Assets
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|---|
Revenue
| Type | Start date | End date | Amount | Unit |
|---|
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The full data:
Management's report
Financial statements
Financial highlights - Danske Bank Group
Executive summary
Financial review
Personal Customers
Business Customers
Large Corporates & Institutions
Danica Pension
Northern Ireland
Non-core
Group Functions
Definition of alternative performance
measures
3
4
7
16
18
20
23
25
27
29
31
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
33
34
35
36
38
39
75
76
77
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Provision for Estonia matter
Impairment charge on goodwill
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Tax
Net profit
Q1-Q3
2022
17,746
9,536
679
-323
1,203
28,840
19,570
728
14,000
1,627
-6,357
794
-7,151
-10
-7,161
2,080
Q1-Q3
Index
2021 22/21
16,498
9,700
3,111
1,576
623
31,509
18,874
523
-
-
12,635
587
12,048
23
12,071
2,805
108
98
22
-
193
92
104
139
-
-
-
135
-
-
-
74
Q3
2022
6,307
2,999
503
-286
244
9,767
6,777
237
14,000
1,627
-12,637
368
-13,005
-28
-13,033
760
5,810
3,157
-390
-122
291
8,746
6,421
250
-
-
2,325
192
2,133
31
2,164
458
-9,241
9,266
-
-13,792
1,705
Attributable to additional tier 1 etc.
86
349
25
-
5
Balance sheet (end of period)
Due from credit institutions and central banks
Repo loans
Loans
Trading portfolio assets
Investment securities
Assets under insurance contracts
Other assets
256,327
283,801
296,950
220,822
1,824,278 1,801,353
608,253
304,698
542,718
150,137
784,553
301,993
745,736
115,490
256,327
283,801
245,632
86
129
280,561
101 1,824,278 1,819,297
661,318
129
307,005
99
637,475
137
122,705
77
784,553
301,993
745,736
115,490
Danske Bank / Interim report – first nine months 2022 3/77
Q2
Index
2022 Q3/Q2
Q3
Index
2021 22/21
Full year
2021
109
95
-
84
112
106
95
-
-
-
192
-
-
-
166
-
-
5,533
3,106
820
594
166
10,218
6,104
164
-
-
4,114
-151
4,265
6
4,270
936
3,334
117
114
97
61
-
147
96
111
145
-
-
-
-
-
-
-
81
-
-
22,049
13,525
4,126
2,088
797
42,584
25,663
687
-
-
16,921
348
16,573
-2
16,571
3,651
12,920
451
296,950
104
101
220,822
100 1,801,353
608,253
119
304,698
98
542,718
117
150,137
94
320,042
86
129
253,954
101 1,834,372
509,589
129
303,425
99
547,806
137
166,647
77
Total assets
4,312,177 3,924,931
110 4,312,177 4,073,992
106 3,924,931
110 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
Other liabilities
Subordinated debt
Additional tier 1
Shareholders' equity
104,668
204,229
101,714
242,940
1,187,316 1,154,717
761,742
346,020
368,269
581,618
152,357
39,306
8,606
167,642
667,033
317,045
716,470
767,786
151,233
40,008
-
156,389
103
84
104,668
204,229
102,772
217,035
103 1,187,316 1,155,841
697,698
307,773
590,249
659,747
131,980
39,503
-
171,394
667,033
317,045
716,470
767,786
151,233
40,008
-
156,389
88
92
195
132
99
102
-
93
102
94
101,714
242,940
103 1,154,717
761,742
346,020
368,269
581,618
152,357
39,306
8,606
167,642
96
103
121
116
115
101
-
91
103
84
101,786
193,391
103 1,167,638
770,661
355,757
374,958
588,736
166,882
39,321
5,497
171,207
88
92
195
132
99
102
-
93
Total liabilities and equity
4,312,177 3,924,931
110 4,312,177 4,073,992
106 3,924,931
110 3,935,834
Ratios and key figures
Dividend per share (DKK)
Earnings per share (DKK)
Return on avg. shareholders' equity (% p.a.)
Adj. return on avg. shareholders' equity (% p.a.)*
Net interest income as % p.a. of loans and deposits
Cost/income ratio (C/I), (%)
Adj. 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)
-
-11.0
-7.4
5.0
0.79
122.0
67.9
21.3
16.9
94.8
183.8
21,528
-
10.4
7.3
7.3
0.73
59.9
59.9
23.4
18.1
108.5
196.5
22,027
-
-16.2
-33.7
4.5
0.83
229.4
69.4
21.3
16.9
94.8
183.8
21,528
-
2.0
4.0
4.0
0.77
73.4
73.4
21.3
17.1
100.3
201.3
21,663
-
3.8
7.7
7.7
0.74
59.7
59.7
23.4
18.1
108.5
196.5
22,027
99
2.0
14.6
7.6
7.6
0.73
60.3
60.3
22.4
17.7
113.0
200.6
21,754
98
98
*Excluding goodwill impairment charge and the provision for the Estonia matter.
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 31.
Executive summary
Danske Bank has made an additional provision of DKK 14.0
billion related to the Estonia matter, which significantly
impacted the financial result for the first nine months of
2022. The Estonia matter section provides more
information.
The uncertainty in the operating environment we saw in the
first half of 2022 continued into the third quarter and even
increased as geopolitical tension intensified, conditions in the
financial markets tightened and the macroeconomic outlook
became weaker. Furthermore, throughout the third quarter,
we saw living costs increase for households due to a
significant surge in primarily energy prices but also the
prices of household goods, and we see signs of a weaker
housing market as mortgage rates have increased.
Hence, central banks face the challenge of lowering inflation
and secondarily avoiding over-tightening
that could
potentially lead to a recession. As inflation has continued to
increase, so has central banks’ willingness to hike interest
rates in order to curb it. In early September, the Danish
central bank thus hiked rates by 75 bps following the ECB’s
rate move. In Finland, Norway and Sweden, the central banks
also raised rates, with the Swedish central bank lifting rates
a historic 100 bps – with further rate hikes possible later in
2022.
The weaker consumer purchasing power and higher interest
rates point to an increasing likelihood of a recession, with the
global economy also showing signs of weakening.
Nonetheless, the Nordic economies are weakening from a
strong starting point. For instance, labour markets in the
Nordic countries are still strong, providing a cushion against
the impact of weaker demand.
Despite the gloomier outlook and uncertain operating
environment, Danske Bank is progressing well, as core
banking activities continue to improve, credit quality remains
strong with a low level of actual impairments, and we
continue to execute on our Better Bank plan to become a
simpler and better bank for all our stakeholders.
This means that Danske Bank continues to be a strong
Nordic bank in a good position to help customers and
societies, despite the macroeconomic challenges that lie
ahead.
In these challenging times, customers’ need for expert
advisory services
financial partner
from us as their
increases. As the uncertainty in the financial markets, the
housing markets and the export markets increases, we
therefore have a close dialogue with our customers across
all segments. For instance, for personal customers, the
changes in interest rates mean that advisory services
relating to mortgage finance are in high demand. Many
business and corporate customers require advice in relation
to the rising energy prices, inflation and currency risk, and we
have seen
leading risk
management solutions.
increased demand
for our
Danske Bank / Interim report – first nine months 2022 4/77
interest
Our core banking activities continue to deliver, driven by
improved net
following our repricing
income
initiatives that now have full effect, the positive trends in
volumes and the return to positive interest rates. In addition,
fee income held up well despite subdued capital markets, as
our risk advisory solutions saw good customer activity. As we
saw in the second quarter, income lines related to financial
markets are affected by market turmoil but with a
stabilisation of net trading income on the back of calibrated
risk appetite at Large Corporates & Institutions.
improving the bank
The execution of our Better Bank plan continues, and we see
solid progress with
for all our
stakeholders. The underlying cost base continued to improve
on the basis of efficiency gains achieved through the agile
transformation of our development organisation and other
simplification
launch new
initiatives. We continue to
solutions to make Danske Bank more digital and convenient
for personal customers. For instance, we implemented digital
signing of mortgages in Sweden, and in Denmark, we saw
good interest in loan products targeted at home energy
efficiency improvements. We continue to build even more
features into the ‘bank in your pocket’, and 9 of 10 customers
now use our mobile banking apps.
Our efforts to remain a leader within sustainability continue.
In September, Position Green, an independent consulting
firm, studied how well businesses in the Nordic countries
report on their sustainability efforts, and among the 100
largest listed businesses in Denmark, Danske Bank and just
seven others received a mark of “outstanding" for their
sustainability reporting. We also launched the “Danske Invest
Global Responsible Portfolio" balanced funds that provide
investors with good diversification across equities and bonds
while also offering a strong sustainability profile.
We continued our efforts to remediate the legacy issues,
which also means that we continue to close issues. In the
third quarter, we announced an accelerated solution for our
debt collection customers that entails setting the debt of
approximately 90,000 customers at zero and compensating
customers for any potential overcollection as a result of the
issues with our historical debt collection systems. The
solution we have chosen means that we will inform the
customers whose debt is written off, and from next year, we
will start to pay out compensation. This will have a total effect
on profit before tax of DKK 1,250 million, consisting of a
negative effect on operating expenses of DKK 600 million and
an increase in loan impairment charges of DKK 650 million.
However, it will also ensure that we can reduce the elevated
remediation costs in coming years. Excluding the effect of
elevated remediation costs, underlying costs continued to
the downward trend, as our efforts to make the bank more
efficient continued to result in a decrease in the number of
FTEs.
We continued to see strong credit quality and low loan
impairment charges in the first nine months of 2022 and
also in the third quarter. As mentioned, the solution to the
Danske Bank / Interim report – first nine months 2022 5/77
debt collection case led to an increase in loan impairment
charges of DKK 650 million in the third quarter.
the Board of Directors will propose to the annual general
meeting in 2023 not to pay out dividend for 2022.
Estonia matter
On 28 April 2022, Danske Bank announced that it had
started initial discussion with U.S. and Danish authorities on
resolution of the Estonia matter.
On the basis of the current stage of these discussions with
the US Department of Justice, the US Securities and Ex-
change Commission and the Danish Special Crime Unit,
Danske Bank is now in a position to reliably estimate with a
high degree of certainty the financial impact of a potential co-
ordinated resolution with these authorities, at a total of
DKK 15.5 billion. This includes the provision of DKK 1.5 bil-
lion recognised in the third quarter of 2018 as it is Danske
Bank’s best assessment that the resolution will include con-
fiscation of no less than DKK 1.5 billion. Therefore, Danske
Bank now books an additional provision of DKK 14 billion in
the third quarter. Discussions with authorities are ongoing
and there is still uncertainty that a resolution will be reached,
but Danske Bank is working towards a coordinated resolution
before year end, however, the final timing is not within Danske
Bank’s control. Danske Bank will not comment further on the
discussions with authorities.
Merger of MobilePay
As announced on 21 October 2022, the agreement between
Danske Bank and the consortium of banks behind Vipps to
merge MobilePay and Vipps has been approved by all rele-
vant authorities, including the EU Commission. The parties
expect to complete the transaction during the fourth quarter
of 2022.
The transaction will result in a one-off gain of around
DKK 400 million for Danske Bank.
Capital
For the first nine months of 2022, our total capital ratio was
21.3% and our CET1 capital ratio was 16.9%, against 22.4%
and 17.7%, respectively, at the end of 2021.
At the end of September 2022, the Group’s solvency need
ratio was 10.6%, a decrease of 0.8 percentage points from
the level at the end of 2021. The decrease was primarily due
to removal of DKK 7.5 billion of the DKK 10 billion Pillar II add-
on as required under the orders issued by the Danish FSA in
2018. The reduction in the Pillar II add-on was driven by the
provision related to the Estonia matter.
Dividend
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.
In light of the provision made today, the Board of Directors
has decided to cancel the remaining dividend for 2021, and
Financials
Danske Bank posted a net loss of DKK 9,241 million for the
first nine months of 2022, against a net profit of DKK 9,266
million for the same period in 2021. The return on sharehold-
ers’ equity was a negative 7.4%. Excluding the additional pro-
vision for the Estonia matter and the goodwill impairment
charge, net profit was DKK 6,386 million and the return on
shareholders’ equity was 5.0%.
Our core banking activities continued to deliver good
progress, with solid business lending growth and deposit
repricing leading to higher net interest income. Net fee
income from everyday banking products maintained the
positive trend throughout the first nine months. Investment
fees decreased as a consequence of the challenged financial
markets. Assets under management declined from the end-
of-year level, as asset prices continued to fall.
Net trading income recovered in the third quarter, despite a
reduction in risk utilisation, as market conditions became
more supportive, but was negatively
impacted by
extraordinarily high volatility in core 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 in the second quarter.
Income from insurance business was also negatively affected
by the financial market turmoil in the first nine months of
2022, however, some of the effect was offset by the gain of
DKK 415 million on the sale of Danica Norway. The
underlying business is healthy, and we still see improvement
in the risk result in the health and accident business.
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.
Our underlying expenses continued to progress according to
plan, but total expenses are higher, driven by elevated
remediation costs and costs related to the Estonia matter. In
addition, costs were affected by the DKK 600 million one-off
item related to the accelerated solution for our debt
collection customers. The number of FTEs continued to fall
and stood at 21,528 at the end of September 2022, against
22,582 at its peak in the third quarter of 2020.
In Danica Pension, goodwill amounting to DKK 1,627 million
related to the acquisition of SEB Pension Danmark was as-
sessed to be impaired due to increasing discount rates and
the current turbulence in the financial markets.
Although the macroeconomic landscape remains uncertain
and develops at a fast pace, the credit quality of individual
customers was strong across the core loan portfolios as a
result of the post-pandemic financial recovery. Loan impair-
ment charges in core activities continued to be low, underpin-
ning the strong credit quality. The accelerated solution to the
debt collection case led to higher loan impairment charges
because of the one-off charge of DKK 650 million to cover
Danske Bank / Interim report – first nine months 2022 6/77
part of the costs for compensation for potential overcollec-
tion.
Outlook
We expect a net loss better than DKK 5.5 billion.
We continue to expect income from core banking activities to
be higher in 2022, as higher net interest income driven by
good economic activity and higher interest rates will more
than offset lower capital market and investment-related fee
income. Net income from insurance business and trading
activities are expected below normalised levels based on
significantly lower income in the first nine months of the year
and a stabilisation in income in the fourth quarter subject to
market conditions. The degree of uncertainty is higher than
usual.
Including the additional provision for the Estonia matter, the
impact from the solution to the debt collection case and the
goodwill impairment charge, total expenses are expected to
be around DKK 41.7 billion. Excluding the additional provision
for the Estonia matter, the impact from the solution to the
debt collection case and the goodwill impairment charge, we
expect costs in 2022 to reflect our continued focus on cost
management and to be around DKK 25.5 billion, including
sustained elevated remediation costs.
Given our overall strong credit quality, loan impairments are
expected to be below normalised level, including the solution
to the debt collection case.
We have revised the outlook for net profit of DKK 10-12
billion to a net loss better than DKK 5.5 billion due to the
additional provision for the Estonia matter and the goodwill
impairment charge. The outlook includes the gains from
MobilePay, Danske Bank International and Danica Norway.
As regards our 2023 financial ambitions, we maintain our
ambition of a return on shareholders’ equity of 8.5-9% in
2023.
The outlook is subject to uncertainty and depends on
economic conditions.
Financial review
First nine months 2022 vs first nine months 2021
The result for the first nine months of 2022 was affected by
the additional provision
the Estonia matter of
for
DKK 14,000 million and the goodwill impairment charge of
DKK 1,627 million. Excluding the additional provision for the
Estonia matter and the goodwill impairment charge, net profit
amounted to DKK 6,386 million (Q1-Q3 2021: a profit of
DKK 9,266 million). Including the additional provision and the
goodwill impairment charge, the net loss amounted to
DKK 9,241 million. Further, higher net interest income and
other income could not fully compensate for the effect that
the market turmoil had on net trading income and on
valuation adjustments of net
insurance
business.
income
from
Income
Net interest income increased to DKK 17,746 million (Q1-
Q3 2021: DKK 16,498 million). Net interest income saw a
positive impact from higher lending volumes and repricing
initiatives in the Nordic countries combined with higher UK
interest rates and related pricing action in Northern Ireland.
Net fee income decreased slightly to DKK 9,536 million (Q1-
Q3 2021: DKK 9,700 million). We saw good remortgaging
activity as a result of the rise in interest rate levels as well as
increasing service fees as a result of the reopening of
societies. Net fee income from everyday banking products
maintained a positive trend throughout the first nine months
of 2022. Investment fees decreased as a consequence of the
challenged financial markets. Assets under management
declined from the end-of-year level, as asset prices continued
to fall.
Net trading income decreased to DKK 679 million (Q1-Q3
2021: DKK 3,111 million). Net trading income recovered in
the third quarter, despite a reduction in risk utilisation, as
market conditions became more supportive, but was
impacted by historically high volatility in core Nordic fixed
income markets, which translated into negative net trading
income in the second quarter because of losses in Rates &
Credit at Large Corporates & Institutions.
Net income from insurance business amounted to a negative
DKK 323 million (Q1-Q3 2021: DKK 1,576 million). The
underlying business is healthy, and we still see improvement
in the risk result in the health and accident business.
Following the negative market developments in the first nine
months of 2022, the result of the life insurance business
decreased. The decrease was driven mainly by negative
valuation adjustments of life insurance products where
Danica Pension has the investment risk and a provision of
DKK 150 million to cover compensation to customers. Both
effects were partly offset by changes in life insurance
provisions. The result of the health and accident business
also decreased, owing to a lower investment result caused by
negative valuation adjustments. However, some of the
negative effect was offset by the gain of DKK 415 million on
the sale of Danica Norway.
Danske Bank / Interim report – first nine months 2022 7/77
Other income amounted to DKK 1,203 million (Q1-Q3 2021:
DKK 623 million). The increase was due partly to the sale of
our activities in Luxembourg, which generated a one-off gain
of DKK 421 million, but also to increased sales prices of
assets in our leasing company.
Operating expenses
Operating expenses amounted to DKK 19,570 million (Q1-
Q3 2021: DKK 18,874 million). Underlying expenses contin-
ued to progress according to plan, which helped mitigate ele-
vated remediation costs and costs related to the Estonia
matter. As announced on 31 August 2022, we have now cho-
sen an accelerated solution for the vast majority of our debt
collection customers. A provision of DKK 600 million for
compensation to customers was therefore recognised in the
third quarter.
the Resolution
Furthermore,
item
increased to DKK 728 million (Q1-Q3 2021: DKK 523
million) as a result of the Swedish bank tax that came into
force on 1 January 2022.
fund,
bank
etc.
tax
Provision for Estonia matter
provision of DKK 14,000 million has been
An additional
made in the third quarter of 2022. On the basis of the current
stage of the discussions with US and Danish authorities,
Danske Bank is now in a position to reliably estimate with a
high degree of certainty the financial impact of a potential
coordinated resolution with these authorities, at a total of
DKK 15,500 million. In addition to the provision booked in
the third quarter of 2022 of DKK 14,000 million, a provision
of DKK 1,500 million was booked in 2018.
Impairment charge on goodwill
In the third quarter of 2022, goodwill in Danica Pension
amounting to DKK 1,627 million was assessed to be
impaired and written off due to increasing discount rates and
the current turbulence in the financial markets.
Loan impairment charges
Due to strong credit quality, loan impairment charges in core
activities were low in the first nine months of 2022,
amounting to DKK 794 million (Q1-Q3 2021: DKK 587
million).
The accelerated solution to the debt collection case led to a
one-off increase in loan impairment charges of DKK 650 mil-
lion, which covers part of the remediation costs related to
compensating customers for potential overcollection. In ad-
dition, debt of approximately DKK 1.0 billion has been written
off. However, the write-offs were covered by matching impair-
ment charges and have no impact on loan impairment
charges for the first nine months of 2022 at Group level.
reflected
macroeconomic
Impairments
uncertainty and
slowing economic growth because of increased inflationary
pressure as well as interest rate hikes,
while COVID-19-
related uncertainty decreased. Although the macroeconomic
landscape remains uncertain and develops at a fast pace, the
Danske Bank / Interim report – first nine months 2022 8/77
Loan impairment charges
Q1-Q3 2022
Q1-Q3 2021
(DKK millions)
Charges
% of net
credit
exposure1
% of net
credit
exposure1
Charges
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Total core
334
-90
-155
36
669
794
0.05
-0.02
-0.07
0.09
23.16
0.06
-120
574
230
-96
-2
587
-0.02
0.12
0.10
-0.25
-0.05
0.04
1 Defined as net credit exposure from lending activities in core segments,
excluding exposure related to credit institutions and central banks and loan
commitments.
Tax
The tax expense of DKK 2,080 million (Q1-Q3 2021:
DKK 2,805 million) was mainly affected by non-deductible
items, including the additional provision for the Estonia mat-
ter and the goodwill impairment charge. The effective tax rate
excluding the additional provision for the Estonia matter and
the goodwill impairment charge was 24.6% (Q1-Q3 2021
2021: 23.2%).
credit quality of individual customers was strong across the
core loan portfolios as a result of the post-pandemic financial
recovery.
A continued review of post-model adjustments throughout
the period resulted in a post-model adjustment of DKK 1.5
billion for ’global tension’ to address idiosyncratic risks in the
portfolios stemming from the surge in inflation and energy
costs and the worsening macroeconomic outlook. The
changes in the first nine months of 2022 also led to an in-
crease in post-model adjustments related to the property
segment and process-related risks spread across industry
portfolios and personal customers due to increasing inflation
and interest rates and the risk of a decline in property prices
and disposable incomes. On the other hand, COVID-19-re-
lated uncertainties have been reduced since the end of 2021,
and the related post-model adjustments were fully released
by September 2022, as the new virus variants have not re-
sulted in prolonged lockdowns. The total allowance account
amounted to DKK 18.8 billion, including post-model adjust-
ments of DKK 6.0 billion.
Group Functions accounted for the main part of the loan im-
pairment charges in the first nine months of 2022, which
were driven by remediation costs related to the debt collec-
tion case. The impairment charges for Personal Customers
continued the trend from 2021 and returned to more normal
levels. The charges were driven by changes in the macroeco-
nomic scenarios to account for expectations of higher infla-
tion and interest rate hikes as well as increased post-model
adjustments.
In contrast to impairment charges in the first nine months of
2021, Business Customers and Large Corporates &
Institutions saw net loan impairment reversals in the first
nine months of 2022 owing to improved credit quality driven
by the post-pandemic financial recovery and the resulting
decline in charges made against facilities to individual
customers. The effect of this was partly offset by increasing
post-model adjustments.
The effects of the new macroeconomic scenarios were
driven primarily by a lower GDP, 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 nine months 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.
Q3 2022 vs Q2 2022
Net profit excluding the additional provision for the Estonia
matter of DKK 14,000 million and the goodwill impairment
charge of DKK 1,627 million amounted to DKK 1,835
million (Q2 2022: DKK 1,705 million).
Including the
additional provision and the goodwill impairment charge,
the net loss amounted to DKK 13,792 million.
•
Net interest income increased to DKK 6,307 million
(Q2 2022: DKK 5,810 million) due to higher lending
volumes and repricing of deposits as a consequence of
the rise in interest rates. An increase in the number of
interest days also had a positive impact on net interest
income.
•
•
•
•
•
•
•
•
Net fee income amounted to DKK 2,999 million (Q2
2022: DKK 3,157 million), driven by lower investment
activity due to the uncertainty on the financial markets.
Net trading income increased to DKK 503 million (Q2
2022: a negative DKK 390 million), following a recovery
in income in Rates & Credit.
Net income from insurance business amounted to a
negative DKK 286 million (Q2 2022: a negative
DKK 122 million). The negative result was due to a
lower result in the life insurance business caused
primarily by a provision of DKK 150 million. The result
in the life insurance business benefited from a better
investment result on life insurance products where
Danica Pension has the investment risk. The result of
the health and accident business in Danica Pension
declined in the third quarter of 2022 due to negative
valuation adjustments. Furthermore,
the second
quarter benefited from the sale of Danica Norway.
Operating expenses amounted to DKK 6,777 million
(Q2 2022: DKK 6,421 million). The increase was due
primarily to the provision of DKK 600 million for
remediation costs in connection with the debt collection
case.
Provision for Estonia matter amounted to DKK 14,000
million in the third quarter of 2022. On the basis of the
current stage of the discussions with US and Danish
authorities, Danske Bank is now in a position to reliably
estimate with a high degree of certainty the financial
impact of a potential coordinated resolution.
Impairment charge on goodwill amounted
to
DKK 1,627 million. The impairment charge related to
Danica Pension’s acquisition of SEB Pension Danmark.
Loan impairment charges for core units amounted to
DKK 368 million in the third quarter (Q2 2022:
DKK 192 million). This was due mainly to the impact of
reflected
the debt collection case but also
macroeconomic uncertainty related to
increasing
inflationary pressure and interest rate hikes across the
markets. On the other hand, credit quality continued to
improve throughout the third quarter, resulting in
impairment reversals relating to individual customer
exposures.
Tax amounted to DKK 760 million (Q2 2022: DKK 458
million) and was affected by non-deductible items,
including the additional provision for the Estonia matter
and the goodwill impairment charge.
Danske Bank / Interim report – first nine months 2022 9/77
Lending and deposits
Lending stood at DKK 1,824 billion (end-2021: DKK 1,834
billion). Excluding the changes in the fair value of mortgage
loans in Denmark following the increases in interest rate
levels, lending increased 5% from the level at the end of
2021 to DKK 1,921 billion. Mortgage lending at nominal
value at Realkredit Danmark amounted to DKK 803 billion
(end-2021: DKK 808 billion).
The increase in lending at Large Corporates & Institutions
was driven partly by higher volumes in Sweden, reflecting our
strategic ambition to grow the number of core customer
relationships in Sweden. At Business Customers, we saw an
increase in bank lending due to the reopening of societies,
despite the depreciation of currencies. Mortgage lending at
nominal value increased 2%. Green loan volumes have
increased in 2022 to date. At Personal Customers, bank
lending increased, driven primarily by activities in Denmark
and the Danske Bolig Fri product – an alternative to a
mortgage
lending at Personal Customers
decreased 8% due to negative market value adjustments of
mortgage loans caused by the higher interest rate level, the
discontinuation of the customer portfolio in Luxembourg and
the depreciation of currencies.
loan. Total
In Denmark, new gross
loans,
amounted to DKK 98.6 billion. Lending to personal
customers accounted for DKK 23.2 billion of this amount.
lending, excluding repo
In Denmark, our market shares of bank lending, excluding
repo loans, to both personal and business customers,
increased to 19.5% (end-2021: 18.6%) and to 23.0% (end-
2021: 22.0%), respectively. The market share in Denmark,
including mortgage lending, decreased, however, to 24.5% at
the end of August 2022 (end-2021: 24.8%). In Sweden, our
market share of lending (at end-August 2022) increased
from 5.1% to 5.5%, and in Finland, our market share of
lending increased from 9.5% to 10.0%. In Norway, we
maintained our market share of lending at the end-2021
level.
Deposits amounted to DKK 1,187 billion
(end-2021:
DKK 1,168 billion) and were up 2% from the level at the end
of 2021. The increase in deposit volumes was due to
cautious investment strategies among our customers and
the outlook for positive deposit rates.
In Finland and Sweden, our market shares of deposits
increased from the end-2021 level. In Denmark, our market
share of deposits decreased to 28.2% at the end of August
2022 (end-2021: 29.1%). In Norway, our market share of
deposits was also lower than at the end of 2021.
DKK -13,792 million
Net profit
for the third quarter of 2022
Credit exposure and credit quality
Credit exposure from lending activities in core segments
decreased to DKK 2,587 billion (end-2021: DKK 2,716
billion). Higher activity among corporate and institutional
customers was more than offset by lower exposure to
personal and business customers in Denmark, primarily as a
result of the net negative effect of fair value adjustments. In
addition, the effect of the increase in activity was offset by
lower deposits with central banks, and weaker exchange
rates (SEK, NOK and GBP) also reduced credit exposure.
However, in local currency, credit exposure increased among
business customers in Sweden, Finland and Norway. Credit
exposure directly related to customers in or from Russia,
Ukraine and the Baltic countries is limited and amounted to
less than DKK 0.1 billion at 30 September 2022.
Section 3 of Risk Management 2021, which is available at
danskebank.com/ir, provides details on Danske Bank’s credit
risks.
Credit quality
Credit quality remained strong in the first nine months of
for any possible
2022. However, we remain vigilant
deterioration related
the risks and uncertainties
mentioned in the loan impairment charges section above.
to
Large Corporates & Institutions has actively reduced its net
oil-related exposure
(excluding diversified oil & gas
companies) by 54% since the end of 2019.
Stage 3 loans in core segments
(DKK millions)
Gross exposure
Allowance account
Net exposure
30 Sept.
2022
31 Dec.
2021
33,370
8,713
46,012
12,397
24,657
33,615
Collateral (after haircut)
21,264
30,143
Stage 3 coverage ratio (%)
72
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 33.4 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
70% 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.
The allowance account decreased to 1.0% (end-2021:
1.15%) of lending and guarantees due to write-offs relating to
the debt collection case.
Danske Bank / Interim report – first nine months 2022 10/77
30 Sept. 2022
31 Dec. 2021
% of credit
exposure1
Accum.
impairm.
charges
% of credit
exposure1
0.57 5,654
10,186
1.47
0.99 5,227
1.25 850
17
1.26
0.64
1.54
1.84
1.44
0.36
1.15
Allowance account
by business units
(DKK millions)
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Accum.
impairm.
charges
4,827
9,582
3,595
738
32
Total
18,774
0.98
21,935
1 Relating to lending activities in core segments.
Capital ratios and requirements
At the end of September 2022, the Group’s total capital ratio
was 21.3%, and its CET1 capital ratio was 16.9%, against
22.4% and 17.7%, respectively, at the end of 2021. The
movement in the capital ratios in the first nine months of
2022 was mainly driven by the provision for the Estonia
matter and a decline in the IFRS 9 add back. These effects
were partially offset by the cancellation of the remaining
dividends for 2021, the realised net profit excluding the
provision for the Estonia matter and a decrease in the total
REA. The total capital ratio was furthermore affected by the
redemption of additional tier 1 capital instruments of EUR
750 million in April 2022.
During the first nine months of 2022, the total REA
decreased approximately DKK 15 billion due to a decline in
the REA for credit risk, which was partially countered by an
increased REA for market risk.
Danske Bank’s capital management policies are based on the
Internal Capital Adequacy Assessment Process (ICAAP). In
this process, Danske Bank determines its solvency need
ratio. The solvency need ratio consists of the 8% minimum
capital requirement under Pillar I and an individual capital
add-on under Pillar II.
At the end of September 2022, the Group’s solvency need
ratio was 10.6%, a decrease of 0.8 percentage points from
the level at the end of 2021. The decrease was primarily due
to removal of DKK 7.5 billion of the DKK 10 billion Pillar II add-
on as required under the orders issued by the Danish FSA in
2018. The reduction in the Pillar II add-on was driven by the
additional provision related to the Estonia matter made in the
third quarter of 2022. The amount was 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 September 2022, the Group’s CBR was 6.4%, an increase
of 0.7 percentage points from the level at the end of 2021
due mainly to the reactivation of the national countercyclical
buffer rates in Denmark and Sweden at 1.0%.
Announced increases of the national countercyclical buffer
rates in Denmark, Norway and Sweden will increase the
Group’s CBR by 1.2 percentage points. Consequently, the
fully phased-in countercyclical buffer requirement will be
2.0%, bringing the fully phased-in CET1 requirement to
13.6%. This is a 0.3 percentage points decrease from the
level at the end of 2021, which is driven largely by the
removal of DKK 7.5 billion of the Pillar II add-on as described
above. The effect was to some extent countered 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 (O-SII)
Solvency need ratio
30 Sep.
2022
Fully
phased-in*
16.9
21.3
12.4
0.9
2.5
3.0
10.6
16.6
21.1
13.6
2.0
2.5
3.0
10.6
Total capital requirement
17.0
18.1
Buffer to requirement
CET1 capital
Total capital
4.4
4.4
3.1
3.0
* Based on fully phased-in rules and requirements including the fully
phased-in impact of IFRS 9.
** The total capital requirement consists of the solvency need ratio and
the combined buffer requirement. The fully phased-in countercyclical
capital buffer is based on the buffer rates announced at the end of
September 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
(MREL)
The MREL is set at two times the solvency need and one time
the SIFI buffer and one time the capital conservation buffer.
Furthermore, the CBR must be met in addition to the MREL.
At the end of September 2022, the point-in-time requirement
including the CBR, was equivalent to DKK 246 billion, or
33.0% of the REA adjusted for Realkredit Danmark. At the
end of September 2022, the backward-looking MREL, as set
by the Danish FSA, was 28.3% of 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 278 billion. In addition, an
MREL of 6% of the leverage ratio exposure (LRE) is in place.
The LRE-based requirement equalled 22.3% of the REA
(adjusted for RD), making the REA-based requirement the
binding constraint.
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
Danske Bank / Interim report – first nine months 2022 11/77
a significant amount of non-preferred senior debt over the
past few years.
The Danish FSA has set the subordination requirement as
the higher of 8% of total liabilities and own funds (TLOF) and
two times the solvency need plus one time the CBR.
the end of September 2022,
At
the point-in-time
subordination requirement was equivalent to DKK 205
billion. The backward-looking subordination requirement, as
set by the Danish FSA, was 29.2% of the REA adjusted for
Realkredit Danmark. MREL-eligible subordinated liabilities
amounted to DKK 218 billion.
Note: The requirement and eligible funds are adjusted for Realkredit
Danmark’s capital and debt buffer requirements.
Danske Bank will initiate a dialogue with the Danish FSA to
recalibrate the backward-looking MREL and subordination
requirement to reflect the removal of the DKK 7.5 billion
Pillar II add-on in order to decrease the difference between
the point-in-time and backward-looking requirements.
Leverage ratio
At the end of September 2022, the Group’s leverage ratio
was 4.6% 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
Danske Bank / Interim report – first nine months 2022 12/77
At 30 September 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 387 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 September 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 towards the final rules.
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.
In light of the provision made today, the Board of Directors
has decided to cancel the remaining dividend for 2021, and
the Board of Directors will propose to the annual general
meeting in 2023 not to pay out dividend for 2022.
Danske Bank’s general dividend policy remains unchanged,
targeting a dividend of 40-60% of net profit.
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 third quarter of 2022, the credit markets
remained active with decent supply despite equity and rates
volatility following high inflation prints, numerous central
bank rate hikes and a continually tense geopolitical situation.
At the end of September 2022, the Group had issued
covered bonds of DKK 30.5 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 52.0
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 September 2022, our
liquidity coverage ratio stood at 159% (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.
Credit ratings
There were no credit rating changes in the third 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
There were no ESG rating changes in the third quarter of
2022.
ESG rating agency
CDP Worldwide, UK
Score at
Score at
30 Sept. 2022
30 June 2022
B
B
ISS ESG, USA
C+ Prime
C+ Prime
MSCI ESG Ratings, USA
BBB
BBB
Sustainalytics, USA
Medium Risk
Medium Risk
Moody’s ESG Solutions, USA
61
61
Estonia matter
Investigation
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 Eco-
nomic and International Crime), the U.S. Department of Jus-
tice (DOJ) and the U.S. Securities and Exchange Commission
(SEC), in relation to the Estonia matter.
The internal investigation work that was planned for comple-
tion in 2020 has been finalised, and Danske Bank has re-
ported the findings to the relevant authorities investigating
Danske Bank. We continue to fully cooperate and will provide
the authorities with further information if and when re-
quested.
On 28 April 2022, Danske Bank announced that it had
started initial discussion with U.S. and Danish authorities on
resolution of the Estonia matter.
Danske Bank / Interim report – first nine months 2022 13/77
On the basis of the current stage of these discussions with
the US Department of Justice, the US Securities and Ex-
change Commission and the Danish Special Crime Unit,
Danske Bank is now in a position to reliably estimate with a
high degree of certainty the financial impact of a potential co-
ordinated resolution with these authorities, at a total of DKK
15.5 billion. This includes the provision of DKK 1.5 billion rec-
ognised in the third quarter of 2018 as it is Danske Bank’s
best assessment that the resolution will include confiscation
of no less than DKK 1.5 billion. Therefore, Danske Bank now
books an additional provision of DKK 14 billion in the third
quarter. Discussions with authorities are ongoing and there
is still uncertainty that a resolution will be reached, but
Danske Bank is working towards a coordinated resolution be-
fore year end, however, the final timing is not within Danske
Bank’s control. Danske Bank will not comment further on the
discussions with authorities.
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, Inc. (and other defend-
ants) in the United States District Court for the Eastern Dis-
trict of New York and a number of court cases initiated
against Danske Bank in Denmark. Danske Bank intends to de-
fend itself against the various claims. The timing of comple-
tion of any such lawsuits (pending or threatening) and their
outcome are uncertain and could be material.
Update on the debt collection case
As announced on the 31 August 2022, Danske bank has cho-
sen an accelerated solution for its debt collection customers,
whereby approximately 90,000 debt collection customers in
Denmark will have their debt to the bank set to zero, and
Danske Bank will not collect this debt. Furthermore, Danske
Bank has decided to compensate customers of any potential
overcollection related to the issues in the historical debt col-
lection systems on the basis of a statistical model.
In the coming period, we expect to begin communicating the
effect of the solution to customers and expect the compensa-
tion pay-out to the vast majority of customers to be com-
pleted by the end of 2023.
The accelerated solution affects the financial result for the
third quarter as it impacts our operating expenses by a one-
off amount of DKK 600 million due to an increase in provi-
sions for compensation to customers, whereas write-downs
of debt will increase loan impairment charges by a one-off
amount of DKK 650 million, which includes part of the com-
pensation to customers.
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 nine months 2022 14/77
Investigation into Danske Bank’s operations in Ireland
Danske Bank operates on a branch basis in Ireland and is reg-
ulated by the Central Bank of Ireland (CBI) for conduct of busi-
ness. On 15 September 2022, the CBI announced the con-
clusion of its investigation into Danske Bank’s operations in
Ireland. Following a notification from Danske Bank’s Irish
Branch to the CBI in 2019 of the omission of certain custom-
ers from Danske Bank’s automated transaction monitoring
system for a period from 2010 to 2019, the CBI commenced
an investigation into the matter. Danske Bank has agreed to
pay a fine of €1,820,000 under the CBI's administrative
sanctions procedure. The issue under investigation by CBI
has been fully remediated since March 2019 and the agreed
settlement brings an end to the investigation.
Danske Bank merges MobilePay with another mobile pay-
ment provider
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 European Commission has expressed concerns about
both MobilePay and Pivo being part of the merger, since this
would result in the merger of two sizeable players in Finland.
Consequently, the owner banks behind the planned merger of
the three mobile payment providers MobilePay, Vipps and
Pivo have reached the decision that OP Financial Group in Fin-
land will not be a co-owner and that Pivo will not be part of the
merger.
The planned merger, as amended, was approved by all rele-
vant authorities, including the EU Commission, on 21 Octo-
ber 2022. The parties expect to complete the transaction
during the fourth quarter of 2022. The transaction will result
in a one-off gain of around DKK 400 million for Danske Bank.
Danske Bank / Interim report – first nine months 2022 15/77
Business units
Danske Bank / Interim report – first nine months 2022 16/77
Personal Customers
Personal Customers continued to see progress. Customer activity remained high, with rising interest rates driving high
remortgaging activity in Denmark. Market rates in Denmark and Finland switched from negative to positive at the end of the third
quarter, which had a positive effect on our income from deposits. The financial markets continued to be under pressure due to the
uncertainty caused by inflation and higher energy prices as a consequence of the war in Ukraine. This adversely affected assets
under management and investment income. The increasing cost of living also slowed down the housing market in all the countries
in which we operate.
Net interest income increased 2% due to a rise in income from deposits driven by higher interest rates. The reopening of societies
in 2022 has had a positive effect on trading income and service and trading fees, even though investment fees are under pressure
due to the uncertainty on the financial markets. Other income increased due to a one-off gain on the sale of the customer portfolio
in Luxembourg. Credit quality remained solid, but the changed macroeconomic outlook raised the level of loan impairment charges
relative to the same period last year. As a result, profit before tax for the first nine months of 2022 decreased 4% to DKK 2,924
million.
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
Q1-Q3
2022
6,039
3,662
343
547
10,592
7,334
121
3,258
334
Q1-Q3
2021
5,936
3,621
227
171
9,954
7,015
86
2,939
-120
Index
22/21
102
101
151
-
106
105
141
111
-
Q3
2022
2,168
1,108
123
39
3,438
2,237
40
1,201
9
Profit before tax
2,924
3,058
96
1,191
Q2
2022
1,935
1,219
116
45
3,315
2,530
41
785
327
458
Index
Q3/Q2
112
91
106
87
104
88
98
153
3
Q3
2021
2,034
1,177
91
57
3,358
2,302
31
1,056
-136
Index
22/21
Full year
2021
107
94
135
68
102
97
129
114
-
7,876
4,903
322
211
13,311
10,109
117
3,202
60
260
1,192
100
3,142
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
803,452
4,140
415,364
603,569
31,091
873,136
5,019
407,296
668,068
33,560
92
82
102
90
93
803,452
4,140
415,364
603,569
30,934
830,890
5,233
420,252
607,496
30,881
97
79
99
99
100
873,136
5,019
407,296
668,068
32,366
92
82
102
90
96
883,166
5,087
407,904
663,096
32,980
0.65 0.62
14.0 11.7
-
-
0.70
0.62
15.5
10.2
12.5 12.1
69.2 70.5
4,749 4,977
-
-
95
15.4
65.1
4,749
5.9
76.3
4,874
-
-
-
-
97
0.64
13.1
14.7
68.6
4,977
-
-
-
-
95
0.62
9.7
9.5
75.9
4,866
Fact Book Q3 2022 provides financial highlights at customer type level for Personal Customers. Fact Book Q3 2022 is available at danskebank.com/ir.
Business initiatives
The cost of living has increased significantly in 2022 due to
high inflation, rising interest rates and record-high energy
prices. In these difficult times, we support our customers by
providing expert advice on a daily basis, especially in relation
to home finance, and our chief economist shares knowledge
and insights on the economy, personal finances and the hous-
ing market via social media, customer webinars and our web-
site. We are also removing barriers for energy renovation of
private homes by offering advisory services on financially
sustainable options in collaboration with our partners. In re-
lation to this, we offer attractive loans for our customers in
Denmark with the lowest interest rate on the market for both
small and large energy-efficiency improvements.
Interest rates have increased in 2022, and in September, we
announced that we would also be moving away from negative
interest rates and offer positive interest rates on savings ac-
counts for our customers in Denmark again with effect from
1 October.
The steeply increasing mortgage rates have fuelled remort-
gaging activity in 2022, with a positive effect on our fee in-
come. The nominal value of our mortgage volumes increased
1% from the level in the same period last year, but measured
at fair value, there was a decrease of 14% due to the rise in
interest rates. In the third quarter, the market share of new
lending increased from the level in the same period last year,
but due to the slowdown on the housing market, new mort-
gage lending decreased from the level in the preceding quar-
ters. Combined with the effect of the high activity in 2022 to
date from customers remortgaging to a higher coupon in re-
turn for a reduction of their outstanding debt, we saw a de-
crease in the value of mortgage volumes in the third quarter.
The geopolitical uncertainty and high market volatility had a
negative effect on our customers’ investment appetite and
assets under management. To support customers, we have
introduced a new investment knowledge centre in our mobile
banking app, giving customers easy access to general market
news.
First nine months 2022 vs first nine months 2021
Profit before tax amounted to DKK 2,924 million (Q1-Q3
2021: DKK 3,058 million). Total income increased due to
higher net interest income from deposits driven by the rise in
interest rates, higher fees driven by high remortgaging activ-
ity and a one-off gain on the sale of the customer portfolio in
Luxembourg. Loan impairment charges increased from a net
reversal in same period last year and more than offset the in-
crease in income.
Net interest income increased 2% due to higher net interest
income from deposits driven by rising interest rates. In Fin-
land and Denmark in particular, we see an increase in net in-
terest income from deposits. Deposit volumes increased 2%
due to cautious investment strategies among our customers
and the outlook for positive deposit rates.
Our market share of bank lending improved due to an in-
crease of 2% in bank lending volumes, driven primarily by ac-
tivities in Denmark and the Danske Bolig Fri product – an al-
ternative to a mortgage loan. Total lending, however, de-
creased 8% due to negative market value adjustments of
mortgage loans caused by the higher interest rate level, the
discontinuation of the customer portfolio in Luxembourg and
the depreciation of currencies.
Net fee income increased to DKK 3,662 million, (Q1-Q3
2021: DKK 3,621 million). Service and trading fees in-
creased on the back of the reopening of societies as well as
high remortgaging activity. Investment fees decreased as a
consequence of the challenging financial markets and the
sale of our customer portfolio in Luxembourg.
Net trading income increased to DKK 343 million (Q1-Q3
2021: DKK 227 million) due to foreign exchange activity
driven by the reopening of societies.
Other income amounted to DKK 547 million (Q1-Q3 2021:
DKK 171 million). The increase was driven by a one-off gain
on the sale of our customer portfolio in Luxembourg.
We continued to see a decrease in transformation costs re-
lated to 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, and total operating ex-
penses thus increased 5%. The increase was due mainly to
the changes to the allocation of costs between the business
units implemented in the fourth quarter of 2021.
Danske Bank / Interim report – first nine months 2022 17/77
In the first nine months of 2022, loan impairment charges
amounted to DKK 334 million (Q1-Q3 2021: a net reversal
of DKK 120 million). The increase in charges was driven by
changes in the macroeconomic outlook with increasing inter-
est rates and inflation, as well as changes in post-model ad-
justments, while credit quality remained solid.
The number of full-time-equivalent staff has decreased 5%
since the end of the third quarter of 2021 due to continued
efficiency efforts.
Q3 2022 vs Q2 2022
in the third quarter
Profit before tax
increased to
DKK 1,191 million (Q2 2022: DKK 458 million), driven
primarily by higher net interest income from deposits due to
the rise in interest rates but also by clearly declining
operating expenses and lower loan impairment charges.
•
•
•
•
•
Net interest income increased 12% driven by deposit
income as a consequence of the rise in interest rates.
Net fee income decreased 9% due to lower investment
fees driven by the uncertainty in the financial markets.
Operating expenses decreased 12% and stood at
DKK 2,237 million (Q2 2022: DKK 2,530 million). The
decrease was due to a lower number of FTEs.
in
loan
The third quarter of 2022 saw loan impairment
charges of DKK 9 million (Q2 2022: DKK 327 million).
The decrease
impairment charges was
attributable to strong credit quality. Credit exposure
decreased in third quarter of 2022, due mainly to the
negative effect of fair value adjustments in Denmark
and decreasing exposure in Norway and Sweden due to
weaker exchange rates.
lending decreased due
Bank lending volumes increased 4% in Denmark, but
to market value
total
adjustments driven by increasing market rates as well
as the depreciation of the Swedish krona and the
Norwegian krone.
•
Deposit volumes decreased 1% due to the depreciation
of currencies as well as the higher cost of living.
DKK 1,191 million
Profit before tax
for the third quarter of 2022
Danske Bank / Interim report – first nine months 2022 18/77
Business Customers
The increase in inflation, combined with the rise in interest rates and higher energy prices, increasingly poses a challenge for many
of our customers. We are doing our outmost to help and guide our customers in these difficult times, not least supported by our
new service model. We have seen several interest rate hikes in all of the markets in which we operate, and this has called for very
active deposit repricing in order to continue to have an attractive value proposition for our customers. The global supply of new
assets is still under pressure due to the war in Ukraine, which continues to fuel income from the sale of existing assets in our leasing
company.
Profit before tax for the first three quarters of 2022 amounted to DKK 5,004 million, an improvement of 50% from the same period
last year. This was driven primarily by repricing initiatives for deposits, as well as an increase in customer activity 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
Q1-Q3
2022
6,476
1,353
372
632
8,833
3,919
168
4,914
-90
Q1-Q3
2021
5,819
1,185
270
443
7,716
3,817
131
3,899
574
Index
22/21
111
114
138
143
114
103
128
126
-
Q3
2022
2,392
448
129
201
3,170
1,254
56
1,917
-289
Q2
2022
2,110
426
134
231
2,902
1,352
54
1,550
86
Index
Q3/Q2
113
105
96
87
109
93
104
124
-
Q3
2021
1,954
362
93
145
2,554
1,242
42
1,312
40
Index
22/21
Full year
2021
122
124
139
139
124
101
133
146
-
7,788
1,613
351
580
10,333
5,144
173
5,189
426
Profit before tax
5,004
3,325
150
2,205
1,464
151
1,272
173
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
625,945
8,274
287,523
336,593
39,723
648,863
9,187
286,252
374,438
40,590
96
90
100
90
98
625,945
8,274
287,523
336,593
39,439
634,239
8,474
290,934
348,195
39,417
99
98
99
97
100
648,863
9,187
286,252
374,438
41,770
96
90
100
90
94
652,955
9,059
292,530
377,388
40,881
0.93 0.83
16.5 12.8
-
-
1.03
0.91
19.4
15.7
-
-
0.84
12.6
-
-
0.83
12.7
16.8 10.9
44.4 49.5
1,689 1,693
-
-
100
22.4
39.6
1,689
14.9
46.6
1,696
-
-
100
12.2
48.6
1,693
-
-
100
11.7
49.8
1,699
Fact Book Q3 2022 provides financial highlights at customer type level for Business Customers. Fact Book Q3 2022 is available at danskebank.com/ir.
Business initiatives
The changes in the macroeconomic outlook put significant
pressure on our business customers. Record-high energy
prices and the outlook for a possible recession create a chal-
lenging operating environment for most of our customers.
With our new customer service model, we customise our
help and advice to better match the needs of our customers
in order to support them in the best possible way during
these difficult times.
Despite the increased pressure on our customers, we see
good customer activity relative to the same period last year
due to the reopening of societies. Ancillary income increased,
driven by cash management and foreign exchange activities.
Income from the sale of existing assets in our leasing com-
pany continued to be high due to the decrease in the global
supply of new assets as a result of the war in Ukraine.
The repricing of deposits, increased fees and higher trading
income were the primary factors behind the positive income
development in the first nine months. The increase in interest
rates sharpened the focus on offering attractive prices for
our customers and potential new customers. We saw a good
inflow of deposit volumes in Denmark due to our customers’
having excess liquidity. Bank lending volumes increased 4%
due to the reopening of societies, despite the depreciation of
currencies. Mortgage lending at nominal value increased 2%,
but measured at fair value, there was a decrease of 10% due
to the higher market rates, resulting in a decrease in total
lending of 4%. Green loan volumes have increased in 2022
to date, and we held events across the Nordic countries to
increase the focus on and knowledge about green loans. Sus-
tainability remains a high priority, accelerated by the Euro-
pean energy crisis, and through our advisers’ strategic finan-
cial sparring, we continue to guide our customers in a more
sustainable direction.
Danske Bank / Interim report – first nine months 2022 19/77
Q3 2022 vs Q2 2022
in the third quarter
Profit before tax
increased to
DKK 2,205 million (Q2 2022: DKK 1,464 million), driven by
higher net interest income from deposits and lower loan
impairment charges.
•
•
•
•
Net interest income increased 13% and stood at
DKK 2,392 million (Q2 2022: DKK 2,110 million),
driven by deposit income.
Net fee income increased 5%, driven by increased
service fees due to repricing.
Operating expenses decreased 7%. We continue to
see a decrease in costs related to the Better Bank plan
implementation.
The third quarter of 2022 saw loan impairment
reversals of DKK 289 million (Q2 2022: a charge of
DKK 86 million). The reversals were driven by changes
in post-model adjustments and strong credit quality.
DKK 2,205 million
Profit before tax
for the third quarter of 2022
In the beginning of 2022, we launched the Marketplace mod-
ule for our online platform District in Sweden, enabling cus-
tomers to purchase new products themselves via the plat-
form. We continue to see an increasing use of Marketplace,
with 15% of all District users in Sweden having visited Mar-
ketplace.
First nine months 2022 vs first nine months 2021
Profit before tax amounted to DKK 5,004 million (Q1-Q3
2021: DKK 3,325 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 pan-
demic, combined with lower loan impairment charges.
Net interest income increased 11%, driven by income from
deposits following market developments in pricing and rates.
In Denmark, deposit volumes increased to the highest level in
years, which further fuelled income from deposits. Further-
more, we saw increased activity among our customers, lead-
ing to an increase in bank lending volumes of 4%.
Net fee income stood at DKK 1,353 million, an increase of
14% (Q1-Q3 2021: DKK 1,185 million). This increase was
driven by higher service fees due to repricing as well as high
refinancing and remortgaging activity, the latter as a result of
the higher interest rate levels.
Net trading income increased to DKK 372 million (Q1-Q3
2021: DKK 270 million), driven by increased foreign ex-
change activity as a result of the reopening of societies.
Other income amounted to DKK 632 million (Q1-Q3 2021:
DKK 443 million). The increase was the result of higher sales
prices for assets in our leasing company.
Operating expenses increased 3% in the first nine months.
We continue to see a decrease in transformation costs re-
lated to 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. Furthermore, the
changes to the allocation of costs between the business units
implemented in the fourth quarter of 2021 also affected op-
erating expenses.
In the first nine months of 2022, we saw loan impairment re-
versals of DKK 90 million (Q1-Q3 2021: charges of DKK 574
million). Reversals for the first nine months of 2022 were due
mainly to strong credit quality driven by the post-pandemic
economic recovery and changes in our post-model adjust-
ments.
Danske Bank / Interim report – first nine months 2022 20/77
Large Corporates & Institutions
In the first nine months of 2022, the operating environment became increasingly challenging as the highest inflation rate in decades
caused central banks to tighten monetary policy more and sooner than expected. Combined with an uncertain economic outlook,
demand for credit, advisory services and risk hedging increased, and we supported our customers with more than DKK 60 billion
in additional lending. This demonstrates the value of our diversified business model, as higher net interest income helped mitigate
the effect of lower net fee income from capital markets activities. Net trading income recovered in the third quarter despite a
reduction in risk utilisation in the markets area amid continually volatile markets. Notwithstanding the negative macroeconomic
impact, we continue to see positive underlying momentum, as illustrated by high growth in everyday banking fees and our leading
position in sustainable finance.
Profit before tax in the first nine months of 2022 was DKK 4,001 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.
Q2
2022
Index
Q3/Q2
Q3
2021
Index
22/21
Full year
2021
Large Corporates & Institutions
(DKK millions)
Q1-Q3
2022
Q1-Q3
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
4,015
4,296
622
2
8,936
5,090
379
3,846
-155
3,553
4,720
2,417
2
10,692
5,562
276
5,129
230
Profit before tax
4,001
4,900
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)
354,247
293,947
2,134
399,252
333,514
24,035
42,246
244,046
220,608
3,974
376,909
330,126
26,862
44,156
113
91
26
100
84
92
137
75
-
82
145
133
54
106
101
89
96
Q3
2022
1,404
1,364
596
-
3,364
1,599
125
1,765
-11
1,328
1,419
-710
1
2,037
1,747
138
290
-233
1,775
523
354,247
293,947
2,134
399,252
333,514
24,035
41,958
311,269
270,910
1,231
352,697
302,542
24,217
43,864
106
96
-
-
165
92
91
-
5
-
114
109
173
113
110
99
96
1,161
1,499
565
-
3,225
1,811
84
1,414
-22
121
91
105
-
104
88
149
125
50
4,732
6,777
3,137
5
14,650
7,025
360
7,625
-13
1,436
124
7,638
244,046
220,608
3,974
376,909
330,126
26,862
42,916
145
133
54
106
101
89
98
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
0.79 0.72
-
0.79
0.80
-
0.76
-
0.73
12.1 15.5
12.6 14.8
57.0 52.0
2,109 2,716
-
-
-
78
16.8
16.9
47.5
2,109
2.6
4.8
85.8
2,097
-
-
-
101
13.2
13.4
56.2
2,716
-
-
-
78
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)
4,989
1,305
-172
1,762
143
879
4,647
2,904
54
1,741
80
1,399
107
45
-
101
179
63
1,719
728
-73
611
57
306
1,645
-313
30
573
66
132
104
-
-
107
86
232
1,535
685
-40
637
25
368
112
106
183
96
228
83
6,203
3,909
104
2,653
385
1,886
Total income
8,936
10,692
84
3,364
2,037
165
3,225
104
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
399,196
261,181
478,051
313,311
84
83
399,196
261,181
432,201
272,053
92
96
478,051
313,311
84
83
487,560
325,025
Total assets under management1
660,378 791,362
83 660,378 704,254
94 791,362
83 812,585
1 Includes assets under management from Group entities.
Danske Bank / Interim report – first nine months 2022 21/77
Net fee income declined to DKK 4,296 million (Q1-Q3 2021:
DKK 4,720 million), reflecting extraordinarily high ECM
income last year and generally lower capital markets activity.
Higher net fee income from M&A advisory and everyday
banking services, such as cash management, partly
mitigated the decline. Income in Asset Management was on
par with the level in the first nine months of 2021, as higher
performance fees compensated for the decline in assets
under management. Assets under management fell 17%
from the level in the third quarter of 2021 as a result of
declining asset prices and negative net sales, especially
within the institutional segment.
Net trading income fell to DKK 622 million (Q1-Q3 2021:
DKK 2,417 million) as a result of losses in Rates & Credit in
the second quarter. We continued to support our customers
through the volatile repricing of the financial markets,
however, the extraordinarily high volatility and lower liquidity
in the Nordic fixed income markets made it challenging to
provide market-making services and manage the risk held to
support our fixed income franchise. Net trading income
recovered in the third quarter, despite a reduction in risk
utilisation, as market conditions became more supportive.
Operating expenses decreased to DKK 5,090 million (Q1-Q3
2021: DKK 5,562 million), mainly as a result of the changes
to the allocation of costs between the business units imple-
mented in the fourth quarter of 2021 and lower provisions
for performance-based compensation. The Resolution Fund,
bank tax etc. item increased to DKK 379 million (Q1-Q3
2021: DKK 276 million) as a result of the Swedish bank tax
that came into force on 1 January 2022 and higher resolu-
tion fund costs.
The number of full-time equivalent staff fell to 2,109 (Q1-Q3
2021: 2,716) as the 1st line Financial Crime Risk and Busi-
ness Controls functions were moved to Group Functions and
Personal Customers, respectively.
The overall credit quality of our portfolio remained strong in
the third quarter of 2022, with the general rating trend being
stable. Loan impairments in the first nine months of 2022
amounted to a net reversal of DKK 155 million (Q1-Q3 2021:
a charge of DKK 230 million). The reversals reflect strong
credit quality and were driven by single-name workouts and
the post-pandemic economic recovery, with the effect being
partly offset by an increase in our post-model adjustments.
Since the fourth quarter of 2019, we have actively reduced
net oil-related exposure (excluding diversified oil & gas
companies) by 54%.
Business initiatives
In the current environment of global macroeconomic and
geopolitical turmoil, our ambition to be our customers’
preferred strategic financial partner has become more
relevant than ever. The operating environment has turned
more challenging for Nordic corporates and institutions,
which are facing not only higher input prices and funding
costs but also continued uncertainty about whether the
economic slowdown will turn into a recession – and if so, how
deep it will be.
We maintain a close dialogue with our customers and
support them with advisory services as well as credit and risk
management solutions. Danske Bank’s strong liquidity and
capital position enable us to support customers across our
home markets amid continually high credit demand, driven by
factors such as the rapid
in energy prices,
challenging capital markets and an increased need for
working capital. In 2022 to date, we have worked closely with
local governments and regulators to set up government-
backed schemes to support energy companies.
increase
Notwithstanding the lower customer activity in the capital
markets, we maintained a strong Nordic market position, as
illustrated by our leading position among Nordic banks in
terms of supported volumes in the European debt capital
markets issuance league table. This should position us well
to support customers when conditions in the primary
markets improve.
The slowdown in activity was less pronounced within Nordic
sustainable bonds issuance, in which area we maintained a
leading position, as illustrated by the Bloomberg League
tables
for arrangers of both sustainable bonds and
sustainability-linked loans in terms of volumes supported in
2022 to date. Within responsible investments, we continue
to expand and strengthen our offering. We are proud to have
launched a range of multi-asset funds called Global Ansvarlig
Portefølje (Global Responsible Portfolio) that have a high
allocation to sustainable
funds are
available to customers in all the Nordic countries.
investments. The
First nine months 2022 vs first nine months 2021
Profit before tax declined to DKK 4,001 million (Q1-Q3 2021:
DKK 4,900 million) as a result of significantly lower net
trading income.
Net interest income increased to DKK 4,015 million (Q1-Q3
2021: DKK 3,553 million) as a result of higher lending
volumes and deposit margins. Lending margins declined,
partly reflecting market interest rates having turned positive
for loans with embedded interest rate floors.
Lending volumes in General Banking increased 33% from the
level at the end of the third quarter of 2021, driven both by
new credit facilities and customers drawing more on existing
facilities. The high growth in lending volumes reflects the
challenging operating environment for our customers, but
also our strategic ambition to grow in especially Sweden.
Lending volumes are expected to normalise when market
conditions improve.
Danske Bank / Interim report – first nine months 2022 22/77
Q3 2022 vs Q2 2022
Profit before tax increased to DKK 1,775 million (Q2 2022:
DKK 523 million), as net trading income recovered in the
third quarter of 2022.
• Net interest income increased to DKK 1,404 million (Q2
2022: DKK 1,328 million), driven by higher lending
volumes and deposit margins.
• Net fee income declined to DKK 1,364 million (Q2 2022:
low
DKK 1,419 million) as a result of continually
customer activity in the capital markets.
• Net trading income increased to DKK 596 million (Q2
2022: a negative DKK 710 million) following a recovery in
income in Rates & Credit.
• Operating expenses decreased to DKK 1,599 million (Q2
2022: DKK 1,747 million) due to lower underlying
expenses and a one-off provision in the second quarter.
• Loan impairment charges amounted to a net reversal of
DKK 11 million (Q2 2022: net reversal of DKK 233
million). The lower reversals in the third quarter of 2022
were due to post-model adjustments.
DKK 1,775 million
Profit before tax
for the third quarter of 2022
Danske Bank / Interim report – first nine months 2022 23/77
Danica Pension
The continued uncertainty in the financial markets during the first nine months of 2022 caused by the rise in inflation and associated
interest rate hikes affected the financial performance of Danica Pension and thereby our customers’ pension savings.
Net income from insurance business before goodwill impairment amounted to DKK –323 million in the first nine months of 2022,
a decline from the level in the same period last year.
Q2
2022
Index
Q3/Q2
Q3
2021
Index
22/21
Full year
2021
Danica Pension
(DKK millions)
Result, life insurance
Result, health and accident insurance
Return on investments, shareholders' equity etc.
Discontinued operations
Q1-Q3
2022
Q1-Q3
2021
Index
22/21
207
-882
99
-
1,998
-338
-26
-
10
261
-
-
Q3
2022
-150
-118
-108
-
-101
-417
318
-
-
-
-
-
Net income before tax in Danica Pension1
-576
1,635
Included within Group Treasury2
Net income from insurance business
Goodwill impairment
252
-59
-323
1,576
1,627
-
Net income from insurance business incl. goodwill
-1,951
1,576
-
-
-
-
-
-375
-200
188
90
79
114
-286
-122
234
1,627
-
-1,913
-122
Premiums, insurance contracts
Premiums, investment contracts
Provisions, insurance contracts
Provisions, investment contracts
26,565
1,897
385,782
18,362
27,201
3,627
441,804
35,775
98
52
87
51
7,766
185
385,782
18,362
8,697
765
396,379
18,566
Allocated capital (average)
20,477
13,121
156
20,805
20,915
713
-3
-94
-
616
-22
594
-
594
-
-
115
-
-
-
-
-
-
2,724
-520
-20
-
2,184
-96
2,088
-
2,088
9,369
1,582
441,804
35,775
83
12
87
51
37,617
5,563
449,344
20,847
12,411
168
12,918
-
-
89
24
97
99
99
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff
-2.1 16.0
196 222
872 963
-
-
-
-5.5
196
872
-2.3
184
957
-
-
-
19.1
222
963
-
-
-
16.2
210
960
Asset under management
Life insurance
Health and accident insurance
377,883
14,749
465,430
17,362
81
85
377,883
14,749
399,328
15,690
95
94
465,430
17,362
81
85
462,930
17,449
Total1
392,631 482,792
81 392,631 415,018
95 482,792
81 480,379
1Figures are for the Danica Group.
2 Includes the difference between the actual return on the investment of shareholders’ equity (net of interest on subordinated debt) and the sum of interest on allocated capital and allocated capital
and shareholder costs. Special allotments are also included (page 155 of Annual Report 2021 provides further information).
increase in the use of the solution, surpassing 18,000 con-
sultations year to date, and many of the customers would not
have received help if not for the new solution.
The number of individual Danica Pension customers who
have taken a Pension Check has surpassed 250,000, which
is a major milestone as the Pension Check provides custom-
ers with an overview of their pension and insurance solutions
and thus creates security immediately as well as in the longer
term.
The rise in interest rates and inflation, which has led to global
market turbulence, had a negative impact on the returns of
many of our customers’ pension savings in the first nine
months of 2022, and assets under management decreased
19% as a result of the financial headwinds.
After a period of high growth, Danica Pension saw a decrease
in premiums in the third quarter of 2022 of 16% from the
level in the second quarter of 2022. This development re-
flects a deliberate focus on maintaining a profitable business
model, which has affected the number of new customers and
thereby the single premiums.
It continues to be Danica Pension’s ambition to reduce long-
term illness through the early involvement of health person-
nel, which will ultimately have a positive effect on our health
and accident results, and the health package launched in
2021 continued to receive a very high satisfaction score of
95% year-to-date from customers. We also see a sustained
Danske Bank / Interim report – first nine months 2022 24/77
Assets under management decreased DKK 90 billion, driven
by the development in the financial markets and the sale of
Danica Norway.
Q3 2022 vs Q2 2022
Net income from insurance business (before goodwill
impairments) decreased to a loss of DKK 286 million (Q2
2022: a loss of DKK 122 million) due to lower results of the
life insurance business, partly offset by an improved result
of the health and accident business. The result in the second
quarter of 2022 benefited from the profit from the sale of
Danica Norway.
• The result of the life insurance business decreased 49%,
due mainly to a provision of DKK 150 million to cover
compensation to customers, as announced on 9
September 2022, and a reversal of a risk allowance
amount of DKK 136 million recognised in the first half of
2022. Danica Pension was not able to recognise the full
risk allowance amount in the third quarter of 2022. The
result was, however, positively affected by a better
investment result on life insurance products where
Danica Pension has the investment risk.
• The result of the health and accident business increased
in the third quarter of 2022 due to a better investment
and risk result.
• The return on investments allocated to shareholders’
equity etc. decreased to a loss of DKK 108 million, due
mainly to the profit of DKK 415 million on the sale of
Danica Norway being included in the second quarter of
2022.
• Total premiums decreased 16%, mainly because of a
decrease in single premiums, as regular premiums
increased due to an inflow of new business customers in
earlier periods.
• Assets under management decreased DKK 22 billion,
due mainly to the negative developments in the financial
markets.
DKK -286 million
Net income from
insurance business
for the third quarter of 2022
First nine months 2022 vs first nine months 2021
Danica Pension was affected by the negative developments
in the financial markets in the first nine months of 2022 and
the impairment of goodwill of DKK 1,627 million from the pur-
chase of SEB Pension in 2018. The impairment charge is due
to increasing discount rates and the current turbulence in
the financial markets. The underlying business is still healthy.
We continue to see a more positive development in the health
& accident business than expected - with fewer claims and
people returning faster to work. In 2022, claims continue to
be at a stable and lower level compared to previous years.
Net income from insurance business (before goodwill impair-
ment) decreased to a loss of DKK 323 million (Q1-Q3 2021:
DKK 1,576 million), due primarily to the negative develop-
ments in the financial markets. The profit of DKK 415 million
from the sale of Danica Norway is included in the result for
the first nine months of 2022.
The result of the life insurance business decreased to DKK
207 million (Q1-Q3 2021: DKK 1,998 million). The decrease
was driven mainly by negative valuation adjustments of life in-
surance products where Danica Pension has the investment
risk, with the effect being partly offset by changes in life insur-
ance provisions and a provision of DKK 150 million to cover
compensation to customers, as announced on 9 September
2022. Due to the negative developments in the financial mar-
kets in the third quarter of 2022, Danica Pension was not
able to recognise the full risk allowance amount from all in-
terest groups, and a reversal of a risk allowance amount of
DKK 136 million recognised in the first half of 2022 affected
the result negatively in the third quarter of 2022. The result
was also affected by a change in the presentation, which had
a negative effect on the result of the life insurance business
of DKK 626 million and a positive effect on the health and ac-
cident business of the same amount.
The result of the health and accident business declined to a
loss of DKK 882 million (Q1-Q3 2021: a loss of DKK 338
million). The result benefited from the above-mentioned
change in presentation. The risk result improved due to a
reduction of technical provisions, and claims continue to be
at a stable level in 2022. However, negative valuation
adjustments caused a decrease in the investment result of
DKK 702 million to a loss of DKK 791 million in the first nine
months of 2022 (Q1-Q3 2021: a loss of DKK 89 million). The
first nine months of 2021 included a provision for pension
yield tax of DKK 267 million.
The return on investments allocated to shareholders’ equity
etc. increased DKK 125 million from the level in the first nine
months 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 investment assets and liabilities allocated to
shareholders’ equity.
Total premiums decreased 8%, mainly because of fewer sin-
gle premiums, as regular premiums increased due to an in-
flow of new business customers in earlier periods.
Danske Bank / Interim report – first nine months 2022 25/77
Northern Ireland
The underlying income performance was strong. UK central bank interest rates rose in the first nine months of 2022 in response
to inflationary pressure, supporting an increase in net interest income, and activity levels and related fee income also increased.
However, the improvement of the underlying performance was almost wholly offset by negative trading income given the impact of
significantly increased expectations of rising interest rates on the bank’s hedging portfolio. This negative impact will reverse over
the life of the portfolio.
Profit before tax in the first nine months of 2022 was DKK 7 million, a decline from the same period last year driven by the negative
trading income.
Q1-Q3
2021
Index
22/21
Q3
2022
Q2
2022
Index
Q3/Q2
Q3
2021
Index
22/21
Full year
2021
Northern Ireland
(DKK millions)
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Loans, excluding reverse transactions before
impairments
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)*
Net interest income as % p.a. of loans and
deposits
Profit before tax as % p.a. of allocated capital
(avg.)
Cost/income ratio (%)
Full-time-equivalent staff
* Allocated capital equals the legal entity’s capital.
Q1-Q3
2022
1,332
248
-611
18
986
943
43
36
7
996
201
-13
9
1,193
937
257
-96
353
54,478
694
96,232
6,069
57,365
857
99,665
6,724
134
123
-
200
83
101
17
-
2
95
81
97
90
508
84
-402
3
194
320
-126
-2
444
88
-66
12
477
315
162
19
-124
143
54,478
694
96,232
6,081
58,313
711
99,977
6,020
114
95
-
25
41
102
-
-
-
93
98
96
101
1.11 0.87
1.28
1.09
0.2 7.0
95.6 78.5
1,271 1,289
-8.2
164.9
1,271
9.5
66.0
1,256
99
101
334
72
-13
3
395
367
29
-31
60
57,365
857
99,665
6,936
0.85
3.5
92.9
1,289
152
117
-
100
49
87
-
6
-
95
81
97
88
99
1,341
288
-66
12
1,576
1,317
259
-127
386
55,848
802
98,980
6,713
0.87
5.8
83.6
1,268
Business initiatives
Our focus in Northern Ireland is to remain a stable, strong
and risk-astute bank, consolidating our market-leading
position alongside pursuing prudent
low-cost growth
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
We continued to enhance our digital value proposition for
both personal and business customers. In the third quarter,
we added new functionality to our app, allowing personal
customers to set up standing orders and make international
transfers. We have also introduced a digital self-service
application for business customers, giving them the ability to
apply online for an overdraft or an overdraft increase.
To reflect accelerating digital adoption by our customers,
with more than 6.5 million monthly logons, we reduced our
branch network in the third quarter through the closure of
four branches and also announced the sale of our offsite ATM
network to an established local provider – actions that also
reflect our continuing management of costs against a
backdrop of inflationary pressure.
While loan impairments remain low, supported by low levels
of unemployment, we have responded to the current
inflationary pressure and economic uncertainty in the UK by
revising our affordability assessments for new mortgages
and unsecured loans. As part of our commitment to continue
to support our customers, we have also launched a Money
Worries online hub that offers advice and assistance to
customers who are worried about the financial impacts of the
increased cost of living.
Danske Bank / Interim report – first nine months 2022 26/77
Q3 2022 vs Q2 2022
In the third quarter, significant, negative mark-to-market
movements in the hedging portfolio resulted in a pre-tax loss
of DKK 124 million (Q2 2022: pre-tax gain of DKK 143
million).
•
•
•
•
•
Net interest income increased to DKK 508 million (Q2
2022: DKK 444 million), reflecting higher UK interest
rates and related pricing actions.
Net fee income decreased marginally to DKK 84 million
(Q2 2022: DKK 88 million).
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. The negative trading income will reverse
over the remaining life of the hedging portfolio once
market conditions stabilise.
Operating expenses increased marginally to DKK 320
million (Q2 2022: DKK 315 million).
Loan impairment charges remained low in the third
quarter.
DKK -124 million
Profit before tax
for the third quarter of 2022
First nine months 2022 vs first nine months 2021
Profit before tax decreased to DKK 7 million (Q1-Q3 2021:
DKK 353 million), with growth in underlying income being
more than offset by negative trading income as well as the
same period in 2021 benefiting from net impairment rever-
sals. Net interest income and net fee income increased, re-
flecting higher interest rates and improved post-pandemic
activity levels. Higher UK interest rates will continue to sup-
port a strong net interest income performance, and the neg-
ative trading income will start to reverse over the remaining
life of the hedging portfolio once market expectations stabi-
lise.
Balance sheet growth remained subdued, with low demand
for lending from large business customers partially offset by
increasing momentum in mortgage lending. Many business
customers have delayed investment decisions and continue
to hold additional liquidity. Deposits were reduced marginally
year-on-year. Net
increased 34% to
DKK 1,332 million (Q1-Q3 2021: DKK 996 million), driven by
higher UK interest rates and related pricing actions.
interest
income
Net fee income grew 23% to DKK 248 million (Q1-Q3 2021:
DKK 201 million) as a result of improved post-pandemic ac-
tivity levels and pricing actions.
Net trading income was negative due to adverse mark-to-
market movements on the hedging portfolio given increased
market expectations of rising UK interest rates. This will re-
verse over the remaining life of the hedging portfolio, starting
when market expectations stabilise.
Operating expenses were marginally higher and stood at
DKK 943 million (Q1-Q3 2021: DKK 937 million), reflecting
a continually strong cost focus.
Loan impairment charges remained low, against a net rever-
sal in the same period in 2021. The loan portfolio remains
strong, and impairment levels continue to be low, driven by a
conservative risk appetite and astute handling of existing and
new lending opportunities.
Danske Bank / Interim report – first nine months 2022 27/77
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 nine months of 2022 decreased from the level in the first
nine months of 2021 to a loss of DKK 10 million. Lending decreased DKK 1.2 billion from the level at the end of September 2021,
driven by the 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
Q1-Q3
2022
Q1-Q3
2021
Index
22/21
Q3
2022
Q2
2022
Index
Q3/Q2
Q3
2021
Index
22/21
Full year
2021
21
95
-74
-63
-10
22
82
-60
-83
23
1,235
40
2,105
693
2,429
814
2,128
918
95
116
123
76
-
51
5
99
75
1
30
-29
-2
-28
7
39
-32
-63
31
1,235
40
2,105
662
1,364
47
2,174
683
14
77
91
3
-
91
85
97
97
22
28
-6
-11
6
2,429
814
2,128
809
-0.18 0.56
-
-0.43
0.10
-1.9 3.3
-
36 25
-
-16.9
-
36
18.2
-
37
144
3.0
-
25
97
5
107
-
18
-
51
5
99
82
144
25
234
-210
-207
-2
2,123
811
2,191
872
0.38
-0.2
-
25
-1
-63
-63
-130
47
-83
1
-
-
-
-2
-2
-
-63
-63
-
3
3
-11
-
-11
-
-
-
-254
47
-207
* Non-core banking encompasses the Group’s activities in Lithuania, Non-core Ireland, Luxembourg and Germany.
At the end of September 2022, total lending was down to
DKK 1.2 billion. The decrease from the level at the end of Sep-
tember 2021 related to the sale of a legacy exposure at Non-
core as well as divestment of portfolios in Lithuania and Ire-
land.
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. The winding-up ac-
tivities in Germany are now completed. The winding up of the
remaining Non-core activities is proceeding according to
plan, including the activities in Luxembourg.
The only portfolio remaining at the Lithuanian branch is a
small portfolio of mainly leasing contracts with local custom-
ers. This portfolio will be fully amortised by the end of 2022.
First nine months 2022 vs first nine months 2021
Profit before tax decreased to a loss of DKK 10 million (Q1-
Q3 2021: DKK 23 million) due to an increase in operating ex-
penses related to the Group’s remaining activities in Ger-
many and Luxembourg being transferred to Non-core and a
decrease in loan impairment reversals driven by settlement
of part of the exposure. The loan impairment reversals in the
first nine months of 2021 related to the sale of a Latvian port-
folio of commercial loans held by the Lithuanian branch.
Danske Bank / Interim report – first nine months 2022 28/77
Q3 2022 vs Q2 2022
The Non-core unit posted a loss before tax of DKK 28 million
in the third quarter of 2022 (Q2 2022: a profit of DKK 31
million) due to a decrease in loan impairment reversals. This
was partly offset by a decrease in operating expenses.
•
•
•
•
Total income amounted to DKK 1 million (Q2 2022:
DKK 7 million). This was primarily the result of a
decrease in total income from the Non-core part of the
Group’s private equity investments.
Operating expenses decreased to DKK 30 million (Q2
2022: DKK 39 million). The decrease mainly reflects
the progress made within the winding-up activities in
Germany and Luxembourg.
Loan impairment charges amounted to a net reversal
of DKK 2 million (Q2 2022: DKK 63 million). The
decrease reflects the second quarter benefitting from
the closing of the sale of a legacy exposure at Non-core.
Total lending was down to DKK 1.2 billion (Q2 2022:
DKK 1.4 billion) due to winding-up activities for
Luxembourg.
DKK -28 million
Profit before tax
for the third quarter of 2022
Danske Bank / Interim report – first nine months 2022 29/77
Group Functions
Group Functions includes Group Treasury, Technology & Services and other Group functions. In addition, Group Functions includes
eliminations.
In the first nine months of 2022, loss before tax decreased to DKK 17,136 million compared to the first nine months of 2021. The
decrease was driven by the additional provision of DKK 14,000 million for the Estonia matter and the provision of DKK 1,250 million
related to the compensation of debt collection customers for potential overcollection of debt. In addition, net interest income and
net trading income were down, due, among other things, to market developments.
Q1-Q3
2022
Q1-Q3
2021
Index
22/21
Q3
2022
Q2
2022
Index
Q3/Q2
Q3
2021
Index
22/21
Full year
2021
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
Provision for Estonia matter
-115
-24
-48
4
-183
2,284
59
24
14,000
195
-26
211
-2
378
1,543
30
-
-
Profit before loan impairment charges
Loan impairment charges
Profit before tax
-16,467
669
-1,165
-2
-17,136
-1,163
-
92
-
-
-
148
197
-
-
-
-
-
-166
-4
57
-
-113
1,368
15
-
14,000
-15,481
659
-7
6
137
2
137
478
17
24
-
-341
-7
-16,140
-333
-
-
42
-
-
286
88
-
-
-
-
-
50
-4
84
-39
91
382
7
-
-
-291
-2
-290
-
100
68
-
-
-
214
-
-
-
-
-
312
-56
381
-10
627
2,068
37
36
-
-1,442
2
-1,444
Full-time-equivalent staff
10,802
10,364
104
10,802
10,746
101
10,364
104
10,252
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
-592
438
88
-17,069
280
-68
350
-1,725
-
-
25
-
-304
252
2
-16,089
-103
220
5
-455
295
115
40
-
-2
27
118
-432
-17,136
-1,163
-
-16,140
-333
-
-290
-
-
2
-
-
599
-67
451
-2,427
-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 han-
dle, for example, the pricing of funding. Group Treasury also
manages the Group’s liquidity bond portfolio and the invest-
ment 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 nine months 2022 vs first nine months 2021
Excluding the additional provision of DKK 14,000 million for
the Estonia matter, Group Functions posted a loss before tax
of DKK 3,136 million (Q1-Q3 2021: a loss of DKK 1,163 mil-
lion). Including the additional provision, loss before tax was
DKK 17,136 million. The loss was due to the additional pro-
vision of DKK 14,000 million for the Estonia matter and an
increase in operating expenses of DKK 600 million and in
loan impairment charges of DKK 650 million resulting from
the decision to compensate debt collection customers for po-
tential overcollection of debt. In addition, net interest income
and net trading income were down, due, among other things,
to market developments.
Net interest income decreased to a loss of DKK 115 million
(Q1-Q3 2021: a gain of DKK 195 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 48 million
(Q1-Q3 2021: DKK 211 million), as Group Treasury’s fair
value bond portfolios were negatively affected by market
value adjustments of Danish mortgage bond investments in
the first nine months of 2022. Furthermore, the first nine
months of 2021 benefited from 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, in-
creased from the level in the first nine months of 2021 and
amounted to DKK 2,284 million (Q1-Q3 2021: DKK 1,543
million). This was due primarily to the decision to compensate
debt collection customers for potential overcollection of debt,
which led to a provision of DKK 600 million.
An additional provision of DKK 14,000 million has been
made in the third quarter of 2022. On the basis of the current
stage of the discussions with US and Danish authorities,
Danske Bank is now in a position to reliably estimate with a
high degree of certainty the financial impact of a potential
coordinated resolution.
Loan impairment charges increased to DKK 669 million (Q1-
Q3 2021: a net reversal of DKK 2 million) due to the compen-
sation to debt collection customers for potential overcollec-
tion of debt, which led to a charge of DKK 650 million.
The number of full-time equivalent staff increased to 10,802,
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 nine months 2022 30/77
Q3 2022 vs Q2 2022
Excluding the additional provision for the Estonia matter,
Group Functions posted a loss before tax of DKK 2,140 mil-
lion (Q2 2022: loss before tax of DKK 333 million). Including
the additional provision of DKK 14,000 million for the Esto-
nia matter, Group Functions posted a loss before tax of DKK
16,140 million. The higher loss was also due to the decision
to compensate debt collection customers for potential over-
collection of debt.
•
•
•
•
Net interest income amounted to a loss of DKK 166
million (Q2 2022: a loss of DKK 7 million) due to lower
bond portfolio income as a result of the increasing
interest rates and to the maturing 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 DKK 57 million (Q2
2022: DKK 137 million), as Group Treasury’s fair value
bond portfolios were negatively affected by market
value adjustments of Danish mortgage bond
investments. Reduced interest rate hedging income
also contributed to the decrease.
Operating expenses increased to DKK 1,368 million
(Q2 2022: DKK 478 million), due mainly to the decision
to compensate debt collection customers for potential
overcollection of debt.
Provision for Estonia matter amounted to DKK 14,000
million in the third quarter of 2022. On the basis of the
current stage of the discussions with US and Danish
authorities, Danske Bank is now in a position to reliably
estimate with a high degree of certainty the financial
impact of a potential coordinated resolution.
DKK -16,140 million
Profit before tax
for the third quarter of 2022
Danske Bank / Interim report – first nine months 2022 31/77
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 sharehold-
ers’ 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 denomina-
tor represents equity, excluding additional tier 1 capital and other non-controlling interests equal to a re-
duction in the average of the quarterly average of equity of DKK 2,224 million (2021: DKK 7,733 million)
compared to a simple average of total equity (beginning and the end of the period).
Adjusted return on average shareholders' equity (% p.a.)
Net profit, excluding provision for Estonia matter and impairment charge on goodwill, divided by the aver-
age of the quarterly average shareholders’ equity (beginning and end of each quarter) within the year. The
numerator and denominator are adjusted as per Return on average shareholders’ equity above.
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 nine
month of 2022 would be 0.79% (full-year 2021: 0.73%) due to the daily average of the sum of loans and
deposits being DKK 2.6 billion lower (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 provision for Estonia matter and impairment charge on goodwill divided by total
income. All amounts are from the financial highlights.
Adjusted cost/income ratio (C/I), (%)
Operating expenses, divided by total income. All amounts are from the financial highlights.
Book value per share
Shareholders’ equity (that is, excluding equity-accounted additional tier 1 capital) divided by the number of
Loan impairment charges as % of net credit exposure
Allowance account as % of 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 seg-
ments. The numerator is the loan impairment charges of DKK 794 million (full-year 2021: DKK 348 mil-
lion) 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 18.8 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 1,119.5 billion
(2021: DKK 1,026.1 billion), Loans at fair value of DKK 706.3 billion (2021: DKK 809.9 billion), guarantees
of DKK 79.5 billion (2021: DKK 81.0 billion) and the allowance account at the end of the period, as dis-
closed 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 nine months 2022 32/76
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
33
34
35
36
38
39
Note G1: Significant accounting policies and estimates
Note G2: Changes in accounting policies,
financial highlights and segment reporting
41
Note G3: Business segments
43
47
Note G4: Income
Note G5: Loan impairment charges and reconciliation of total allowance account 48
49
Note G6: Issued bonds, subordinated debt and additional tier 1 capital
50
Note G7: Assets held for sale and Liabilities in disposal groups held for sale
51
Note G8: Other assets and other liabilities
52
Note G9: Foreign currency translation reserve
52
Note G10: Guarantees, commitments and contingent liabilities
55
Note G11: Assets provided or received as collateral
56
Note G12: Fair value information for financial instruments
59
Note G13: Group holdings and undertakings
60
Risk Management
60
Breakdown of credit exposure
61
Credit exposure from core lending activities
Credit exposure from Non-core lending activities
71
Counterparty credit risk and credit risk from trading and investment securities 72
72
Bond portfolio
Income statement Danske Bank Group
Danske Bank / Interim report first nine months 2022 33/77
Note
(DKK millions)
G4
G4
G4
Interest income calculated using the effective interest method
Other interest income
Interest expense
G4
G4
G4
Net interest income
Fee income
Fee expenses
Net trading income or loss
Other income
Net premiums
Net insurance benefits
Operating expenses
G8, G10 Provision for Estonia matter
G1
Impairment charges on goodwill
Profit before loan impairment charges
Loan impairment charges
G5
Profit before tax
Tax
Net profit
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Net profit
Earnings per share (DKK)
Diluted earnings per share (DKK)
Proposed dividend per share (DKK)
Q1-Q3
2022
20,376
31,187
31,106
20,456
13,147
4,575
-40,567
5,316
26,646
-12,039
23,266
14,000
1,627
-6,431
730
-7,161
2,080
Q1-Q3
2021
16,336
28,874
24,868
20,342
13,318
4,507
23,185
4,087
27,114
48,221
22,743
-
-
12,575
504
12,071
2,805
Q3
2022
7,865
12,442
13,436
6,870
4,095
1,418
-5,311
1,839
7,941
3,088
7,968
14,000
1,627
-12,667
366
-13,033
760
Q3
2021
5,482
9,559
8,316
6,725
4,268
1,452
4,313
1,214
9,404
12,930
7,433
-
-
4,109
-161
4,270
936
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
-9,241
9,266
-13,792
3,334
12,920
-9,327
86
8,917
349
-13,792
-
3,217
117
12,469
451
-9,241
9,266
-13,792
3,334
12,920
-11.0
-11.0
-
10.4
10.4
-
-16.2
-16.2
-
3.8
3.8
-
14.6
14.6
2.0
Danske Bank / Interim report first nine months 2022 34/77
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
Q1-Q3
2022
Q1-Q3
2021
Q3
2022
Q3
2021
Full year
2021
-9,241
9,266
-13,792
3,334
12,920
-615
-104
-511
-3,820
2,101
-2,028
-12
-752
-3,008
-3,519
331
-21
352
959
-674
-303
2
-72
56
408
-189
-28
-162
-1,207
677
-705
-32
-268
-999
-1,160
-162
-110
-52
-202
126
-100
-3
-39
-140
-192
-90
-146
56
1,708
-1,270
-326
6
-152
270
326
-12,760
9,674
-14,953
3,142
13,246
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
-12,846
86
9,325
349
-14,953
-
3,025
117
12,795
451
Total comprehensive income
-12,760
9,674
-14,953
3,142
13,246
* A positive amount is a tax expense, and a negative amount is a tax income
Danske Bank / Interim report first nine months 2022 35/77
30 September
2022
31 December 30 September
2021
2021
200,515
133,762
784,555
302,334
1,120,703
916,854
63,592
745,736
248
7,070
5,531
31,276
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
274,689
52,192
608,256
305,039
1,000,876
999,831
89,869
542,718
5,167
8,722
2,966
34,606
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*
G7
G8
G6
G6
G7
G8
G6
G6
G9
G6
Total assets
4,312,177
3,935,834
3,924,931
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
Shareholders of Danske Bank A/S (the Parent Company)
Additional tier 1 capital holders
Total equity
Total liabilities and equity
184,281
716,472
1,314,036
669,904
206,469
64,521
767,786
-
2,419
82,186
107,706
40,008
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
220,408
368,271
1,281,091
779,016
222,098
90,361
581,618
6,212
1,890
51,764
106,648
39,306
4,155,788
3,759,130
3,748,683
8,622
-2,331
-2,006
152,104
-
156,389
-
8,622
-612
34
161,439
1,724
171,207
5,497
8,622
-765
62
159,723
-
167,642
8,606
156,389
176,704
176,248
4,312,177
3,935,834
3,924,931
* 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
comparative information at 30 September 2021 has been restated.
Danske Bank / Interim report first nine months 2022 36/77
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
Additional
tier 1
capital
Total
Total
Total equity as at 1 January 2022
8,622
-612
34
161,439
1,724
171,207
5,497
176,704
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-9,327
-
-3,820
2,101
-
-
-
-
-
-
-2,028
-12
-
-1,719
-2,040
-615
-
-
-
-
856
241
-1,719
-2,040
-9,087
-
-
-
-
-
-
-
-
-
-9,327
86
-9,241
-615
-3,820
2,101
-2,028
-12
856
-3,519
-
-
-
-
-
-
-
-615
-3,820
2,101
-2,028
-12
856
-3,519
-12,846
86
-12,760
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
-
-1,724
-
-
-1,705
-
-164
-
-5,419
-164
-1,705
-5,419
-13,481
13,237
-23
-
-
-
-
-13,481
13,237
-23
156,389
-
-
-
-
-13,481
13,237
-23
156,389
Total equity as at 30 September 2022
8,622
-2,331
-2,006
152,104
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
Acquisition of own shares and additional tier 1
capital
Sale of own shares and additional tier 1 capital
Tax
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8,917
-
959
-674
-
-
-
285
285
-
-
-
-
-
-
-
-
-303
2
9
-292
331
-
-
-
-
84
415
-292
9,332
-
-
-
-
-
-15,514
15,376
-8
Total equity as at 30 September 2021
8,622
-765
62
159,723
-
-
-
-
-
-
-
-
-
8,917
349
9,266
331
959
-674
-303
2
93
408
-
-
-
-
-
-
-
331
959
-674
-303
2
93
408
9,325
349
9,674
-
16
-
-1,724
-
-1,708
-268
-
-268
-1,708
-
-
-
-
-15,514
15,376
-8
-
17
-
-15,514
15,393
-8
167,642
8,606
176,248
Danske Bank / Interim report first nine months 2022 37/77
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. No dividends were
paid out in connection with the interim report for the second quarter of 2022 as the discussions with authorities were still ongoing. In light of the additional
provision for the Estonia matter made today, the Board of Directors has decided to cancel the remaining dividend for 2021.
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 September 2022 31 December 2021
8,621,846,210
862,184,621
850,680,609
851,761,974
856,453,686
8,621,846,210
862,184,621
853,352,443
853,352,805
853,974,744
30 September 2022 31 December 2021
156,389
199
-23
156,566
-
-
156,566
-121
1,890
-1,202
-818
-
-5,483
-156
232
-239
-1,705
-6,398
142,566
16,846
159,412
20,740
180,153
845,063
16.9%
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 Groups 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
Danske Bank / Interim report first nine months 2022 38/77
Q1-Q3
2022
-7,161
-3,779
19,736
Q1-Q3
2021
Full Year
2021
12,071
-469
2,373
16,571
-2,459
4,916
Cash flow from operations before changes in operating capital
8,796
13,975
19,028
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.
8,902
66,548
-244
1,442
13,616
22,006
-141,954
-19,779
17,971
9,062
-56,370
-121
-8,270
46,721
-52,690
-26,251
-7,322
3,031
-38,509
48,984
-82
-7,007
-4,114
-41,751
-7,596
-5,291
-1,224
-22,696
-78,235
-37,562
1,314
-637
-233
3
447
-
-
20,052
-20,438
-1,705
-5,419
-164
-464
-
-549
-233
8
-
-885
-686
8
-774
-1,563
10,102
-3,718
4,352
-6,309
-1,708
-
-267
-497
10,102
-3,718
4,352
-6,309
-1,708
-3,000
-466
-654
-8,137
1,955
-1,401
362,997
-2,280
-30,386
400,889
1,641
-77,054
400,889
2,634
-40,526
330,331
325,476
362,997
6,231
194,285
129,815
6,847
267,843
50,786
6,765
286,621
69,611
330,331
325,476
362,997
Danske Bank / Interim report first nine months 2022 39/77
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 Groups 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 Annual
Report 2021) and the designation of financial liabilities at fair value through profit or loss to eliminate or significantly reduce an accounting mismatch
(further explained in note G16 of the Annual Report 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 inherent
uncertainties and the high level of subjectivity and judgement involved in the recognition and measurement of the items listed below, it is possible that
the outcomes in the next reporting period could differ from those on which managements 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 Groups senior management and involves the creation of scenarios (base case, upside and downside), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on
the expected credit losses. The risk management notes provide information on the scenarios as at 30 September 2022.
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 September 2022 amounted to DKK 18.8 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 1.6 billion (31 December 2021: DKK 1.7 billion). Compared to the base case scenario, the allowance account
would increase DKK 8.3 billion (31 December 2021: DKK 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 DKK 0.3 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 September 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 Groups credit exposures. On the types of risks covered by post-model adjustments, more information can be found in the
risk management notes.
The Groups credit exposure directly related to customers in or from Russia and Ukraine amounted to less than DKK 20 million as at 30 September
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 September 2022, financial assets covered by the expected credit loss model accounted for about 49.9% of total assets (31 December 2021: 54.2%).
Danske Bank / Interim report first nine months 2022 40/77
Notes Danske Bank Group
(b) Significant accounting estimates continued
Fair value measurement of financial instruments
At the end of September 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 derivatives.
As at 30 September 2022, the adjustments totalled DKK 0.2 billion (31 December 2021: DKK 1.0 billion), including the adjustment for credit risk on
derivatives 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 meas-
urement 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 financial
instruments to variable interest rates by the use of swaps. The ongoing Interest Rate Benchmark Reform will replace existing benchmark interbank
offered rates (IBORs) with alternative risk-free rates. The Groups IBOR Transition Programme successfully managed the cessation of the LIBOR interest
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 IASBs 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 September 2022, goodwill amounted to DKK 4.4 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. In the third quarter of 2022, goodwill in Danica Pension amounting to DKK 1.6 billion was
assessed to be impaired due to increasing discount rates and lower financial outlook. Following the impairment charges on goodwill, goodwill in Danica
Pension amounts to DKK 0.0 billion as at 30 September 2022 (31 December 2021: DKK 1.6 billion).
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 FSAs benchmark, while other variables are estimated based on data from the Groups 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 liabilities
and sensitivity to changes in assumptions.
Danske Bank / Interim report first nine months 2022 41/77
Notes Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting
(a) Changes in accounting policies and presentation during the year
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 September
2021 has been restated.
In the third quarter of 2022, the Group recognised impairment charges on goodwill. This is presented as a separate line in the Income statement.
In the third quarter of 2022, the Group recognised an increase in provision for Estonia matter. This is presented as a separate line in the Income state-
ment.
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 amendment
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
others 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 Groups financial statements. This in-
cludes an assessment of the Groups 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 significant
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 nine months 2022 42/77
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. The separate presentation of Resolution fund, bank tax etc. is also reflected in the comparative infor-
mation, although there is no change to total Operating expenses. 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 Groups 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
Groups 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 nine months 2021:
Changes in financial highlights and segment reporting - first nine months 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
5,936
3,621
227
171
9,954
7,015
86
2,939
-120
5,819
1,185
270
443
7,716
3,817
131
3,899
574
3,058
3,325
11,755
4,805
496
614
17,670
10,832
6,838
454
6,383
868,118
317,555
639,676
212,249
1,507,794
529,804
1,185,673
851,925
2,037,597
407,296
746,874
31,503
286,252
523,946
41,727
693,548
1,270,819
73,230
1,185,673
851,925
2,037,597
12.1
70.5
4,977
10.9
49.5
1,693
11.5
61.3
6,669
During the third quarter of 2022, the Group recognised impairment charges on goodwill in Danica Pension. This is presented as a separate line in the
financial highlights and segment reporting.
In the third quarter of 2022, the Group recognised an increase in provision for Estonia matter. This is presented as a separate line in the financial
highlights and segment reporting.
Danske Bank / Interim report first nine months 2022 43/77
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 Groups commercial activities that were announced on 7 January 2022 and came into effect in May 2022. The Groups commercial activities are organ-
ised in five reporting business units:
Personal Customers, which serves personal customers and Private Banking customers in Denmark, Sweden, Norway and Finland.
Business Customers, which serves small and medium-sized business customers across all markets, and includes the Groups 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 personal, business and corporate customers in Northern Ireland alongside digital channels.
Besides the five commercial business units, the Groups reportable segments under IFRS 8 include Non-core and Group functions. Comparative infor-
mation has been restated to reflect the new structure.
Danske Bank / Interim report first nine months 2022 44/77
Notes Danske Bank Group
G3. Business segments continued
Business segments first nine months 2022
Northern
Ireland
Non-
core
Danica
Group
Functions Eliminations
Financial
highlights
Reclassi-
fication
(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
of which resolution fund,
bank tax etc.
of which impairment
charges, other intangible
assets
Provision for Estonia matter
Goodwill impairment
charges
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Personal
Customers
Business
Customers
6,039
3,662
343
-
547
-
-
6,476
1,353
372
-
632
-
-
Large Cor-
porates &
Institutions
4,015
4,296
622
-
2
-
-
10,592
7,334
8,833
3,919
8,936
5,090
121
168
379
-
-
-
-
-
-
-
-
-
-323
-
-
-
-323
-
-
-
-
1,627
3,258
334
2,924
-
4,914
-90
5,004
-
3,846
-155
-1,951
-
4,001
-
-1,951
-
-
-
-
1,332
248
-611
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-48
-39
-181
-
1,990
-
-
1,722
4,327
59
24
14,000
-
-16,605
669
-
-10
-17,274
-
-
18
-
-
986
943
-
-
-
-
43
36
7
-
7
IFRS
financial
statements
20,456
8,572
-40,567
-
5,316
26,646
-12,039
32,462
23,266
-67
15
133
17,746
9,536
679
2,710
-964
-41,245
-
-1,986
-
-
-1,905
-2,043
-323
1,203
323
4,113
- 26,646
-12,039
-
28,840
19,570
3,622
3,696
-
-
-
-
728
-728
-
24
14,000
-24
-
-
14,000
1,627
-
1,627
138
-
138
-
-6,357
794
-7,151
-10
-74
-63
-10
10
-6,431
730
-7,161
-
Profit before tax
2,924
5,004
4,001
-1,951
-10
-17,274
138
-7,161
-
-7,161
Loans, excluding reverse
transactions
Other assets (including
Non-core)
799,312
617,671
352,114
-
53,784
-
30,583
-29,185 1,824,278
1,196 1,825,474
318,519
200,037 4,281,630 840,782
59,999 1,786 4,520,736
-7,735,591 2,487,899
-1,196 2,486,703
Total assets
1,117,831
817,708 4,633,743 840,782 113,783 1,786 4,551,319 -7,764,776 4,312,177
- 4,312,177
Deposits, excluding repo de-
posits
Other liabilities (including
Non-core)
Allocated capital
415,364
287,523
399,252
-
96,232
-
2,041
-13,096 1,187,316
2,105 1,189,421
671,426
31,042
490,701 4,193,469 819,835
41,023 20,947
39,485
12,338 2,446 4,529,939
18,680
5,213
-
-7,751,680 2,968,472
156,389
-
-2,105 2,966,368
156,389
-
Total liabilities and equity
1,117,831
817,708 4,633,743 840,782 113,783 2,446 4,550,660 -7,764,776 4,312,177
- 4,312,177
Profit before tax as % p.a. of
allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
12.5
69.2
16.8
44.4
12.6
57.0
-12.7
-
0.2
95.6
-
-
-61.5
-
4,749
1,689
2,109
872
1,271
36
10,802
-
-
-
-5.6
122.0
21,528
-
-
-
-5.6
119.8
21,528
Danske Bank / Interim report first nine months 2022 45/77
Notes Danske Bank Group
G3. Business segments continued
Business segments first nine months 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 insurance
business
Other income
Net premiums
Net insurance benefits
Total income
Operating expenses
of which resolution fund,
bank tax etc.
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
5,936
3,621
227
-
171
-
-
9,954
7,015
5,819
1,185
270
-
443
-
-
3,553
4,720
2,417
-
2
-
-
7,716
3,817
10,692
5,562
-
-
-
1,576
-
-
-
1,576
-
996
201
-13
-
9
-
-
1,193
937
86
131
276
-
-
2,939
-120
3,058
-
3,899
574
3,325
-
5,129
230
4,900
-
1,576
-
1,576
-
257
-96
353
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23
197
66
300
-
1,628
-
-
2,192
1,705
-3
-92
-89
16,498
3,844
-889
9,700
3,111 20,074
-
-1,630
-
-
-1,814
-162
1,576
623
-1,576
3,464
- 27,114
- 48,221
31,509
18,874
3,810
3,870
IFRS
financial
statements
20,342
8,811
23,185
-
4,087
27,114
48,221
35,318
22,743
30
-
523
-523
-
487
-2
488
-
-1,652
-
-1,652
-
12,635
587
12,048
23
-60
-83
23
-23
12,575
504
12,071
-
Profit before tax
3,058
3,325
4,900
1,576
353
23
488
-1,652
12,071
-
12,071
Loans, excluding reverse
transactions
Other assets (including
Non-core)
868,118
639,676
240,090
-
56,508
-
28,074
-31,112 1,801,353
1,616 1,802,969
317,555
212,249 3,118,398 654,241
62,069 2,184 3,919,938
-6,163,056 2,123,578
-1,616 2,121,962
Total assets
1,185,673
851,925 3,358,487 654,241 118,577 2,184 3,948,012 -6,194,168 3,924,931
- 3,924,931
Deposits, excluding repo
deposits
Other liabilities (including
Non-core)
Allocated capital
407,296
286,252
376,909
-
99,665
-
1,522
-16,927 1,154,717
2,128 1,156,845
746,874
31,503
523,946 2,938,617 641,927
42,961 12,315
41,727
12,419 2,456 3,913,575
32,642
6,494
-
-6,177,241 2,602,573
167,642
-
-2,128 2,600,445
167,642
-
Total liabilities and equity
1,185,673
851,925 3,358,487 654,241 118,577 2,456 3,947,739 -6,194,168 3,924,931
- 3,924,931
Profit before tax as % p.a.
of allocated capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
12.1
70.5
10.9
49.5
14.8
52.0
16.0
-
7.0
78.5
-
-
2.1
77.8
4,977
1,693
2,716
963
1,289
25
10,364
-
-
-
9.8
59.9
22,027
-
-
-
9.8
64.4
22,027
* Comparative information has been restated, as described in note G2(c).
Danske Bank / Interim report first nine months 2022 46/77
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 nine months 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
Provision for Estonia matter
Goodwill impairment charges
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Reclassification first nine month 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
Danica
Pension
Non-core
Total
reclassification
Financial
highlights
20,456
8,572
-40,567
-
5,316
26,646
-12,039
32,462
23,266
14,000
1,627
-6,431
730
-7,161
-
-7,161
-
-
-
-
-2,779
-
-
-2,779
-2,779
-
-
-
-
-
-
-
-923
57
875
-
-8
-
-
-
-
-
-
-
-
-
-
-
-1,792
912
40,383
-323
-1,316
-26,646
12,039
-822
-822
-
-
-
-
-
-
-
5
-5
-12
-
-9
-
-
-21
-95
-
-
74
63
10
-10
-
-2,710
964
41,245
-323
-4,113
-26,646
12,039
-3,622
-3,696
-
-
74
63
10
-10
17,746
9,536
679
-323
1,203
-
-
28,840
19,570
14,000
1,627
-6,357
794
-7,151
-10
-
-7,161
IFRS financial
statements Operating leases
Markets, Invest-
ment Banking &
Securities and
Group Treasury
Danica
Pension
Non-core
Total
reclassification
Financial
highlights
20,342
8,811
23,185
-
4,087
27,114
48,221
35,318
22,743
12,575
504
12,071
-
12,071
-
-
-
-
-2,880
-
-
-2,880
-2,880
-
-
-
-
-
-1,362
82
1,321
-
-41
-
-
-
-
-
-
-
-
-
-2,465
808
-21,384
1,576
-548
-27,114
-48,221
-907
-907
-
-
-
-
-
-17
-1
-11
-
6
-
-
-22
-82
60
83
-23
23
-
-3,844
889
-20,074
1,576
-3,464
-27,114
-48,221
-3,810
-3,870
60
83
-23
23
16,498
9,700
3,111
1,576
623
-
-
31,509
18,874
12,635
587
12,048
23
-
12,071
Danske Bank / Interim report first nine months 2022 47/77
Notes Danske Bank Group
G4. Income
(a) Interest income and interest expense
For the nine months ending 30 September 2022, total interest income and interest expenses amounted to DKK 51,563 million and DKK 31,106 million
respectively (30 September 2021: DKK 45,210 million and DKK 24,868 million respectively). Of this, negative interest income during the period ending
September 2022 amounted to DKK 1,289 million (30 September 2021: DKK 1,171 million) and negative interest expenses amounted to DKK 2,742
million (30 September 2021: DKK 2,721 million). In the income statement, negative interest income is recognised as interest expenses and negative
interest expenses are recognised as interest income. Note G5 of the Annual Report 2021 provides more information on the treatment of negative interest
income and negative interest expense.
(b) Fee income
Note G6 of the Annual Report 2021 provides additional information on the Groups accounting policy for fee income, including the description by fee type.
Fee income first nine months 2022
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
Financial
highlights
- net fee income
Reclassifica-
tions
IFRS
- net fee income
Fee expense
IFRS
- gross fee income
3,715
2,869
2,065
886
9,536
-485
-181
399
-697
-964
3,231
2,688
2,464
189
8,572
3,505
985
86
-
4,575
6,736
3,673
2,549
189
13,147
Fee income first nine months 2021
(DKK millions)
Investment
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
(c) Net trading income or loss
Financial
highlights
- net fee income
Reclassifica-
tions
IFRS
- net fee income
Fee expense
IFRS
- gross fee income
4,044
2,359
1,896
1,402
9,700
-318
-60
513
-1,025
-889
3,725
2,300
2,409
377
8,811
3,435
992
81
-
4,507
7,160
3,291
2,490
377
13,318
Net trading income amounted to net loss of DKK 40,567 million for the nine months ending 30 September 2022 (30 September 2021: net income of
DKK 23,185 million). Net trading income includes a loss of DKK 39,970 million in relation to assets and liabilities under insurance contracts.
(d) Other income
Other income amounted to DKK 5,316 million for the nine months ending 30 September 2022 (30 September 2021: DKK 4,087 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. Further, other income includes a gain of DKK 421 million from the sale of the Groups activities in Luxembourg, and a gain of DKK 415 million
from the sale of Danica Pensjonforsikring AS (Danica Pension business segment in Norway) during the first nine months of 2022.
.
Danske Bank / Interim report first nine months 2022 48/77
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
*DKK 0.7 billion of Write-offs charged directly to income statement relates to the Groups debt collection customers.
30 September
2022
30 September
2021
3,442
-5,169
1,321
1,510
-189
-186
730
3,083
-5,913
1,548
2,188
-220
-182
504
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
Stage 1
Stage 2
Stage 3
Total
2,267
1,844
-180
-120
646
-632
-942
-5
21
-182
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
ECL allowance account as at 31 December 2021
2,717
6,807
13,223
22,746
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account*
Foreign exchange adjustments
Other changes
ECL allowance account as at 30 September 2022
1,094
-332
-20
703
-653
-493
-
-38
-16
2,961
-1,023
709
-555
1,228
-1,048
1,066
-2
-80
-
7,102
-71
-376
575
1,511
-3,468
748
-3,594
139
64
-
-
-
3,442
-5,169
1,321
-3,596
22
49
8,751
18,814
*Write-offs debited to the allowance account includes DKK 1.0 billion in relation to the Groups debt collection customers.
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 nine months 2022 49/77
30 September
2022
31 December
2021
667,033
-
2,870
770,661
24,248
-
669,904
794,909
30 September
2022
31 December
2021
-
59,992
146,476
1,488
65,221
157,145
206,469
223,854
107,706
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
Foreign
currency 30 September
2022
translation
2,508
1,400
30,500
20,100
26,709
8,407
24,850
20,404
489
6,337
-7,906
7,184
-
67,055
162,811
114,983
Other issued bonds
364,607
54,508
80,370
6,104
344,849
*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
*Preferred senior bonds includes structured retail notes.
Danske Bank / Interim report first nine months 2022 50/77
Notes Danske Bank Group
G6. Issued bonds, subordinated debt and additional tier 1 capital continued
Subordinated debt and additional tier 1 capital
As at 30 September 2022, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 42,019 million (31
December 2021: DKK 39,649 million). During the nine months ended 30 September 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 September 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 September 2022, distributable items for Danske Bank A/S amounted to DKK 124.0 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 September 2022 the common
equity tier 1 capital ratio was 19.0% (31 December 2021: 20.9%) for Danske Bank A/S. The ratios for the Danske Bank Group are disclosed in the Statement
of capital.
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 September 31 December
2021
2022
-
-
248
248
-
-
-
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
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 nine months 2022 51/77
30 September
2022
31 December
2021
12,24
5,318
2
1,849
1,211
7,639
2,803
215
18
3,450
,558
2,451
2,263
8,583
3,922
206
31,276
39,433
51,01
1
7,148
385
1,624
2,787
3,105
5
16,120
41
,191
5,845
441
1,986
3,909
2,335
5
557
82,186
56,268
In the table above showing the composition of Other liabilities, the line item Sundry creditors included provisions for customer remediation of DKK 1,817
million (31 December 2021: DKK 603 million), and provisions for restructuring costs of DKK 268 million (31 December 2021: DKK 327 million). The
line item Other provisions, including litigations includes DKK 15.5 billion in relation to the Estonia matter.
The provision for customer remediation (included within Sundry creditors) increased by DKK 1.3 billion during the third quarter of 2022 in relation to
the Groups debt collection customers in Denmark. DKK 0.6 billion of the increase relates to compensation to customers, whilst the remaining DKK 0.7
billion relates to loan impairment charges (which includes part of the compensation to customers). The majority of the provision is expected to be utilised
by the end of 2023.
In relation to the Estonia matter, Danske Bank is now in a position to reliably estimate with a high degree of certainty the financial impact of a
potential coordinated resolution with the Danish and the US authorities, at a total of DKK 15.5 billion. This includes the provision of DKK 1.5 billion
recognised in the third quarter of 2018 as it is Danske Banks best assessment that the resolution will include confiscation of no less than DKK 1.5
billion. Therefore, Danske Bank now books an additional provision of DKK 14 billion in the third quarter. Discussions with authorities are ongoing and
there is still uncertainty that a resolution will be reached, but Danske Bank is working towards a coordinated resolution before year end, however,
the final timing is not within Danske Banks control.
Danske Bank / Interim report first nine months 2022 52/77
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 34,786 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 Groups net investment in its subsidiaries Danske Hypotek AB (Sweden) and Danske Mortgage Bank Plc (Finland) has been
included in the structural FX hedge position to extend the hedge to the risk exposure amount measured by currency for EUR, NOK and SEK across the entire
Group balance sheet, although with constraints to the size of the loans to the foreign branches and the net investments in the foreign subsidiaries. This
strategy of partly hedging the sensitivity to capital ratios from volatility in foreign currency rates, increases the volatility in Other comprehensive income and
the Foreign currency translation reserve in equity under IFRS since it decreases the hedge of the currency risk on the net investments in those units. As at
30 September 2022, the structural FX hedge position totalled DKK 41,648 million (31 December 2021: DKK 39,749 million) and a loss of DKK 1,771
million has been recognised in Other comprehensive income during the first nine months of 2022, primarily due to a depreciation of both NOK and SEK against
DKK throughout the first nine month of 2022. During the first nine months of 2021, a gain of DKK 245 million related to the structural FX hedge position was
recognised in Other comprehensive income mainly due to a strengthening of NOK against DKK throughout the first nine month 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 Groups control. Contingent liabilities that can, but are not likely to, result in
an outflow of economic resources are disclosed.
The Group uses a variety of loan related financial instruments to meet customers financial requirements. Instruments include loan offers and other
credit facilities, guarantees and instruments not recognised in the balance sheet. If an instrument is likely to result in a payment obligation, a liability is
recognised under Other liabilities corresponding to the present value of expected payments.
(a) Guarantees
(DKK millions)
Financial guarantees
Other guarantees
Total
(b) Commitments
(DKK millions)
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
Total
30 September 31 December
2021
2022
6,480
73,005
79,485
6,267
74,733
81,000
30 September 31 December
2021
2022
211,165
215,659
15,386
271,862
205,503
16,183
442,210
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 196 billion
(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 Banks 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 Banks Estonian branch, amounting to around DKK 160 million and performed between 2007 and 2014. The Bank has posted
bail in the amount of DKK 80 million.
Danske Bank / Interim report first nine months 2022 53/77
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 Banks 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 Authorities
on the resolution of the Estonia matter. On the basis of the current stage of these discussions with the US Department of Justice, the US Securities and
Exchange Commission and the Danish Special Crime Unit, Danske Bank is now in a position to reliably estimate with a high degree of certainty the
financial impact of a potential coordinated resolution with these authorities, at a total of DKK 15.5 billion. This includes the provision of DKK 1.5 billion
recognised in the third quarter of 2018 as it is Danske Banks best assessment that the resolution will include confiscation of no less than DKK 1.5 billion.
Therefore, Danske Bank now books an additional provision of DKK 14 billion in the third quarter. Discussions with authorities are ongoing and there is still
uncertainty that a resolution will be reached, but Danske Bank is working towards a coordinated resolution before year end, however, the final timing is not
within Danske Banks control. Danske Bank will not comment further on the discussions with authorities. The provision is disclosed in note G8.
Based on orders from the Danish FSA, Danske Banks 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, of which now DKK 2.5 billion remains.
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, and permission to appeal was denied on 17 August 2022. 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 approxi-
mately 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 investors against the Bank with a total claim amount
of approximately DKK 2.1 billion. On 18 September 2020, one case was filed against the Bank and Thomas F. Borgen by two investors with a total claim
amount of DKK 10 million, which was increased to approximately DKK 147 million on 3 January 2022. These court actions relate to alleged violations in
the Banks 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 litigation
funder Deminor Recovery Services. The total claim amount is approximately DKK 3 billion. The main hearing in the first case was concluded on 11 October
2022, and a decision is expected on the 8 November 2022. In the second case, a hearing on limitation is expected to be scheduled in H1 2023. 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 stated that the claim against the Bank will continue on a standalone basis before the Copenhagen City Court and has stayed the claim pending
resolution of the claims pending before the Eastern High 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 A gency 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 financia l position. Provisions for litigations are in cluded in Other liabilities, see note G8.
Danske Bank / Interim report first nine months 2022 54/77
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 institutions
covered deposits may be required. Extraordinary contributions above this percentage require the consent of the Danish FSA. The first contribution to the
Danish Resolution Fund was made in December 2015. Danske Bank A/S and Realkredit Danmark A/S make contributions to the Resolution Fund on the
basis of their size and risk relative to other credit institutions in Denmark. The contribution to the Danish Resolution Fund is recognised as operating
expenses.
If the Resolution Fund does not have sufficient means to make the required payments, extraordinary contributions of up to three 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 institutions share of covered deposits relative to other credit insti-
tutions in Denmark. However, each institutions 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 financial
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 nine months 2022 55/77
Notes Danske Bank Group
G11. Assets provided or received as collateral
As at 30 September 2022, the Group had deposited securities (including bonds issued by the Group) worth DKK 46.7 billion as collateral with Danish
and international clearing centres and other institutions (31 December 2021: DKK 42.1 billion).
As at 30 September 2022, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 144.1 billion as collateral for
derivatives transactions (31 December 2021: DKK 73.2 billion).
As at 30 September 2022, the Group had registered assets (including bonds and shares issued by the Group) under insurance contracts and unit-linked
investment contracts worth DKK 408.1 billion (31 December 2021: DKK 514.5 billion) as collateral for policyholders savings of DKK 404.1 billion (31
December 2021: DKK 493.1 billion).
As at 30 September 2022, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 710.7
billion (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 297.0 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.
30 September 2022
31 December 2021
(DKK millions)
Repo
Other
Total
Repo
Other
Total
Due from credit institutions
Trading and investment securities
Loans at fair value
Loans at amortised cost
Assets under insurance contracts and
unit-linked investment contracts
Other assets
-
201,000
-
-
-
-
61,084
79,258
706,337
331,308
335,715
44
61,084
280,257
706,337
331,308
-
193,258
-
-
335,715
44
-
-
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
201,000
33,080
1,513,746
92,453
1,714,746
125,533
193,258
32,592
1,683,562
90,192
1,876,820
122,784
Total, including own issued bonds
234,080
1,606,199
1,840,278
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 201.0 billion as at 30 September 2022 (31 December 2021: DKK 193.3 billion).
As at 30 September 2022, the Group had received securities worth DKK 388.0 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 September 2022, the Group had sold securities or provided
securities as collateral worth DKK 171.9 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 nine months 2022 56/77
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)
Financial assets
Cash in hand and demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Loans held for sale
30 September 2022
31 December 2021
Fair value
Amortised cost
Fair value
Amortised cost
-
71,681
784,555
148,571
-
916,854
63,592
704,380
-
200,515
62,081
-
153,763
1,120,703
-
-
-
-
-
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
2,689,634
1,537,062
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 con-
tracts
Liabilities held for sale
Non-preferred senior bonds
Subordinated debt
Loan commitments and guarantees
104,512
716,472
134,013
669,904
-
64,521
-
-
-
-
79,769
-
1,180,023
-
206,469
-
-
107,706
40,008
3,105
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
1,689,422
1,617,080
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 valued
substantially on the basis of other observable input are recognised in the Observable input category. This category covers instruments such as derivatives
valued on the basis of observable yield curves and exchange rates and illiquid mortgage bonds valued by reference to the value of similar, liquid bonds.
Other financial instruments valued substantially on the basis of non-observable input are recognised in the Non-observable input category. This category
covers instruments such as unlisted shares, some unlisted bonds and a very limited portion of the derivatives portfolio.
If, at the balance sheet date, a financial instrument's classification differs from its classification at the beginning of the year, the classification of the
instrument changes. Changes are considered to have taken place at the balance sheet date. Developments in the financial markets have resulted in re-
classification between the categories. Some bonds have become illiquid and have therefore been moved from the Quoted prices to the Observable input
category, while other bonds have become liquid and have been moved from the Observable input to the Quoted prices category. The amounts transferred
are insignificant.
Financial instruments at amortised cost
Note G33(b) in Annual Report 2021 provides information on the difference between the carrying amount and the fair value of financial instruments
recognised at amortised cost. The carrying amount of investment securities as at 30 September 2022 is DKK 154 billion compared to the fair value of
DKK 140 billion (31 December 2021: DKK 147 billion and 146 billion respectively). The carrying amount of subordinated debt is DKK 40 billion com-
pared to the fair value of DKK 37 billion at 30 September 2022 (31 December 2021: DKK 39 billion and DKK 41 billion respectively). There is no signifi-
cant difference between the carrying amount and the fair value of all other financial instruments at amortised cost.
Danske Bank / Interim report first nine months 2022 57/77
Notes Danske Bank Group
G12. Fair value information for financial instruments continued
(DKK millions)
30 September 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
-
18,607
212,292
5,966
121,518
-
-
63,592
161,656
124,081
-
71,681
523,032
22,668
-
25,138
-
916,854
-
15,703
5,083
344,420
-
1,867
-
123
-
1,916
-
-
3,331
48,923
1,183
Total
71,681
543,506
234,960
6,089
146,656
1,916
916,854
63,592
180,690
178,087
345,603
Total
707,711
1,924,579
57,343
2,689,634
Financial liabilities
Due to credit institutions and central banks
Derivatives
Obligations to repurchase securities
Deposits
Issued bonds at fair value
Deposits under pooled schemes and unit-linked investment contracts
Total
(DKK millions)
31 December 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
-
18,558
169,128
-
669,904
-
104,512
524,210
2,784
134,013
-
64,521
-
1,765
27
-
-
-
104,512
544,533
171,939
134,013
669,904
64,521
857,590
830,040
1,792
1,689,422
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 nine months 2022 58/77
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)
Carrying amount
Increase
Decrease
Realised
Unrealised
Sensitivity (change in fair value)
Gains/losses for the period
30 September 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
48,923
2,012
3,331
1,284
45,353
1,220
5,300
2,504
-
201
73
-
-
122
101
-
-
201
73
-
-
122
101
-
6,688
18
-116
-
3,950
125
120
-
1,344
-20
-135
176
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 Groups net profit. The Groups 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 input
disclosed in the table is calculated as a 10% increase or 10% decrease in fair value. Under current market conditions, a 10% decrease in the fair value
is considered to be below a possible alternative estimate of the fair value at the end of the period. The unrealised adjustments in the nine month period
ended 30 September 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 measurement
to changes in non-observable input is calculated as a 50bps widening or narrowing of the credit spread.
A substantial number of derivatives valued on the basis of non-observable input are hedged by similar derivatives or are used for hedging the credit risk
on bonds also valued on the basis of non-observable input. Changing one or more of the non-observable inputs to reflect reasonable, possible alternative
assumptions would not change the fair value of the derivatives significantly above what is already covered by the reserve related to fair value adjustment
for model risk.
Shares, bonds and derivatives valued on the basis of non-observable input
Reconciliation from beginning to end of period
30 September 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
8,030
20,890
-24,557
-
-
5,300
-251
48
-1,766
-
-
2,504
176
-125
-283
-
-988
36,028
11,865
9,556
-10,611
-
-265
7,438
237
122
-2,497
-
-
3,083
-909
-191
161
-2
363
Fair value end of period
50,936
3,331
1,284
46,573
5,300
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 nine months 2022 59/77
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 400,000 shops
and webshops.
Following dialogue with the EUs Directorate-General for Competition, it has been decided that OP Financial Group (in Finland) will no longer be a co-owner,
and hence Pivo will not be part of the merger.
In October 2022, the agreement between Danske Bank and the consortium of banks behind Vipps to merge MobilePay and Vipps has been approved by
all relevant authorities, including the EU Commission. The parties expect to complete the transaction during the fourth quarter of 2022. The transaction
will result in a one-off gain of around DKK 400 million for Danske Bank. After the merger, Danske Bank will own 27.8% of the new parent company, Vipps
AS.
Danske Bank / Interim report first nine months 2022 60/77
Notes Danske Bank Group
Risk Management
The consolidated financial statements for 2021 provide a detailed description of the Groups risk management practices.
Breakdown of credit exposure
Lending activities
Total
Core
Non-core
Counterparty
credit risk
Trading and
investment
securities
Customer-
funded
investments
(DKK billions)
30 September 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
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
194.3
133.8
784.6
302.3
1,120.7
916.9
63.6
745.7
79.5
211.2
215.7
15.4
194.3
62.1
-
-
1,119.5
706.3
-
-
79.5
209.8
215.7
-
4,783.5
2,587.2
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
-
-
-
-
-
1.2
-
-
-
-
1.3
-
-
2.5
-
-
-
-
1.3
-
-
-
-
-
1.6
-
-
2.9
-
71.7
543.5
-
-
210.5
-
-
-
-
-
-
-
-
241.0
302.3
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
63.6
745.7
-
-
-
15.3
825.7
543.5
824.6
-
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
196 billion at 30 September 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 Groups direct exposure to Russia and Ukraine amounted to less than DKK 0.1 billion at 30 September 2022.
Danske Bank / Interim report first nine months 2022 61/77
Notes Danske Bank Group
Credit exposure
Credit exposure from core lending activities
Credit exposure from lending activities in the Groups 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 month-end), whereas default is updated daily. For the same reason, some credit exposure in default
is outside stage 3. For most 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 Groups 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 September 2022
(DKK billions)
PD level
Upper
Lower
Gross exposure
Stage 1 Stage 2 Stage 3
Expected credit loss
Stage 1 Stage 2 Stage 3
Net exposure
Stage 1 Stage 2 Stage 3
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
-
0.01
0.01
0.03
0.03
0.06
0.06
0.14
0.14
0.31
0.31
0.63
0.63
1.90
7.98
1.90
7.98 25.70
25.70 99.99
100.00 100.00
160.9
266.3
567.3
620.4
482.5
240.8
81.9
9.4
0.9
0.4
0.2
0.1
0.2
1.0
1.6
8.7
33.5
51.1
29.6
3.6
12.0
0.5
-
-
-
-
-
-
0.2
-
-
1.3
31.7
-
-
0.1
0.3
0.5
0.5
1.0
0.5
-
-
0.2
-
-
-
-
0.1
0.6
2.2
2.5
1.0
0.7
-
-
-
-
-
-
-
-
-
-
0.2
8.5
160.9
266.3
567.2
620.1
482.1
240.3
81.0
8.9
0.9
0.4
-
0.1
0.2
1.0
1.6
8.6
32.8
48.9
27.1
2.6
11.3
0.5
-
-
-
-
-
-
0.2
-
-
1.0
23.2
145.0
150.0
289.1
289.5
173.8
80.1
25.6
2.3
-
0.1
-
-
0.1
0.5
0.5
5.1
15.5
18.7
4.8
-
2.1
0.2
-
-
-
-
-
-
0.2
-
-
0.7
2.5
2,430.9
141.7
33.4
3.0
7.1
8.7
2,427.9
134.6
24.7
1,155.5
47.5
3.4
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 definition
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 72% (31 December
2021: 78%).
Danske Bank / Interim report first nine months 2022 62/77
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 Groups business risk approach used for the
active management of the credit portfolio.
30 September 2022
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
(DKK billions)
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Stage 1 Stage 2 Stage 3
Public institutions
Financials
Agriculture
Automotive
Capital goods
Commercial property
Construction and building materials
Consumer goods
Hotels, restaurants and leisure
Metals and mining
Other commercials
Pharma and medical devices
Private housing co-ops and non-
profit associations
Pulp, paper and chemicals
Retailing
Services
Shipping, oil and gas
Social services
Telecom and media
Transportation
Utilities and infrastructure
Personal customers
265.7
150.9
55.4
27.1
82.1
268.9
45.1
67.9
8.0
14.6
17.3
44.7
184.7
56.6
31.1
58.1
33.9
26.9
24.3
13.5
90.2
863.9
1.3
3.3
6.1
2.2
8.6
23.7
6.9
7.5
5.1
0.6
0.9
3.2
3.9
4.5
2.4
5.8
0.9
0.8
1.0
3.1
4.0
46.0
-
0.4
3.1
0.2
1.3
3.7
1.3
0.9
1.1
-
0.2
-
0.6
0.2
1.8
0.7
6.4
0.7
0.2
0.5
-
10.0
-
0.1
0.3
-
0.1
0.5
0.1
0.1
-
-
0.2
-
0.1
-
0.1
0.3
-
-
-
-
0.1
1.0
-
0.2
0.8
0.1
0.3
1.6
0.5
0.4
0.1
-
-
0.1
0.1
0.1
0.1
0.2
-
0.1
-
0.2
0.3
1.8
-
0.2
0.8
0.1
0.6
0.8
0.5
0.3
0.3
-
-
-
0.1
0.1
0.5
0.3
1.5
0.1
0.1
0.1
-
2.2
265.7
150.8
55.1
27.1
82.0
268.4
45.0
67.9
8.0
14.6
17.0
44.7
184.6
56.6
31.0
57.8
33.9
26.9
24.2
13.5
90.1
862.9
1.3
3.1
5.3
2.1
8.2
22.1
6.4
7.1
5.0
0.5
0.9
3.1
3.8
4.4
2.2
5.6
0.9
0.7
0.9
2.9
3.7
44.2
-
0.2
2.3
0.1
0.7
2.9
0.8
0.6
0.8
-
0.2
-
0.5
0.1
1.2
0.4
4.8
0.6
0.1
0.4
-
7.8
263.1
144.4
14.3
22.0
74.0
51.7
33.7
54.5
3.4
12.6
13.6
42.1
29.0
45.7
20.4
48.4
21.9
13.0
22.4
6.2
71.0
148.2
-
2.1
1.0
1.1
6.6
3.2
3.4
4.8
0.9
0.2
0.2
2.9
0.5
3.1
1.2
4.0
0.3
0.3
0.7
1.5
3.2
6.4
-
0.2
0.1
-
0.3
0.3
0.3
0.2
0.2
-
-
-
-
-
0.6
0.1
0.4
0.4
-
0.2
-
-
Total
2,430.9
141.7
33.4
3.0
7.1
8.7
2,427.9
134.6
24.7
1,155.5
47.5
3.4
As at 30 September 2022, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 18.8 billion (31 December
2021: DKK 18.3 billion) and expected credit losses of DKK 0.8 billion (31 December 2021: DKK 1.8 billion). Oil and gas exposures represent the majority
of the exposures in stage 3 within the Shipping, oil and gas industry at the end of September 2022.
Danske Bank / Interim report first nine months 2022 63/77
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
- 332.8
0.2 122.0
57.3
1.2
25.3
0.1
0.6
71.3
1.2 290.7
46.1
0.7
71.0
0.3
8.5
0.4
12.6
-
13.1
-
53.1
-
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
-
3.1 952.8
1.4
2.5
4.7
1.5
6.7
18.1
4.1
4.0
5.2
0.4
1.1
5.5
4.0
1.5
1.6
3.2
2.9
0.8
0.5
1.8
4.4
48.0
-
0.2
3.6
0.2
1.0
4.3
1.2
0.7
1.4
-
0.1
-
0.7
0.1
1.4
0.5
4.2
0.7
0.1
0.4
-
12.8
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 September 2022 can
be found as the difference between the columns Net exposure and Net exposure, ex collateral and amounted to DKK 1,380.8 billion at 30 September
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 3.3 billion (31 December 2021: DKK 4.9 billion) with the guarantees
covering DKK 2.9 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 nine months 2022 64/77
Notes Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
30 September 2022
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
(DKK billions)
Stage 1 Stage 2 Stage 3
Stage 1
Stage 2 Stage 3 Stage 1
Stage 2 Stage 3
Stage 1
Stage 2 Stage 3
Personal 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
Northern Ireland
Group Functions
Total
466.5
27.2
6.3
0.9
1.5
1.3
465.6
25.7
5.0
62.7
4.3
0.1
386.6
14.4
3.2
0.2
0.2
0.8
386.4
14.2
2.5
88.7
2.0
-
853.0
41.6
9.5
1.0
1.7
2.0
852.0
39.9
7.5
151.4
6.3
0.1
48.4
327.4
286.6
12.5
44.3
12.0
1.2
11.8
1.3
0.1
1.0
0.2
0.4
3.2
0.5
0.3
3.6
0.3
48.4
326.4
286.4
12.1
41.1
11.5
0.8
8.2
1.0
19.0
120.2
49.9
2.5
14.6
1.9
-
1.7
0.2
662.4
68.8
14.2
1.2
4.2
4.2
661.2
64.7
10.0
189.0
19.0
1.9
652.0
25.7
85.4
178.1
5.4
0.1
8.0
1.6
-
0.5
0.2
-
1.1
0.1
-
2.0
651.6
24.6
5.9
588.8
21.4
0.4
85.1
-
178.1
5.3
0.1
1.2
48.5
-
177.7
0.8
0.1
1.3
0.1
-
2,430.9
141.7
33.4
3.0
7.1
8.7
2,427.9
134.6
24.7
1,155.5
47.5
3.4
Danske Bank / Interim report first nine months 2022 65/77
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
Total
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
Gross exposure
Expected credit loss
Net exposure
Stage 1
Stage 2 Stage 3
Stage 1
Stage 2 Stage 3
Stage 1
Stage 2 Stage 3
Net exposure, ex collateral
Stage 1
Stage 2 Stage 3
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
93.7
256.7
5.4
0.1
2.0
-
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
-
-
256.7
5.3
0.1
1.4
55.9
-
256.3
0.7
0.1
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 nine months 2022 66/77
Notes Danske Bank Group
Credit exposure continued
Exposures subject to forbearance measures
The Group adopts forbearance plans to assist customers in financial difficulty. Concessions granted to customers include interest-reduction schedules,
interest-only schedules, temporary payment holidays, term extensions, cancellation of outstanding fees, waiver of covenant enforcement and debt for-
giveness. Forbearance plans must comply with the Groups Credit Policy. They are used as an instrument to retain long -term business relationships
during economic downturns if there is a realistic possibility that the customer will be able to meet its obligations again, or are used for minimising losses
in the event of default. The Groups 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. At the end of 2021, such concessions repre-
sented an increase in gross exposure of DKK 13 billion, of which around DKK 13 billion (net of expected credit losses) was considered forbearance
measures. This level have decreased in the first nine months of 2022. The remaining concessions considered forbearance measures relate primarily to
Personal customers and Shipping, oil and gas.
Exposures subject to forbearance measures
(DKK millions)
Active forbearance
Under probation
Total
*These loans are part of the total stage 3 loan amount.
30 September 2022
31 December 2021
Performing Non-performing*
Performing
Non-performing*
2,500
9,434
11,934
7,856
-
7,856
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 nine months 2022 67/77
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
1,087
-332
-20
703
-646
-512
-
-38
-14
-1,016
707
-551
1,228
-1,026
1,068
-2
-80
-33
-71
-375
571
1,511
-3,386
755
-2,775
65
22
-
-
-
3,442
-5,058
1,312
-2,778
-53
-25
ECL allowance account as at 30 September 2022
2,961
7,100
8,713
18,774
* Write-offs debited to the allowance account includes DKK 1.0 billion in relation to the Groups debt collection customers.
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 nine months 2022 68/77
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
450
-603
265
-928
-27
15
1,339
-1,613
260
-434
-131
-25
1,608
-2,734
660
-1,295
143
-13
ECL allowance account as at 30 September 2022
4,827
9,582
3,595
* Comparative information has been restated, as described in note G2(c).
** Write-offs debited to the allowance account includes DKK 1.0 billion in relation to the Groups debt collection customers.
990
259
-266
-135
-5
71
-63
850
43
-104
108
-120
-38
-1
738
15
2
-3
4
-
-
-1
17
2
-4
19
-
-
-1
32
22,554
3,767
-6,489
1,259
-5
343
505
21,935
3,442
-5,058
1,312
-2,778
-53
-25
18,774
The method used for calculating expected credit losses is described in detail in note G15 of the Annual Report 2021.
Macroeconomic scenarios
The incorporation of forward-looking elements reflects the expectations of the Groups 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 nine months 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 scenario is an extension of the Groups official view of the Nordic economies (the Nordic Outlook report). At 30 September 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 strong 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 Groups 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 Groups
core markets are included below.
Danske Bank / Interim report first nine months 2022 69/77
Notes Danske Bank Group
Credit exposure continued
30 September 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
2.4
3.5
4.5
5.9
3.1
2.9
1.5
2.5
1.4
2.1
4.6
2.7
2.0
-2.7
1.9
2.4
1.5
2.1
4.7
1.8
1.8
0.8
1.8
2.3
-3.4
-5.1
7.3
-0.3
-3.7
-15.1
-0.2
-0.5
-1.7
-2.5
8.8
0.6
-0.8
-10.2
-0.3
-0.4
0.3
0.5
9.3
0.6
-0.1
-1.5
-0.3
0.1
2.9
3.9
4.5
5.7
3.9
3.9
1.5
2.5
2.4
3.6
4.2
2.6
2.7
-0.5
1.9
2.2
1.5
1.7
4.3
2.1
2.0
2.0
1.8
2.1
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
Downside
2023
2024
2022
2023
2024
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 September 2022 amounted to DKK 18.8 billion (31 December 2021: 21.9 billion). If the base case scenario was assigned a probability of 100%, the
allowance account would decrease DKK 1.6 billion (31 December 2021: 1.7 billion). Compared to the base case scenario, the allowance account would
increase DKK 8.2 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 0.3 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 September 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
Commercial Property
Construction and building materials
Personal customers (including other retail exposures)
Others**
Coverage of individual industries and types
Model changes
Total
Danske Bank / Interim report first nine months 2022 70/77
30 September
2022
31 December
2021*
0.8
1.3
0.4
1.4
2.1
6.0
-
6.0
0.9
1.5
0.2
1.7
1.1
5.4
0.9
6.3
* Post-model adjustments for Construction and building materials 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 0.3 billion at 30 September 2022 (31 December 2021: DKK 0.2 billion).
In first nine months 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 current macroeconomic uncertainties characterised by the supply chain disruptions, labour shortages and rising inflation and energy costs 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 1.5 billion to address the uncertainties presented by the secondary effects from the
economic sanctions affecting specific industries such as Utilities, Construction, etc. The post-model adjustment cuts across industries that are sensi-
tive 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 Groups 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 and the related post-model adjustments are fully released by
September 2022, as the new virus variants has not resulted in prolonged lockdowns.
Danske Bank / Interim report first nine months 2022 71/77
Notes Danske Bank Group
Credit exposure from Non-core lending activities
Credit portfolio in non-core activities broken down by industry (NACE) and stages b
30 September 2022
(DKK millions)
Non-core banking
Commercial customers
Non-core conduits etc.
Total
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
14
14
2,462
2,476
-
-
39
39
-
-
66
67
-
-
1
1
-
-
2
2
-
-
37
14
14
2,462
37
2,475
-
-
37
37
-
-
30
30
-
-
27
27
-
-
6
6
-
-
-
-
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 September 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
821
1,646
1
1
1
6
1
-
-
-
-
-
-
-
-
2
-
-
19
-
18
-
-
-
-
-
-
-
-
-
-
3
64
2,476
39
67
-
-
1
-
-
-
-
-
-
-
-
1
-
-
-
-
-
-
-
2
-
-
-
2
-
-
-
-
-
-
-
-
-
3
34
821
1,646
-
1
1
6
1
-
-
-
-
-
-
-
-
2
-
-
17
-
18
-
-
-
-
-
-
-
-
-
-
-
30
-
27
-
-
-
-
-
-
-
-
-
37
2,475
37
30
27
-
-
-
-
2
-
-
4
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
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
587
1,026
1,086
127
2
48
20
-
-
-
1
2,897
-
2
-
-
-
2
-
-
-
18
809
831
-
-
-
-
2
-
2
-
-
-
6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
2
-
-
-
-
-
-
-
-
-
5
804
587
1,026
1,085
127
2
48
20
-
-
-
1
809
2,897
-
-
-
-
-
2
-
-
-
-
-
3
-
2
-
-
-
2
-
-
-
13
5
122
14
3
1
-
-
15
-
-
-
-
22
154
-
-
-
-
-
-
-
-
-
-
-
-
-
2
-
-
-
-
-
-
-
13
4
19
Danske Bank / Interim report first nine months 2022 72/77
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 value*
Credit exposure from other trading and investment securities
Bonds
Shares
Other unutilised commitments**
Total
30 September 31 December
2021
2022
543.5
282.2
535.4
8.0
0.1
260.2
254.1
539.8
13.3
0.1
1,369.2
1,067.6
* 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 282.2 billion (31 December 2021: DKK 252.3 billion), of which DKK 71.7 billion relates to credit institutions and central banks (31 December 2021: DKK 37.7 billion), and other primarily
short-term loans of DKK 0.0 billion (31 December 2021: DKK 1.7 billion) related to credit institutions and central banks.
** Other unutilised commitments comprise private equity investment commitments and other obligations.
Derivatives with positive fair value
(DKK millions)
Derivatives with positive fair value before netting
Netting (under accounting rules)
Carrying amount
Netting (under capital adequacy rules)
Net current exposure
Collateral
Net amount
Derivatives with positive fair value after netting for accounting purposes:
Interest rate contracts
Currency contracts
Other contracts
30 September
2022
31 December
2021
1,358,112
814,607
543,506
407,688
135,818
115,670
654,261
394,037
260,224
183,395
76,829
59,732
20,148
17,098
340,286
201,931
1,289
187,176
72,468
580
543,506
260,224
Total
Bond portfolio
(DKK millions)
30-September-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
157,973
2,975
13,962
53,288
3,929
752
4,177
8,255
15,121
25,473
63,734
85,544
42,792
713
7,133
5,699
Other
covered
bonds
6,266
188
24,944
977
Corporate
bonds
8,879
1,614
989
-
Total
234,960
31,715
114,941
153,763
Total
228,198
17,113
189,872
56,337
32,376
11,482
535,378
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 September 2022, the Group had an additional bond portfolio, including bond-based unit trust certificates, worth DKK 180,690 (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
Annual Report 2021 provides more information. For bonds classified as hold-to-collect, fair value exceeded amortised cost as at 30 September 2022
and 31 December 2021, see note G12.
Danske Bank / Interim report first nine months 2022 73/77
Notes Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
30-September-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
Total
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
60,806
63,745
5,269
4,680
18,062
3,011
11,470
-
10,351
1,751
1,309
30
5,288
3,797
38,190
438
-
-
-
144
-
4,444
-
18
5,429
3,529
-
-
-
-
7
-
2,942
600
189,872
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
56,337
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,706
28,581
-
1
145
-
375
-
-
-
13
17
293
1
246
2,213
3,965
637
2,008
32
-
83
68
1,224
10
4
-
33
736
373
-
95
Total
252,891
124,047
8,756
35,269
22,538
3,012
11,716
5,497
15,479
1,761
1,313
30
5,334
4,557
38,855
3,381
941
228,198
17,113
189,872
56,337
32,376
11,482
535,378
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
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 September 2022.
Danske Bank / Interim report first nine months 2022 74/77
Notes Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
30-September-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
185,700
11,024
21,027
5,273
813
2,738
-
273
246
1,093
-
-
-
11
14,186
2,712
215
-
-
-
-
-
-
-
-
-
-
-
189,021
-
-
-
-
847
-
-
4
-
-
-
-
-
56,327
-
10
-
-
-
-
-
-
-
-
-
-
-
32,104
61
112
-
-
100
-
-
-
-
-
-
-
-
1,283
47
1,520
20
94
3,188
1,195
1,670
1,851
303
131
108
4
69
Total
478,621
13,844
22,883
5,293
907
6,873
1,195
1,943
2,101
1,396
131
108
5
79
Total
228,198
17,113
189,872
56,337
32,376
11,482
535,378
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 Annual Report 2021.
Danske Bank / Interim report – first nine months 2022 75/77
Statement by the management
The Board of Directors and the Executive Leadership Team (the management) have considered and approved Interim report – first
nine months 2022 of the Danske Bank Group.
The consolidated interim financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting, as
adopted by the EU. Furthermore, the interim report has been prepared in accordance with Danish disclosure requirements for
interim reports of listed financial institutions.
In our opinion, the interim financial statements give a true and fair view of the Group’s assets, liabilities, total equity and financial
position at 30 September 2022 and of the results of the Group’s operations and the consolidated cash flows for the period starting
on 1 January 2022 and ending on 30 September 2022. Moreover, in our opinion, the management’s report includes a fair view of
developments in the Group’s operations and financial position and describes the significant risks and uncertainty factors that may
affect the Group.
Copenhagen, 27 October 2022
Executive Leadership Team
Carsten Egeriis
CEO
Magnus Agustsson
Berit Behring
Christian Bornfeld
Karsten Breum
Stephan Engels
Johanna Norberg
Frans Woelders
Board of Directors
Martin Blessing
Chairman
Jan Thorsgaard Nielsen
Vice Chairman
Lars-Erik Brenøe
Jacob Dahl
Raija-Leena Hankonen-Nybom
Bente Avnung Landsnes
Allan Polack
Carol Sergeant
Helle Valentin
Bente Bang
Elected by the employees
Kirsten Ebbe Brich
Elected by the employees
Aleksandras Cicasovas
Elected by the employees
Louise Aggerstrøm Hansen
Elected by the employees
Danske Bank / Interim report – first nine months 2022 76/77
Independent auditors’ review report
To the shareholders of Danske Bank A/S
Independent auditors’ review report on the consolidated interim financial statements
We have reviewed the consolidated interim financial statements of Danske Bank A/S for the financial period 1 January to 30
September 2022, pp. 33-74 which comprise the income statement, statement of comprehensive income, balance sheet, statement
of capital and notes, for the Group, as well as the consolidated cash flow statement.
Management’s responsibility for the consolidated interim financial statements
Management is responsible for the preparation of the consolidated interim financial statements in accordance with IAS 34 Interim
Financial Reporting as adopted by the EU and Danish disclosure requirements for listed financial companies, and for such internal
control as Management determines is necessary to enable the preparation of the consolidated interim financial statements that
are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express a conclusion on the consolidated interim financial statements. We conducted our review in
accordance with the International Standard on Engagements to Review Interim Financial Information Performed by the Independent
Auditor of the Entity and additional requirements under Danish audit regulation. This requires that we express a conclusion about
whether anything has come to our attention that causes us to believe that the consolidated interim financial statements, taken as
a whole, have not been prepared, in all material respects, in accordance with the applicable financial reporting framework. This also
requires us to comply with relevant ethical requirements.
A review of financial statements in accordance with the International Standard on Engagements to Review Interim Financial
Information Performed by the Independent Auditor of the Entity is a limited assurance engagement. The auditor performs
procedures primarily consisting of inquiries of management and others within the entity, as appropriate, and applying analytical
procedures, and evaluates the evidence obtained.
A review is substantially less in scope than an audit performed in accordance with International Standards on Auditing. Accordingly,
we do not express an audit opinion on the consolidated interim financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the consolidated interim financial statements
for the financial period 1 January to 30 September 2022 have not been prepared, in all material respects, in accordance with IAS
34 Interim Financial Reporting as adopted by the EU and Danish disclosure requirements for listed financial companies.
Emphasis of matter
We draw attention to note G8 and G10 to the consolidated interim financial statements that includes a description of the estimated
provision from the potential coordinated resolution with authorities in US and Denmark and the uncertainty that a resolution will be
reached and a description of the contingent liability regarding the uncertainty as to the outcome of the civil claims into the
terminated non-resident portfolio at Danske Bank’s Estonian Branch.
Our conclusion is not modified in respect of this matter.
Copenhagen, 27 October 2022
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No. 33 96 35 56
Kasper Bruhn Udam
State-Authorised
Public Accountant
Identification No
(MNE) mne29421
Jakob Lindberg
State-Authorised
Public Accountant
Identification No
(MNE) mne40824
Supplementary information
Danske Bank / Interim report – first nine months 2022 77/77
Financial calendar
2 February 2023
16 March 2023
28 April 2023
21 July 2023
27 October 2023
Contacts
Claus Ingar Jensen
Head of Investor Relations
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Danske Bank’s financial statements are available online at danskebank.com/Reports.