to the Basel IV
standard, and the output floor is subject to a transitional
arrangement that means that the output floor must be fully
implemented by 1 January 2030.
the expected REA
In order to estimate any effects that the finally adopted
regulation and directive may have on the Group, the Group
continuously monitors the
legislative negotiations and
conducts impact assessments. On the basis of the Group’s
current and updated analysis of the EU Banking Package
2021, the Group’s current capital planning takes into
account
initial
implementation expected in 2025. The fully phased-in impact
of the EU Banking Package 2021 on the Group depends on
the final outcome of the EU legislative process, including the
calibration of the output floor. Taking into account the
proposed transitional arrangements with regard to the
output floor, the Group currently expects the output floor to
restrict the Group at the earliest in 2033, when the
transitional arrangements are set to lapse.
impact of
the
The outcome of the EU legislative negotiations on the
proposals is uncertain and may result in further adjustments
as the EU negotiations progress.
Danske Bank / Interim report – first half 2022 15/85
Credit ratings
There were no credit rating changes in the second quarter of
2022.
Danske Bank’s credit ratings
Fitch
Moody’s
S&P
Counterparty rating
A+
A1/P-1
AA-/A-1+
Deposits
A+/F1
A2/Stable/P-1
Senior debt
A+/F1
A3/P-2
A+/A-1
Issuer rating
A/F1
A3/P-2
A+/A-1
Outlook
Stable
Stable
Negative
Non-preferred
senior debt
Tier 2
AT1
A
BBB+
BBB-
Baa2
BBB+
-
-
BBB
BB+
Environmental, Social and Governance (ESG) ratings
On 16 June 2022, ISS ESG raised its rating to ‘C+ Prime’
from ‘C Prime’ after reassessing its ‘Staff and Suppliers’,
‘Environmental Management’, ‘Products and Services’ and
‘Eco-efficiency’ rating factors.
ESG rating agency
CDP Worldwide, UK
Score at
Score at
30 June 2022
31 March 2022
B
B
ISS ESG, USA
C+ Prime
C Prime
MSCI ESG Ratings, USA
BBB
BBB
Sustainalytics, USA
Medium Risk
Medium Risk
Vigeo Eiris, France
61
61
Estonia matter
Investigation
Danske Bank is in continued discussions with US and Danish
Authorities on the resolution of the Estonia matter.
Danske Bank is not yet able to reliably estimate the timing,
form of resolution or amount of a potential settlement or
fines, which is likely to be material, and will not comment on
discussions with authorities.
Danske Bank continues to cooperate with various authorities
regarding the terminated non-resident portfolio at Danske
Bank’s former branch in Estonia. This includes criminal and
regulatory investigations by authorities in Estonia, Denmark,
France and the US.
Danske Bank reports to, responds to and cooperates with
various authorities, including the Danish Special Crime Unit
(SCU) (formerly the Danish State Prosecutor for Serious
Economic and International Crime), the U.S. Department of
Justice
(DOJ) and the U.S. Securities and Exchange
Commission (SEC), in relation to the Estonia matter.
Danske Bank / Interim report – first half 2022 16/85
Changes to the Executive Leadership Team
On 2 June 2022, it was announced that Philippe Vollot had
decided to resign from his position as Chief Administrative
Officer (CAO) of Danske Bank, and the CAO area was closed
down.
In the Executive Leadership Team, Head of Personal
Customers Christian Bornfeld has assumed responsibility
for Danske Bank’s Financial Crime Prevention and Financial
Crime Risk units working with financial crime prevention
across the organisation, while Chief Risk Officer Magnus
Agustsson has on an
interim basis taken over the
responsibility for Group Compliance.
Changes to segment reporting in 2022
As announced in January 2022, we implemented the new
organisation in May 2022 and split the former Personal &
Business Customers unit into two units. Our commercial
activities are now organised in three units, each focusing on
a customer segment: Personal Customers, Business
Customers and Large Corporates & Institutions.
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 is expected in the second half of 2022. The
expected one-off gain on the transaction is approximately
DKK 400-500 million.
internal
The
investigation work that was planned for
completion in 2020 has been finalised, and Danske Bank has
reported the findings to the relevant authorities investigating
Danske Bank. We continue to fully cooperate and will provide
the authorities with
if and when
requested.
information
further
Civil claims
Danske Bank is also subject to ongoing litigation in relation to
the Estonia matter. This includes, inter alia, an action against
Danske Bank and Danske Markets,
(and other
defendants) in the United States District Court for the
Eastern District of New York and a number of court cases
initiated against Danske Bank in Denmark. Danske Bank
intends to defend itself against the various claims. The timing
of completion of any such lawsuits (pending or threatening)
and their outcome are uncertain and could be material.
Inc.
Update on the debt collection case
In our efforts to become a better bank, we have in recent
years systematically improved compliance, risk and control
capabilities and processes and sought to foster a culture
under which potential issues are raised and addressed.
In connection with this work, several issues have been
identified. These include the debt collection issues. At the end
of October 2021, we had reviewed all 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 7,800 of
these customers.
As we have communicated on an ongoing basis, 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. Furthermore, we are now exploring new
approaches in order to accelerate the timeline in which we
will be able to provide clarity for debt collection customers.
We will continue to update affected customers and other
stakeholders on our progress on the debt collection matter.
We welcome the continued impartial investigation and will
continue the cooperation with the Danish FSA.
Market monitoring
In June 2020, the Danish FSA filed a criminal complaint
against Danske Bank A/S for violation of the Market Abuse
Regulation on account of inadequate market monitoring and
market manipulation in respect of self-matching trades, and
on 25 June 2021, Danske Bank was preliminarily charged
with this alleged violation. Danske Bank has a dialogue with
and cooperates with the SCU, but cannot comment further as
long as the SCU is investigating the case.
Danske Bank / Interim report – first half 2022 17/85
Business units
Danske Bank / Interim report – first half 2022 18/85
Personal Customers
Personal Customers continued to see progress and commercial momentum. Customer activity remained high, with higher interest
rates driving high remortgaging activity in Denmark. However, inflation rates, higher energy prices and the war in Ukraine continue
to impact the financial markets. This adversely affected assets under management and investment income, and resulted in a general
slowdown in new lending as a result of a more subdued housing market.
Profit before tax in the first half of 2022 amounted to DKK 1,732 million, a decrease of 7% from the level in the same period in
2021. This was due to higher loan impairment charges driven by macroeconomic developments, especially inflation. Total income
increased 8% due to a one-off gain on the sale of the customer portfolio in Luxembourg as well as increased fee and trading income
from higher customer activity following the reopening of societies, whereas the first half of 2021 was affected by lockdowns.
First half
2022
First half
2021
Index
22/21
Personal Customers
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Profit before loan impairment charges
Loan impairment charges
3,871
2,555
220
508
7,154
5,097
81
2,057
325
3,902
2,444
135
114
6,595
4,713
55
1,882
16
Profit before tax
1,732
1,866
Loans, excluding reverse transactions
before impairments
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
Net interest income as % p.a. of loans
and deposits
Profit before loan impairment charges
as % p.a. of allocated capital
Profit before tax as % p.a. of allocated
capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
830,890
5,233
420,252
607,496
31,170
875,553
5,175
413,213
668,561
34,166
0.62
0.62
13.2
11.0
11.1
71.2
4,874
10.9
71.5
5,090
Assets under management
(DKK millions)
Q2
2022
1,935
1,219
116
45
3,315
2,530
41
785
327
Q1
2022
1,936
1,335
105
463
3,839
2,567
40
1,273
-2
458
1,274
830,890
5,233
420,252
607,496
30,881
864,272
4,903
410,363
643,149
31,463
Index
Q2/Q1
100
91
110
10
86
99
103
62
-
36
96
107
102
94
98
Q2
2021
1,963
1,116
70
56
3,204
2,354
25
850
-179
1,029
875,553
5,175
413,213
668,561
33,721
0.62
0.62
10.2
16.2
-
-
0.62
10.1
5.9
76.3
4,874
16.2
66.9
4,850
-
-
100
12.2
73.5
5,090
Index
22/21
Full year
2021
99
109
166
80
103
107
164
92
-
45
95
101
102
91
92
-
-
-
-
96
7,876
4,903
322
211
13,311
10,109
117
3,202
60
3,142
883,166
5,087
407,904
663,096
32,980
0.62
9.7
9.5
75.9
4,866
99
105
163
-
108
108
147
109
-
93
95
101
102
91
91
-
-
-
-
96
Assets under custody
474,870
554,274
86
474,870
493,070
96
554,274
86
568,913
Fact Book Q2 2022 provides financial highlights at customer type level for Personal Customers. Fact Book Q2 2022 is available at danskebank.com/ir.
Business initiatives
The home finance market had a good start to 2022, and the
nominal value of our mortgage volumes increased 1% from
the same period last year. Measured at fair value, though, the
high interest rate levels drove the volume down.
At the end of the first half of 2022, the housing market in all
of the markets in which we operate saw a general slowdown
due to inflation, higher interest rates and new regulation. In
Denmark, the increasing rates fuelled remortgaging activity
among our customers.
The increase in inflation as well as the rise in energy prices
and the war in Ukraine continued to impact the financial
markets, and we saw customers derisking their portfolios
and displaying generally
investment
products.
less appetite
for
We are helping our customers make their homes more
energy efficient and thereby support their sustainability
ambitions through favourable pricing.
Across our Nordic markets, partnerships continue to be a
key lever of growth. We continued the good collaboration with
Akava in Finland and SACO/TCO in Sweden, and in Norway,
we extended our agreement with Akademikerne in June
2022.
Danske Bank / Interim report – first half 2022 19/85
The number of full-time-equivalent staff has decreased by
more than 200 since the end of the first half of 2021 due to
continued efficiency efforts.
Q2 2022 vs Q1 2022
Profit before tax in the second quarter decreased to
DKK 458 million, driven primarily by the one-off gain on the
sale of the customer portfolio in Luxembourg in the first
quarter and lower fees in the second quarter.
•
•
•
•
•
•
Net interest income was on par with the first quarter
and stood at DKK 1,935 million (Q1 2022: DKK 1,936
million).
Net fee income decreased 9%, driven by
lower
refinancing and remortgaging activity after high activity
in the first quarter of 2022.
Operating expenses decreased 1% and stood at DKK
2,530 million (Q1 2022: DKK 2,567 million).
The second quarter of 2022 saw loan impairment
charges of DKK 327 million (Q1 2022: a net reversal of
DKK 2 million). The increase in loan
impairment
charges was attributable to changes in macroeconomic
scenarios as well as changes
in post-model
adjustments. A post-model adjustment of DKK 250
million relating to potentially lower debt collection
recovery rates was made.
Lending volumes decreased 4%, mainly as a result of
negative value adjustments of mortgage
loans at
Realkredit Danmark.
Deposit volumes increased 2% due to customers
derisking their portfolio.
First half 2022 vs first half 2021
Profit before tax amounted to DKK 1,732 million (H1 2021:
DKK 1,866 million). The decrease was driven by higher loan
impairment charges. Total income increased due to a one-off
gain on the sale of the customer portfolio in Luxembourg and
higher fees resulting from the reopening of societies following
the COVID-19 pandemic lockdowns.
Net interest income decreased slightly, due primarily to the
sale of our customer portfolio in Luxembourg. Furthermore,
the funding value of deposits in Denmark continued to
decline, and our repricing initiatives are only partly mitigating
the effect. We also saw continued margin pressure on
lending and an adverse interest rate environment across the
Nordic countries.
Total lending decreased 5% due to negative market value
adjustments of mortgage loans caused by the higher interest
rate level. Bank lending volumes in the Nordic markets
increased 1% due to higher customer activity, despite a
negative currency effect of 2%. In Denmark, we have seen an
upward trend in bank lending market shares over the past
year. Deposit volumes increased due to cautious investment
strategies among our customers as a result of the distressed
financial markets. Mortgage lending to Personal Customers
at nominal value at Realkredit Danmark has increased 1%
over the last year.
Net fee income stood at DKK 2,555 million, an increase of
5% (H1 2021: DKK 2,444 million). This was driven by an
increase in service fees resulting from the reopening of
societies as well as good remortgaging activity as a result of
the rise in interest rate levels. Investment fees decreased as
a consequence of the challenged financial markets. The
discontinuation of the customer portfolio in Luxembourg had
a negative effect on fee income of DKK 72 million.
Net trading income increased to DKK 220 million (H1 2021:
DKK 135 million) due to foreign exchange activity driven by
the reopening of societies following the corona pandemic.
Other income amounted to DKK 508 million (H1 2021:
DKK 114 million). The increase was due primarily to a one-off
gain on the sale of our customer portfolio in Luxembourg of
DKK 421 million.
in
transformation costs
Operating expenses increased 8%. We continued to see a
decrease
the
implementation of the Better Bank plan, however, the new
bank tax in Sweden as well as increased compliance costs
more than offset the decrease.
related
to
In the first half of 2022, loan impairment charges amounted
to DKK 325 million (H1 2021: DKK 16 million). The increase
in charges was driven mainly by changes
the
macroeconomic outlook, rising interest rates and inflation, as
well as changes in post-model adjustments. A post-model
adjustment of DKK 250 million relating to potentially lower
debt collection recovery rates was made.
in
DKK 458 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 20/85
Business Customers
In the first half of 2022, Business Customers continued the good traction from the beginning of the year. Customer activity was
supported by the reopening of the markets and societies in the Nordic countries following the discontinuation of COVID-19
restrictions. Lockdown in China, however, impacted the global supply of new assets but fuelled income from the sale of existing
assets in our leasing company. The rising inflation and interest rate levels continue to put pressure on the financial markets and
create uncertainty for our customers. We are supporting our customers with help and guidance, and combined with the new service
model that was implemented towards the end of last year, this means that we are now even better equipped to match our
customers’ needs.
Profit before tax in the first half of 2022 amounted to DKK 2,799 million, an improvement of 36% from the first half of 2021. This
was driven primarily by repricing initiatives for deposits as a result of the negative interest rates as well as higher income resulting
from the reopening of societies following the COVID-19 pandemic, combined with lower loan impairment charges.
Business Customers
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Profit before loan impairment charges
Loan impairment charges
First half
2022
First half
2021
Index
22/21
4,083
906
243
431
5,663
2,665
112
2,997
198
3,864
823
177
298
5,162
2,575
88
2,587
534
106
110
137
145
110
103
127
116
37
Q2
2022
2,110
426
134
231
2,902
1,352
54
1,550
86
Q1
2022
1,973
480
109
199
2,761
1,314
58
1,447
112
Index
Q2/Q1
107
89
123
116
105
103
93
107
77
Q2
2021
1,924
401
92
161
2,578
1,296
49
1,281
294
Index
22/21
Full year
2021
110
106
146
143
113
104
110
121
29
7,788
1,613
351
580
10,333
5,144
173
5,189
426
Profit before tax
2,799
2,053
136
1,464
1,335
110
987
148
4,763
Loans, excluding reverse transactions
before impairments
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
Net interest income as % p.a. of loans
and deposits
Profit before loan impairment charges
as % p.a. of allocated capital
Profit before tax as % p.a. of allocated
capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
Assets under management
(DKK millions)
634,239
8,474
290,934
348,195
39,869
653,391
9,260
289,253
377,130
39,991
97
92
101
92
100
634,239
8,474
290,934
348,195
39,417
648,224
8,556
290,063
365,357
40,325
98
99
100
95
98
653,391
9,260
289,253
377,130
41,571
97
92
101
92
95
652,955
9,059
292,530
377,388
40,881
0.88
0.83
15.0
12.9
14.0
47.1
1,696
10.3
49.9
1,736
-
-
-
-
98
0.91
0.85
15.7
14.4
-
-
0.83
12.3
14.9
46.6
1,696
13.2
47.6
1,678
-
-
101
9.5
50.3
1,736
-
-
-
-
98
0.83
12.7
11.7
49.8
1,699
Assets under custody
143,138
118,376
121
143,138
162,648
88
118,376
121
144,832
Fact Book Q2 2022 provides financial highlights at customer type level for Business Customers. Fact Book Q2 2022 is available at danskebank.com/ir.
Business initiatives
The reopening of societies in the Nordic countries has had a
positive effect on customer activity. We saw increases both
for transactional services and in currency exchange activity.
The lockdown in China affected the sale of new assets,
however, income from the sale of existing assets in our
leasing company increased.
The repayment of the Danish government COVID-19 support
loans began in the second quarter of 2022. The majority of
our customers were able to repay their loans with limited use
of our favourable COVID-19 loans. This signals that our
customers are resilient even in turbulent times.
The rising inflation and interest rate levels combined with the
increase in energy prices have created renewed uncertainty
for our customers. As a consequence, we have strengthened
our green product offering and launched green loans for all
business customers within electric transportation and
energy (solar and wind).
Danske Bank / Interim report – first half 2022 21/85
First half 2022 vs first half 2021
Profit before tax amounted to DKK 2,799 million (H1 2021:
DKK 2,053 million). The increase was driven primarily by
repricing initiatives for deposits, as well as higher income
from the reopening of societies following the COVID-19
pandemic, combined with lower loan impairment charges.
Net interest income increased 6% following the repricing of
deposits, which, due to the negative interest levels, have a
very low funding value. Furthermore, we saw increased
activity among our customers, leading to an increase in bank
lending volumes of 2%. Total lending volumes decreased 3%
due to negative market value adjustments of loans at
Realkredit Danmark, driven by the higher interest rate levels.
The increase in nominal volume at Realkredit Danmark was
1%.
Net fee income stood at DKK 906 million, an increase of 10%
(H1 2021: DKK 823 million). This increase was driven by
higher service fees as well as high remortgaging and
refinancing activity as a result of the higher interest rate
levels.
Net trading income increased to DKK 243 million (H1 2021:
DKK 177 million), driven by increased foreign exchange
activity as a result of the reopening of societies.
Other income amounted to DKK 431 million (H1 2021:
DKK 298 million). The increase was due to higher sales
prices for assets in our leasing company.
Q2 2022 vs Q1 2022
Profit before tax in the second quarter increased to
DKK 1,464 million, driven by increased net interest income
and lower loan impairment charges.
•
•
•
•
•
Net interest income increased 7% and stood at
DKK 2,110 million (Q1 2022: DKK 1,973 million) due
to lower margin pressure in Sweden and Norway.
Net fee income decreased 11%, driven by lower
refinancing activity than in the preceding quarter.
Operating expenses increased 3%. We continue to see
a decrease in costs related to the Better Bank plan
implementation, however, the increase in costs for
compliance and financial crime prevention more than
offset the decrease.
The second quarter of 2022 saw loan impairment
charges of DKK 86 million (Q1 2022: DKK 112 million).
The charges were attributable to changes in the
macroeconomic outlook as well as increased post-
model adjustments.
Lending volumes decreased 2%, mainly as a result of
loans at
negative value adjustments of mortgage
Realkredit Danmark as a consequence of the higher
interest rate levels.
in
transformation costs
Operating expenses increased 3%. We continue to see a
decrease
the
implementation of the Better Bank plan, however, the new
bank tax in Sweden as well as increased regulatory costs
more than offset the decrease.
related
to
In the first half of 2022, loan impairment charges amounted
to DKK 198 million
(H1 2021: DKK 534 million).
Impairments thus continued the trend from 2021 and
returned to a more normal level. The impairment charges for
the first half of 2022 were driven mainly by changes in the
macroeconomic outlook due to the ongoing war in Ukraine as
well as by changes in post-model adjustments and a slight
deterioration in credit quality.
The number of full-time-equivalent staff has decreased by 40
since the first half of 2021 due to continued efficiency efforts.
DKK 1,464 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 22/85
Large Corporates & Institutions
In the first half of 2022, the operating environment became increasingly challenging as rising inflation caused central banks to
tighten monetary policy more and sooner than expected. Combined with an uncertain economic outlook, the demand for credit and
risk hedging increased, and we supported our customers with almost DKK 40 billion in additional lending. This demonstrates the
value of our diversified business model, as higher net interest income helps mitigate the effect of lower net fee income from capital
markets activities. The large repricing on the financial markets also led to extraordinarily high volatility and low liquidity in the Nordic
fixed income markets, creating a challenging environment for providing market-making services and managing the risk held to
support our debt capital markets franchise. We have continued to support our customers but saw negative trading income in the
second quarter as a result of losses in Rates & Credit. Notwithstanding the negative macroeconomic impact, we continue to see a
positive underlying momentum, as illustrated by high growth in everyday banking fees, by our leading position in sustainable finance
and by the inflow of new customers in Sweden.
Profit before tax in the first half of 2022 was DKK 2,226 million, a decline from the same period last year as a result of significantly
lower net trading income following losses in Rates & Credit in the second quarter.
Q1
2022
Index
Q2/Q1
Q2
2021
Index
22/21
Full year
2021
Large Corporates & Institutions
(DKK millions)
First half
2022
First half
2021
Index
22/21
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Profit before loan impairment charges
Loan impairment charges
2,611
2,932
27
2
5,572
3,491
254
2,081
-145
2,392
3,220
1,852
2
7,466
3,751
192
3,715
252
Profit before tax
2,226
3,463
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)
311,269
270,910
1,231
352,697
302,542
24,217
42,393
240,407
218,520
4,197
403,958
358,474
21,682
44,786
109
91
1
100
75
93
132
56
-
64
129
124
29
87
84
112
95
Q2
2022
1,328
1,419
-710
1
2,037
1,747
138
290
-233
1,284
1,514
737
1
3,535
1,744
116
1,791
88
523
1,703
311,269
270,910
1,231
352,697
302,542
24,217
43,864
291,266
243,461
2,562
381,753
333,948
25,424
40,906
103
94
-
100
58
100
119
16
-
31
107
111
48
92
91
95
107
1,177
1,621
749
1
3,548
1,900
117
1,648
183
1,465
240,407
218,520
4,197
403,958
358,474
21,682
45,003
113
88
-
100
57
92
118
18
-
36
129
124
29
87
84
112
97
4,732
6,777
3,137
5
14,650
7,025
360
7,625
-13
7,638
264,824
232,890
4,363
383,547
340,477
26,055
43,591
Net interest income as % p.a. of loans and deposits
Profit before loan impairment charges as % p.a. of
allocated capital
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
0.80
0.70
-
0.80
0.79
-
0.69
-
0.73
9.8
10.5
62.7
2,097
16.6
15.5
50.2
2,565
-
-
-
82
2.6
4.8
85.8
2,097
17.5
16.7
49.3
2,226
-
-
-
94
14.6
13.0
53.6
2,565
-
-
-
82
17.5
17.5
48.0
2,684
Total income
(DKK millions)
General Banking
Markets
of which xVA*
Asset Management
of which performance fees
Investment Banking & Securities (IBS)
3,270
577
-99
1,151
86
574
3,113
2,218
94
1,104
55
1,031
105
26
-
104
156
56
1,645
-313
30
573
66
132
1,625
891
-130
577
20
442
101
-
-
99
-
30
1,549
1,029
-
550
31
421
106
-
-
104
213
31
6,203
3,909
104
2,653
385
1,886
Total income
5,572
7,466
75
2,037
3,535
58
3,548
57
14,650
*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
432,201
272,053
481,278
307,797
90
88
432,201
272,053
469,299
301,546
92
90
481,278
307,797
90
88
487,560
325,025
Total assets under management1
704,254 789,075
89 704,254 770,846
91 789,075
89 812,585
1 Includes assets under management from Group entities.
Business initiatives
The global macroeconomic and geopolitical tension created
a challenging operating environment for corporates and
institutions across the Nordic countries. The Russian
invasion of Ukraine and the continued rise in inflation have
increased the uncertainty and operational complexity for our
customers, who have faced higher input prices, continued
supply chain challenges, declining asset prices on the
financial markets, and uncertainty about whether the
economic slowdown will turn into a recession.
As a result, we saw an increase in demand for credit and risk
hedging, while customer activity within capital markets
slowed. Especially within Equity Capital Markets (ECM), the
level of activity was low, with transactions being postponed
and cancelled. Despite the fall in customer activity in the first
half of 2022, we maintained our strong market position in the
debt capital markets as the leading Nordic bank in terms of
supported volumes in the European issuance league table.
While capital markets were challenged, customer demand
for bank credit increased. This illustrates the strength of our
diversified business offering as it enables us to support our
customers
through changing operating environments.
Lending growth was especially high in Sweden, our strategic
growth market, and while customers are likely to draw less
on their credit facilities when capital markets conditions
improve, this does enable us to build even stronger customer
relationships.
The sustainable finance market continued to grow in the first
half of 2022, and we supported issuers and investors in a
substantial number of transactions. For example, we are
proud to have acted as sole Sustainability Coordinator,
Documentation Agent, Bookrunner, Mandated Lead
Arranger and Agent in connection with Chr. Hansen’s EUR
900 million equivalent Term Loan and sustainability-linked
Revolving Credit Facility. We also continued to be ranked
number one among Nordic banks according to the
Bloomberg League tables for arrangers of both sustainability-
linked loans and sustainable bonds in terms of volumes
supported in the first half of 2022.
Danske Bank / Interim report – first half 2022 23/85
First half 2022 vs first half 2021
Profit before tax declined to DKK 2,226 million (H1 2021:
DKK 3,463 million) as a result of significantly lower net
trading income.
Net interest income increased to DKK 2,611 million (H1
2021: DKK 2,392 million), as higher lending volumes and
deposit margins more than compensated for the continued
normalisation of deposit volumes.
Lending volumes in General Banking increased 24% from the
level at the end of the first half of 2021, as we continued to
support customers through the challenging operating
environment. The increase in lending was especially high in
Denmark and Sweden, where we have grown lending volumes
by more than 30% over the past year.
The higher customer demand for credit was driven by a
number of factors, including less attractive capital markets
and a greater need for working capital as input and energy
prices, for example, have increased, but it also reflects our
strategic ambition to grow our franchise
in especially
Sweden. The increase in lending represents both new
facilities and customers drawing more on existing facilities,
implying that
lending volumes could normalise when
conditions in the capital markets improve.
Net fee income declined to DKK 2,932 million (H1 2021:
DKK 3,220 million), as lower fee income from capital
markets activities more than countered the positive
development in everyday banking fees. The lower capital
markets fee income reflects both income being very high in
the first half of 2021 and customer activity slowing in
especially
the
the equity capital markets
deteriorating macroeconomic environment.
following
Net fee income from everyday banking products sustained
the positive trend seen in recent quarters as we continued to
deliver on our strategic ambition, with fees from financing,
money transfers, etc. increasing close to 10% from the same
period last year. This reflects our strong position in everyday
banking services such as foreign exchange and cash
management where Danske Bank maintains number one
positions across both products in the Nordic customer
satisfaction surveys measured by Prospera, the independent
market research company in the Nordic market.
Fee income in Asset Management increased slightly from the
level in the first half of 2021 as higher performance fees
mitigated the negative impact from the continued reduction
in assets under management. The primary driver of
performance fees in the first half of 2022 was fees received
in Danske Private Equity. Assets under management
declined 13% from the end-of-year level, as asset prices fell
further in the second quarter, while net sales were positive in
the first half, driven by the institutional segment.
Net trading income fell to DKK 27 million (H1 2021:
DKK 1,852 million) as a result of losses in Rates & Credit. A
negative value adjustment on a loan held for distribution in
Investment Banking & Securities also contributed to the
lower net trading income result.
The large repricing on the financial markets during the first
half of 2022 led to extraordinarily high volatility, wider credit
spreads and low liquidity in the Nordic fixed income markets.
This is illustrated by the 2-year Swedish interest swap rate
seeing the biggest increase in more than 20 years. While we
continued to support our customers through this volatile
period, the operating environment made it challenging for us
to provide market-making services and manage the risk held
to support our fixed income and leading debt capital markets
franchise.
Operating expenses decreased DKK 260 million, mainly as a
result of the changes to the allocation of costs between the
business units implemented in the fourth quarter of 2021 as
well as a
for performance-based
compensation. The Resolution fund, bank tax etc. item
increased DKK 62 million as a result of the Swedish bank tax
that came into force on 1 January 2022 and higher
resolution fund costs in the second quarter.
lower provision
The number of full-time equivalent staff fell to 2,097, as the
1st
line Financial Crime Risk and Business Controls
functions were moved from Large Corporates & Institutions
to Group Functions and Personal Customers, respectively.
Overall credit quality remained strong. During the first half of
2022, the general rating trend was positive, and loan
impairment charges amounted to a net reversal of DKK 145
million, against a charge of DKK 252 million in the first half of
2021. Since the fourth quarter of 2019, we have actively
reduced net oil-related exposure (excluding oil majors) by
55%.
Danske Bank / Interim report – first half 2022 24/85
Q2 2022 vs Q1 2022
Profit before tax declined to DKK 523 million (Q1 2022:
DKK 1,703 million) as a result of negative net trading
income, with the effect being partly off-set by a reversal of
loan impairment charges.
• Net interest income increased to DKK 1,328 million (Q1
2022: DKK 1,284 million), driven by higher lending
volumes and deposit margins.
• Net fee income declined to DKK 1,419 million (Q1 2022:
low
DKK 1,514 million) as a result of continually
customer activity in the capital markets amid challenging
markets.
• Net trading income decreased to a negative DKK 710
million (Q1 2022: DKK 737 million) as a result of losses
in Rates & Credits amid volatile markets with low liquidity
and value adjustments
Investment Banking &
in
Securities.
• Operating expenses were broadly unchanged as the
effect of lower performance-based compensation was
offset by higher resolution fund costs.
• Loan impairment charges amounted to a net reversal of
DKK 233 million (Q1 2022: DKK 88 million). The reversal
in the second quarter of 2022 was due to changes in
post-model adjustments as well as improving credit
quality.
DKK 523 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 25/85
Danica Pension
The turbulence in the financial markets during the first half of 2022, which was caused by the rise in inflation, the shortage of
commodities and the rapidly rising interest rates, affected the financial performance of Danica Pension and thereby our customers’
pension savings. The underlying business continued to develop positively, as more customers choose Danica Pension.
Net income from insurance business amounted to DKK -38 million in the first half of 2022, a decline from the level in the same
period last year.
Danica Pension
(DKK millions)
First half
2022
First half
2021
Index
22/21
Q2
2022
Q1
2022
Index
Q2/Q1
Q2
2021
Index
22/21
Full year
2021
Result, life insurance
Result, health and accident insurance
Return on investments, shareholders' equity etc.
357
-764
207
1,285
-335
68
28
228
-
Net income before tax in Danica Pension1
-200
1,018
Included within Group Treasury2
Net income from insurance business
162
-38
-36
982
-
-
-
-101
-417
318
-200
79
-122
458
-347
-111
-
84
84
Premiums, insurance contracts
Premiums, investment contracts
Provisions, insurance contracts
Provisions, investment contracts
18,799
1,712
17,832
2,045
105
84
8,697
765
10,102
947
396,379
18,566
437,847
34,731
91
53
396,379 427,100
20,130
18,566
-
120
-
-
94
-
86
81
93
92
547
-91
68
524
-33
491
-
-
-
-
-
-
2,724
-520
-20
2,184
-96
2,088
9,233
1,396
437,847
34,731
94
55
91
53
37,617
5,563
449,344
20,847
Allocated capital (average)
20,311
13,481
151
20,915
19,701
106
13,133
159
12,918
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff
-0.4
184
957
14.6
215
859
-
-
-
-2.3
184
957
1.7
202
954
-
-
-
15.0
215
859
-
-
-
16.2
210
960
Asset under management
Life insurance
Health and accident insurance
Total1
1Figures are for the Danica Group.
399,328
15,690
463,722
17,079
86
92
399,328 426,691
17,297
15,690
94
91
463,722
17,079
86
92
462,930
17,449
415,018 480,802
86 415,018 443,987
93 480,802
86 480,379
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 155 of Annual Report 2021 provides further information).
Business initiatives
The rise in interest rates and inflation, which has led to global
market turmoil, had a negative impact on the returns of many
of our customers’ pension savings in the second quarter of
2022, and assets under management decreased 7% as a
result of the financial headwinds.
In the first half of 2022, Danica Pension saw growth in
premiums in Denmark of 6%, reflecting a strong position in
the market and the fact that more business customers
choose Danica Pension. The strong position is due to a very
attractive value proposition based on solid
long-term
investment returns, a strong advisory services platform, a
leading portfolio of health solutions and a
focus on
sustainable investments.
It is Danica Pension’s ambition that the early involvement of
health personnel will reduce long-term illness and ultimately
have a positive effect on our health and accident results, and
the health package launched in 2021 continues to receive a
very high satisfaction score from customers, and we see an
increase in the use of the solution.
In April 2022, Danica Pension launched a ’Healthy Steps’ tool
for business customers. Businesses can receive concrete
recommendations and tools for preventive activities by
answering a few questions about the overall health status of
their employees.
The ongoing refinement of the preventive efforts in our health
insurance system have resulted in a much improved position
for Danica Pension in relation to cover for loss of earning
capacity, as we have seen a decrease in new claims
throughout the past three calendar years. This decrease
continued in the first half of 2022.
The sale of Danica Norway, made in line with our strategy,
was approved by the Norwegian financial supervisory
authority and the Norwegian Competition Authority. The
transfer of the Norwegian business unit to the buyer
Storebrand will allow us to focus even more on our
customers in Denmark. The sale added a profit of DKK 415
million to the result for the first half of 2022.
First half 2022 vs first half 2021
Danica Pension was affected by the negative developments
in the financial markets in the first half of 2022. The
underlying business is still healthy, and in the first half of
2022, we saw a decline in claims in the health and accident
business. Claims have fallen 25% from the level three years
ago, and there has been a 10% increase in the number of
people who return to work from the level one year ago.
Net income from insurance business decreased to DKK -38
million (H1 2021: DKK 982 million), due primarily to the
negative developments in the financial markets. The profit of
DKK 415 million on the sale of Danica Norway is included in
the result for the first half of 2022.
The result of the life insurance business decreased to
DKK 357 million (H1 2021: DKK 1,285 million). The
decrease was driven mainly by negative valuation
adjustments of investment assets relating to life insurance
products where Danica Pension has the investment risk, with
the effect being partly offset by changes in life insurance
provisions. The result was, however, also affected by a
change in accounting policies resulting in the change in the
part of the profit margin that is used to cover expected future
losses on the health and accident business now being
presented as part of the life insurance business and not, as
previously, as part of the health and accident business. This
change caused a negative effect on the result of the life
insurance business of DKK 332 billion and a positive effect
on the health and accident business of the same amount.
The result of the health and accident business declined to a
loss of DKK 764 million (H1 2021: a loss of DKK 335 million).
The result benefited from the above-mentioned change in
presentation. The underlying business and the risk result
improved due to fewer claims and a reduction of technical
provisions as a result of fewer claims. However, negative
valuation adjustments of investment assets, the effect of
which was partly offset by a decline in insurance provisions,
caused a decrease in the investment result of DKK 808
million, from DKK 110 million in the first half of 2021 to a
loss of DKK 698 million in the first half of 2022. The first half
of 2021 included a provision for pension yield tax of DKK 200
million.
Danske Bank / Interim report – first half 2022 26/85
Q2 2022 vs Q1 2022
Net income from insurance business decreased to a loss of
DKK 122 million (Q1 2022: DKK 84 million) due to lower
results of the life insurance business and the health and
accident business. The result benefited from the profit on
the sale of Danica Norway.
• The result of the life insurance business decreased 78%
due to negative valuation adjustments of life insurance
products where Danica Pension has the investment risk,
with the effect being partly offset by changes in life
insurance provisions.
• The result of the health and accident business declined
in the second quarter of 2022. The underlying business
and risk result improved due to fewer claims, but the
investment result decreased significantly due to negative
valuation adjustments.
• The return on investments allocated to shareholders’
equity etc. increased to DKK 318 million, due mainly to
the profit of DKK 415 million on the sale of Danica
Norway.
• Total premiums decreased 14%, mainly because of a
decrease in single premiums.
• Assets under management decreased DKK 29 billion,
due mainly to the negative developments in the financial
markets.
DKK -122 million
Net income from
insurance business
for the second quarter of 2022
The return on investments allocated to shareholders’ equity
etc. increased DKK 139 million from the level in the first half
of 2021. The return was affected by the profit of DKK 415
million on the sale of Danica Norway but also by negative
valuation adjustments, leading to lower investment results
on
to
shareholders’ equity.
investment assets and
liabilities allocated
Total premiums increased 3%, driven mainly by an increase
in regular premiums due to an inflow of new business
customers in earlier periods.
Asset under management decreased DKK 66 billion, driven
by the development in the financial markets and the sale of
Danica Norway.
Danske Bank / Interim report – first half 2022 27/85
Northern Ireland
Underlying income performance was strong, and impairments remained low. UK central bank interest rates rose in the first half of
2022 in response to inflationary pressure, supporting an increase in net interest income. However, increasing market expectations
of future UK rate hikes had a negative impact on trading income in the period.
Profit before tax in the first half of 2022 was DKK 131 million, a decline from the same period last year driven by a decline in net
trading income.
Profit before tax
131
293
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
Loans, excluding reverse transactions before
impairments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)*
Net interest income as % p.a. of loans and
deposits
Profit before tax as % p.a. of allocated capital
(avg.)
Cost/income ratio (%)
Full-time-equivalent staff
* Allocated capital equals the legal entity’s capital.
First half
2022
First half
2021
Index
22/21
Q2
2022
Q1
2022
Index
Q2/Q1
Q2
2021
Index
22/21
Full year
2021
823
164
-209
15
793
623
169
38
662
129
-
6
798
570
228
-65
58,313
711
99,977
6,063
58,364
911
99,772
6,616
124
127
-
250
99
109
74
-
45
100
78
100
92
444
88
-66
12
477
315
162
19
143
379
76
-143
3
315
308
7
19
-12
117
116
46
-
151
102
-
100
331
69
21
3
424
294
129
-57
-
187
58,313
711
99,977
6,020
56,234
724
99,094
6,106
104
98
101
99
58,364
911
99,772
6,715
134
128
-
-
113
107
126
-
76
100
78
100
90
1,341
288
-66
12
1,576
1,317
259
-127
386
55,848
802
98,980
6,713
1.02
0.88
1.09
0.96
0.86
0.87
4.3
78.6
1,256
8.9
71.4
1,324
9.5
66.0
1,256
-0.8
97.8
1,257
95
11.1
69.3
1,324
5.8
83.6
1,268
95
100
Business initiatives
Our focus in Northern Ireland is to remain a stable, strong
and risk-astute bank, consolidating our market leading
low-cost growth
position alongside pursuing prudent
opportunities in the rest of the UK. Our ambition is to deliver
a strong
for the bank as a more efficient,
geographically diverse and digitally orientated business,
achieving sustainable and responsible growth.
future
Activity levels and related fee income increased in the first
half year. UK central bank interest rates rose during the
period from 0.25% to 1.25% in response to inflationary
pressures, supporting increased net interest income. Market
expectations for further interest rate hikes had a negative
effect on net trading income, reflecting primarily mark-to-
market movements on the bank’s hedging portfolio. These
movements will reverse over the life of the portfolio.
UK inflation is at a multi-decade high. We expect UK central
bank interest rates to rise again in the second half of 2022,
with the Bank of England forecasting UK inflation as high as
11% in the months ahead. While we are currently seeing a
gradual recovery from the pandemic and very low levels of
loan arrears, the outlook for the UK economy remains
uncertain, and we are ready to support any customers who
encounter financial difficulties as a result of cost-of-living
pressures.
The first six months saw healthy levels of lending in both the
mortgage and small business segments. Lending to large
businesses remained subdued, as many of these customers
continue to carry excess liquidity.
We continue to work hard to enhance our reputation as a
bank with strong digital credentials. In the second quarter, we
became the first UK bank to create a digital solution that
allows business customers to view all of their accounts and
payments across multiple banks in one place. This is an open
banking solution with excellent feedback to date on ease of
use and efficiency benefits
financial
management.
for customers’
We also remain focused on supporting the climate change
agenda. In the second quarter, we entered into a partnership
with the Woodland Trust, the UK’s
leading woodland
conservation charity. The Woodland Carbon Scheme will see
Danske Bank facilitate the planting of 20,000 trees across
Northern Ireland to promote biodiversity and create wildlife
habitats while offsetting our own carbon emissions.
First half 2022 vs first half 2021
Profit before tax decreased to DKK 131 million (H1 2021:
DKK 293 million), with the difference driven by negative net
trading income and impairment reversals in 2021. Net
interest income and net fee income increased, reflecting
higher interest rates and improved post-pandemic activity
levels only partially offset by increased costs.
While balance sheet growth remained subdued, lending
activity began to improve, with net interest income increasing
24% to DKK 823 million (H1 2021: DKK 662 million), driven
by a combination of higher UK interest rates and pricing
actions.
Net fee income grew 27% to DKK 164 million (H1 2021:
DKK 129 million), as a result of improved post-pandemic
activity levels and pricing actions.
Net trading income was negative in the first half of 2022 due
to adverse mark-to-market movements on the hedging
portfolio given increased market expectations of rising UK
interest rates.
Operating expenses were up 9% and stood at DKK 623
million (H1 2021: DKK 570 million), reflecting normalised
activity levels and increased costs for Group supplied
services.
Loan impairment charges remained low, while the same
period last year saw a net reversal.
Customer lending to large businesses remained subdued, but
the effect of this was partially offset by increasing momentum
in mortgage lending and continually strong demand from
small businesses. Many customers have continued to delay
investment decisions, with many continuing to hold additional
liquidity.
Danske Bank / Interim report – first half 2022 28/85
Q2 2022 vs Q1 2022
In the second quarter, profit before tax increased to
DKK 143 million (Q1 2022: loss of DKK 12 million), driven
by improved net interest income and fee income combined
with less negative trading income.
•
•
•
•
•
Net interest income increased to DKK 444 million (Q1
2022: DKK 379 million), reflecting a combination of
higher UK interest rates and pricing actions.
Net fee income increased to DKK 88 million (Q1 2022:
improving post-
DKK 76 million), supported by
pandemic commercial activity.
Net trading income was negative in both quarters due
to adverse mark-to-market movements on the hedging
portfolio given increased expectations of rising UK
interest rates.
Operating expenses were broadly unchanged at
DKK 315 million (Q1 2022: DKK 308 million).
Lending activity improved slightly in the quarter, with a
strong pipeline in residential mortgages.
DKK 143 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 29/85
Non-core
Non-core mainly comprises legacy credit exposures as well as non-strategic private equity investments. The winding up of the Non-
core activities is proceeding according to plan. Profit before tax in the first half of 2022 was stable at DKK 17 million from the level
in the first half of 2021. Lending decreased DKK 1.1 billion from the level at the end of June 2021, due primarily to divestment of a
legacy exposure at Non-core.
Non-core
(DKK millions)
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions
before impairments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)
Net interest income as % p.a. of loans
and deposits
Profit before tax as % p.a. of allocated
capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
Loan impairment charges
(DKK millions)
Non-core banking*
Non-core conduits etc.
Total
First half
2022
First half
2021
Index
22/21
Q2
2022
Q1
2022
Index
Q2/Q1
Q2
2021
Index
22/21
Full year
2021
21
65
-44
-61
17
-
54
-54
-72
17
1,364
47
2,174
804
2,475
793
2,169
973
-
120
81
85
100
55
6
100
83
7
39
-32
-63
31
14
26
-12
2
-14
1,364
47
2,174
683
2,309
875
2,198
736
50
150
267
-
-
59
5
99
93
4
24
-19
-17
-3
2,475
793
2,169
856
175
163
168
-
-
55
6
100
80
25
234
-210
-207
-2
2,123
811
2,191
872
-0.27
0.49
-0.43
-0.11
0.40
0.38
4.2
-
37
3.5
-
25
18.2
-
37
-7.6
-
33
148
-1.4
-
25
112
-0.2
-
25
148
-
-61
-61
-119
47
-72
-
-
-
-
-63
-63
-
2
2
-
-
-
-17
-
-17
-
-
-
-254
47
-207
* Non-core banking encompasses the Group’s activities in Lithuania, Non-core Ireland, Luxembourg and Germany.
of 2021 related to the sale of a Latvian portfolio of
commercial loans held by the Lithuanian branch.
At the end of June 2022, total lending decreased to DKK 1.4
billion. The decrease from the level at the end of June 2021
related to the sale of a legacy exposure at Non-core as well
as divestment of portfolios in Lithuania and Ireland.
Initiatives
The Non-core unit focuses on actively managing down legacy
assets and portfolios by way of divestment, refinancing with
other credit institutions or amortisation.
In the second quarter of 2022, the Group’s remaining
activities in Germany were transferred to Non-core with very
limited effect on lending and deposits.
The only portfolio remaining at the Lithuanian branch is a
small portfolio of mainly
local
customers. This portfolio will be fully amortised by the end of
2022.
leasing contracts with
First half 2022 vs first half 2021
Profit before tax was stable at DKK 17 million (H1 2021:
DKK 17 million). An increase in total income was offset by an
increase in operating expenses related to the winding-up of
the activities in Germany and Luxembourg and by a decrease
in loan impairment reversals driven by settlement of part of
the exposure. The loan impairment reversals in the first half
Danske Bank / Interim report – first half 2022 30/85
Q2 2022 vs Q1 2022
The Non-core unit posted a profit before tax of DKK 31
million in the second quarter of 2022 (Q1 2022: a loss of
DKK 14 million) due to an improvement in loan impairment
charges from a charge in the first quarter of 2022 to a net
reversal in the second quarter. This was partly offset by an
increase in operating expenses and a decrease in total
income.
•
•
•
Total income amounted to DKK 7 million (Q1 2022:
DKK 14 million). The decrease was primarily the result
of the first quarter benefiting from value adjustments
relating to the Luxembourg portfolio.
Operating expenses amounted to DKK 39 million (Q1
2022: DKK 26 million). The increase mainly reflects the
transfer to Non-core of the remaining activities in
Germany.
Loan impairment charges amounted to a net reversal
of DKK 63 million (Q1 2022: a charge of DKK 2 million).
The improvement was driven by the closing of the sale
of a legacy exposure at Non-core.
DKK 31 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 31/85
Group Functions
Group Functions includes Group Treasury, Technology & Services and other Group functions. In addition, Group Functions includes
eliminations.
In the first half of 2022, the loss before tax decreased DKK 122 million from the level in the first half of 2021, due primarily to a
decrease in net trading income.
Group Functions
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
of which impairment charges, other intangible
assets
Profit before loan impairment charges
Loan impairment charges
First half
2022
First half
2021
Index
22/21
Q2
2022
Q1
2022
Index
Q2/Q1
Q2
2021
Index
22/21
Full year
2021
51
-20
-105
4
-70
916
43
24
-987
10
145
-21
127
37
287
1,161
23
-
-874
-
35
95
-
11
-
79
187
-
113
-
-7
6
137
2
137
478
17
24
-341
-7
58
-26
-242
2
-207
439
26
-
-646
17
-
-
-
100
-
109
65
-
53
-
50
120
-13
92
41
241
652
7
-
-411
-2
-409
-
-
149
5
57
73
243
-
83
-
81
312
-56
381
-10
627
2,068
37
36
-1,442
2
-1,444
Profit before tax
-996
-874
114
-333
-663
Full-time-equivalent staff
10,746
10,327
104
10,746
10,856
99
10,327
104
10,252
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
-288
186
86
-980
11
-95
232
-1,022
-
-
37
96
-103
220
5
-455
-185
-34
81
-525
-996
-874
114
-333
-663
56
-
6
87
50
-184
80
117
-422
-
275
4
-
599
-67
451
-2,427
-409
81
-1,444
Initiatives
Group Functions supports the business units by allocating
capital, interest-bearing capital and long-term funding costs
through the Group Treasury setup that is established to
handle, for example, the pricing of funding. Group Treasury
also manages the Group’s liquidity bond portfolio and the
investment of shareholders’ equity for Danica Pension and
Realkredit Danmark. Operating expenses related to the sub-
units within Group Functions are allocated to the business
units. This is done to ensure cost efficiency throughout the
Group.
First half 2022 vs first half 2021
Group Functions posted a loss before tax of DKK 996 million
(H1 2021: a loss of DKK 874 million), due primarily to a
decrease in net trading income.
Net interest income decreased to DKK 51 million (H1 2021:
DKK 145 million), due primarily to the redemption of the
Group’s final equity-accounted additional tier 1 capital
instrument, which reduced the income of Group Functions
from the allocation of costs to the business units.
Net trading income decreased to a loss of DKK 105 million
(H1 2021: DKK 127 million), as Group Treasury’s fair value
bond portfolios were negatively affected by market value
adjustments of Danish mortgage bond investments in the
first half of 2022. Furthermore, the first half of 2021 was
affected by a gain of DKK 227 million on the sale of VISA
shares in the Group’s private equity portfolio.
Operating expenses, after allocation to the business units, fell
from the level in the first half of 2021 and amounted to DKK
916 million (H1 2021: DKK 1,161 million). The first half of
2021 was affected by provisions relating to the VAT case in
Sweden of DKK 500 million as well as a one-off investment of
DKK 122 million to ensure good working-from-home
conditions.
The number of full-time equivalent staff increased to 10,746,
as the 1st line Financial Crime Risk and Business Controls
functions were moved from Large Corporates & Institutions
to Group Functions.
Danske Bank / Interim report – first half 2022 32/85
Q2 2022 vs Q1 2022
Group Functions posted a loss before tax of DKK 333
million (Q1 2022: loss of DKK 663 million). The lower loss
was due primarily to an increase in net trading income, with
the effect being partly offset by an increase in operating
expenses.
•
•
•
Net interest income amounted to a loss of DKK 7
million (Q1 2022: DKK 58 million), due primarily to the
final equity-accounted
maturing of
additional tier 1 capital
instrument, reducing the
income of Group Functions from the allocation of costs
to the business units.
the Group’s
Net trading income increased to DKK 137 million (Q1
2022: a loss of DKK 242 million), driven primarily by
interest rate risk hedges held at fair value and hedge
accounting of debt issues.
Operating expenses increased to DKK 478 million (Q1
2022: DKK 439 million,) due mainly to remediation
costs, costs relating to financial crime prevention and
legal costs related to the Estonia matter.
DKK -333 million
Profit before tax
for the second quarter of 2022
Danske Bank / Interim report – first half 2022 33/85
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,
plus any additional dividend payments approved by the Board of Directors and paid to shareholders during
the year.
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 86 million (full-year 2021: DKK 451 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 2,511 million (2021: DKK
7,733 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 the first half
of 2022 would be 0.77% (full-year 2021: 0.73%) due to the daily average of the sum of loans and deposits
being DKK 26 billion higher (2021: DKK 5.4 billion higher) 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 and impairment charges on goodwill divided by total income. All amounts are from the
financial highlights.
C/I, excluding impairment on intangible assets (%)
Operating expenses, excluding impairment charges on other intangible assets, 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 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 426 million (full-year 2021: DKK 348
million) from the financial highlights and annualised. The denominator is the sum of Loans at amortised
cost of DKK 1,026.1 billion (2021: DKK 1,022.7 billion), Loans at fair value of DKK 809.9 billion (2021:
DKK 816.3 billion) and guarantees of DKK 81.0 billion (2021: DKK 71.7 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 19.8 billion (2021: DKK 21.9 billion) at the end of the
period, as disclosed in the “Allowance account in core activities broken down by segment” table in the notes
to the financial statements. The denominator is the sum of Loans at amortised cost of DKK 1,082.4 billion
(2021: DKK 1,026.1 billion), Loans at fair value of DKK 739.6 billion (2021: DKK 809.9 billion), guarantees
of DKK 80.6 billion (2021: DKK 81.0 billion) and the allowance account 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 2021 included November
2021 data for Finland and Norway as December 2021 data was not available at the time of publication of
Annual Report 2021. This has been updated to December 2021 data in Interim report – first quarter
2022.
Danske Bank / Interim report – first half 2022 34/84
Income statement
Statement of comprehensive inc ome
Balance s heet
Statement of capi tal
Cash fl ow statement
Notes
35
36
37
38
40
41
Note G 1: Significant accounting policies and estimates
Note G2: Changes in accounting policies,
43
financial highlights a nd segme nt reporting
45
Note G 3: Business seg ments
Note G 4: Inco me
48
Note G5: Loan impairment charges and reconciliation of total allowance account 49
50
Note G6: Issued bonds, subordinated debt and additional tier 1 capital
51
Note G7: Assets held for sale and Liabilities in disposal groups held for sale
52
Note G 8: Ot her assets a nd other liabilities
53
Note G 9: Foreign c urrency translation reserve
53
Note G10: Guarantees, commitments and contingent liabilities
56
Note G 11: Assets provided or received as collateral
57
Note G12: Fair value information for financial instruments
60
Note G 13: Group holdings a nd underta kings
61
Risk Management
62
Breakdo wn of credit e xposure
62
Credit exposure fro m core lending activities
Credit exposure fro m Non-c ore lendi ng activities
72
Counterparty credit risk and credit risk from trading and investment securities 73
73
Bond port folio
Financial statements – Danske Bank A/S
76
Danske Bank / Interim report – first half 2022 35/85
Income statement – Danske Bank Group
Note
(DKK millions)
G4
G4
G4
G4
G4
G4
Interest income calculated using the effective interest method
Other interest income
Interest expense
Net interest income
Fee income
Fee expenses
Net trading income or loss
Other income
Net premiums
Net insurance benefits
Operating expenses
Profit before loan impairment charges
Loan impairment charges
G5
Profit before tax
Tax
Net profit
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Net profit
Earnings per share (DKK)
Diluted earnings per share (DKK)
Proposed dividend per share (DKK)
First half
2022
First half
2021
12,510
18,746
17,670
13,586
9,052
3,158
-35,256
3,478
18,704
-15,127
15,298
6,236
365
5,871
1,320
10,854
19,314
16,551
13,617
9,051
3,055
18,873
2,873
17,710
35,292
15,310
8,466
666
7,801
1,869
Q2
2022
6,488
9,697
8,434
7,751
4,390
1,588
-22,761
1,189
8,722
-12,242
7,652
2,293
129
2,164
458
Q2
2021
5,440
9,831
8,211
7,060
4,391
1,561
11,160
1,368
9,225
19,819
7,854
3,970
223
3,747
955
Full year
2021
22,077
35,601
30,904
26,774
18,495
6,378
36,600
5,733
37,518
71,208
30,822
16,712
141
16,571
3,651
4,551
5,932
1,705
2,792
12,920
4,465
86
4,551
5.2
5.2
-
5,700
231
5,932
6.7
6.7
-
1,700
5
1,705
2.0
2.0
-
2,676
117
12,469
451
2,792
12,920
3.1
3.1
-
14.6
14.6
2.0
Danske Bank / Interim report – first half 2022 36/85
Statement of comprehensive income – Danske Bank Group
(DKK millions)
Net profit
Other comprehensive income
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
* A positive amount is a tax expense, and a negative amount is a tax income
First half
2022
First half
2021
Q2
2022
Q2
2021
Full year
2021
4,551
5,932
1,705
2,792
12,920
-426
-77
-349
-2,613
1,424
-1,323
19
-484
-2,009
-2,358
493
88
405
1,162
-800
-204
5
-33
196
600
-496
-58
-438
-2,973
1,563
-703
7
-430
-1,675
-2,113
207
56
151
-157
112
-22
-
21
-88
63
-90
-146
56
1,708
-1,270
-326
6
-152
270
326
2,193
6,532
-407
2,856
13,246
2,107
86
2,193
6,300
231
6,532
-413
5
-407
2,739
117
12,795
451
2,856
13,246
Total assets
4,073,992
3,935,834
3,975,032
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
Assets held for sale*
Intangible assets
Tax assets
Other assets*
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
Liabilities in disposal groups held for sale*
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
G7
G8
G6
G6
G7
G8
G6
G6
G9
G6
Shareholders of Danske Bank A/S (the Parent Company)
Additional tier 1 capital holders
Total equity
Total liabilities and equity
Danske Bank / Interim report – first half 2022 37/85
30 June
2022
31 December
2021
30 June
2021
209,680
115,974
661,320
307,361
1,083,740
944,084
66,055
637,475
250
8,842
5,401
33,810
293,386
71,156
509,590
303,777
1,027,442
1,024,461
76,654
547,806
28,800
8,819
4,510
39,433
313,404
67,817
612,529
304,812
1,009,879
998,819
89,293
532,154
252
8,758
3,660
33,655
168,493
590,251
1,309,329
704,842
194,162
66,660
659,747
-
2,627
60,518
106,467
39,503
172,976
374,959
1,292,030
794,909
223,854
76,982
588,736
29,577
1,864
56,268
107,654
39,321
215,265
373,366
1,363,809
770,654
216,646
90,017
573,849
-
1,966
46,187
111,275
38,836
3,902,598
3,759,130
3,801,872
8,622
-1,801
-1,270
165,843
-
171,394
-
8,622
-612
34
161,439
1,724
171,207
5,497
8,622
-689
157
156,523
-
164,613
8,547
171,394
176,704
173,161
4,073,992
3,935,834
3,975,032
* Since 31 December 2021, Assets held for sale and Liabilities in disposal groups held for sale are presented separately from Other assets and Other liabilities respectively. The com-
parative information at 30 June 2021 has been restated.
Danske Bank / Interim report – first half 2022 38/85
Statement of capital – Danske Bank Group
Changes in equity
(DKK millions)
Shareholders of Danske Bank A/S (the Parent Company)
Foreign
currency
translation
reserve
Reserve for
bonds at fair
value (OCI)
Share
capital
Retained
earnings
Proposed
dividends
Total
Additional
tier 1
capital
Total
Total equity as at 1 January 2022
8,622
-612
34
161,439
1,724
171,207
5,497
176,704
Total equity as at 30 June 2022
8,622
-1,801
-1,270
165,843
Total equity as at 1 January 2021
8,622
-1,050
354
150,521
1,724
160,171
8,508
168,679
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
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,465
-
-2,613
1,424
-
-
-
-
-
-
-1,323
19
-
-1,189
-1,304
-426
-
-
-
-
561
135
-1,189
-1,304
4,600
-
-
-
-
-
-
-
-
-
4,465
86
4,551
-426
-2,613
1,424
-1,323
19
561
-2,358
-
-
-
-
-
-
-
-426
-2,613
1,424
-1,323
19
561
-2,358
2,107
86
2,193
-
19
-
-
-1,724
-
-
-1,705
-
-164
-
-5,419
-164
-1,705
-5,419
-
-
-
-
-
-
-
-
-
-
-
-
-10,706
10,506
-15
-
-
5,700
-
1,162
-800
-
-
-
361
361
-
-
-
-
-
-
-
-
-204
5
-
-199
493
-
-
-
-
-56
437
-199
6,137
-
-
-
-
-
-11,411
11,271
-10
-
-
-
-
-10,706
10,506
-15
171,394
-
-
-
-
-10,706
10,506
-15
171,394
-
-
-
-
-
-
-
-
-
5,700
231
5,932
493
1,162
-800
-204
5
-56
600
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-56
600
6,300
231
6,532
-
16
-
-1,724
-
-1,708
-233
-
-233
-1,708
-
-
-
-
-11,411
11,271
-10
-
41
-
-11,411
11,312
-10
164,613
8,547
173,161
Total equity as at 30 June 2021
8,622
-689
157
156,523
Danske Bank / Interim report – first half 2022 39/85
Statement of capital – Danske Bank Group
Dividend
To ensure prudent capital management with a high degree of flexibility in light of the Estonia matter, the general meeting adopted the proposal for an
initial dividend payment of DKK 2 per share that was paid out in March. The remaining DKK 5.5 per share was intended to be paid out in three tranches
following the publication of the interim reports in 2022, subject to a decision by the Board of Directors.
On 28 April 2022, the Board of Directors decided that Danske Bank would not pay out dividends in connection with the interim report for the first quarter
of 2022 as Danske Bank had entered into initial discussions with U.S. and Danish authorities on the resolution of the Estonia matter. These discussion s
have not been concluded, and, consequently, the Board of Directors has decided that Danske Bank will not pay out dividends for 2021 in connection with
the announcement of the interim report for the first half of 2022. Danske Bank is not yet able to reliably estimate the timing, form of resolution or amount
of a potential settlement or fines, which is likely to be material, and will not comment on discussions with authorities.
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 (%)
30 June 2022 31 December 2021
8,621,846,210
862,184,621
851,334,055
852,029,421
855,788,090
8,621,846,210
862,184,621
853,352,443
853,352,805
853,974,744
30 June 2022 31 December 2021
171,394
199
-23
171,570
-
-
171,570
-61
2,257
-1,196
-682
-7,472
-5,594
-133
256
-237
-1,890
-9,368
147,451
15,671
163,121
20,819
183,940
861,658
17.1%
18.9%
21.3%
176,704
200
-23
176,881
-5,419
-78
171,384
-104
2,593
-983
-173
-6,466
-5,325
-51
198
-35
-2,220
-6,882
151,935
19,933
171,868
20,888
192,757
860,173
17.7%
20.0%
22.4%
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
Cash flow from operations before changes in operating capital
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
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
* See note G7 for details of sale of businesses.
Danske Bank / Interim report – first half 2022 40/85
First half
2022
First half
2021
Full Year
2021
5,871
-3,147
659
3,383
-6,676
63,561
-200
-3,584
23,714
17,299
-120,561
-19,558
10,013
7,801
-280
888
8,409
3,955
-55,549
-99
-8,043
38,567
30,029
-41,096
-4,526
-2,049
16,571
-2,459
4,916
19,028
-38,509
48,984
-82
-7,007
-4,114
-41,751
-7,596
-5,291
-1,224
-32,609
-30,402
-37,562
1,314
-563
-179
2
574
-
-
20,052
-20,438
-1,705
-5,419
-164
-312
-
-374
-143
5
-
-885
-686
8
-512
-1,563
10,102
-3,718
3,701
-
-1,708
-
-233
-331
10,102
-3,718
4,352
-6,309
-1,708
-3,000
-466
-654
-7,986
7,813
-1,401
362,997
-1,060
-40,021
400,889
2,064
-23,101
400,889
2,634
-40,526
321,916
379,851
362,997
6,670
203,010
112,236
6,104
307,300
66,447
6,765
286,621
69,611
321,916
379,851
362,997
Danske Bank / Interim report – first half 2022 41/85
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 2021.
On 1 January 2022, the Group implemented the amendments to IAS 16, IAS 37, IFRS 3 and Annual Improvements to IFRS Standards 2018 - 2020.
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 2021. Annual Report 2021 provides a full description of the signifi-
cant accounting policies.
Financial statement figures are stated in Danish kroner and whole millions, unless otherwise stated. As a result, rounding discrepancies may occur
because totals have been rounded off and the underlying decimals are not presented to financial statement users.
(b) Significant accounting estimates and judgements
The preparation of financial information requires, in some cases, the use of judgements and estimates by management. This includes judgements made
when applying accounting policies. The most significant judgements made when applying accounting policies relate to the classification of financial assets
and financial liabilities under IFRS 9, especially related to the business model assessment, and the SPPI test (further explained in note G15 of the Annua l
Report 2021) and the designation of financial liabilities at fair value through profit or loss to eliminate or significantly reduce an accounting mismatc h
(further explained in note G16 of the Annual Report 2021). An overview of the classification and measurement basis for financial instruments can be
found in note G1(c) of the Annual Report 2021.
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 inheren t
uncertainties and the high level of subjectivity and judgement involved in the recognition and measurement of the items listed below, it is possible that
the outcomes in the next reporting period could differ from those on which management’s estimates are based.
Measurement of expected credit losses on loans, financial guarantees and loan commitments, and bonds measured at amortised cost or fair value
through other comprehensive income
The three-stage expected credit loss impairment model in IFRS 9 depends on whether the credit risk has increased significantly since initial recognition .
If the credit risk has not increased significantly, the impairment charge equals the expected credit losses resulting from default events that are possible
within the next 12 months (stage 1). If the credit risk has increased significantly, the loan is more than 30 days past due, or the loan is in default or
otherwise impaired, the impairment charge equals the lifetime expected credit losses (stages 2 and 3). In determining the impairment for expected credit
losses, management exercises judgement and uses estimates and assumptions as explained below.
The expected credit losses are calculated for all individual facilities as a function of probability of default (PD), exposure at default (EAD) and loss given
default (LGD) and incorporate forward-looking information. The estimation of expected credit losses involves forecasting future economic conditions over
a number of years. Such forecasts are subject to management judgement and those judgements may be sources of measurement uncertainty that have
significant risk of resulting in a material adjustment to a carrying amount in future periods. The incorporation of forward-looking elements reflects the
expectations of the Group’s senior management and involves the creation of scenarios (base case, upside and downside), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on
the expected credit losses.
With the new suite of scenarios, the base case scenario enters with a probability of 70% (31 December 2021: 70%), the upside scenario with a proba-
bility of 10% (31 December 2021: 10%) and the downside scenario with a probability of 20% (31 December 2021: 20%). On the basis of these assess-
ments, the allowance account as at 30 June 2022 amounted to DKK 19.8 billion (31 December 2021: DKK 22.7 billion). If the base case scenario was
assigned a probability of 100%, the allowance account would decrease DKK 2.1 billion (31 December 2021: DKK 1.7 billion). Compared to the base case
scenario, the allowance account would increase DKK 10.6 billion (31 December 2021: DKK 8.5 billion), if the downside scenario was assigned a proba-
bility 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 0.2 billion (31 December 2021: DKK 0.2
billion) compared to the base case scenario.
Management applies judgement when determining the need for post-model adjustments. As at 30 June 2022, the post-model adjustments amounted to
DKK 6.0 billion (31 December 2021: DKK 6.3 billion) which are predominantly linked to economic uncertainties arising from the outbreak of war in
Ukraine, the uncertainty related to inflation and increasing interest rates, and other sector-specific factors that ensure prudent coverage of expected
credit losses for the Group’s credit exposures. On the types of risks covered by post-model adjustments, more information can be found in the risk
management notes.
The Group’s credit exposure directly related to customers in or from Russia and Ukraine amounted to less than DKK 23 million as at 30 June 2022.
Note G15 of the Annual Report 2021 and the section on credit risk in the risk management notes provide more details on expected credit losses. As at
30 June 2022, financial assets covered by the expected credit loss model accounted for about 52.8% of total assets (31 December 2021: 54.2%).
Danske Bank / Interim report – first half 2022 42/85
Notes – Danske Bank Group
(b) Significant accounting estimates continued
Fair value measurement of financial instruments
At the end of June 2022, no unusual challenges in obtaining reliable pricing apart from insignificant parts of the portfolio remained. The majority of
valuation techniques continues to employ only observable market data, and there has been no significant increase in financial instruments measured on
the basis of valuation techniques that are based on one or more significant unobservable inputs. The latter continues to include only unlisted shares,
certain bonds and some long-dated derivatives for which there is no active market. On the derivatives portfolio, the Group makes fair value adjustments
to cover changes in counterparty risk (CVA and DVA) and to cover expected funding costs (FVA and ColVA) on derivatives, bid-offer spreads on the net
open position of the portfolio of assets and liabilities with offsetting market risk recognised at mid-market prices, and model risk on level 3 derivative s .
As at 30 June 2022, the adjustments totalled DKK 0.2 billion (31 December 2021: DKK 1.0 billion), including the adjustment for credit risk on derivative s
that are credit impaired. Note G12 of this report and note G33(a) of the Annual Report 2021 provides more details on the fair value measurement of
financial instruments.
The Group uses derivatives to hedge the fixed interest rate on some financial assets and liabilities, thus converting the fixed interest rates on the financia l
instruments to variable interest rates by the use of swaps. The ongoing Interest Rate Benchmark Reform will replace existing benchmark interban k
offered rates (IBORs) with alternative risk-free rates. The Group’s IBOR Transition Programme successfully managed the cessation of the LIBOR interes t
rate indexes for GBP, EUR, CHF and JPY at 31 December 2021, and is now focused of the transition of USD LIBOR contracts ahead of the June 2023
deadline. In addition, the Programme is also providing oversight on how the introduction of the DESTR and SWESTR indexes could affect its core Nordic
customer base. As a result of these developments, accounting judgement is involved in determining whether certain hedge accounting relationships that
hedge the interest rate risk due to changes in IBORs continue to qualify for hedge accounting. Following IASB’s project ‘Interest Rate Benchmark Reform’
for the assessment of effectiveness of such hedges, it is assumed that the interest rate benchmark is not altered as a result of the reform. For further
information, see note G12(d) of the Annual Report 2021.
Measurement of goodwill
Goodwill is tested for impairment once a year or more frequently if indications of impairment exist. Impairment testing requires management to estimate
the present value of future cash flows. A number of factors affect the value of such cash flows, including discount rates, changes in the economic outlook,
customer behaviour and competition. At 30 June 2022, goodwill amounted to DKK 6.1 billion (31 December 2021: 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 whether indications of
impairment exists has been considered at a more detailed level than usual. This assessment has been performed as a high level update of the 2021 test.
It was concluded that no indications of impairment were noted at the end of June 2022.
The goodwill in Danica Pension of DKK 1.6 billion (31 December 2021: 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 2021: DKK 2.1 billion) in Markets, DKK 1.8 billion (31 December 2021: DKK
1.8 billion) in Asset Management and DKK 0.5 billion (31 December 2021: DKK 0.5 billion) in General Banking (all part of the business segment Large
Corporates & Institutions) showing significant amounts of excess value in the impairment tests in 2021.
Note G19 of the Annual Report 2021 provides more information about impairment testing and sensitivity to changes in assumptions.
Measurement of liabilities under insurance contracts
Liabilities under insurance contracts are measured at the present value of expected benefits for each insurance contract. The measurement is based on
actuarial computations that rely on estimates of a number of variables, including mortality and disability rates, and on the discount rate. The future
mortality rates are based on the Danish FSA’s benchmark, while other variables are estimated based on data from the Group’s own portfolio of insurance
contracts. Note G18 and the risk management notes of the Annual Report 2021 provide more information on the measurement of insurance liabilitie s
and sensitivity to changes in assumptions.
Danske Bank / Interim report – first half 2022 43/85
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting
(a) Changes in accounting policies
On 1 January 2022, the Group implemented the amendments to IAS 16, IAS 37, IFRS 3 and Annual Improvements to IFRS Standards 2018 - 2020. The
implementation of the amendments to IFRSs had no impact on the financial statements. The sections below explain in further details the changes to
accounting policies and presentation implemented.
Since 31 December 2021, the Group has changed the presentation of Assets held for sale and Liabilities in disposal groups held for sale to be presented
separately on the face of the balance sheet rather than within Other assets and Other liabilities respectively. Comparative information as at 30 June
2021 has been restated.
Amendment to IAS 16, Property, plant and equipment
The amendment clarifies that if items are produced while bringing an item of property, plant and equipment into use, the proceeds from sale of that item
cannot be deducted from the cost of the asset. The proceeds must instead be recognised in profit or loss.
The amendment has no impact on the financial statements.
Amendment to IAS 37, Provisions, contingent liabilities and contingent assets
The amendment clarifies that when assessing whether a contract is onerous, costs to be included are those that are directly related to the contract, and
include the incremental costs of fulfilling the contract and an allocation of other costs directly related to fulfilling the contract.
The amendment has no impact on the financial statements.
Amendment to IFRS 3, Business combinations
IFRS 3 has been amended to refer to the updated contractual framework. The amendment has no impact on the financial statements.
Annual Improvements to IFRS Standards 2018 – 2020 Cycle
The annual improvements contain amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41. In IFRS 1, the amendment provides a subsidiary that becomes a
first-time adopter of IFRS later than its parent with an exemption relating to the measurement of its assets and liabilities. In IFRS 9, the amendmen t
clarifies that, when applying the “10% per cent test” for derecognition of financial liabilities and determining the fees paid net of fees received, a borrower
should include only fees paid or received between the borrower and the lender, including fees paid or received by either the borrower or lender on the
other’s behalf. The amendment to IFRS 16 is to one of its illustrative examples. Finally, the amendment to IAS 41 removes the requirement to exclude
cash flows for taxation when measuring fair value.
None of these amendments has any impact on the financial statements.
(b) Standards not yet in force
IFRS 17, Insurance contracts
In May 2017, the IASB issued IFRS 17, Insurance Contracts. IFRS 17 replaces IFRS 4, Insurance Contracts, which was an interim standard that did not
prescribe the measurement of insurance contracts but relied on existing accounting practices. IFRS 17 is a comprehensive standard with principles
for, for example, the measurement of insurance contracts at a current (fulfilment) value in the balance sheet, the recognition of insurance contract
revenue in the income statement and the presentation of information on the performance in relation to insurance contracts. IFRS 17 was endorsed by
the EU in November 2021, and is effective for annual reporting periods beginning on or after 1 January 2023.
The Group is in the process of making required changes to models and data, and assessing the impact on the Group’s financial statements. This in-
cludes an assessment of the Group’s insurance products in terms of classification and measurement and aggregation into portfolios. Estimates using
the three measurement approaches (Building Bloch approach, Variable Fee approach and Premium Allocation approach), including a preliminary calcu-
lation of the Contractual Service Margin, have been made. The Group will apply all three measurement approaches, with the Variable Fee approach
applied to the majority of insurance contracts.
The Group expects to apply the fair value approach for measuring insurance contracts at the transition date. The Group does not expect a significan t
impact on equity on implementation of IFRS 17. The Group also does not expect any material changes to profitability patterns in the insurance business
under IFRS 17.
Danske Bank / Interim report – first half 2022 44/85
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
c) Changes in financial highlights and segment reporting
From 2022 the Group has changed the presentation of Resolution fund, bank tax etc to be presented as a separate element within Operating expenses
in the financial highlights and segment reporting. Comparative information in note G3 has therefore been restated to reflect this change in presenta-
tion. This change does not affect the presentation in the IFRS income statement.
During the first quarter of 2022, Danske Bank settled the sale of its business activities in Luxembourg. The residual activities in Luxembourg have been
moved from Personal Customers to Non-core in the first quarter of 2022, and this change is reflected in the 2022 financial highlights and segment
reporting. There is no impact on 2021 financial highlights nor 2021segment reporting; that is, comparatives have not been restated as this change is
not a reclassification.
During the second quarter of 2022, the Group transferred the remaining activities in Germany from Large Corporates & Institutions to Non-core that
had not been transferred to other group entities due to closure of the Group’s banking activities in Germany. This change is reflected in the 2022 finan-
cial highlights and segment reporting. There is no impact from this on 2021 financial highlights nor 2021 segment reporting; that is, comparatives
have not been restated as this change is not a reclassification.
With effect from second quarter of 2022, the presentation in the financial highlights and segment reporting has been changed to reflect changes to the
Group’s commercial activities that were announced on 7 January 2022. The business unit Personal & Business Customers has been divided into two
business units: Personal Customers and Business Customers. Comparative information in note G3 has been restated to reflect the change in business
segments. The IFRS income statement and balance sheet are not impacted by the change. The table below shows the restated amounts in the financial
highlights and segment reporting for first half 2021:
Changes in financial highlights and segment reporting - first half 2021 restated
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions
Other assets
Total assets
Deposits, excluding repo deposits
Other liabilities
Allocated capital
Total liabilities and equity
Profit before tax as % p.a. of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff, end of period
Personal
Customers
Business
Customers
Personal &
Business
Customers
3,902
2,444
135
114
6,595
4,713
55
1,882
16
1,866
3,864
823
177
298
5,162
2,575
88
2,587
534
2,053
7,766
3,267
312
412
11,757
7,288
143
4,469
550
3,919
870,378
325,550
644,131
211,721
1,514,509
537,271
1,195,929
855,852
2,051,781
413,213
749,851
32,865
289,253
524,684
41,915
702,466
1,274,535
74,780
1,195,929
855,852
2,051,781
10.9
71.5
5,090
10.3
49.9
1,736
10.6
62.0
6,826
Danske Bank / Interim report – first half 2022 45/85
Notes – Danske Bank Group
G3. Business segments
(a) Business model and business segmentation
With effect from the second quarter of 2022, the presentation in the financial highlights and segment reporting has been changed to reflect the changes to
the Group’s commercial activities that were announced on 7 January 2022 and came into effect in May 2022. The Group’s commercial activities are organ-
ised in five reporting business units:
•
•
•
•
•
Personal Customers, which serves personal customers across all markets
Business Customers, which serves small and medium-sized business customers across all markets, and includes the Group’s Asset Finance operations
Large Corporates & Institutions, which serves large corporates and institutional customers across all Nordic markets
Danica Pension, which specialises in pension schemes, life insurance policies and health insurance policies in Denmark
Northern Ireland, which serves retail and commercial customers through a network of branches and business centres in Northern Ireland alongside
digital channels.
Besides the five commercial business units, the Group’s reportable segments under IFRS 8 include Non-core and Group functions. Comparative infor-
mation has been restated to reflect the new structure.
Business segments first half 2022
Personal
Customers
Business
Customers
Large Cor-
porates &
Institutions
Northern
Ireland
Non-
core
Danica
Group
Functions Eliminations
Financial
highlights
Reclassifi-
cation
IFRS finan-
cial state-
ments
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insur-
ance business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
of which resolution fund,
bank tax etc.
of which impairment
charges, other intangible
assets
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
3,871
2,555
220
4,083
906
243
2,611
2,932
27
-
508
-
-
-
431
-
-
-
2
-
-
7,154
5,097
5,663
2,665
5,572
3,491
81
112
254
-
-
-
2,057
325
1,732
-
2,997
198
2,799
-
2,081
-145
2,226
-
Profit before tax
1,732
2,799
2,226
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
825,657 625,765 310,039
-
316,326 202,859 3,482,262 730,320
-
-
-
-
-
-
-
-38
-
-
-
-38
-
-
-
-38
-
-38
-
-38
823
164
-209
-
15
-
-
793
623
-
-
169
38
131
-
131
57,601
60,024
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
17
69
-4
-190
-
1,309
-
-
1,185
994
43
24
190
10
180
-
-18
-16
85
11,440
6,537
175
2,146
-642
-35,431
13,586
5,895
-35,256
-
-1,306
-
-
-38
959
-
-
38
2,518
18,704
-15,127
-
3,478
18,704
-15,127
-1,255
-78
19,073
12,793
2,461
2,505
21,533
15,298
-
-
491
-491
24
-24
-
-
-1,177
-
-1,177
-
6,280
426
5,854
17
-44
-61
17
-17
6,236
365
5,871
-
180
-1,177
5,871
-
5,871
29,713
-
-29,479 1,819,297
- 4,540,645 -7,079,695 2,252,740
1,956
-
-
1,956
1,316 1,820,613
639 2,253,379
-
-1,956
Total assets
1,141,982 828,624 3,792,301 730,320 117,625
1,956 4,570,359 -7,109,174 4,073,992
- 4,073,992
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-core
420,252 290,934 352,697
-
691,396 498,675 3,395,531 709,945
20,375
-
44,072
-
39,015
-
30,334
-
99,977
12,178
5,470
-
1,859
-
-9,878 1,155,841
- 4,535,789 -7,099,296 2,744,218
- 171,394
-
2,539
-
2,539
32,127
-
2,174 1,158,015
365 2,744,584
- 171,394
-
-2,539
Total liabilities and equity 1,141,982 828,624 3,792,301 730,320 117,625
2,539 4,569,775 -7,109,174 4,073,992
- 4,073,992
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
11.1
71.2
14.0
47.1
10.5
62.7
-0.4
-
4.3
78.6
-
-
1.0
83.9
4,874
1,696
2,097
957
1,256
37
10,746
-
-
-
6.9
67.1
21,663
-
-
-
6.9
71.0
21,663
Danske Bank / Interim report – first half 2022 46/85
Notes – Danske Bank Group
G3. Business segments continued
Business segments first half 2021
Personal
Customers*
Business
Customers*
Large Cor-
porates &
Institutions Danica
Northern
Ireland
Non-
core
Group
Functions
Elimina-
tions
Financial
highlights
Reclassi-
fication
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insur-
ance business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
of which resolution fund,
bank tax etc.
of which impairment
charges, other intangible
assets
Profit before loan
impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
3,902
2,444
135
-
114
-
-
3,864
823
177
-
298
-
-
2,392
3,220
1,852
-
2
-
-
6,595
4,713
5,162
2,575
7,466
3,751
55
88
192
-
-
-
1,882
16
1,866
-
2,587
534
2,053
-
3,715
252
3,463
-
-
-
-
982
-
-
-
982
-
-
-
982
-
982
-
662
129
-
-
6
-
-
798
570
-
-
228
-65
293
-
147
40
219
-
1,031
-
-
1,437
1,252
23
-
186
-
186
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
17
17
IFRS
financial
statements
13,617
5,996
18,873
-
2,873
17,710
35,292
-2
-62
-93
2,652
10,965
6,595
-599
2,291 16,581
-
-994
-
-
982
457
-982
2,415
- 17,710
- 35,292
-1,150
-91
21,291
12,770
2,486
2,540
23,776
15,310
-
-
359
-359
-
-
-
-
-1,059
-
-1,059
-
8,521
737
7,783
17
-54
-72
17
-17
8,466
666
7,801
-
Profit before tax
1,866
2,053
3,463
982
293
186
-1,059
7,801
-
7,801
Loans, excluding reverse
transactions
Other assets
Total assets in Non-core
870,378
325,550
-
236,226
644,131
-
211,721 3,276,196 641,751
-
-
-
57,453
61,070
33,103
-
-31,487 1,809,805
- 4,096,125 -6,448,969 2,163,445
1,783
-
-
1,682 1,811,487
101 2,163,546
-
-1,783
- 1,783
Total assets
1,195,929
855,852 3,512,423 641,751 118,523 1,783 4,129,228 -6,480,457 3,975,032
- 3,975,032
Deposits, excluding repo
deposits
Other liabilities
Allocated capital
Total liabilities in Non-
core
413,213
749,851
32,865
403,958
289,253
-
524,684 3,064,275 628,501
44,190 13,250
41,915
99,772
12,019
6,732
1,676
-
-9,962 1,197,910
- 4,101,170 -6,470,495 2,610,005
- 164,613
-
25,661
2,169 1,200,079
335 2,610,340
164,613
-
-
-
-
-
- 2,504
-
-
2,504
-2,504
-
Total liabilities and equity
1,195,929
855,852 3,512,423 641,751 118,523 2,504 4,128,507 -6,480,457 3,975,032
- 3,975,032
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
10.9
71.5
10.3
49.9
15.5
50.2
14.6
-
8.9
71.4
-
-
0.6
87.1
5,090
1,736
2,565
859
1,324
25
10,327
-
-
-
8.0
60.0
21,926
-
-
-
8.0
64.4
21,926
* Comparative information has been restated, as described in note G2(c).
Danske Bank / Interim report – first half 2022 47/85
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 75 in Annual Report 2021. 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 half 2022
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Reclassification first half 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
IFRS financial
statements Operating leases
Markets, Invest-
ment Banking &
Securities and
Group Treasury
13,586
5,895
-35,256
-
3,478
18,704
-15,127
21,533
15,298
6,236
365
5,871
-
5,871
-
-
-
-
-1,868
-
-
-1,868
-1,868
-
-
-
-
-
-1,062
20
1,043
-
-2
-
-
-
-
-
-
-
-
-
IFRS financial
statements Operating leases
Markets, Invest-
ment Banking &
Securities and
Group Treasury
13,617
5,996
18,873
-
2,873
17,710
35,292
23,776
15,310
8,466
666
7,801
-
7,801
-
-
-
-
-1,852
-
-
-1,852
-1,852
-
-
-
-
-
-1,005
45
960
-
-
-
-
-
-
-
-
-
-
-
Danica
Pension
-1,089
627
34,399
-38
-640
-18,704
15,127
-572
-572
-
-
-
-
-
Danica
Pension
-1,637
555
-17,541
982
-574
-17,710
-35,292
-634
-634
-
-
-
-
-
Non-core
Total
reclassification
Financial
highlights
5
-5
-11
-
-9
-
-
-21
-65
44
61
-17
17
-
-2,146
642
35,431
-38
-2,518
-18,704
15,127
-2,461
-2,505
44
61
-17
17
11,440
6,537
175
-38
959
-
-
19,073
12,793
6,280
426
5,854
17
-
5,871
Non-core
Total
reclassification
Financial
highlights
-10
-1
-
-
11
-
-
-
-54
54
72
-17
17
-
-2,652
599
-16,581
982
-2,415
-17,710
-35,292
-2,486
-2,540
54
72
-17
17
10,965
6,595
2,291
982
457
-
-
21,291
12,770
8,521
737
7,783
17
-
7,801
Danske Bank / Interim report – first half 2022 48/85
Notes – Danske Bank Group
G4. Income
(a) Interest income and interest expense
Negative interest income during the period ending June 2022 amounted to DKK 1,108 million (30 June 2021: DKK 812 million). Negative interest ex-
penses amounted to DKK 2,190 million (30 June 2021: DKK 1,712 million). In the income statement, negative interest income is recognised as interes t
expenses and negative interest expenses are recognised as interest income.
(b) Fee income
Note G6 of the Annual Report 2021 provides additional information on the Group’s accounting policy for fee income, including the description by fee type.
Fee income first half 2022
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Fee income first half 2021
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
(c) Net trading income
Financial
highlights
- net fee income
Reclassifica
tions
IFRS
- net fee income
Fee expense
IFRS
- gross fee income
2,528
1,880
1,459
669
6,537
-317
-118
307
-513
-642
2,211
1,762
1,766
156
5,895
2,458
644
55
-
3,158
4,669
2,406
1,821
156
9,052
Financial
highlights
- net fee income
2,629
1,563
1,352
1,051
6,595
Reclassifica
tions
IFRS
- net fee income
Fee expense
IFRS
- gross fee income
-192
-10
372
-768
-599
2,436
1,553
1,723
284
5,996
2,262
646
147
-
3,055
4,698
2,199
1,870
284
9,051
Net trading income includes a loss of DKK 26,104 million in relation to assets and liabilities under insurance contracts, including a gain of DKK 415
million from the sale of Danica Pensjonforsikring AS (Danica Pension business segment in Norway).
(d) Other income
Other income amounted to DKK 3,478 million for the six months ending 30 June 2022 (30 June 2021: DKK 2,873 million). Other income includes
income from lease assets, investment property and real estate brokerage, gain or loss on sale of disposal groups, and income from holdings in associates.
Danske Bank / Interim report – first half 2022 49/85
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 2021
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 2021
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
30 June 2022
30 June 2021
2,092
-4,298
1,970
897
-173
-123
365
2,569
-4,779
1,464
1,662
-133
-118
666
Stage 1
Stage 2
Stage 3
Total
2,267
1,844
-180
-120
646
-632
-942
-5
21
-182
2,717
866
-306
-18
476
-476
-158
-
-15
-18
7,459
-1,605
649
-872
1,282
-1,491
1,172
-
54
160
13,617
-239
-469
993
1,839
-4,578
1,058
-
328
675
23,342
-
-
-
3,768
-6,701
1,287
-5
402
653
6,807
13,223
22,746
-813
628
-369
636
-766
719
-2
-65
2
-54
-322
387
980
-3,056
1,409
-2,758
134
33
-
-
-
2,092
-4,298
1,970
-2,760
54
17
ECL allowance account as at 30 June 2022
3,068
6,777
9,975
19,820
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. ECL on assets derecognised relates to, for example, loans that have been modified significantly (e.g. due to restructuring) which have re-
sulted in derecognition of the original loans. The amount reflects normal credit procedures. 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
Structured retail notes
Issued bonds at fair value, total
Issued bonds at amortised cost
(DKK millions)
Commercial papers and certificates of deposits
Preferred senior bonds
Covered bonds
Issued bonds at amortised cost, total
Non-preferred senior bonds
Danske Bank / Interim report – first half 2022 50/85
30 June
2022
31 December
2021
697,698
3,813
3,330
770,661
24,248
-
704,842
794,909
30 June
2022
31 December
2021
182
60,047
133,933
1,488
65,221
157,145
194,162
223,854
106,467
107,654
Further information on issued bonds at fair value through profit or loss can be found in note G16 of the Annual Report 2021. The issuance and redemption of
bonds (including commercial papers and certificates of deposits at fair value and structured retail notes) 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
2022
23,712
67,724
165,067
108,104
Issued
Redeemed
4,308
1,400
10,600
20,100
22,421
7,289
22,464
20,404
Foreign
currency
translation
-1,406
5,159
-5,798
3,762
30 June
2022
4,193
66,993
147,406
111,561
Other issued bonds
364,607
36,408
72,579
1,717
330,153
*Preferred senior bonds includes structured retail notes.
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
53,067
27,282
33,344
4,371
52,783
27,717
34,037
6,422
Foreign
currency 31 December
2021
translation
913
4,805
-2,685
5,126
23,712
67,724
165,067
108,104
Other issued bonds
359,340
118,066
120,959
8,159
364,607
Subordinated debt and additional tier 1 capital
As at 30 June 2022, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 40,977 million (31
December 2021: DKK 39,649 million). During the six months ended 30 June 2022, the Group redeemed additional tier 1 capital accounted for as equity of
EUR 750 million, leaving the nominal value of equity accounted additional tier 1 capital of DKK 0 million at 30 June 2022 (31 December 2021: DKK 5,577
million). During 2021, the Group redeemed DKK 3,000 million of additional tier 1 capital accounted for as equity. The Group also issued DKK 5,577 million
and redeemed DKK 3,718 million of tier 2 capital in 2021, and issued USD 750 million (DKK 4,565 million) of liability accounted additional tier 1 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 6.4.3 of Risk Management 2021
for further information). As at 30 June 2022, distributable items for Danske Bank A/S amounted to DKK 138.4 billion (31 December 2021: DKK 133.2
billion). The additional tier 1 capital will be temporarily written down or converted into a variable number of ordinary shares, depending on the terms of each
issued bond, if the common equity tier 1 capital ratio falls below 7% for Danske Bank A/S or Danske Bank Group. As at 30 June 2022 the common equity tier
1 capital ratio was 19.5% (31 December 2021: 20.9%) for Danske Bank A/S. The ratios for the Danske Bank Group are disclosed in the Statement of capital.
Danske Bank / Interim report – first half 2022 51/85
Notes – Danske Bank Group
G7. Assets held for sale and Liabilities in disposal groups held for sale
Assets held for sale and Liabilities in disposal groups held for sale include assets and liabilities that fall under IFRS 5.
(DKK millions)
Assets held for sale
Loans held for sale
Assets under insurance contracts
Other
Total
Liabilities in disposal groups
Deposits held for sale
Insurance liabilities
Total
30 June
2022
31 December
2021
-
-
250
250
-
-
-
4,539
23,979
282
28,800
6,453
23,124
29,577
In December 2021, Danske Bank entered into an agreement for the sale of Danica Pensjonforsikring AS (Danica Pension business segment in Norway)
to Storebrand. The sale, which included assets and liabilities under insurance contracts, was approved by the Norwegian authorities in June 2022 and
subsequently settled.
Loans held for sale and associated deposits consists of loan portfolios where the Group has entered into sales agreements. In July 2021, Danske Bank
entered into a binding contract for the sale of the business activities of Danske Bank International in Luxembourg to Union Bancaire Privée SA. The
sale, which included loans, assets under management and deposits, settled in the first quarter of 2022.
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. The Group expects to sell the properties through a real estate agent within 12 months from the date of
acquisition. The properties comprise properties in Denmark and in other countries.
Notes – Danske Bank Group
G8. 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
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
Other provisions, including litigations
Total
Danske Bank / Interim report – first half 2022 52/85
30 June
2022
31 December
2021
3,579
15,904
2,051
1,236
7,933
2,898
210
3,450
18,558
2,451
2,263
8,583
3,922
206
33,810
39,433
46,718
4,675
380
1,523
2,878
3,705
5
633
41,191
5,845
441
1,986
3,909
2,335
5
557
60,518
56,268
In the table above showing the composition of Other liabilities, the line item Sundry creditors included provisions for customer remediation of DKK 380
million (31 December 2021: DKK 603 million), provisions for restructuring costs of DKK 300 million (31 December 2021: DKK 327 million) and the
provision of DKK 1.5 billion (31 December 2021: 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 half 2022 53/85
Notes – Danske Bank Group
G9. 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 35,272 million (31 December
2021: DKK 35,698 million). The loans are part of the net investment in those units and the foreign currency gains/losses on these loans are recognised in
Other comprehensive income. The funding of the loans is partly done in DKK in order to create a so-called structural FX hedge position in accordance with
banking regulations, i.e. to reduce the impact on capital ratios resulting from changes in the risk exposure amount due to changes in currency rates. With
effect from 1 January 2021, the Group’s net investment in its subsidiaries Danske Hypotek AB (Sweden) and Danske Mortgage Bank Plc (Finland) has been
included in the structural FX hedge position to extend the hedge to the risk exposure amount measured by currency for EUR, NOK and SEK across the entire
Group balance sheet, although with constraints to the size of the loans to the foreign branches and the net investments in the foreign subsidiaries. This
strategy of partly hedging the sensitivity to capital ratios from volatility in foreign currency rates, increases the volatility in Other comprehensive income and
the Foreign currency translation reserve in equity under IFRS since it decreases the hedge of the currency risk on the net investments in those units. As at
30 June 2022, the structural FX hedge position totalled DKK 41,465 million (31 December 2021: DKK 39,749 million) and a loss DKK 1,222 million has
been recognised in Other comprehensive income during the first half of 2022, primarily due to a depreciation of both NOK and SEK against DKK throughout
the first half of 2022. During the first half of 2021, a gain of DKK 324 million related to the structural FX hedge position was recognised in Other comprehen-
sive income mainly due to a strengthening of NOK against DKK throughout the first half of 2021.
G10. Guarantees, commitments and contingent liabilities
Contingent liabilities consist of possible liabilities arising from past events. The existence of such liabilities will be confirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the Group’s control. Contingent liabilities that can, but are not likely to, result in
an outflow of economic resources are disclosed.
The Group uses a variety of loan related financial instruments to meet customers’ financial requirements. Instruments include loan offers and other
credit facilities, guarantees and instruments not recognised in the balance sheet. If an instrument is likely to result in a payment obligation, a liability is
recognised under Other liabilities corresponding to the present value of expected payments.
(a) Guarantees
(DKK millions)
Financial guarantees
Other guarantees
Total
(b) Commitments
(DKK millions)
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
Total
30 June 31 December
2021
2022
6,501
74,092
6,267
74,733
80,593
81,000
30 June 31 December
2021
2022
261,778
192,157
15,598
271,862
205,503
16,183
469,533
493,549
In addition to credit exposure from lending activities, loan offers made and uncommitted lines of credit granted by the Group amounted to DKK 201 billio n
(31 December 2021: DKK 194 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 Special Crime Unit (“SCU”) (formerly the Danish State Prosecutor for Serious Eco-
nomic and International Crime) with violating 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, SCU added violation of Section 71 of the Danish Financial Business Act for governance and control failures in the
period from 1 February 2006 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 half 2022 54/85
Notes – Danske Bank Group
G10. Guarantees, commitments and contingent liabilities continued
The Bank is reporting to, responding to and cooperating with various authorities, including SCU, 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 that the Bank had planned to complete during 2020
has been finalised and the Bank has reported the findings to relevant authorities. The Bank continues to fully cooperate and will provide the authorities with
further information if and when requested. On 28 April 2022, the bank announced that it had entered into initial discussion with US and Danish Authoritie s
on the resolution of the Estonia matter. The Bank is in continued discussions with these authorities. 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 is likely to 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 3 March 2019, a court case was initiated against Danske Bank 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 decision to dismiss was confirmed by the Eastern High Court on appeal on 1
April 2022. The claimants have applied for permission to appeal the Eastern High Court’s decision to the Supreme Court. In March 2019, October 2019,
January 2020, March 2020, September 2020, and February 2021 a total of 320 separate cases were initiated, of which 318 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 1.6 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 inves-
tors 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, which was increased to approximately DKK 147 million on 3 Januar y
2022. 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 198 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 litigatio n
funder Deminor Recovery Services. The total claim amount is approximately DKK 3.2 billion. The main hearing was scheduled to be held in September
2021, but this hearing was cancelled after a default judgement was issued on 14 September 2021. The case was subsequently resumed on 15 Septem-
ber 2021, and the main hearing has been rescheduled for September and October 2022. 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. On 12 November 2021, the Bank received a joinder statement of claim from the claimants requesting that Danske Bank be joined to the
case initiated on 20 February 2020 against Thomas F. Borgen. The claim amount is currently limited to DKK 10 million with a reservation to increase
this to the full amount of the claim initiated against Thomas F. Borgen on 20 February 2020. The court has stayed the claim against the Bank pending
resolution of the claims pending before the Eastern High Court. The court has stated that the claim against the Bank will not be joined to the claim against
Thomas F. Borgen but will instead continue on a standalone basis before the Copenhagen City Court.
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 2016 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 allegedly 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. On 18 March 2022, the
defendants separately filed motions seeking dismissal of this action. Those motions remain pending. 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 dialogue with public authori-
ties, such as the Danish FSA and the Danish Tax Agency on other matters. The Danish Data Protection Agency has filed a criminal complaint against
Danske Bank for the violation of the General Data Protection Regulation (GDPR) and recommends that the Danish prosecution service impose a fine of
DKK 10 million on Danske Bank. 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 G8.
Danske Bank / Interim report – first half 2022 55/85
Notes – Danske Bank Group
G10. 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 age, 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 least 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 operatin g
expenses.
If the Resolution Fund does not have sufficient means to make the required payments, extraordinary contributions of up to three times 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 made 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 other 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.
With effect from 1 April 2022, Danske Bank A/S is no longer registered jointly with all significant Danish entities of Danske Bank Group for financia l
services employer tax and VAT, for which Danske Bank A/S and the entities had been jointly and severally liable.
Danske Bank / Interim report – first half 2022 56/85
Notes – Danske Bank Group
G11. Assets provided or received as collateral
As at 30 June 2022, the Group had deposited securities (including bonds issued by the Group) worth DKK 34.3 billion as collateral with Danish and
international clearing centres and other institutions (31 December 2021: DKK 42.1 billion).
As at 30 June 2022, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 99.9 billion as collateral for derivative s
transactions (31 December 2021: DKK 73.2 billion).
As at 30 June 2022, the Group had registered assets (including bonds and shares issued by the Group) under insurance contracts and unit-linke d
investment contracts worth DKK 419.3 billion (31 December 2021: DKK 514.5 billion) as collateral for policyholders’ savings of DKK 414.9 billion (31
December 2021: DKK 493.1 billion).
As at 30 June 2022, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 744.9 billio n
(31 December 2021: DKK 818.9 billion) as collateral for bonds issued by Realkredit Danmark. Similarly, the Group had registered loans and other assets
worth DKK 289.2 billion (31 December 2021: DKK 325.1 billion) as collateral for covered bonds issued under Danish, Finnish and Swedish law.
The table below shows assets provided as collateral for liabilities or contingent liabilities. Assets provided as collateral under repo transactions are
shown separately whereas the types explained above are included in the column ‘Other’.
(DKK millions)
Repo
Other
Total
Repo
Other
Total
30 June 2022
31 December 2021
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
-
215,040
-
-
-
-
41,020
64,800
739,641
308,294
352,442
42
41,020
279,841
739,641
308,294
352,442
42
-
193,258
-
-
-
-
29,928
70,857
809,872
339,183
433,672
50
29,928
264,115
809,872
339,183
433,672
50
Total
Own issued bonds
215,040
35,113
1,506,239
80,731
1,721,279
115,844
193,258
32,592
1,683,562
90,192
1,876,820
122,784
Total, including own issued bonds
250,154
1,586,970
1,837,123
225,850
1,773,754
1,999,604
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 215.0 billion as at 30 June 2022 (31 December 2021: DKK 193.3 billion).
As at 30 June 2022, the Group had received securities worth DKK 364.0 billion (31 December 2021: DKK 297.8 billion) as collateral for reverse repo
transactions, securities lending, derivatives transactions and other transactions entered into on the standard terms for such transactions. As the party
receiving the collateral, the Group is entitled in most cases to sell the securities or provide the securities as collateral for other loans in exchange for
returning similar securities to the counterparty at the expiry of the transactions. As at 30 June 2022, the Group had sold securities or provided securities
as collateral worth DKK 176.2 billion (31 December 2021: DKK 133.0 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 2021 provide more details on assets received as collateral in connection with
ordinary lending activities.
Danske Bank / Interim report – first half 2022 57/85
Notes – Danske Bank Group
G12. Fair value information for financial instruments
Financial instruments are recognised in the balance sheet at fair value or amortised cost.
(DKK millions)
Fair value
Amortised cost
Fair value
Amortised cost
30 June 2022
31 December 2021
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
-
73,753
661,320
155,410
-
944,084
66,055
598,827
-
209,680
42,222
-
151,951
1,083,740
-
-
-
-
-
39,462
509,590
157,056
-
1,024,461
76,654
522,184
-
293,386
31,694
-
146,721
1,027,442
-
-
-
4,539
Total
2,499,448
1,487,593
2,329,407
1,503,781
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
84,619
590,251
159,520
704,842
-
66,660
-
-
-
-
83,874
-
1,149,810
-
194,162
-
-
106,467
39,503
3,705
84,763
374,959
134,332
794,909
-
76,982
-
-
-
-
88,213
-
1,157,698
-
223,854
-
6,453
107,654
39,321
2,335
Total
1,605,891
1,577,522
1,465,945
1,625,529
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 2021 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 value d
substantially on the basis of other observable input are recognised in the Observable input category. This category covers instruments such as derivative s
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 inpu t
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 2021 provides information on the difference between the carrying amount and the fair value of financial instruments rec-
ognised at amortised cost. No significant change to this difference has occurred during the first six months of 2022.
Danske Bank / Interim report – first half 2022 58/85
Notes – Danske Bank Group
G12. Fair value information for financial instruments continued
(DKK millions)
30 June 2022
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
-
10,256
217,548
6,601
129,273
-
-
66,055
155,800
128,206
-
73,753
409,309
16,228
-
24,246
-
944,084
-
20,842
4,949
238,020
-
1,302
-
75
-
1,891
-
-
3,487
46,219
1,304
Total
73,753
420,868
233,776
6,676
153,519
1,891
944,084
66,055
180,129
179,374
239,324
Total
713,739
1,731,431
54,278
2,499,448
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
-
9,191
173,664
-
704,842
-
84,619
402,843
2,568
159,520
-
66,660
-
1,967
17
-
-
-
84,619
414,001
176,249
159,520
704,842
66,660
Total
887,697
716,210
1,984
1,605,891
(DKK millions)
31 December 2021
Financial assets
Due from credit institutions and central banks
Derivatives
Trading portfolio bonds
Trading portfolio shares
Investment securities, bonds
Investment securities, shares
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts, bonds
Assets under insurance contracts, shares
Assets under insurance contracts, derivatives
Quoted prices
Observable
input
Non-observable
input
Total
-
3,925
226,350
11,977
132,415
-
-
76,654
176,479
156,574
-
39,462
254,193
10,933
-
23,411
-
1,024,461
-
23,610
4,998
107,636
-
2,106
-
106
-
1,230
-
-
5,300
45,353
2,234
39,462
260,224
237,283
12,083
155,826
1,230
1,024,461
76,654
205,389
206,925
109,870
Total
784,374
1,488,704
56,329
2,329,407
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
-
3,929
130,396
-
794,909
-
84,763
236,240
2,443
134,332
-
76,982
-
1,835
116
-
-
-
84,763
242,004
132,955
134,332
794,909
76,982
Total
929,234
534,760
1,951
1,465,945
Danske Bank / Interim report – first half 2022 59/85
Notes – Danske Bank Group
G12. 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)
30 June 2022
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
31 December 2021
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
Carrying amount
Increase
Decrease
Sensitivity (change in fair value)
Gains/losses for the period
Realised
Unrealised
46,219
1,949
3,487
638
45,353
1,220
5,300
2,504
-
195
75
-
-
122
101
-
-
195
75
-
-
122
101
-
2,822
11
-89
-
3,950
125
120
-
328
-13
-10
-222
7,802
-12
117
-909
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 unobservable inpu t
disclosed in the table is calculated as a 10% increase or 10% decrease in fair value. Under current market conditions, a 10 % decrease in the fair value
is considered to be below a possible alternative estimate of the fair value at the end of the period. The unrealised adjustments in the six month period
ended 30 June 2022 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 measuremen t
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 adjustmen t
for model risk.
Shares, bonds and derivatives valued on the basis of non-observable input
Reconciliation from beginning to end of period
30 June 2022
31 December 2021
(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
46,573
3,148
4,491
-6,044
-
-
5,300
-99
101
-1,815
-
-
2,504
-222
-698
46
-3
-988
36,028
11,865
9,556
-10,611
-
-265
7,438
237
122
-2,497
-
-
Fair value end of period
48,168
3,487
638
46,573
5,300
3,083
-909
-191
161
-2
363
2,504
The value adjustment through profit or loss is recognised under Net trading income or loss. The transfer of derivatives to the Observable input category
consists primarily of maturity reductions, implying that the yield curves have become observable.
Danske Bank / Interim report – first half 2022 60/85
Notes – Danske Bank Group
G13. 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 second half of 2022. After the merger, Danske Bank will own 25% of the new parent company, Vipps AS.
Danske Bank / Interim report – first half 2022 61/85
Notes – Danske Bank Group
Risk Management
The consolidated financial statements for 2021 provide a detailed description of the Group’s risk management practices.
Breakdown of credit exposure
Lending activities
Total
Core
Non-core
Counterparty
credit risk
Trading and
investment
securities
Customer-
funded
investments
(DKK billions)
30 June 2022
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
Assets 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 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
Assets held for sale
Off-balance-sheet items
Guarantees
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
203.0
116.0
661.3
307.4
1,083.7
944.1
66.1
637.5
-
80.6
261.8
192.2
15.6
203.0
42.2
-
-
1,082.4
739.6
-
-
-
80.6
260.2
192.2
-
4,569.1
2,600.2
286.6
71.2
509.6
303.8
1,027.4
1,024.5
76.7
547.8
28.5
81.0
271.9
205.5
16.2
286.6
31.7
-
-
1,026.1
809.9
-
-
4.5
81.0
270.3
205.5
-
-
-
-
-
1.3
-
-
-
-
-
1.6
-
-
2.9
-
-
-
-
1.3
-
-
-
-
-
1.6
-
-
2.9
-
73.8
420.9
-
-
204.4
-
-
-
-
-
-
-
-
-
240.5
307.4
-
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
66.1
637.5
-
-
-
-
15.5
699.1
547.9
719.0
-
39.5
260.2
-
-
214.6
-
-
-
-
-
-
-
-
-
249.4
303.8
-
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
76.7
547.8
24.0
-
-
-
16.0
514.3
553.3
664.5
Total
4,450.5
2,715.6
In addition to credit exposure from lending activities, Danske Bank had made uncommitted loan offers and granted uncommitted lines of credit of DKK
201 billion at 30 June 2022 (31 December 2021: DKK 194 billion). These items are included in the calculation of the total risk exposure amount in
accordance with the Capital Requirements Directive.
The Group’s direct exposure to Russia and Ukraine amounted to less than DKK 0.1 billion at 30 June 2022.
Danske Bank / Interim report – first half 2022 62/85
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.
The Group implemented a new Definition of Default in January 2022 in order to align the existing definition of default for accounting purposes with the
regulatory definition. According to the new definition of default, all exposures in stage 3 are considered default. As a result, all non-performing loans are
now considered default, and hence equal to the total of stage 3 exposures.
Although Stage 3 and default (rating 11) are generally aligned, a small amount of credit exposure in stage 3 can be found outside default. This is due to
impairment staging being updated monthly (after each balance day), whereas default is updated daily. For the same reason, some credit exposure in
default is outside stage 3. For a number of industries the exposure in stage 2 has increased since the end of 2021. This is mainly driven by (forward-
looking) post model adjustments related to global tensions etc. and does not reflect a weakening in credit quality measured by e.g. customer classification .
For further details about the Group’s credit risk management and the use of information on expected credit losses for risk management purposes, see
Risk Management 2021.
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 customers can be found on
page 162 in Annual report 2021.
30 June 2022
(DKK billions)
PD level
Upper Lower
Gross exposure
Expected credit loss
Stage 1 Stage 2 Stage 3 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
120.1
293.6
560.2
638.0
484.1
250.2
84.6
9.5
1.0
0.4
0.2
0.1
0.2
1.2
1.8
7.0
30.1
50.2
34.6
4.0
13.5
0.4
-
-
-
-
-
-
0.1
0.2
0.1
0.4
34.0
-
-
0.1
0.2
0.4
0.5
1.2
0.5
-
-
0.2
-
-
-
-
0.1
0.4
1.9
2.7
0.7
0.9
-
-
-
-
-
-
-
-
-
-
0.2
9.7
120.1
293.6
560.2
637.8
483.8
249.7
83.4
9.0
0.9
0.4
-
0.1
0.2
1.2
1.7
6.9
29.7
48.2
32.0
3.3
12.6
0.4
-
-
-
-
-
-
0.1
0.2
0.1
0.2
24.3
103.7
173.1
268.9
294.9
174.9
88.9
25.7
2.5
0.2
0.2
0.1
-
0.1
0.8
0.8
4.0
15.9
16.9
6.6
0.2
2.8
0.1
-
-
-
-
-
-
-
0.1
-
-
2.1
2,442.0
143.1
34.9
3.1
6.8
9.9
2,438.9
136.3
25.0
1,132.9
48.3
2.3
31 December 2021
(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
264.7
207.3
570.6
637.2
485.0
275.7
103.0
16.5
0.6
0.4
-
0.1
0.6
1.9
2.5
4.0
17.1
46.6
40.0
5.1
12.6
0.2
-
0.4
1.5
2.3
2.1
1.1
1.0
0.3
0.1
22.5
14.6
-
-
0.1
0.1
0.3
0.5
0.9
0.6
0.1
-
0.1
-
-
-
-
-
0.2
1.4
2.9
1.1
1.2
-
-
-
-
-
-
-
-
0.1
-
4.9
7.3
264.7
207.3
570.6
637.0
484.7
275.1
102.1
16.0
0.5
0.4
0.1
0.1
0.6
1.9
2.5
4.0
16.9
45.2
37.1
4.0
11.4
0.2
-
0.4
1.4
2.2
2.1
1.1
1.0
0.2
0.1
17.7
7.3
245.1
80.6
264.9
287.3
150.3
94.6
30.1
3.8
0.1
0.1
0.1
-
0.2
0.9
0.8
0.9
5.9
13.8
11.0
0.5
3.4
-
-
-
-
0.1
0.1
-
-
-
-
3.0
0.2
2,560.9
130.6
46.0
2.7
6.8
12.4 2,558.2
123.8
33.6 1,156.8
37.5
3.5
Exposures, expected credit losses and collateral in default have increased compared to the end of 2021 due to the implementation of the new definitio n
of default in January 2022. At the same time, stage 3 decreased primarily due to 1) final adjustments of staging during the implementation of new
definition of default that is now aligned to European Banking Authority requirements and 2) write-offs. The stage 3 coverage ratio is 81%.
Danske Bank / Interim report – first half 2022 63/85
Notes – Danske Bank Group
Credit exposure continued
Credit portfolio in core activities broken down by industry (NACE) and stages
The table below breaks down credit exposure by industry. The industry segmentation is based on the classification principles of the Statistical Classifi-
cation of Economic Activities in the European Community (NACE) standard that has been adapted to the Group’s business risk approach used for the
active management of the credit portfolio.
30 June 2022
(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
260.4
131.0
53.8
27.1
79.3
274.8
47.1
62.5
8.3
13.6
22.0
41.0
193.3
40.6
31.9
58.3
34.7
27.0
24.3
13.0
83.6
914.3
1.3
2.7
9.0
2.2
9.3
21.8
6.2
7.7
5.5
0.5
1.1
3.3
4.1
4.4
4.0
5.0
1.2
0.8
0.9
3.4
3.5
45.3
-
0.5
3.6
0.2
1.5
3.9
1.3
0.7
1.2
-
0.2
-
0.8
0.2
1.8
0.8
5.4
0.7
0.2
0.5
-
11.4
-
0.1
0.3
-
0.1
0.6
0.1
-
-
-
0.3
-
0.1
-
-
0.2
-
-
-
-
-
1.1
-
0.1
1.0
0.1
0.4
1.5
0.6
0.3
0.2
-
-
0.1
0.1
0.1
0.1
0.2
0.2
-
-
0.3
0.1
1.5
-
0.2
1.0
0.1
0.6
0.8
0.6
0.3
0.4
-
-
-
0.1
0.1
0.5
0.3
1.4
0.1
0.1
0.1
-
3.3
260.4
131.0
53.5
27.1
79.2
274.2
47.0
62.5
8.3
13.6
21.7
41.0
193.3
40.6
31.9
58.1
34.6
27.0
24.3
12.9
83.6
913.1
1.3
2.6
8.0
2.1
8.9
20.4
5.6
7.4
5.4
0.5
1.1
3.2
4.0
4.3
3.9
4.8
1.1
0.8
0.9
3.1
3.4
43.8
-
0.3
2.6
0.1
0.9
3.1
0.8
0.4
0.9
-
0.2
-
0.6
0.1
1.2
0.4
4.0
0.6
0.1
0.4
-
8.1
257.7
123.0
13.3
21.9
71.6
58.7
35.0
48.7
3.6
11.7
18.1
38.5
32.0
29.1
21.3
48.0
23.1
12.6
22.4
6.1
64.1
172.2
-
1.8
1.4
1.1
7.2
2.5
2.7
5.1
1.1
0.2
0.2
2.9
0.7
3.1
2.9
3.3
0.9
0.3
0.6
1.4
2.7
6.2
-
-
0.2
-
0.5
0.2
0.2
0.1
0.2
-
-
-
-
-
0.2
0.1
-
0.4
-
0.1
-
-
Total
2,442.0
143.1
34.9
3.1
6.8
9.9 2,438.9
136.3
25.0
1,132.9
48.3
2.3
As at 30 June 2022, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 19.7 billion (31 December
2021: DKK 18.3 billion) and expected credit losses of DKK 0.8 billion (31 December 2021: DKK 1.8 billion). Those exposures represent the majority of
the exposures in stage 3 within the Shipping, oil and gas industry at the end of June 2022.
Danske Bank / Interim report – first half 2022 64/85
Notes – Danske Bank Group
Credit exposure continued
31 December 2021
(DKK billions)
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Public institutions
Financials
Agriculture
Automotive
Capital goods
Commercial property
Construction and building materials
Consumer goods
Hotels, restaurants and leisure
Metals and mining
Other commercials
Pharma and medical devices
Private housing co-ops and
non-profit associations
Pulp, paper and chemicals
Retailing
Services
Shipping, oil and gas
Social services
Telecom and media
Transportation
Utilities and infrastructure
Personal customers
332.8
122.0
57.6
25.3
71.4
291.2
46.1
71.1
8.5
12.6
13.3
53.1
207.4
39.0
28.4
57.9
31.3
25.5
22.2
14.3
76.1
953.9
1.4
2.8
5.6
1.6
6.9
19.6
4.5
4.3
5.4
0.4
1.1
5.5
4.2
1.5
1.7
3.3
3.2
0.9
0.5
2.0
4.6
49.6
-
0.4
4.8
0.3
1.6
5.5
1.9
1.0
1.9
0.1
0.1
-
0.9
0.2
2.4
0.8
6.6
1.0
0.2
0.5
-
15.9
-
0.1
0.3
-
-
0.5
-
-
-
-
0.2
-
0.1
-
-
0.2
0.1
-
-
-
-
1.1
-
0.2
0.9
0.1
0.3
1.5
0.4
0.3
0.2
-
-
0.1
0.2
-
0.1
0.2
0.3
0.1
-
0.2
0.1
1.6
1.4
- 332.8
2.5
0.2 122.0
4.7
57.3
1.2
1.5
25.3
0.1
0.6
6.7
71.3
1.2 290.7 18.1
4.1
46.1
0.7
4.0
71.0
0.3
5.2
8.5
0.4
0.4
12.6
-
1.1
13.1
-
5.5
53.1
-
-
0.2
3.6
0.2
1.0
4.3
1.2
0.7
1.4
-
0.1
-
0.2 207.3
39.0
0.1
28.4
1.0
57.7
0.4
31.2
2.4
25.4
0.3
22.2
0.1
14.3
0.1
76.0
-
0.7
0.1
1.4
0.5
4.2
0.7
0.1
0.4
-
3.1 952.8 48.0 12.8
4.0
1.5
1.6
3.2
2.9
0.8
0.5
1.8
4.4
330.1
107.9
12.2
19.9
62.6
59.3
32.8
53.0
3.0
10.0
9.1
50.7
34.1
27.8
18.1
46.9
16.8
9.3
20.3
6.5
56.4
170.1
0.1
1.4
0.8
0.7
5.7
1.9
1.9
2.6
0.8
0.1
0.2
4.5
0.5
0.3
1.0
1.9
1.4
0.4
0.3
0.8
4.2
5.8
-
-
0.1
0.1
0.5
0.6
0.5
-
0.2
-
-
-
0.1
-
0.2
0.1
-
0.4
-
0.1
-
0.5
Total
2,560.9
130.6
46.0
2.7
6.8 12.4 2,558.2 123.8 33.6 1,156.8
37.5
3.5
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 2021, a table showing collateral by type (after haircut) is included. The mitigating effect from collateral at the end of June 2022 can be
found as the difference between the columns ‘Net exposure’ and ‘Net exposure, ex collateral’ and amounted to DKK 1,416.7 billion at 30 June 2022 (31
December 2021: DKK 1,517.8 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 3.6 billion (31 December 2021: DKK 4.9 billion) with the guarantees
covering DKK 3.3 billion of the loans (31 December 2021: DKK 4.0 billion). A large part of the guarantees relates to Northern Ireland.
Danske Bank / Interim report – first half 2022 65/85
Notes – Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
30 June 2022
(DKK billions)
Personal Customers
Personal Customers
Denmark
Personal Customers
Nordic
Total
Personal Customers
Business Customers
Asset Finance
Business Customers
Commercial Real Estate
Total
Business Customers
Large Corporates &
Institutions
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
499.5
25.8
7.5
1.0
1.2
2.4
498.4
24.6
5.1
76.5
4.1
-
404.0
15.3
3.4
0.2
0.3
0.8
403.8
15.0
2.6
98.2
2.0
903.5
41.1
10.9
1.2
1.5
3.1
902.3
39.6
7.7
174.7
6.1
-
-
47.8
327.7
297.9
13.8
45.7
10.8
1.1
12.2
1.5
0.1
0.9
0.3
0.6
3.2
0.4
0.3
3.7
0.3
47.7
326.8
297.6
13.2
42.5
10.4
0.8
8.5
1.1
19.0
120.4
56.4
2.5
14.3
1.4
0.1
1.2
-
673.4
70.3
14.8
1.3
4.2
4.3
672.1
66.1
10.5
195.8
18.3
1.3
591.3
27.2
7.4
Northern Ireland
91.4
4.3
1.8
Group Functions
182.4
0.2
-
0.4
0.2
-
1.0
2.0
590.9
26.2
5.4
527.2
23.1
0.9
0.1
0.5
91.2
4.2
1.3
53.0
-
-
182.4
0.2
-
182.2
0.7
0.2
-
-
Total
2,442.0
143.1
34.9
3.1
6.8
9.9
2,438.9
136.3
25.0
1,132.9
48.3
2.3
Danske Bank / Interim report – first half 2022 66/85
Notes – Danske Bank Group
Credit exposure continued
31 December 2021
(DKK billions)
Personal Customers*
Personal Customers
Denmark
Personal Customers
Nordic
Personal Customers
Other
Total
Personal Customers
Business Customers*
Asset Finance
Business Customers
Commercial Real Estate
Business Customers
Other
Total
Business Customers
Large Corporates &
Institutions
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
532.7
23.4
12.0
0.9
1.2
2.3
531.8
22.2
9.8
63.9
2.3
0.3
400.8
20.1
3.2
0.2
0.3
0.7
400.6
19.8
2.6
103.8
2.9
0.2
4.0
0.2
0.1
-
-
-
4.0
0.2
0.1
0.9
0.1
--
937.5
43.7
15.3
1.1
1.5
3.0
936.4
42.2
12.5
168.6
5.3
0.5
48.8
349.8
313.8
10.7
35.5
9.8
0.9
15.8
1.7
0.1
0.9
0.1
0.4
3.5
0.2
0.2
4.5
0.4
48.8
348.9
313.7
10.3
32.0
9.6
0.7
11.4
1.4
17.5
122.0
54.4
2.0
9.7
1.3
0.1
1.7
0.1
-
-
-
-
-
-
-
-
-
-
-
-
712.4
56.0
18.4
1.1
4.0
5.0
711.4
52.0
13.4
193.9
13.0
1.9
560.5
25.4
10.1
Northern Ireland
93.7
5.4
2.0
Group Functions
256.7
0.1
-
0.3
0.1
-
1.1
3.8
560.2
24.2
6.3
482.2
18.4
0.9
0.1
0.6
93.6
5.3
1.4
55.9
0.7
0.1
-
-
256.7
0.1
-
256.3
0.1
-
Total
2,560.9
130.6
46.0
2.7
6.8
12.4
2,558.2
123.8
33.6
1,156.8
37.5
3.5
* Comparative information has been restated, as described in note G2(c).
Danske Bank / Interim report – first half 2022 67/85
Notes – Danske Bank Group
Credit exposure continued
Exposures subject to forbearance measures
The Group’s forbearance practices are described on page 169 in Annual Report 2021.
During the corona crisis, the Group has granted concessions to assist customers affected by the crisis. Such concessions represent an increase in gross
exposure of around DKK 20 billion, of which around DKK 10 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 2021 for the definition of when such
concessions are considered to be a forbearance measure. At the end of 2021, such concessions represented an increase in gross exposure of DKK 13
billion, of which around DKK 13 billion (net of expected credit losses) was considered forbearance measures. The concessions considered forbearance
measures relate primarily to Personal customers and the shipping, oil and gas, Hotels, restaurants and leisure, Consumer goods and Retailing industries .
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
*These loans are part of the total stage 3 loan amount.
30 June 2022
31 December 2021
Performing Non-performing*
Performing
Non-performing*
2,023
11,223
13,247
7,279
-
7,279
7,348
13,993
21,341
7,317
-
7,317
Notes – Danske Bank Group
Credit exposure continued
Allowance account in core activities
(DKK millions)
ECL allowance account as at 1 January 2021
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
Danske Bank / Interim report – first half 2022 68/85
Stage 1
Stage 2
Stage 3
Total
2,263
1,843
-180
-120
646
-629
-923
-5
21
-182
7,438
-1,604
649
-864
1,282
-1,483
1,172
-
54
160
12,853
-239
-469
984
1,839
-4,377
1,011
-
268
527
22,554
-
-
-
3,767
-6,489
1,259
-5
343
505
ECL allowance account as at 31 December 2021
2,733
6,804
12,397
21,935
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
859
-305
-18
476
-470
-176
-
-15
-16
-806
626
-364
636
-745
721
-2
-65
-31
-54
-321
382
980
-3,049
1,488
-1,945
59
-9
-
-
-
2,092
-4,263
2,033
-1,947
-21
-57
ECL allowance account as at 30 June 2022
3,067
6,774
9,930
19,772
ECL on assets derecognised relates to, for example, loans that have been modified significantly (e.g. due to restructuring) which have resulted in derec-
ognition of the original loans. The amount reflects normal credit procedures.
Danske Bank / Interim report – first half 2022 69/85
Notes – Danske Bank Group
Credit exposure continued
Allowance account in core activities broken down by segment
(DKK millions)
Personal
Customers*
Business
Customers*
Large
Corporates &
Institutions
Northern
Ireland
Group
Functions
Allowance
account
Total
ECL allowance account as at 1 January 2021
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
5,814
524
-864
304
-
12
-136
9,959
1,768
-2,023
934
-
2
-454
5,777
1,215
-3,333
152
-
257
1,159
ECL allowance account as at 31 December 2021
5,654
10,186
5,227
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
290
-430
394
-73
-18
15
1,043
-1,227
350
-445
-90
-46
734
-2,542
1,196
-1,311
105
-23
ECL allowance account as at 30 June 2022
5,831
9,772
3,385
* Comparative information has been restated, as described in note G2(c).
990
259
-266
-135
-5
71
-63
850
23
-64
86
-118
-16
-1
760
The method used for calculating expected credit losses is described in detail in note G15 of the Annual Report 2021.
15
2
-3
4
-
-
-1
17
2
-1
7
-
-
-1
22,554
3,767
-6,489
1,259
-5
343
505
21,935
2,092
-4,263
2,033
-1,947
-21
-57
24
19,772
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. That is, after the forecast period, the
macroeconomic scenarios revert slowly towards a steady state.
The applied scenarios that drive the expected credit loss calculation in the first half of 2022 have been updated with the latest macroeconomic data.
Compared to the end of 2021, the base and the upside scenarios have been revised to reflect expectations of higher inflation and interest rate hikes
fuelled by the war in Ukraine. The scenario weighting remained unchanged from the end of 2021.
The base case is an extension of the Group’s official view of the Nordic economies (the Nordic Outlook report). At 30 June 2022, the base case scenario
reflects an expectation of higher inflation and interest rates fuelled by the war in Ukraine. This results in a weaker GDP growth due to soaring energy
costs, skills shortages and wage pressures that affect consumers and businesses in the Nordic economies. Unemployment rates have been revised
downwards, which is reflective of a stronger performance of the labour market.
The upside scenario represents a slightly better outlook than the base case scenario across the macroeconomic parameters. In this scenario, consumers
spend a large proportion of the substantial savings accumulated during the pandemic. There is a consumer-led global recovery, and in this scenario there
is slightly more support for the housing market. In this scenario, the Central Banks are expected to hike rates earlier as inflation expectations will be
higher.
The Group’s downside scenario is a severe recession scenario, calibrated to a level of severity resembling the recession in 2008-2009, however with a
slightly less steep decline in GDP and other variables reflecting that the economy is no longer on top of the economic cycle. A trigger of the economic
setback could be continued macroeconomic worsening and challenges linked to high business costs. This adversely impacts the labour market, results
in higher and more persistent unemployment, sending inflation to plummet. This would lead to a severe slowdown in the economies in which the Group is
represented.
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.
Danske Bank / Interim report – first half 2022 70/85
Notes – Danske Bank Group
Credit exposure continued
30 June 2022
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base-case
2023
2022
2024
Downside
2023
2022
2024
2022
Upside
2023
2024
2.9
3.6
4.7
4.5
3.6
3.6
1.0
1.9
1.8
2.4
4.5
2.3
2.2
0.5
1.3
2.0
1.6
2.3
4.4
1.9
1.8
2.4
1.3
2.0
-3.1
-4.6
8.0
-0.3
-3.5
-15.1
-0.3
-0.5
-1.5
-2.2
9.5
0.6
-0.6
-10.2
-0.4
-0.4
0.3
0.5
10.0
0.6
-0.1
-1.5
-0.5
0.2
3.6
4.6
4.5
5.1
4.6
4.6
1.5
2.1
2.1
3.0
4.2
2.7
2.1
1.5
1.8
2.2
1.5
1.6
4.1
2.1
1.6
3.4
1.8
2.2
At 31 December 2021, the following base case and downside scenarios were used:
31 December 2021
GDP
Industrial Production
Unemployment
Inflation
Consumption Expenditure
Property prices - Residential
Interest rate - 3 month
Interest rate - 10 year
Base case
2023
2022
2024
2022
2023
2024
2022
2023
2024
Downside
Upside
3.4
4.4
5.0
1.6
4.3
2.6
0.2
0.9
1.9
2.6
4.9
1.6
2.0
2.3
0.3
1.1
1.8
2.6
4.8
1.6
1.8
2.4
0.4
1.2
-1.5
-2.2
9.9
-0.7
-0.7
-8.3
-0.6
-1.1
0.3
0.5
10.4
-0.1
-0.6
-1.5
-0.6
-0.7
0.2
0.4
10.6
0.1
-0.2
-0.3
-0.7
-0.7
4.5
5.9
4.7
2.3
5.4
3.6
0.3
1.1
1.7
2.4
4.6
1.9
1.5
3.3
0.3
1.5
1.6
2.2
4.6
1.9
1.6
2.4
0.7
1.5
The base case scenario enters with a probability of 70% (31 December 2021: 70%), the upside scenario with a probability of 10% (31 December 2021:
10%) and the downside scenario with a probability of 20% (31 December 2021: 20%). On the basis of these assessments, the allowance account as at
30 June 2022 amounted to DKK 19.8 billion (31 December 2021: 21.9 billion). If the base case scenario was assigned a probability of 100%, the
allowance account would decrease DKK 2.1 billion (31 December 2021: 1.7 billion). Compared to the base case scenario, the allowance account would
increase DKK 10.6 billion (31 December 2021: 8.5 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 0.2 billion (31 December 2021: 0.2 billion) compared to the base case scenario. It
should be noted that the expected credit losses in the individual scenarios (i.e. without the weighting) do not represent forecasts of expected credit losses
(ECL).
Post-model adjustments
Management applies judgement when determining the need for post-model adjustments. At 30 June 2022, the post-model adjustments amounted to
DKK 6.0 billion (31 December 2021: 6.3 billion). The post-model adjustments primarily relate to the following types of risks:
•
specific macroeconomic risks on certain industries not fully captured by the expected credit loss model, for instance the Agriculture industry. For
such industries, supplementary calculations are made in order to ensure sufficient impairment coverage. This also includes post-model adjustments
relating to secondary effects from the war in Ukraine and 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.
Notes – Danske Bank Group
Credit exposure continued
Post-model adjustments by type and mostly impacted industries
(DKK billions)
Coverage of individual industries and types
Agriculture
Capital goods
Commercial Property
Oil & Gas
Personal customers (including other retail exposures)
Others**
Coverage of individual industries and types
Model changes
Total
Danske Bank / Interim report – first half 2022 71/85
30 June
2022
31 December
2021*
1.0
0.2
1.4
-
1.5
1.9
6.0
-
6.0
0.9
0.2
1.5
0.2
1.7
0.9
5.4
0.9
6.3
* Post-model adjustments for Capital goods and Oil & Gas are now presented separately in 2022 (previously included within Others). In addition, DKK 2.2 billion of process related post-model
adjustments as at 31 December 2021 have been redistributed between the individual industries. As such, 2021 post-model adjustments have been restated. There is no change to the total
value of post-model adjustments at 31 December 2021.
** No individual industry included in Others exceeds DKK 0.2 billion at 30 June 2022 (31 December 2021: DKK 0.1 billion) except Construction and Building material, where the post-model
adjustment increased to DKK 0.6 billion due to the uncertain outlook within this industry.
In first half of 2022, the total balance of post-model adjustments has been reduced by a net amount of DKK 0.3 billion compared to the end of 2021. A
reduction of DKK 0.9 billion was due to a release of the post-model adjustment reserved to cover the model changes for the new Definition of Default
that was implemented in January 2022. The post-model adjustment related to Oil & Gas was released in the second quarter of 2022 due to improved
outlook resulting from the high energy prices contributing to a reduction of DKK 0.2 billion.
The current macroeconomic uncertainties characterized by the supply chain disruptions, labour shortages and rising inflation have been exacerbated
by the war in Ukraine giving rise to a new set of challenges that affect economic and business activity. In light of these developments, the Group has
formulated a new post-model adjustment of DKK 1.4 billion to address the uncertainties presented by the secondary effects from the economic sanc-
tions affecting specific industries such as Agriculture, Capital goods, etc. The post-model adjustment cuts across industries that are sensitive to prices
rises on energy, agriculture and metals, which have been assessed for idiosyncratic risks to ensure a prudent coverage of expected credit loss in the
Group’s portfolios. Likewise, post-model adjustments associated with the property segment (commercial property and retail mortgages) and process
related risks have been increased due to higher uncertainty related to inflation and increasing interest rates.
On the other hand, Covid-related uncertainties have been reduced from the end of 2021, as the new virus variants has not resulted in prolonged lock-
downs, while business activity continued to rise. Post-model adjustments for Covid-related tail risks of DKK 0.5 billion remain spread across industry
portfolios and retail exposures.
Danske Bank / Interim report – first half 2022 72/85
Notes – Danske Bank Group
Credit exposure from Non-core lending activities
Credit portfolio in non-core activities broken down by industry (NACE) and stages
30 June 2022
(DKK millions)
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
Non-core banking
Personal customers
Commercial customers
Public Institutions
Non-core conduits etc.
28
-
28
-
2,768
-
-
-
-
41
-
-
-
-
103
Total
2,795
41
104
-
-
-
-
1
1
-
-
-
-
2
2
-
-
-
-
45
28
-
28
-
2,767
-
-
-
-
39
-
-
-
-
59
45
2,795
39
59
-
-
-
-
1
1
-
-
-
-
6
6
-
-
-
-
13
13
31 December 2021
(DKK millions)
Non-core banking
Personal customers
Commercial customers
Public Institutions
Non-core conduits etc.
Total
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
126
-
121
5
2,771
2,897
6
-
5
-
-
6
14
6
9
-
817
831
-
-
-
-
-
-
2
-
2
-
-
2
14
6
9
-
795
126
-
120
5
2,771
809
2,897
3
-
3
-
-
3
-
-
-
-
22
33
-
27
5
122
22
154
-
-
-
-
-
-
-
-
-
-
19
19
Credit portfolio in non-core activities broken down by rating category and stages
30 June 2022
(DKK millions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
31 December 2021
(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
1,329
975
454
-
1
36
1
-
-
-
-
-
-
-
-
2
-
-
20
-
18
-
-
-
-
-
-
-
-
-
-
-
104
2,795
41
104
-
-
1
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
2
-
-
-
2
-
-
-
-
-
-
-
-
-
-
45
1,329
975
453
-
1
36
1
-
-
-
-
-
-
-
-
2
-
-
18
-
18
-
-
-
-
-
-
-
-
-
-
-
59
-
-
-
-
-
-
-
-
-
-
-
45
2,795
39
59
1
-
-
-
-
2
-
-
3
-
-
-
6
-
-
-
-
-
-
-
-
-
-
13
13
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
0.01
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
587
1,026
1,086
127
2
48
20
-
-
-
1
-
2
-
-
-
2
-
-
-
18
809
-
-
-
-
2
-
2
-
-
-
2,897
6
831
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
-
-
-
-
-
-
-
-
-
5
804
587
1,026
1,085
127
2
48
20
-
-
-
1
2
809
2,897
-
-
-
-
-
2
-
-
-
-
-
3
-
2
-
-
-
2
-
-
-
13
5
122
14
3
1
-
-
15
-
-
-
-
22
154
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
-
-
-
-
13
4
19
Notes – Danske Bank Group
Counterparty credit risk and credit exposure from trading and investment securities
(DKK billions)
Counterparty credit risk
Derivatives with positive fair value
Reverse transactions and other loans at fair value¹
Credit exposure from other trading and investment securities
Bonds
Shares
Other unutilised commitments²
Total
Danske Bank / Interim report – first half 2022 73/85
30 June
2022
31 December
2021
420.9
278.2
539.2
8.6
0.1
260.2
254.1
539.8
13.3
0.1
1,247.0
1,067.6
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 277.8 billion (31 December 2021: DKK 252.3 billion), of which DKK 73.3 billion relates to credit institutions and central banks (31 December 2021: DKK 37.7 billion), and other primarily
short-term loans of DKK 0.4 billion (31 December 2021: DKK 1.7 billion), of which DKK 0.4 billion (31 December 2021: DKK 1.7 billion) relates to credit institutions and central banks.
2 Other unutilised commitments comprise private equity investment commitments and other obligations.
Derivatives with positive fair value
(DKK millions)
Derivatives with positive fair value before netting
Netting (under accounting rules)
Carrying amount
Netting (under capital adequacy rules)
Net current exposure
Collateral
Net amount
Derivatives with positive fair value after netting for accounting purposes:
Interest rate contracts
Currency contracts
Other contracts
30 June
2022
31 December
2021
1,128,715
707,847
420,868
311,968
108,900
83,534
654,261
394,037
260,224
183,395
76,829
59,732
25,366
17,098
269,257
150,599
1,012
187,176
72,468
580
420,868
260,224
Total
Bond portfolio
(DKK millions)
30 June 2022
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
161,782
3,079
13,639
52,340
4,344
895
4,408
8,336
16,352
25,855
69,279
82,686
32,927
758
8,570
7,701
Other
covered
bonds
6,851
289
24,230
888
Corporate
bonds
11,520
1,585
931
-
Total
233,776
32,461
121,058
151,951
Total
230,840
17,983
194,172
49,956
32,258
14,036
539,246
31 December 2021
Held-for-trading (FVPL)
Managed at fair value (FVPL)
Held to collect and sell (FVOCI)
Held to collect (AMC)
174,732
4,342
14,620
50,051
3,305
921
4,822
5,307
11,113
27,360
69,859
82,903
38,878
819
10,116
6,694
3,576
670
19,640
1,766
5,679
2,417
239
-
237,283
36,530
119,296
146,721
Total
243,744
14,356
191,236
56,507
25,652
8,335
539,830
At 30 June 2022, the Group had an additional bond portfolio, including bond-based unit trust certificates, worth DKK 180,129 (31 December 2021:
DKK 205,389 million) recognised as assets under insurance contracts and thus not included in the table above. The section on insurance risk in Annua l
Report 2021 provides more information. For bonds classified as hold-to-collect, fair value exceeded amortised cost as at 30 June 2022 and 31 Decem-
ber 2021, see note G12.
Danske Bank / Interim report – first half 2022 74/85
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
30 June 2022
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
Total
31 December 2021
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
62,908
68,401
5,361
9,695
16,950
1,499
13,882
-
10,229
1,029
1,199
31
2,699
5,285
31,212
460
-
-
-
255
-
4,407
-
19
5,920
3,476
-
-
-
-
6
-
3,086
814
194,172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
49,956
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Other
covered
bonds
-
1
2,553
28,560
-
1
184
-
544
-
-
-
14
19
121
1
261
Corporate
bonds
2,202
4,228
570
4,012
2
-
116
99
1,234
12
5
-
63
783
554
-
156
Total
259,283
122,587
8,738
42,268
21,359
1,500
14,200
6,018
15,483
1,042
1,204
31
2,776
6,094
31,887
3,546
1,231
230,840
17,983
194,172
49,956
32,258
14,036
539,246
79,233
72,787
4,300
5,249
16,581
2,627
12,939
-
6,684
2,100
2,475
46
4,674
5,526
27,564
655
304
-
-
-
-
3,628
-
15
5,982
1,908
-
-
-
-
6
-
2,265
551
191,236
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,507
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,128
21,612
-
1
159
-
766
3
-
-
-
27
687
1
268
2,498
2,106
274
1,737
6
-
112
66
760
17
4
-
57
489
38
-
168
272,967
131,400
6,701
28,599
20,215
2,628
13,226
6,048
10,119
2,120
2,479
46
4,731
6,047
28,289
2,921
1,291
Total
243,744
14,356
191,236
56,507
25,652
8,335
539,830
The Group has no exposure to government bonds issued by Russia or Ukraine at 30 June 2022.
Danske Bank / Interim report – first half 2022 75/85
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
30 June 2022
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub. "investment-grade" or unrated
Central and
Quasi-
local govern- government
bonds
ment bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds*
Corporate
bonds
Total
190,188
7,721
23,922
5,466
803
1,213
286
215
1,015
-
-
-
11
15,504
2,260
219
-
-
-
-
-
-
-
-
-
-
-
193,657
-
-
-
-
511
-
-
4
-
-
-
-
-
49,942
-
14
-
-
-
-
-
-
-
-
-
-
-
31,851
61
244
-
-
102
-
-
-
-
-
-
-
-
1,224
2
1,915
259
175
4,526
549
1,650
2,774
411
203
268
11
70
482,365
10,045
26,314
5,725
978
6,353
549
1,936
2,993
1,426
203
268
11
81
Total
230,840
17,983
194,172
49,956
32,258
14,036
539,246
31 December 2021
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub. "investment-grade" or unrated
203,216
9,186
19,022
4,731
304
3,263
-
1,465
455
2,065
-
-
-
36
12,061
15
2,279
-
-
-
-
-
-
-
-
-
-
-
190,753
-
-
-
-
473
-
-
10
-
-
-
-
-
56,491
-
16
-
-
-
-
-
-
-
-
-
-
-
25,090
87
3
-
-
472
-
-
-
-
-
-
-
-
334
3
1,718
87
41
1,641
956
1,005
1,363
415
324
183
30
233
487,946
9,292
23,038
4,818
345
5,848
956
2,470
1,828
2,481
324
183
30
269
Total
243,744
14,356
191,236
56,507
25,652
8,335
539,830
*Comparative information has been restated as the amounts were exchanged in the annual report 2021.
Danske Bank / Interim report – first half 2022 76/85
Financial statements – Danske Bank A/S
The financial statements of the Parent Company, Danske Bank A/S, are prepared in accordance with the Danish Financial Business Act and the Danish
FSA’s Executive Order No. 281 of 26 March 2014 on Financial Reports for Credit Institutions and Investment Companies, etc. as amended by Execu-
tive Order No. 707 of 1 June 2016, Executive Order No. 1043 of 5 September 2017, Executive Order No. 1441 of 3 December 2018 and Executive
Order No. 1593 of 9 November 2020. A description of policies for data ethics is available at https://danskebank.com/about-us/corp orate-go vernance.
Note G2(a) provides further information on changes in accounting policies implemented as at 1 January 2022. Except for these changes, Danske Bank
A/S has not changed its significant accounting policies from those applied in the Annual Report 2021.
The accounting policies applied are identical to the Group’s IFRS accounting principles, see note G1, with the following exception:
•
Domicile property (except right-of-use assets) is measured (revalued) at its estimated fair value through Other comprehensive income.
The estimated fair value of domicile property is determined in accordance with the Danish FSA’s Executive Order on Financial Reports for Credit Institu -
tions and Investment Companies, etc.
Holdings in subsidiaries are measured on the basis of the equity method. Net profit from these undertakings is recognised under Income from associates
and group undertakings.
The format of the Parent Company’s financial statements is not identical to the format of the consolidated financial statements in accordance with IFRS.
The table below shows the differences in net profit and shareholders’ equity between the IFRS consolidated financial statements and the Parent Com-
pany’s financial statements presented in accordance with Danish FSA rules.
(DKK millions)
Danske Bank Group based on IFRS
Domicile properties
Tax effect
Parent company statement based on Danish FSA rules
Net profit
2022
Net profit
2021
Equity
Equity
30 June 2022 31 December 2021
4,551
-2
1
4,550
5,932
-6
1
5,926
171,394
199
-23
176,704
200
-23
171,570
176,881
Income statement – Danske Bank A/S
Note
(DKK millions)
Interest income
Interest expense
Net interest income
Dividends from shares etc.
Fee and commission income
Fees and commissions paid
P1
Net interest and fee income
Value adjustments
Other operating income
Staff costs and administrative expenses
Amortisation, depreciation and impairment charges
Loan impairment charges etc.
Income from associates and group undertakings
Profit before tax
Tax
Net profit
Danske Bank / Interim report – first half 2022 77/85
First half
2022
10,756
3,095
7,661
348
6,931
1,080
13,860
-504
835
10,205
1,440
343
2,889
5,091
542
4,550
First half
2021
11,940
4,908
7,032
283
7,033
1,076
13,272
1,383
864
10,306
1,494
463
3,456
6,713
787
5,926
Statement of comprehensive income – Danske Bank A/S
Danske Bank / Interim report – first half 2022 78/85
(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
* A positive amount is a tax expense, and a negative amount is a tax income
First half
2022
First half
2021
4,550
5,926
-426
-77
-349
-2,613
1,424
-1,323
19
-484
-2,009
-2,358
2,192
2,106
86
2,192
493
88
405
1,162
-800
-204
5
-37
200
604
6,531
6,299
231
6,531
Balance sheet – Danske Bank A/S
Note
(DKK millions)
P2
P2
P3
Assets
Cash in hand and demand deposits with central banks
Due from credit institutions and central banks
Loans and other amounts due at fair value
Loans and other amounts due at amortised costs
Bonds at fair value
Bonds at amortised cost
Shares etc.
Holdings in associates
Holdings in group undertakings
Assets under pooled schemes
Intangible assets
Land and buildings
Investment property
Domicile property
Other tangible assets
Current tax assets
Deferred tax assets
Assets held for sale
Other assets
Prepayments
Total assets
Liabilities and equity
Amounts due
Due to credit institutions and central banks
Deposits and other amounts due
Deposits under pooled schemes
Issued bonds at fair value
Issued bonds at amortised cost
Current tax liabilities
Other liabilities
Deferred income
Total amounts due
Provisions for liabilities
Provisions and pensions and similar obligations
Provisions for deferred tax
Provisions for losses on guarantees
Other provisions for liabilities
Total provisions for liabilities
Subordinated debt
Subordinated debt
Equity
Share capital
Accumulated value adjustments
Equity method reserve
Retained earnings
Proposed dividends
Shareholders of Danske Bank A/S (the Parent Company)
Additional tier 1 capital holders
Total equity
Total liabilities and equity
Danske Bank / Interim report – first half 2022 79/85
30 June
2022
31 December
2021
30 June
2021
171,012
152,812
204,443
918,720
356,395
102,749
7,276
210
90,269
47,582
6,148
3,056
103
2,954
4,535
4,471
557
97
452,101
1,568
248,835
109,816
214,590
855,956
359,178
101,672
12,631
206
94,315
55,945
5,963
3,400
192
3,208
5,197
4,152
700
92
289,666
958
264,511
105,743
195,854
822,951
474,593
99,142
17,292
199
91,954
54,723
5,894
3,716
190
3,526
4,662
3,074
751
96
291,463
1,298
2,524,000
2,363,271
2,437,914
172,458
1,218,489
48,094
7,143
218,986
444
645,370
658
191,259
1,204,160
56,135
24,248
246,265
160
424,840
577
235,152
1,266,386
55,286
10,201
242,402
116
416,009
552
2,311,642
2,147,645
2,226,104
165
306
3,992
459
4,923
177
104
2,542
451
3,275
150
2
2,915
498
3,564
35,864
35,470
34,928
8,622
-3,056
25,460
140,544
-
171,570
-
8,622
-564
29,651
131,950
1,724
171,383
5,497
8,622
-524
27,159
129,513
-
164,770
8,547
171,570
176,881
173,318
2,524,000
2,363,271
2,437,914
Danske Bank / Interim report – first half 2022 80/85
Statement of capital – Danske Bank A/S
Change in equity
(DKK millions)
Total equity as at 1 January 2022
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
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
Accumulated
value adjust-
ments*
Equity
method
reserve
Retained
earnings
Proposed
dividends
Additional
tier 1 capital
Total
Total
-564
-
29,651
-4,191
131,950
8,655
1,724 171,383
4,464
-
5,497 176,881
4,550
86
Share
capital
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-2,613
1,424
-1,323
19
-
-2,492
-
-
-
-
-
-
-
-426
-
-
-
-
561
135
-2,492
-4,191
8,790
-
-
-
-
-
-
-
-
-426
-2,613
1,424
-1,323
19
561
-2,358
2,106
-
-
-
-
-
-
-
-426
-2,613
1,424
-1,323
19
561
-2,358
86
2,192
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
-10,706
10,506
-15
-
-1,724
-
-
-
-
-
-1,705
-
-10,706
10,506
-15
-164
-
-5,419
-
-
-
-164
-1,705
-5,419
-10,706
10,506
-15
Total equity as at 30 June 2022
8,622
-3,056
25,460
140,544
- 171,570
- 171,570
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
8,622
-
-686
-
27,522
-363
123,146
6,058
1,724 160,328
5,695
-
8,507 168,836
5,926
231
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,162
-800
-204
5
-
162
162
-
-
-
-
-
-
-
-
-
-
-
-
493
-
-
-
-
-51
442
-363
6,500
-
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-51
604
-
-
-
-
-
-
-
493
1,162
-800
-204
5
-51
604
6,299
231
6,531
-
-
-
-
-
-
16
-11,411
11,271
-10
-
-1,724
-
-
-
-
-1,708
-11,411
11,271
-10
-233
-
-
41
-
-233
-1,708
-11,411
11,312
-10
Total equity as at 30 June 2021
8,622
-524
27,159
129,513
- 164,770
8,547 173,318
*Accumulated value adjustments includes foreign currency translation reserve, reserve for bonds at fair value through other comprehensive income (FVOCI) and valuation reserve.
Notes – Danske Bank A/S
P1. Value adjustments
(DKK millions)
Loans at fair value
Bonds
Shares etc.
Currency
Derivatives
Assets under pooled schemes
Other liabilities
Total
P2. Impairment charges for loans and guarantees
Danske Bank / Interim report – first half 2022 81/85
30 June
2022
547
-6,272
-432
908
-6,802
19
11,528
-504
30 June
2021
-549
-