Assets
| Type | Time | Amount | Unit |
|---|
Revenue
| Type | Start date | End date | Amount | Unit |
|---|
XML
See the xml submitted here:
No XML document available for this report.
Separator
The full data:
Interim report
– first nine months 2023
Danske Bank Group
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
15
18
20
23
25
27
28
30
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
Statements
Statement by the management
Supplementary information
32
33
34
35
37
38
74
75
Financial highlights – Danske Bank Group
Q1-Q3
Index
2022* 23/22
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.
of which impairment charges, other intangible assets
Provision for Estonia matter
Impairment charges 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
Net profit before goodwill impairment charges and
provision for Estonia matter
Attributable to additional tier 1 etc.
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 (including Non-core)
Q1-Q3
2023
25,866
8,560
2,946
922
324
38,618
18,822
741
-
-
-
19,796
294
19,502
-55
19,447
3,950
17,666
9,536
879
-241
1,203
29,042
19,570
728
24
14,000
1,627
-6,155
794
-6,949
-10
-6,959
2,177
15,497
-9,136
15,497
-
6,491
86
295,739
285,269
256,257
283,801
1,743,662 1,824,278
784,553
280,626
805,863
111,924
602,915
279,514
506,426
115,674
Danske Bank / Interim report – first nine months 2023 3/75
Q3
2023
9,326
2,867
174
233
431
13,031
6,204
245
-
-
-
6,827
322
6,505
-30
6,475
1,156
5,319
Q2
2023
8,516
2,739
1,160
192
-431
12,176
6,338
243
-
-
-
5,838
-175
6,013
5
6,018
1,007
5,011
Index
Q3/Q2
Q3
Index
2022* 23/22
Full year
2022*
110
105
15
121
-
107
98
101
-
-
-
117
-
108
-
108
115
6,297
2,999
558
-139
244
9,959
6,777
237
-
14,000
1,627
-12,445
368
-12,813
-28
-12,841
834
148
96
31
-
177
131
92
103
-
-
-
-
88
-
107
-
139
25,108
12,590
1,875
280
1,936
41,789
26,478
962
24
13,800
1,627
-116
1,568
-1,684
-13
-1,697
2,883
106
-13,674
-
-4,580
5,319
-
5,011
-
106
-
1,953
-
272
-
10,848
86
146
90
-
-
27
133
96
102
-
-
-
-
37
-
-
-
181
-
239
-
115
101
295,739
285,269
251,568
259,077
96 1,743,662 1,752,598
559,305
77
287,966
100
502,546
63
118,546
103
602,915
279,514
506,426
115,674
118
110
256,257
283,801
99 1,824,278
784,553
280,626
805,863
111,924
108
97
101
98
115
101
191,828
247,752
96 1,803,955
638,799
77
287,078
100
502,995
63
118,149
103
Total assets
3,829,199 4,347,301
88 3,829,199 3,731,608
103 4,347,301
88 3,790,556
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 (including Non-core)
Subordinated debt
Shareholders' equity
68,821
212,442
104,668
204,229
1,123,448 1,187,316
701,316
317,045
716,470
769,757
150,520
40,008
155,972
716,009
346,872
529,337
487,225
137,352
39,053
168,642
66
104
68,821
212,442
71,592
238,059
95 1,123,448 1,092,945
712,186
308,444
480,024
486,606
134,766
38,338
168,648
716,009
346,872
529,337
487,225
137,352
39,053
168,642
102
109
74
63
91
98
108
96
89
104,668
204,229
103 1,187,316
701,316
101
317,045
112
716,470
110
769,757
100
150,520
102
40,008
102
155,972
100
66
104
91,159
137,920
95 1,169,879
711,773
298,068
554,321
488,891
139,918
38,350
160,278
102
109
74
63
91
98
108
Total liabilities and equity
3,829,199 4,347,301
88 3,829,199 3,731,608
103 4,347,301
88 3,790,556
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)
7
18.0
12.5
12.5
1.19
48.7
48.7
23.2
18.8
164.4
196.4
20,097
-
-10.7
-7.3
5.1
0.78
121.2
67.4
21.3
16.9
94.8
181.9
21,528
-
6.2
12.6
12.6
1.31
47.6
47.6
23.2
18.8
164.4
196.4
20,097
7
5.8
12.0
12.0
1.18
52.1
52.1
22.4
18.1
166.0
196.4
21,339
93
-
-15.9
-33.5
4.8
0.83
225.0
68.0
21.3
16.9
94.8
181.9
21,528
-
-5.4
-2.8
6.5
0.83
100.3
63.4
22.1
17.8
137.3
186.7
21,022
93
94
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 30.
*Comparative information for financial highlights has been restated as explained in note G3.
**Adjusted return on average shareholders’ equity and Adjusted cost/income ratio exclude the effect of the provision for Estonia matter and the impairment charges on goodwill. See Definition of Alternative Perfor-
mance Measures for more detail.
Executive summary
During the first nine months of 2023, geopolitical tension and
uncertainty increased even more. Despite this challenging
operating environment, we note that macroeconomic senti-
ment, especially in Denmark, has improved recently. The in-
flationary pressure has eased, and the labour markets in the
Nordic countries are resilient. Nevertheless, activity in the
housing markets remained subdued, which had a negative ef-
fect on credit demand and customer-driven activity at our
banking operations. Although macroeconomic sentiment has
improved, and the credit quality of our portfolio is strong, we
are mindful that the macroeconomic outlook remains uncer-
tain, and the full effects of the new interest rate environment
have yet to be seen. Also, we start to see slight credit deteri-
oration in the economic sectors first affected by the interest
rate increases. We therefore remain prudent, with significant
buffers in place.
Against this backdrop, we continued to help our customers
navigate the environment in the third quarter on the basis of
our strong balance sheet, while also delivering on our strate-
gic ambitions. The financial results for the third quarter and
the first nine months of 2023 as a whole were driven primar-
ily by higher net interest income, which was in line with our
full-year outlook, due to the improved interest rate environ-
ment. We want to ensure that our offerings are attractive and
competitive for our customers and therefore now offer posi-
tive interest rates on salary and budget accounts and have
continuously raised interest rates on several of our savings
account types. Fee income was higher in the third quarter
than in the second quarter, benefiting from improved cus-
tomer activity in the capital markets and stable investment
activity, although activity in the housing markets relative to
peak levels had a negative effect on lending fees. Income from
insurance business was closer to a normalised level in the
third quarter, and net trading income was lower, impacted by
a one-off item and due to seasonality at Large Corporates &
Institutions in the third quarter. Despite the inflationary envi-
ronment, we were able to keep costs under control as oper-
ating expenses decreased 4% in the first nine months rela-
tive to the same period last year and 2% from the second to
the third quarter of 2023 (not including one-off items).
In summary, this enabled us to achieve a strong return on eq-
uity of 12.5% and a net profit of DKK 15.5 billion for the first
nine months of 2023.
Our solid financial results, well-capitalised balance sheet and
good funding position with a strong deposit base continued to
allow us to help our customers and other stakeholders navi-
gate the new normal of macroeconomic uncertainty and
higher rates. Fitch Ratings upgraded Danske Bank to A+ on
the basis of our strong capitalisation and the expected com-
pletion of our remediation and financial crime prevention pro-
jects.
We are in the process of finalising our execution of the Better
Bank strategy that we launched in the third quarter of 2019.
Danske Bank / Interim report – first nine months 2023 4/75
Essentially, the Better Bank strategy has enabled us to im-
prove Danske Bank since 2019 to the benefit of all stakehold-
ers as we have delivered on the four strategic promises that
we made in 2019, namely that we would ensure attractive
solutions for customers, that we cared about and would de-
velop our employees, that we contribute to society, and that
we deliver strong returns to our investors. All four pillars
have been solidified over the last four years, and we are in the
process of finalising our execution of the Better Bank strat-
egy. Therefore, in the Annual Report 2023, we will provide a
more detailed update.
In the period since the launch of the Better Bank strategy, we
have made major changes that have transformed our finan-
cial crime prevention setup. We have made significant pro-
gress in relation to our financial crime remediation plan and
we are over 90% complete. The aim of the plan has been to
design and implement effective controls which comply with
applicable regulatory requirements and manage our financial
crime risk within our risk tolerance. We remain committed to
completing the plan by our target date of 31 December
2023.
As we approach completion of the plan, we are subjecting it
to closure validation work. This work is currently being per-
formed. There is a possibility that a small number of remain-
ing items on the plan may not be closed out by December
2023. Danske Bank will prioritise these and seek to close
them as soon as possible.
To strengthen our position further and unleash Danske
Bank’s full potential, we announced our new Forward ’28
strategy in June. The new strategy will take effect from 2024
following the conclusion of the Better Bank strategy period
that ends at year-end 2023. With Forward ’28, we set our
strategic direction towards 2028 and have set new financial
targets for 2026, reflecting our ambition to deliver a solid re-
turn on equity of 13% with a CET1 capital ratio of above 16%.
Sustainability is a core part of our strategy, and in the third
quarter of 2023, our progress in this area continued.
Through an analysis of portfolio data, Danske Bank has ob-
tained an initial understanding of the drivers and sectors in
its lending and investment portfolios that potentially have a
negative impact on nature and biodiversity. The findings will
lay the foundation for future engagement with customers and
investee companies.
Danske Bank and Realkredit Danmark also ramped up ESG
efforts in the property sector with a new reporting tool
intended to make ESG reporting easier for real estate
companies. Furthermore, Danske Bank received an 'A' score
in Position Green’s annual assessment of 300 companies’
ESG reporting in Denmark, Norway and Sweden.
Capital and funding
Danske Bank’s underlying business is strong, our treasury
asset and liability management is prudent, and our capital
and liquidity positions continue to be strong with significant
buffers well above the regulatory requirements. At the end of
September 2023, our liquidity coverage ratio stood at 173%
(30 September 2022: 159%), with an LCR reserve of
DKK 604 billion (31 December 2022: DKK 570 billion), and
our net stable funding ratio stood at 127%.
Total deposits were up 3% from the preceding quarter, with
the increase driven by deposit inflows stemming from our
competitive savings products, such as Danske Toprente.
Financials
Danske Bank delivered a net profit of DKK 15,497 million in
the first nine months of 2023 (Q1-Q3 2022: a loss of
DKK 9,136 million). The result for the first nine months of
2022 was affected by the additional provision for the Estonia
matter of DKK 14,000 million and the goodwill impairment
charge of DKK 1,627 million. Excluding the additional provi-
sion for the Estonia matter and the goodwill impairment
charge, net profit amounted to DKK 6,491 million in the first
nine months of 2022.
Net interest income showed a strong development due to re-
pricing actions and income from deposits driven by the posi-
tive interest rate environment. We aim to always offer our
customers an attractive value proposition at competitive
prices and took several pricing actions in the third quarter,
lifting interest rates on both transaction accounts and sav-
ings accounts across the markets in which we operate.
Net fee income was higher in the third quarter than in the sec-
ond quarter because of increased capital markets activity,
stable investment activity and improving, though still low,
housing market activity towards the end of the quarter. Net
fee income in the first nine months was lower than in the
same period last year due mainly to the slowdown in the
housing market and lower fees from assets under manage-
ment.
Net trading income rose, with the increase driven by the fixed
income strategy implemented at Large Corporates & Institu-
tions towards the end of 2022. In the third quarter, net trad-
ing income was negatively affected by the reclassification
through profit and loss of the loss on a CET1 FX hedge related
to the sale of our personal customer business in Norway of
DKK 786 million.
Danske Bank / Interim report – first nine months 2023 5/75
Net income from insurance business recovered from the
level in the first nine months of 2022 due primarily to the
more positive developments in the financial markets in 2023
and amounted to DKK 922 million. Net income was nega-
tively affected by a provision of DKK 250 million for possible
compensation to customers in relation to an omission to pro-
vide advice concerning indexation of the state pension age.
Other income benefited from a one-off gain of DKK 104 mil-
lion related to the sale of Danske IT in India, which was, how-
ever, more than offset by a provision for prudent valuation
and expected transaction costs, amounting to DKK 693 mil-
lion, related to the agreement to sell our personal customer
business in Norway.
Operating expenses were lower than in the first nine months
of 2022 as underlying expenses developed according to plan
and are on track to meet our full-year guidance. The trend in
expenses also benefited from exchange rate developments,
which were partly offset by inflation, though. Furthermore, the
corresponding period in 2022 was affected by a provision of
DKK 600 million related to the debt collection case.
The number of FTEs decreased by 1,242 from the level in the
second quarter due mainly to staff in Danske IT India being
transferred to InfoSys in September.
Credit quality was strong overall with a low level of loan im-
pairments. We are starting to see some deterioration in
credit quality for large customers in specific sectors that is
driven by single names. We monitor certain sectors, such as
commercial real estate, prudently and have made sufficient
post-model adjustments to cover the increasing risks.
Changes to the Executive Leadership Team
On 1 August 2023, Joachim Alpen joined Danske Bank as
new Head of Large Corporates & Institutions and member of
Danske Bank’s Executive Leadership Team.
Danske IT in India
We have entered into a strategic partnership with Infosys.
The partnership supports us in the digital and technology
transformation we have undertaken to be a leading bank in a
digital age.
Dividend for 2023
In connection with the interim report for the first half-year, we
paid an interim dividend of DKK 7 per share, corresponding
to 59% of net profit for the period, to our shareholders.
Danske Bank’s dividend policy remains unchanged, targeting
a dividend payout of 40-60% of net profit. Danske Bank has
strong capital and liquidity positions, and the Board of Direc-
tors remains committed to our capital distribution policy.
Danske Bank / Interim report – first nine months 2023 6/75
Outlook for 2023
The outlook for 2023 is narrowed as we now expect net profit
for 2023 to be in the range of DKK 19.5-20.5 billion, includ-
ing different one-off items recognised during the first nine
months of 2023.
We expect net interest income to continue to grow on the ba-
sis of the announced central bank rate hikes and our contin-
ued efforts to drive commercial momentum.
Net fee income is expected to be below the level in 2022.
Net trading income is expected to be at a normalised level in-
cluding the release of a loss from Other comprehensive in-
come on the CET1 FX hedge attributable related to the sale
of our personal customer business in Norway.
Income from insurance business is expected to be lower than
the normalised level due to negative valuation effects, higher
claims and a provision for potential customer compensation.
We maintain our outlook for operating expenses in 2023 to
be in the range of DKK 25-25.5 billion, reflecting the effect of
our continued focus on cost management and despite the in-
flationary pressure. The outlook includes continually elevated
remediation costs for approximately DKK 1.1 billion, includ-
ing the impact of the new Danish bank tax.
We expect loan impairment charges of up to DKK 1 billion
due to continually strong credit quality, recoveries in the first
half of the year, a few single-names and a lower-than-ex-
pected impact in the first nine months of the year from model-
driven charges related to the weaker macroeconomic out-
look.
The outlook is as usual subject to uncertainty and depends on
financial market conditions.
Financial review
Q1-Q3 2023 vs Q1-Q3 2022
Net profit increased to DKK 15,497 million (Q1-Q3 2022: a
loss of DKK 9,136 million) as a result of significant increases
in net interest income, net trading income and income from
insurance business. Net profit also benefited from a decline
in loan impairment charges and stable operating expenses.
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 6,491 million in the first nine months of
2022.
Income
Net interest income increased to DKK 25,866 million (Q1-
Q3 2022: DKK 17,666 million) and developed in line with our
full-year outlook. The increase was due primarily to repricing
actions and income from deposits driven by the rise in market
rates. A one-off interest compensation of DKK 307 million
related to a final tax decision by the tax authorities regarding
tax paid in previous years also contributed to the increase.
Net fee income was down and stood at DKK 8,560 million
(Q1-Q3 2022: DKK 9,536 million). Service fees increased
due to repricing actions and the transfer of customers to a
subscription fee service model implemented in mid-2022.
The increase in service fees was offset by a decline in fees
from new lending related to our commercial real estate
business that was caused by the general slowdown in the
housing market combined with customers switching from
mortgage loans to bank loans. The latter resulted in fee
income accruing over the expected maturity of the loan
instead of at origination. Fees
from assets under
management and fees on advisory services were also lower.
Net trading income increased to DKK 2,946 million (Q1-Q3
2022: DKK 879 million), with the increase driven by the fixed
income strategy
implemented at Large Corporates &
Institutions towards the end of 2022, which has resulted in a
more stable income generated on the basis of solid customer
limited drawdowns despite the
activity and with very
challenging market environment. The reclassification
through profit and loss of the loss of DKK 786 million on a
CET1 FX hedge following the announcement of the sale of our
personal customer business in Norway had a negative effect
on net trading income but a positive effect on Other
comprehensive income.
from
income
insurance business recovered and
Net
loss of
amounted to DKK 922 million (Q1-Q3 2022:
DKK 241 million) due primarily
to more positive
developments in the financial markets in 2023 than the year
before. The
increase was driven mainly by positive
investment results on insurance products where Danica
Pension has the investment risk and positive investment
returns on Danica Pension’s equity capital. A provision of
DKK 250 million for possible compensation to customers in
relation to an omission to provide advice concerning
indexation of the state pension age had a negative effect on
Danske Bank / Interim report – first nine months 2023 7/75
income. Danica Pension continued to see a rise in new health
and accident claims, which resulted in a decrease in the
insurance service result.
Other income amounted to DKK 324 million (Q1-Q3 2022:
DKK 1,203 million). Other income benefited from a one-off
gain of DKK 104 million on the sale of Danske IT in India,
which was, however, more than offset by a provision for
prudent valuation and expected
transaction costs,
amounting to DKK 693 million, related to the agreement to
sell our personal customer business
in Norway.
Furthermore, in the first nine months of 2022, Other income
saw a positive effect from a one-off gain of DKK 421 million
on the sale of our activities in Luxembourg.
Operating expenses
Operating expenses amounted to DKK 18,822 million (Q1-
Q3 2022: DKK 19,570 million) as underlying expenses
continued to develop according to plan. Furthermore, the first
nine months of 2022 were affected by a provision of
DKK 600 million related to the debt collection case.
Operating expenses benefited
rate
developments, but this positive effect was partly offset by
inflation.
from exchange
The Resolution fund, bank tax etc. item continued to increase
and stood at DKK 741 million (Q1-Q3 2022: DKK 728
million).
Provision for the Estonia matter
In the third quarter of 2022, an additional provision of
DKK 14,000 million was made. In addition to this, a provision
of DKK 1,500 million was booked in 2018. No provision for
the Estonia matter has been made in 2023.
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 was written off due to increasing discount rates
and the current turbulence in the financial markets. No
impairment charge on goodwill has been made in 2023.
Loan impairment charges
Loan impairments in core business segments remained low
overall in the first nine months of 2023, amounting to a net
charge of DKK 294 million (Q1-Q3 2022: DKK 794 million).
The first nine months of 2022 were affected by a provision of
DKK 650 million related to the debt collection case.
Impairments reflect successful restructuring activities and
continued post-pandemic recoveries, contributing to overall
stable credit quality. The macroeconomic situation, mainly in
terms of declining property prices and interest rate hikes,
continues to impact impairments, and the macroeconomic
landscape remains uncertain and develops at a fast pace. We
continue to apply significant post-model adjustments related
to the macroeconomic uncertainty and remain watchful of
any possible credit deterioration.
Loan impairment charges
Q1-Q3 2023
Q1-Q3 2022
(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
333
246
-163
-119
-4
294
0.05
0.05
-0.06
-0.29
-0.25
0.02
334
-90
-155
36
669
794
0.05
-0.02
-0.07
0.09
23.16
0.06
1 Defined as net credit exposure from lending activities in core segments,
excluding exposure related to credit institutions and central banks and
loan commitments.
Personal Customers saw impairment charges comparable
to those in the first nine months of 2022. Charges for the first
nine months of 2023 were driven by a combination of
updated macroeconomic scenarios and falling property
prices. Underlying credit quality remained stable.
Business Customers had higher impairment charges than in
the first nine months of 2022, while Large Corporates &
Institutions continued to see a net reversal owing to
successful restructuring within the shipping, oil and gas
sectors and post-pandemic recoveries resulting in a decline
in charges made against facilities to individual customers.
A low GDP, rising interest rates and downward pressure on
property prices remained the primary factors behind the
macroeconomic scenarios. The scenario weights were
updated from the end of 2022 and were as follows: The base-
case scenario has a probability of 60% (2022: 70%), the
upside scenario has a probability of 20% (2022: 10%) and
the downside scenario has a probability of 20% (2022: 20%).
Tax
The tax expense of DKK 3,950 million (Q1-Q3 2022:
DKK 2,177 million) corresponds to an effective tax rate of
20.3%. The effective tax rate in the first nine months of 2023
saw a positive effect from a payment of DKK 670 million from
the tax authorities, booked in the third quarter, due to a
correction of tax paid in previous years on certain financial
assets and liabilities measured at amortised cost and from
the reversal of a provision of DKK 576 million following a final
decision from the tax authorities regarding the exit from the
international joint taxation scheme in 2019. This more than
offset the increase in the tax rate applicable to financial
institutions to 25.2% in 2023 from 22% in 2022. Excluding
the additional provision for the Estonia matter and the
goodwill impairment charge, the effective tax rate was 25.1%
in the first nine months of 2022.
DKK 5,319 million
Net profit
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 8/75
Q3 2023 vs Q2 2023
Net profit increased to DKK 5,319 million (Q2 2023:
DKK 5,011 million). Increases in net interest income, in net
income from insurance business and in other income had a
positive effect on the result.
•
•
•
•
•
•
•
•
Net interest income increased to DKK 9,326 million
(Q2 2023: DKK 8,516 million), driven by increased
margins on deposits as a consequence of rising market
rates and repricing actions. Furthermore, the increase
was due to one-off
income of DKK 307 million
concerning interest related to a final decision by the tax
authorities regarding tax paid in previous years.
Net fee income amounted to DKK 2,867 million (Q2
2023: DKK 2,739 million) as income from capital
markets advisory services increased due to an activity
uptick in the third quarter, and fees from Asset
Management also rose, driven by an increase in assets
under management. Furthermore, service fees and
refinancing and loan establishment fees were higher
due to an increase in customer activity.
Net trading income decreased to DKK 174 million (Q2
2023: DKK 1,160 million) due primarily to the negative
effect of the reclassification through profit and loss of
the loss of DKK 786 million on a CET1 FX hedge
following the announcement of the sale of our personal
customer business in Norway, which, however, had a
positive effect on Other comprehensive income. The
second quarter was furthermore affected by the sale of
shares taken over in connection with a loan. The sale
resulted in a gain of DKK 327 million.
Net income from insurance business increased to
DKK 233 million (Q2 2023: DKK 192 million). The
insurance service result decreased DKK 59 million as
a result of a rise in new health and accident claims. The
increased due to a positive
net
development
insurance
products where Danica Pension has the investment
risk. The third quarter of 2023 also included the
provision of DKK 250 million for possible compensation
to customers.
Other income increased to DKK 431 million (Q2 2023:
a loss of DKK 431 million) due mainly to a one-off gain
of DKK 104 million related to the sale of Danske IT in
India. The second quarter was affected by a provision
related to prudent valuation and expected transaction
costs, amounting to DKK 693 million, related to the
agreement to sell our personal customer business in
Norway.
Operating expenses amounted to DKK 6,204 million
(Q2 2023: DKK 6,338 million) and were flat relative to
the second quarter.
Loan impairment charges for core business segments
amounted to DKK 322 million in the third quarter (Q2
2023: a net reversal of DKK 175 million). Impairment
charges were driven by single-name exposures, while
overall credit quality remained resilient.
Tax amounted to DKK 1,156 million (Q2 2023:
DKK 1,007 million). The effective tax rate was 17.9%
(Q2 2023: 16.7%) and saw a positive effect from a pay-
ment of DKK 670 million from the tax authorities due to
a correction of tax paid in previous years on certain fi-
nancial assets and liabilities measured at amortised
cost.
investment results on
financial result
in
Danske Bank / Interim report – first nine months 2023 9/75
Lending and deposits
Lending stood at DKK 1,744 billion (end-2022: DKK 1,804
billion). Mortgage lending at nominal value at Realkredit
Danmark amounted to DKK 808 billion (end-2022: DKK 802
billion). Lending volumes in Sweden and Norway saw a
negative effect from the depreciation of the currencies.
At Large Corporates & Institutions, we saw a decrease in
lending volumes in General Banking of 5% from the level at
the end of 2022 as the operating environment and capital
markets conditions have improved during 2023. Market
shares in cash management increased as new house bank
mandates were added in all Nordic countries. Relative to the
level at the end of 2022, total lending decreased 7% due
mainly to a decrease in lending volumes in Norway as a result
of the depreciation of the Norwegian krone.
Despite a positive inflow of bank lending volumes in Finland
and Norway, lending volumes at Business Customers were at
the same level as at the end of 2022.
At Personal Customers, we saw an increase in bank lending
volumes in Denmark of 8%. The general slowdown on the
housing market had a negative effect on mortgage volumes in
all four Nordic countries. Total lending across markets de-
creased 5% from the level at the end of 2022 due mainly to
the depreciation of the currencies in Sweden and Norway.
In Denmark, new gross
loans,
amounted to DKK 84.8 billion. Lending to personal
customers accounted for DKK 19.2 billion of this amount.
lending, excluding repo
Credit quality
Credit quality remained strong in the first nine months of
2023 for all business units. However, we remain vigilant for
any possible deterioration related to the uncertainty
mentioned in the loan impairment charges section above.
Stage 3 loans in core segments
(DKK millions)
Gross exposure
Allowance account
Net exposure
30 Sep. 2023 31 Dec. 2022
35,736
8,673
32,132
8,251
27,064
23,881
Collateral (after haircut)
22,953
22,442
Stage 3 coverage ratio (%)
68
85
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 increased to DKK 35.7
billion, driven by single-name exposures
(end-2022:
DKK 32.1 billion), corresponding to 1.4% of total gross
exposure. Stage 3 exposure was concentrated on personal
customers, shipping, oil and gas, commercial property and
agriculture, which combined accounted for 62% of total
gross exposure in stage 3.
The stage 3 coverage ratio declined to a more normalised
level relative to the high coverage ratio at the end of 2022,
with
the development driven mainly by single-name
exposures.
Deposits amounted to DKK 1,123 billion at the end of
September 2023 (end-2022: DKK 1,170 billion). Deposit
volumes in Sweden and Norway decreased due mainly to the
depreciation of the currencies.
Total gross exposure in stage 2 has decreased DKK 29.0
billion since the end of 2022, primarily in the business and
personal customers segments, due mainly to portfolio
developments.
Deposit volumes at Personal Customers
in Denmark
increased 5% from the level at the end of 2022, driven
primarily by the new savings products launched in the first
quarter of 2023. Total deposit volumes decreased 1% from
the level at the end of 2022 due mainly to the depreciation of
the currencies
the
announcement of Danske Bank exiting the personal
customer market in Norway.
in Sweden and Norway and
At Business Banking, deposit volumes were negatively af-
fected by our decision to reduce deposits in the public sector
in Norway. Combined with the depreciation of the currencies
in Sweden and Norway, total deposit volumes decreased 7%
from the level at the end of 2022.
Credit exposure
Credit exposure from lending activities in core business
segments
increased to DKK 2,557 billion (end-2022:
DKK 2,513 billion). The increase was driven by higher
deposits with central banks, while the decrease in exposure
at Personal Customers Norway and Sweden was caused
mainly by weaker NOK and SEK exchange rates.
Risk Management 2022, section 3, which is available at
danskebank.com/ir, provides details on Danske Bank’s credit
risks.
The allowance account amounted to 1.08% (end-2022:
1.02%) of credit exposure.
Allowance account by
business units
(DKK millions)
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
30 Sep. 2023
Accum.
impairm.
charges
% of
credit
exposure1
31 Dec. 2022
Accum.
impairm.
charges
% of
credit
exposure1
5,291
10,494
0.68
1.59
5,427
10,235
3,315
781
25
0.94
1.30
3.01
3,050
863
31
0.66
1.58
0.76
1.56
0.78
1.02
Total
19,906
1.08
19,605
1 Relating to lending activities in core segments.
Interest rate risk in the banking book
Danske Bank is exposed to interest rate risk in the banking
book resulting from providing the Group’s core banking
customers with conventional banking products and from the
Group’s funding and liquidity management activities at Group
Treasury (for more details, please see section 5.3.3 of Risk
Management 2022).
As part of managing the interest rate risk in the banking book,
the Group holds high-rated bonds. To ensure aligned
accounting treatment across the banking book, these bonds
are held at amortised cost. As interest rates have risen,
asset values in the banking book, including bonds held at
amortised cost, have fallen. This should be seen in light of the
significant increase in net interest income from deposits and
the corresponding impact on liability values. The carrying
amount and fair value of the Group’s hold-to-collect bond
instruments can be seen in note G12.
Funding and liquidity
In the third quarter of 2023, market sentiment continued to
be influenced by the inflation outlook, central bank reactions
as well as a continually tense geopolitical situation. The credit
markets stayed active with stable investor appetite for
Danske Bank issues.
At the end of September 2023, the Group had issued cov-
ered bonds of DKK 29 billion, preferred senior debt of
DKK 39 billion and non-preferred senior debt of DKK 16 bil-
lion, thus bringing total long-term wholesale funding to
DKK 84 billion.
Our strategy is to be a regular issuer in the EUR benchmark
format and in the domestic USD market for senior and non-
preferred senior bonds in the Rule 144A format. Our strat-
egy of securing more funding directly in our main lending cur-
rencies, including NOK and SEK, remains in place. The bench-
mark 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 re-
demptions on the one hand 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 2023.
Danske Bank’s liquidity position remained robust. At the end
of September 2023, our liquidity coverage ratio stood at
173% (31 December 2022: 151%), with an LCR reserve of
DKK 604 billion (31 December 2022: DKK 570 billion), and
our net stable funding ratio stood at 127%.
At 30 September 2023, the total nominal value of outstand-
ing long-term funding, excluding debt issued by Realkredit
Danmark, was DKK 360 billion (31 December 2022:
DKK 357 billion).
Capital ratios and requirements
At the end of September 2023, the Group’s total capital ratio
was 23.2%, and its CET1 capital ratio was 18.8%, against
22.1% and 17.8%, respectively, at the end of 2022. The
movement in the capital ratios in the first nine months of
2023 was driven by an increase in net profit after dividends,
a decrease in the insurance deduction and a decrease in the
REA. This was partly counterbalanced by a decline in the IFRS
9 add-back.
Danske Bank / Interim report – first nine months 2023 10/75
During the first nine months of 2023, the total REA
decreased approximately DKK 17 billion due mainly to a
decline in credit risk and 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.
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 Norwegian SyRB
- portion from SIFI buffer (O-SII)
Solvency need ratio
Total capital requirement
Buffer to requirement
CET1 capital
Total capital
30 Sept.
2023
Fully
phased-in*
18.8
23.2
14.3
2.0
2.5
0.5
3.0
10.9
18.9
4.5
4.3
18.6
23.0
14.3
2.0
2.5
0.5
3.0
10.9
18.9
4.3
4.1
* Based on fully phased-in rules and requirements, including the fully
phased-in impact of IFRS 9.
** The total capital requirement consists of the solvency need ratio and
the combined buffer requirement. The fully phased-in countercyclical
capital buffer is based on the buffer rates announced at the end of
September 2023.
At the end of September 2023, the Group’s solvency need
ratio was 10.9%, an increase of 0.3 percentage points from
the level at the end of 2022.
A combined buffer requirement (CBR) applies to financial
institutions in addition to the solvency need ratio. At the end
of September 2023, the Group’s CBR was 8.0%, an increase
of 1.0 percentage points from the level at the end of 2022
due to increases in the national countercyclical buffer rates
in Denmark, Norway and Sweden, and the reciprocation of
the 4.5% Norwegian systemic risk buffer (SyRB) in Denmark,
which took effect on 4 August 2023.
The calculation of the solvency need ratio and the combined
capital buffer requirement is described in more detail in
section 6 of Risk Management 2022, which is available at
danskebank.com/ir.
Minimum requirement for own funds and eligible liabilities
The Danish FSA sets the MREL at two times the solvency
need plus one time the SIFI buffer, the capital conservation
buffer and the systemic risk buffer. Furthermore, the CBR
must be met in addition to the MREL. In the annual MREL de-
cision from the Danish FSA, the (backward-looking) MREL
was set at 26.7% of the total REA adjusted for Realkredit
Danmark.
At the end of September 2023, the point-in-time requirement
including the CBR was equivalent to DKK 247 billion, or
35.8% of the total REA adjusted for Realkredit Danmark. Tak-
ing the deduction of capital and debt buffer requirements for
Realkredit Danmark into account, MREL-eligible liabilities
amounted to DKK 295 billion. In addition, an MREL of 6% of
the leverage ratio exposure (LRE) is in place. The LRE-based
requirement equalled 23.0% of the total REA adjusted for
Realkredit Danmark, making the REA-based requirement the
binding constraint.
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.
At the end of September 2023, the subordination require-
ment was equivalent to DKK 205 billion. The backward-look-
ing subordination requirement, as set by the Danish FSA, was
28.5% of the total REA adjusted for Realkredit Danmark.
MREL-eligible subordinated liabilities stood at DKK 236 bil-
lion.
Danske Bank / Interim report – first nine months 2023 11/75
Based on our strong performance in the first half of 2023
and our strong capital position, the Board of Directors ap-
proved an interim dividend of DKK 7 per share, correspond-
ing to 59% of net profit for the first half of 2023. The dividend
was paid out in July 2023.
Danske Bank’s 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 our capital dis-
tribution policy.
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 2023, 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. On 27 June 2023, the EU co-
legislators reached a provisional political agreement on the
proposals for implementing Basel IV.
the expected REA
On the basis of the Group’s current and updated analysis of
the EU Banking Package 2021, including the provisional
agreement, the Group’s current capital planning takes into
initial
account
implementation in 2025. The fully phased-in impact of the EU
Banking Package on the Group depends on the final legal text,
which is still outstanding. Taking into account the 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
On 3 October 2023, it was announced that the Danish
Systemic Risk Council had recommended to the Danish
minister for Industry, Business and Financial Affairs to
activate a sector-specific Systemic Risk Buffer (SyRB) with a
buffer rate of 7% for exposures to real estate companies in
Denmark. The Danish government intends to follow the
recommendation and activate the SyRB with effect from 30
June 2024. The formal government decision is, however,
subject to approval from the Commission.
Note: The requirement and eligible funds are adjusted for Realkredit Dan-
mark’s capital and debt buffer requirements.
Leverage ratio
At the end of September 2023, the Group’s leverage ratio
was 5.1% under the transitional rules and 5.0% under the
fully phased-in rules.
Capital targets and capital distribution
The CET1 capital ratio target of above 16% was re-affirmed
at the Group’s Investor Update on 7 June 2023 and ensures
a sufficiently prudent buffer in relation to the capital require-
ment. Danske Bank fully meets this capital target.
The Board of Directors will continue to adapt the capital tar-
gets to regulatory developments in order to ensure a strong
capital position.
Credit ratings
On 15 September 2023, Fitch Ratings (Fitch) upgraded
Danske Bank’s issuer rating to A+ from A. The outlook is
Stable. As a consequence, all debt ratings were raised one
notch. The key drivers were the Group’s capitalisation,
improved earnings metrics and Fitch’s view on the closure of
the Estonia case. On 10 July 2023, Moody’s Investors
Service (Moody’s) revised the outlook for the Danske Bank
Group to Positive from Stable.
Danske Bank’s credit ratings
Fitch
Moody’s
S&P
Counterparty rating
AA-
A1/P-1
AA-/A-1+
Deposits
AA-/F1+
/P-1
-
A2/Positive
Preferred senior debt
AA-/F1+
A3/P-2
A+/A-1
Issuer rating
A+/F1
A3/P-2
A+/A-1
Outlook
Stable
Positive
Stable
Non-preferred senior debt
Tier 2
AT1
A+
A-
BBB
Baa2
BBB+
-
-
BBB
BB+
Environmental, Social and Governance (ESG) ratings
There were no ESG credit rating changes in the third quarter
of 2023.
Danske Bank’s ESG ratings
CDP Worldwide, UK
ISS ESG, USA
Score at
30 September
2023
Score at
30 June
2023
B
B
C+ Prime
C+ Prime
MSCI ESG Ratings, USA
BBB
BBB
Sustainalytics, USA
Medium Risk Medium Risk
Moody’s ESG Solutions, USA
60
60
Estonia matter
As announced on 13 December 2022, Danske Bank has
the US
final coordinated resolutions with
reached
Department of Justice (DoJ), the US Securities and Exchange
Commission (SEC) and the Danish Special Crime Unit (SCU)
following the investigations into failings and misconduct
related to the non-resident portfolio at Danske Bank’s former
Estonia branch. The aggregate amounts payable to the US
and Danish authorities were paid in January 2023. The
coordinated resolutions marked the end of the criminal and
regulatory investigations into Danske Bank by the authorities
in Denmark and the United States.
As part of the Bank’s agreement with DoJ, Danske Bank was
placed on corporate probation for three years from 13
December 2022 until 13 December 2025, and Danske Bank
is committed to continuing to improve its compliance
programmes. Danske Bank has taken extensive remediation
action to address those failings to prevent any similar
occurrences, and the Bank remains in contact with DoJ as a
Danske Bank / Interim report – first nine months 2023 12/75
matter of post-resolution obligations set forth
agreement with DoJ.
in the
The Bank remains subject to a criminal investigation by
authorities in France and has posted bail in the amount of
DKK 80 million. The Bank continues to cooperate with the
authorities.
Civil claims
Danske Bank is subject to ongoing litigation in relation to the
Estonia matter. This includes, inter alia, an action against
Danske Bank (and other defendants) in the US and a number
of court cases initiated against Danske Bank in Denmark.
These civil claims were not included in the coordinated
resolutions with DoJ, SEC and SCU. Danske Bank will
continue to defend itself vigorously against these claims. The
timing of completion of any such civil claims (pending or
threatening) and their outcome are uncertain and could be
material.
Update on the debt collection case
As announced on 31 August 2022, Danske Bank has chosen
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. In the fourth quarter of
2022, we began communicating to customers whose debt is
set to zero and at present, nearly 90% of the debt in approxi-
mately 90,000 active customer cases has been set to zero.
Furthermore, Danske Bank has decided to pay compensation
on the basis of a data-driven model to the customers who
were at risk of having been subject to overcollection related
to the issues in the historical debt collection systems.
The work involved in paying compensation to the debt collec-
tion customers who may have been subject to overcollection
began earlier this year, and we expect the compensation pay-
out to the majority of these customers to be completed by the
end of 2023.
In the third quarter of 2022, operating expenses were im-
pacted by a one-off amount of DKK 600 million, whereas
write-downs of debt increased loan impairment charges by a
one-off amount of DKK 650 million, which includes part of the
compensation to customers. It was furthermore communi-
cated that further sample checks related to the customer
compensation model were needed, and this work has now re-
sulted in us taking a more conservative approach, which is to
the benefit of our debt collection customers. This approach
impacted our operating expenses by a further DKK 310 mil-
lion in the fourth quarter of 2022 to cover compensation to
debt collection customers for potential overcollection of debt.
Danske Bank continues to have a dialogue with and report
progress with the debt collection case to the impartial re-
viewers appointed by the Danish FSA.
Changes to the Executive Leadership Team
On 1 August 2023, Joachim Alpen joined Danske Bank as
new Head of Large Corporates & Institutions and member of
Danske Bank’s Executive Leadership Team.
Danske Bank / Interim report – first nine months 2023 13/75
Personal customer business in Norway
Following the Forward ’28 strategy announcement in June,
Danske Bank has entered into an agreement to sell its per-
sonal customer business in Norway to Nordea. The sale of
the personal customer business includes the management of
15 Danske Invest Horisont funds, which are primarily distrib-
uted to personal customers in Norway. The transaction is
subject to regulatory approvals. Pending these approvals and
preparation of the transfer of the customers, the transaction
is expected to close in the fourth quarter of 2024.
Danske Bank enters into strategic partnership with Infosys
As part of our Forward ’28 strategy, we announced our am-
bition to be a leading bank in a digital age. To support us in this
digital and technology transformation, we have entered into a
strategic partnership with Infosys, a global leader in digital
services and consulting.
As at 1 September, Danske Bank has sold Danske IT, a wholly
owned subsidiary of Danske Bank headquartered in Benga-
luru, India, to Infosys. Danske IT covers IT development and
operations for Danske Bank. As part of the sale, the 1,400
employees at Danske IT have transferred to Infosys, which
employs more than 300,000 people globally.
Closing of the Remediation Office
In 2020, we established a Remediation Office, which was
tasked with overseeing the remediation of legacy issues at
Danske Bank that were characterised by having a high de-
gree of complexity and a large time span. As these legacy is-
sues have now either been or are well underway to being re-
solved, the Remediation Office will now close.
Danske Bank / Interim report – first nine months 2023 14/75
Business units
Danske Bank / Interim report – first nine months 2023 15/75
Personal Customers
In the first nine months of 2023, Personal Customers saw an increase in net interest income of 77% from the same period last
year, mainly as a result of repricing actions and higher income from deposits driven by market developments. Fee income decreased
18% from the same period last year, but customer activity picked up in the third quarter of 2023 relative to the preceding quarters,
and this had a positive effect on especially service fees. Also, fees from loan establishment and remortgaging increased from the
level in the preceding quarters, although the level for the first nine months was still significantly lower than in the first nine months
of 2022.
Profit before tax amounted to DKK 6,167 million in the first nine months of 2023, an increase of 111% from the same period in
2022. The increase was driven by higher net interest income and lower operating expenses due to prudent cost controlling and
fewer FTEs, while the expected transaction costs related to the sale of our personal customer portfolio in Norway had a negative
effect on profit before tax. Credit quality remained solid, and loan impairment charges were flat relative to the year-earlier period.
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
2023
Q1-Q3
2022
Index
23/22
10,686
3,020
256
-627
13,335
6,835
127
6,500
333
6,039
3,662
343
547
10,592
7,334
121
3,258
334
177
82
75
-
126
93
105
200
100
Q3
2023
3,669
998
85
23
4,775
2,373
42
2,402
-145
Q2
2023
3,611
950
86
-670
3,977
2,209
44
1,768
66
Index
Q3/Q2
102
105
99
-
120
107
95
136
-
Q3
2022
2,168
1,108
123
39
3,438
2,237
40
1,201
9
Index Full year
2022
23/22
169
90
69
59
139
106
105
200
-
8,778
4,730
444
987
14,939
10,104
161
4,836
927
Profit before tax
6,167
2,924
211
2,547
1,702
150
1,191
214
3,909
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
4,687
764,753 803,452
4,140
408,350 415,364
615,878 603,569
31,091
29,474
113
4,687
95 764,753 767,784
4,810
98 408,350 413,514
102 615,878 607,405
29,439
29,274
95
100 803,452
4,140
97
99 415,364
101 603,569
30,934
99
113
95 805,120
4,727
98 410,806
102 612,997
30,898
95
1.21
0.65
-
1.27
1.23
-
0.70
-
0.71
29.4
27.9
51.3
4,179
14.0
12.5
69.2
4,749
-
-
-
88
32.8
34.8
49.7
4,179
24.0
23.1
55.5
4,288
-
-
-
97
15.5
15.4
65.1
4,749
-
-
-
88
15.7
12.7
67.6
4,262
Fact Book Q3 2023 provides financial highlights at customer type level for Personal Customers. Fact Book Q3 2023 is available at danskebank.com/ir.
Business initiatives
In September 2023, the central banks across our core mar-
kets hiked rates again. We supported our customers in navi-
gating the high market rate environment by offering specialist
advice when they take important decisions, especially in rela-
tion to home financing and investments. Following the rise in
the market rates, we announced that customers in both Den-
mark and Finland would receive a positive interest rate of
0.25% on transaction accounts with effect from October
2023 in Denmark and November 2023 in Finland.
Customer activity in the housing market picked up in the third
quarter of 2023 but was still below the levels in the same pe-
riod last year. Investment fees were likewise challenged due
to lower investment appetite. Both elements were to a large
extent driven by the higher market rate environment that en-
tails an increase in the cost of living while also rendering de-
posit products and bonds more attractive.
To make it easier for our customers to start investing, cus-
tomers in Denmark can now open a custody account via
Danske Mobile Banking. This is an important lever for our rel-
atively young investment solution, Danske Monthly Invest-
ment. Another important milestone in realising our ambition
of increasing customer self-service options and providing a
better customer experience was that it became possible for
our customers in Norway and Finland to open additional sav-
ings accounts directly in the Mobile Banking app. This feature
is expected to become available to customers in Sweden in
the fourth quarter of 2023.
As announced in July 2023, we entered into an agreement to
sell our personal customer business in Norway to Nordea.
The work towards the expected closure of the transaction in
the fourth quarter of 2024 is progressing as planned.
Q1-Q3 2023 vs Q1-Q3 2022
Profit before tax amounted to DKK 6,167 million (Q1-Q3
2022: DKK 2,924 million) and was driven by the effect of
higher net interest income from deposits and lower operating
expenses. This effect was, however, partly offset by a provi-
sion for prudent valuation and expected transaction costs re-
lated to the sale of our personal customer portfolio in Nor-
way. The financial results were adversely affected by the de-
preciation of the Swedish krona and the Norwegian krone.
Net interest income increased to DKK 10,686 million (Q1-
Q3 2022: DKK 6,039 million) due primarily to an increase in
income from deposits driven by the rise in market rates and
repricing actions. Some of the increase was offset by the al-
location from Group Treasury to Personal Customers of the
cost of hedging the interest rate risk related to deposits.
Lending margins were under pressure from the rising market
rates.
Deposit volumes in Denmark increased 3% from the level at
the end of September 2022, driven primarily by the new sav-
ings products launched in the first quarter of 2023. Total de-
posit volumes decreased 2% from the level at the end of Sep-
tember 2022 due mainly to the depreciation of the curren-
cies in Sweden and Norway and the announcement of Danske
Bank exiting the personal customer market in Norway.
We saw a positive increase in bank lending volumes in Den-
mark of 8% from the level at the end of September 2022,
driven by customers looking for a flexible way to finance their
homes in an uncertain interest rate environment as well as
for green car lending. The general slowdown on the housing
market in 2023 had a negative effect on mortgage volumes
in all four Nordic countries. The depreciation of the curren-
cies in Norway and Sweden had a negative effect of DKK 12
billion. Total lending across markets decreased 5% from the
level at the end of September 2022.
Danske Bank / Interim report – first nine months 2023 16/75
Net fee income decreased to DKK 3,020 million (Q1-Q3
2022: DKK 3,662 million), primarily as a result of lower ac-
tivity but also of the divestment of MobilePay. Fee income
from financing activity decreased due to lower customer ac-
tivity in the wake of the general slowdown in the housing mar-
ket combined with customers switching from mortgage loans
to bank loans. The latter resulted in fee income accruing over
the expected maturity of the loan instead of at origination. In-
come from investment fees decreased as a result of the un-
certainty in the financial markets and customers shifting to-
wards low-margin products, but still with an uplift in activity
in 2023 from the level at the end of 2022.
Net trading income decreased to DKK 256 million (Q1-Q3
2022: DKK 343 million) due to lower customer activity.
Other income amounted to a negative DKK 627 million (Q1-
Q3 2022: DKK 547 million). The decrease was due mainly to
the decision to exit the market for personal customers in Nor-
way, which resulted in a provision for prudent valuation and
expected transaction costs of DKK 693 million, as well as the
year-earlier period benefiting from a one-off gain of DKK 421
million on the sale of our customer portfolio in Luxembourg.
Operating expenses decreased to DKK 6,835 million (Q1-Q3
2022: DKK 7,334 million). The decrease was driven by fewer
FTEs and the divestment of MobilePay as well as prudent
cost control.
Credit quality remained solid for the first nine months of
2023. Loan impairment charges amounted to DKK 333 mil-
lion (Q1-Q3 2022: DKK 334 million).
Credit exposure
Credit exposure decreased to DKK 842 billion at the end of
September 2023 (end-2022: DKK 883 billion), driven mainly
by lower exposure in Personal Customers Norway and Swe-
den due mainly to the depreciation of the Swedish krona and
the Norwegian krone.
Danske Bank / Interim report – first nine months 2023 17/75
Q3 2023 vs Q2 2023
Profit before tax in the third quarter of 2023 increased to
DKK 2,547 million (Q2 2023: DKK 1,702 million), driven
partly by higher income from deposits and service fees. In
addition, the second quarter was affected by the provision
for prudent valuation and expected transaction costs
related to the sale of the personal customer business in
Norway.
•
•
•
•
•
•
•
•
Net interest income increased 2%, driven by higher
margins on deposits as a consequence of rising market
rates and repricing actions. Some of the effect was
offset by an adjustment of the interest-bearing capital
costs, which added pressure on the lending margins.
Net fee income increased 5% from the preceding quar-
ter, driven by higher service fees and higher refinancing
and loan establishment fees due to higher customer ac-
tivity. Investment fees decreased 8% from the preced-
ing quarter but were still higher than at the end of 2022,
thus continuing the positive trend in 2023.
Other income increased to DKK 23 million due mainly
to the provision in the second quarter for prudent
valuation and expected transaction costs, amounting to
DKK 693 million, related to the agreement to sell our
personal customer business in Norway.
Operating expenses increased 7% due to seasonality in
IT expenses.
The third quarter of 2023 saw loan impairment
reversals of DKK 145 million (Q2 2023: DKK 66
million). Reversals were driven by improved collateral
values and updated macroeconomic scenarios.
Credit exposure decreased to DKK 842 billion in the
third quarter (Q2 2023: DKK 849 billion) due mainly to
a decrease in exposure in Personal Customers Norway
and Global Private Banking.
Total lending volumes were on par with the preceding
quarter though there was a decrease in local currency
in Sweden, Norway and Finland due to the slowdown in
the housing markets and the announcement of Danske
Bank exiting the personal customer market in Norway.
Deposit volumes decreased 1%, primarily in Denmark
due to seasonality and the announcement of Danske
Bank exiting the personal customer market in Norway.
DKK 2,547 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 18/75
Business Customers
Business Customers continued to see good momentum due to rising market rates as well as repricing activities that had a positive
effect on total income for the first nine months of 2023. The sale of used assets in our leasing company also contributed to the
positive development. On the downside, fee income continued to be under pressure due to subdued customer activity, which affected
activity-driven fees and fees from new lending. We continued to support our customers with expert financial advisory services tai-
lored to their needs.
In the first nine months of 2023, profit before tax amounted to DKK 7,091 million, an improvement of 42% from the level in the
same period in 2022.
Index
Q3/Q2
93
88
73
104
93
104
98
88
-
83
Q3
2022
2,392
448
129
201
3,170
1,254
56
1,917
-289
Index Full year
2022
23/22
115
86
79
129
110
100
114
117
-
9,175
1,825
517
847
12,364
5,356
224
7,008
578
2,205
97
6,430
101 625,945
102
8,274
101 287,523
102 336,593
39,439
100
102 639,557
8,938
111
92 285,177
107 344,445
39,623
100
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
2023
Q1-Q3
2022
Index
23/22
8,605
1,281
363
796
11,045
3,708
191
7,337
246
6,476
1,353
372
632
8,833
3,919
168
4,914
-90
133
95
98
126
125
95
114
149
-
Q3
2023
2,742
387
102
259
3,491
1,253
64
2,237
104
Q2
2023
2,936
438
139
250
3,763
1,209
65
2,554
-7
Profit before tax
7,091
5,004
142
2,133
2,561
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
639,620 625,945
8,274
264,033 287,523
9,166
358,685 336,593
39,723
39,455
102 639,620 633,909
9,012
9,166
111
92 264,033 261,293
107 358,685 352,061
39,525
39,450
99
1.27
0.93
-
1.23
1.30
-
1.03
-
0.99
24.8
24.0
33.6
1,652
16.5
16.8
44.4
1,689
-
-
-
98
22.7
21.6
35.9
1,652
25.8
25.9
32.1
1,677
-
-
-
99
19.4
22.4
39.6
1,689
-
-
-
98
17.7
16.2
43.3
1,635
Fact Book Q3 2023 provides financial highlights at customer type level for Business Customers. Fact Book Q3 2023 is available at danskebank.com/ir.
Business initiatives
The general economy continued to improve through the first
nine months of 2023. Inflation has stabilised across all areas,
and the central banks estimate that the latest market rate
hike in September 2023 will be the last of many. Despite the
more stable economy, customer activity was still subdued
relative to the year-earlier period. We continued to support
our customers across segments and to focus on providing
the best possible advice tailored to their needs.
We continued to prioritise the digital agenda with the aim of
further improving the customer experience. In mid-August,
our partnerships with Zenegy and Axeptia were launched in
District Marketplace
in
Denmark. Zenegy provides solutions within payroll
administration and HR, while Axeptia is a fintech company
that provides credit intelligence. We continued to see an
increase in the number of products ordered digitally through
District Marketplace.
for our business customers
The commercial real estate sector continued to be affected
by rising market rates and widening credit spreads, but our
commercial property portfolio remained stable. The commer-
cial real estate portfolio is well diversified across the four
Nordic markets, and the overall exposure is stable with a
small increase in the third quarter. We maintained a strong
focus on helping our customers mitigate the risk and by sup-
porting them on ESG investments.
Danske Bank and Realkredit Danmark have taken the first
steps towards differentiating the terms and conditions we of-
fer on the basis of the energy efficiency of the property. Along-
side this work, we have joined forces with some of the leading
real estate players to create a unified ESG reporting tool, so
it will become easy for real estate companies to use the same
definitions and principles when it comes to sustainability re-
porting.
Q1-Q3 2023 vs Q1-Q3 2022
Profit before tax amounted to DKK 7,091 million (Q1-Q3
2022: DKK 5,004 million). The increase was driven by in-
come from deposits as a result of repricing actions and rising
market rates, increased sales of used leasing assets as well
as lower operating expenses. The financial performance was
adversely affected by the depreciation of currencies.
Net interest income increased 33%, driven by higher income
on deposits following repricing actions and market rate de-
velopments. Some of the effect was offset by the allocation
from Group Treasury to Business Customers of the cost of
hedging the interest rate risk related to deposits. Lending
margins continued to be under pressure as a result of the ris-
ing market rates.
Deposit volumes were negatively affected by our decision to
reduce deposits in the public sector in Norway. Combined
with the depreciation of the currencies in Sweden and Nor-
way, total deposit volumes thus decreased 8% from the level
at the end of September 2022.
Total lending volumes increased slightly from the level at the
end of September 2022, with the increase driven primarily
by mortgage lending in Denmark where the nominal value of
lending increased 4% driven by our commercial real estate
business. Despite a positive inflow of bank lending volumes in
Finland and Norway, bank lending volumes decreased 1%,
primarily because of the depreciation of currencies.
Net fee income decreased to DKK 1,281 million (Q1-Q3
2022: DKK 1,353 million). Service fees increased due to re-
pricing actions as well as the transfer of customers to a sub-
scription fee service model implemented in mid-2022. The
increase in service fees was, however, offset by a decline in
fees from new lending related to our commercial real estate
business that was caused by the slowdown in the housing
market.
Net trading income decreased to DKK 363 million (Q1-Q3
2022: DKK 372 million) due to more normalised levels for FX
trading than in the same period last year, when trading in-
come was extraordinarily high on the back of high customer
activity and larger spreads.
Operating expenses amounted to DKK 3,708 million, a de-
crease of 5% from the same period last year. The decrease
was driven by lower remediation costs.
Credit quality remained solid in the first nine months of 2023.
Loan impairment charges amounted to DKK 246 million (Q1-
Q3 2022: net reversal of DKK 90 million).
Credit exposure
Credit exposure decreased to DKK 734 billion at the end of
September 2023 (end-2022: DKK 745 billion), primarily as
a result of lower exposure to the Private housing co-ops and
non-profit associations industry.
Danske Bank / Interim report – first nine months 2023 19/75
Q3 2023 vs Q2 2023
Profit before tax decreased to DKK 2,133 million in the third
quarter of 2023 (Q2 2023: DKK 2,561 million). The
decrease was due mostly to lower income, higher operating
expenses and loan impairment charges.
•
•
•
•
•
•
•
•
Net interest income decreased to DKK 2,742 million
(Q2 2023: DKK 2,936 million). The decline was due
mainly to income from lending combined with an
adjustment of the interest-bearing capital costs, which
affected lending margins.
Net fee income decreased 12%, primarily because of a
fall in fees from new lending due to the slowdown in the
housing market and in income from service fees.
Net trading income decreased to DKK 102 million (Q2
2023: DKK 139 million) due to accounting-related
adjustments in Sweden.
Other income increased 4% due to increased sales of
assets in our leasing operations.
Operating expenses increased 4%. The increase was
due primarily to seasonality in IT expenses.
Deposit volumes increased 1% due to a positive inflow
of volumes in Sweden and appreciation of currencies.
Part of the increase was offset by an outflow of volumes
in the public sector in Finland.
Lending volumes
increased 1%, driven by higher
mortgage lending in Denmark due to conversion of
construction loans to mortgage loans, an inflow of bank
lending volumes
in Sweden and Norway and
appreciation of currencies.
The third quarter of 2023 saw loan impairment
charges of DKK 104 million (Q2 2023: net reversals of
DKK 7 million). Credit exposure was stable at DKK 734
billion in the third quarter of 2023 (Q2 2023: DKK 736
billion) due primarily to lower exposure to the Private
housing and Utilities and infrastructure industries. The
decrease was partially offset by an increase in our
exposure to the Commercial property industry.
DKK 2,133 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 20/75
Large Corporates & Institutions
During the first nine months of 2023, risks related to predominantly central bank rates and inflation continued to weigh on the
economic outlook. In the face of uncertainty, we remained fully committed to supporting our customers with advisory services and
solutions to navigate the intricate financial landscape. We continued to see positive underlying business momentum, backed by our
strong balance sheet, as well as signs of improved activity in the capital markets. In addition, a further inflow of new customers in
Sweden and an increasing market share within cash management services continued to provide net interest income tailwinds, and
net interest income rose 28% from the same period in 2022. Furthermore, we continued to be a trusted adviser for our customers
in sustainable finance solutions, where we maintained our leading market position in sustainable bonds and sustainability-linked
loans.
Profit before tax amounted to DKK 6,653 million, an increase of 66% from the same period last year, driven primarily by higher net
interest income and net trading income.
Large Corporates & Institutions
(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
2023
5,142
4,057
2,552
12
4,015
4,296
622
2
11,763
8,936
5,273
368
6,491
-163
5,090
379
3,846
-155
Profit before tax
6,653
4,001
Q1-Q3
Index
Q3
Q2
Index
Q3
Index
Full year
2022
23/22
2023
2023
Q3/Q2
2022
23/22
2022
128
94
-
-
132
104
97
169
105
166
1,728
1,416
592
-
1,741
1,290
754
6
3,736
3,790
1,730
123
2,006
359
1,791
122
1,999
-130
99
110
79
-
99
97
101
100
-
1,404
1,364
596
-
3,364
1,599
125
1,765
-11
123
104
99
-
5,605
5,732
1,489
2
111
12,828
108
98
114
-
6,966
504
5,861
-774
1,647
2,129
77
1,775
93
6,635
Loans, excluding reverse trans. before
impairments
of which loans in General Banking
Allowance account, loans (incl. credit
institutions)
Deposits, excluding repo deposits
of which deposits in General Banking
Covered bonds issued
Allocated capital (average)
Net interest income as % p.a. of loans
and deposits
Profit before loan impairment charges
as % p.a. of allocated capital
Profit before tax as % p.a. of allocated
capital (avg.)
Cost/income ratio (%)
Full-time-equivalent staff
Total income
(DKK millions)
298,655
267,546
354,247
293,947
84
91
298,655
267,546
311,833
279,489
96
96
354,247
293,947
84
91
322,539
281,266
1,799
362,049
297,585
29,391
40,312
2,134
399,252
333,514
24,035
42,246
84
91
89
122
95
1,799
362,049
297,585
29,391
40,597
1,898
325,772
270,837
29,287
40,449
95
111
110
100
100
2,134
399,252
333,514
24,035
41,958
84
91
89
122
97
2,048
389,486
336,580
27,495
42,138
1.04 0.79
21.5 12.1
-
-
1.09
1.06
19.8
19.8
-
-
0.79
16.8
-
-
0.81
13.9
22.0 12.6
44.8 57.0
2,098 2,109
-
-
99
16.2
46.3
2,098
21.1
47.3
2,103
-
-
100
16.9
47.5
2,109
-
-
99
15.7
54.3
2,054
General Banking
Markets
of which xVA*
Asset Management
of which performance fees
Investment Banking & Securities (IBS)
6,222
3,183
-55
1,556
34
802
4,989
1,305
-172
1,762
143
879
125
244
32
88
24
91
2,068
821
-16
558
21
289
2,099
945
-1
510
2
236
Total income
11,763
8,936
132
3,736
3,790
99
87
-
109
-
122
99
1,719
728
-73
611
57
306
120
113
22
91
37
94
6,936
2,387
-48
2,313
174
1,193
3,364
111
12,828
*The xVA acronym covers Credit (CVA), Debit (DVA), Funding (FVA) and Collateral (ColVA) Valuation Adjustments to the fair value of the derivatives portfolio.
Danske Bank has a centralised xVA desk responsible for quantifying, managing and hedging xVA risks. The PnL result of the xVA desk is thus the combined
effect of the net xVA position and funding and collateral costs of the trading book.
Danske Bank / Interim report – first nine months 2023 21/75
Assets under management
(DKK millions)
Institutional clients*
Retail clients
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
2022
Index
23/22
Full year
2022
387,268
310,657
361,185
299,193
107
104
387,268
310,657
382,518
312,695
101
99
361,185
299,193
107
104
366,005
300,848
Total assets under management**
697,925
660,378
106
697,925
695,213
100
660,378
106
666,853
* The split of assets under management between institutional and retail clients was adjusted in Q2 2023, and comparative information has been restated
accordingly.
** Includes assets under management from Group entities.
Business initiatives
During the third quarter, the capital markets became more
constructive. As a result, the debt and equity capital markets
started to see improved conditions, and we are pleased to
have helped our customers capitalise on the opportunities
this offered. In Debt Capital Markets, we saw a high volume of
deals during the quarter, and we remained the leading Nordic
bank in the European debt capital markets in terms of vol-
umes supported. Notably, we acted as Joint Lead Manager on
NIBE Industrier’s SEK 4 billion bond issue – the largest un-
rated corporate bond issue in the Swedish market in over ten
years. Furthermore, we supported S-Bank with their highly
successful inaugural covered bond issue of EUR 500 million,
which saw strong demand from Nordic investors.
In Equity Capital Markets, we saw increasing activity during
the third quarter, and we were the leading ECM adviser in
Denmark during the first nine months of 2023. As a highlight,
we are proud to have acted as Sole Global Coordinator in rais-
ing DKK 9.2 billion in new shares in Coloplast, the largest pri-
mary bookbuild offering for a Nordic company in 15 years.
We continued to deliver on our sustainability-related
ambitions and proved our strong position in sustainable
finance during the period by maintaining our Nordic lead
position in the Bloomberg League Tables for both sustainable
bonds and sustainability-linked loans. We are proud to
further develop the market, and in the third quarter, we acted
as framework structuring adviser and arranged inaugural
sustainable bond issues for Lamor Corp Oyj, Elkem ASA and
Wienerberger AG. On the loan side, we acted as Joint
Sustainability Coordinator in increasing Public Property
Invest’s Term Loan Facility, which now totals NOK 3.3 billion
– the largest facility of this type among Norwegian real estate
companies to date. Furthermore, we assisted Copenhagen
Infrastructure Partners with EUR 1 billion in green fund
financing for their CI V flagship fund, which is set to become
the largest fund globally dedicated to renewable energy
infrastructure investments.
We continue to develop and strengthen our sustainable fi-
nance offering, and in the third quarter, we launched new in-
vestment products featuring different sustainability aspects.
Nordic Sustainable Focus is an equity fund that invests at
least 75% of its assets in sustainable investments in the Nor-
dic region, as defined by our proprietary SDG model. We also
launched an alternative Global Future fund that promotes ex-
pected positive climate impacts by investing, directly or indi-
rectly, in companies producing or developing renewable en-
ergy solutions or otherwise having activities that contribute
to the reduction of greenhouse gas emissions.
Q1-Q3 2023 vs Q1-Q3 2022
Profit before tax increased to DKK 6,653 million (Q1-Q3
2022: DKK 4,001 million), driven by higher net trading in-
come and higher net interest income.
Net interest income increased to DKK 5,142 million (Q1-Q3
2022: DKK 4,015 million) as a result of higher deposit mar-
gins. Lending volumes in General Banking decreased 5%
from the level at the end of 2022 as the operating environ-
ment and capital market conditions improved during 2023.
We continued to execute on our strategic ambition to grow
our business in Sweden, and we are thrilled to have wel-
comed more new large corporate customers, after reaching
our ambition of 40 new customers for the full year already in
the second quarter of 2023. Furthermore, we increased our
market share in cash management by adding new house bank
mandates in all of the Nordic countries.
Net fee income decreased to DKK 4,057 million (Q1-Q3
2022: DKK 4,296 million), with the decline due primarily to
lower fees from assets under management. Income in Asset
Management was lower than the level recorded in the first
nine months of 2022, mainly as a result of the lower level of
assets under management at the beginning of 2023 due to
declining asset prices and negative net sales in the second
half of 2022 as well as lower performance fees. However, as-
sets under management increased during the first nine
months of 2023, partly on the back of recovering financial
markets and a strong investment performance relative to
both peers and benchmark, which should also support future
sales. In addition, strong developments in the institutional
segment contributed to positive net sales.
Net trading income increased to DKK 2,552 million (Q1-Q3
2022: DKK 622 million) as we saw an improved result in our
fixed income business in the first nine months of 2023. In ad-
dition, the increase was driven by our fixed income strategy
implemented towards the end of 2022, which resulted in
more stable income that was generated on the basis of solid
customer activity and with very limited drawdowns despite a
challenging market environment.
Operating expenses increased and amounted to DKK 5,273
million (Q1-Q3 2022: DKK 5,090 million). The increase was
the result of higher provisions for performance-based com-
pensation, with the effect being slightly offset by lower under-
lying costs. The number of full-time equivalent staff de-
creased slightly to 2,098 (Q1-Q3 2022: 2,109).
Overall credit quality remained strong in the first nine months
of 2023, however, with a slightly negative rating trend driven
by a few, single-name exposures. Loan impairments for the
first nine months of 2023 amounted to a net reversal of
DKK 163 million (Q1-Q3 2022: a net reversal of DKK 155
million), driven by post-pandemic recoveries and successful
restructuring within the shipping, oil and gas sectors.
Credit exposure
Net credit exposure from lending activities amounted to
DKK 638 billion at the end of September 2023 (end-2022:
DKK 648 billion), driven primarily by a decrease in exposure
to the Utilities and infrastructure and Public institutions in-
dustries, partially countered by a positive development in ex-
posure to the Financials industry. Furthermore, we have ac-
tively reduced net oil-related exposure (excluding oil majors)
by 58% since the fourth quarter of 2019.
Danske Bank / Interim report – first nine months 2023 22/75
Q3 2023 vs Q2 2023
Profit before tax decreased to DKK 1,647 million (Q2 2023:
DKK 2,129 million) due primarily to lower trading income
and higher loan impairment charges in the third quarter.
• Net interest income decreased slightly to DKK 1,728
million (Q2 2023: DKK 1,741 million) as a result of lower
lending volumes and margins, with the effect being partly
offset by higher deposit margins.
• Net fee income increased and stood at DKK 1,416 million
(Q2 2023: DKK 1,290 million), mainly as a result of
higher income from capital markets advisory services
due to an activity uptick in the third quarter as well as
higher fees from Asset Management driven by an
increase in assets under management.
• Net trading income decreased to DKK 592 million (Q2
2023: DKK 754 million) due primarily to seasonal effects
from lower activity levels over the summer.
• Operating expenses decreased to DKK 1,730 million (Q2
2023: DKK 1,791 million), with the decrease driven pri-
marily by lower underlying costs.
• Loan impairment charges amounted to DKK 359 million
(Q2 2023: net reversal of DKK 130 million). The higher
loan impairment charges were attributable to single-
name exposures, while overall credit quality remained re-
silient.
DKK 1,647 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 23/75
Danica Pension
In the third quarter of 2023, the financial markets were relatively stable, with a slightly positive trend. The beginning of 2023 was
characterised by a very strong development in especially the US tech index, and the latest quarter saw the remaining global markets
having largely caught up. Despite an ongoing focus on the possibility of a recession, it did not materialise, and the negative impact
from 2022 has been partly offset by the positive development in 2023.
Net income at Danica Pension amounted to DKK 922 million in the first nine months of 2023 and recovered from the level in the
same period in 2022 as the net financial result improved due to the positive developments in the financial markets.
Danica Pension
(DKK millions)
Insurance service result
Net financial result
Other income
Net income before tax in Danica Pension
Goodwill impairment
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
Index
2022 23/22
Full year
2022
609
243
69
1,024
-1,323
-1,570
922
-1,869
-
1,627
59
-
-
-
-
-
175
2
57
234
-47
5
75
-
-
320
-465
-1,621
233
192
121
-1,766
-
-
-
1,627
233
192
121
-139
55
-
-
-
-
-
1,895
-1,679
-1,562
-1,347
1,627
280
Net income from Danica Pension excl. goodwill
922
-241
Liabilities under insurance contracts
Liabilities under pooled unit-linked investment
contracts
Allocated capital (average)
Net income as % p.a. of allocated capital
Solvency coverage ratio
Full-time-equivalent staff
506,094
799,837
63 506,094 500,555
101 799,837
63
507,146
20,784
19,644
18,362
20,764
113
95
20,784
19,825
20,850
19,586
100
101
18,362
20,136
113
98
20,469
20,326
6.3 -12.0
213 196
905 872
-
-
-
4.7
213
905
3.9
191
898
-
-
-
-35.1
196
872
-
-
-
-6.6
187
881
Asset under management
(DKK millions)
Insurance
412,451
392,631
105 412,451 418,185
99 392,631
105
403,789
Danica Pension has changed the format of reporting to align with IFRS 17, which was implemented on 1 January 2023. Business unit reporting for Danica
Pension has been changed accordingly, and comparative figures have been restated. See note G2 for more information.
Business initiatives
The third quarter of 2023 was characterised by relative sta-
bility and a positive trend in the global markets. The possibility
and impact of a widespread recession have acted as a steady
coolant of the global market temperature, but a global reces-
sion has yet to materialise.
The negative returns on our customers’ pensions savings in
2022 have been counterbalanced by the positive develop-
ment throughout the year that was driven mainly by equities.
In October 2023, Danica Pension launched two new health
care initiatives aimed at families and people new to the job
market, respectively. As a means to combating the increase
in the number of people in Denmark who experience prob-
lems related to children and parenting, with the new offering,
Danica customers will have the possibility of speaking to a
family counsellor online. Young employees will gain the possi-
bility of speaking to a job coach specialising in the challenges
people face when they enter a workplace for the first time.
The “Become friends with your future self” marketing uni-
verse is the basis of a new marketing campaign that high-
lights the positive, future effects of taking care of your pre-
sent self through our health services. By encouraging cus-
tomers to contact an online doctor in the early phase of symp-
toms, we hope to prevent long-term illness of our customers.
The campaign will run across all media channels.
Omission to provide advice concerning indexation of the
state pension age
Danica Pension has informed 35,000 customers about an is-
sue related to the indexation of the state pension age since
2015. In essence, we have found that we have omitted to pro-
vide advice to some of our customers about the impact that
the indexation of the state pension age would have on their
pension savings. Consequently, some customers may have
received a lower return on their pension savings than they
should have as the risk associated with the investment of
their funds was reduced to match an earlier retirement date
and was thus different from what we would recommend.
To cover the compensation expected to be paid to customers
in this connection, we have set aside an amount of DKK 250
million.
Q1-Q3 2023 vs Q1-Q3 2022
Net income at Danica Pension amounted to DKK 922 million
(Q1-Q3 2022: loss of DKK 241 million excl. goodwill impair-
ments). The increase was due primarily to more positive de-
velopments in the financial markets in 2023 than in 2022.
Net income for the first nine months of 2023 includes the ef-
fect of the above-mentioned provision of DKK 250 million for
possible compensation to customers.
The insurance service result decreased to DKK 609 million
(Q1-Q3 2022: DKK 1,024 million) as Danica Pension contin-
ued to see a rise in new health and accident claims, which,
however, was also a general trend in society. The first nine
months of 2022 benefited from a reduction of technical pro-
visions related to the health and accident business.
The net financial result increased to DKK 243 million (Q1-Q3
2022: loss of DKK 1,323 million). The increase was driven
mainly by positive investment results on insurance products
where Danica Pension has the investment risk and positive
investment returns on Danica Pension’s equity capital. The
net financial result for the first nine months of 2023 includes
the effect of the above-mentioned provision of DKK 250 mil-
lion.
Assets under management increased DKK 20 billion from
the level at the end of September 2022 due mainly to the pos-
itive development in the financial markets in the first nine
months of 2023.
Premiums increased 12% from the same period in 2022 fol-
lowing an increase in both single and regular premiums due
to an inflow of new business customers.
Danske Bank / Interim report – first nine months 2023 24/75
Q3 2023 vs Q2 2023
Net income in Danica Pension increased to DKK 233
million (Q2 2023: DKK 192 million). The insurance service
result decreased from the second-quarter 2023 result,
while the net financial result and other income increased.
•
•
The insurance service result saw a decrease of DKK 59
million caused by a rise in new health and accident
claims.
The net financial result increased in the third quarter
and amounted to DKK 2 million (Q2 2023: loss of
DKK 47 million) due to a positive development in
investment results on insurance products where Danica
Pension has the
increased
investment returns on Danica Pension’s equity capital.
The third quarter of 2023 also included the provision of
DKK 250 million
to
customers.
for possible compensation
investment risk and
• Other income includes a reversal of provisions related
to the sale of Danica Norway.
• Total premiums decreased 3% due primarily to a
decrease in single premiums.
• Assets under management decreased DKK 6 billion due
to the developments in the financial markets in the third
quarter of 2023, which reduced assets under
management related to conventional life insurance
products.
DKK 233 million
Net income in Danica Pension
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 25/75
Northern Ireland
Our focus in Northern Ireland is on remaining a stable, strong and risk-astute bank, consolidating our market-leading position along-
side pursuing prudent low-cost growth opportunities in the rest of the UK. This is supported by a continually strong income and
profitability performance, with profit before tax of DKK 1,469 million for the first nine months of 2023.
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
2022
Index Full year
2022
23/22
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)*
1,888
248
198
13
2,346
995
1,351
-119
1,469
1,332
248
-611
18
986
943
43
36
7
59,353
745
97,696
6,466
54,478
694
96,232
6,069
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
1.60
30.3
42.4
1,261
1.11
0.2
95.6
1,271
* Allocated capital equals the legal entity’s capital.
Business initiatives
The strategy in Northern Ireland aligns with the Group’s key
focus areas, including digitisation, customer journeys, sus-
tainability, and simplicity and efficiency, all underpinned by
continually high levels of employee engagement.
Customer demand for residential mortgages remained resil-
ient despite increasing UK interest rates, supporting contin-
ued growth in lending. Many customers appear to be antici-
pating the possibility of UK interest rates beginning to fall, and
we have seen most new customers opt for a product with in-
terest reset every two years, as opposed to every five years,
which was more popular last year. Around half of new mort-
gage lending approved across the UK in the first nine months
of 2023 was through our carbon neutral mortgage product.
We continued to enhance our day-to-day banking and savings
product offerings. Customer deposits were broadly main-
tained at post-pandemic levels, with an increasing proportion
of customers opting for term deposits.
While loan arrears levels continue to be low, we are mindful
that cost-of-living challenges persist and continue to offer
support and guidance to any customer who faces challenges.
We were also delighted during the third quarter to receive
recognition awards from Business in the Community for
being named Northern Ireland’s best company for both
Climate Action and Diversity & Inclusion.
142
100
-
72
238
106
-
-
-
109
107
102
107
99
652
80
145
3
880
339
541
13
637
85
-61
5
665
338
327
-108
102
94
-
60
132
100
165
-
508
84
-402
3
194
320
-126
-2
528
435
121
-124
59,353
745
97,696
7,177
57,064
742
98,700
6,376
1.63
29.4
38.5
1,261
1.61
27.3
50.8
1,285
104
100
99
113
54,478
694
96,232
6,081
1.28
-8.2
164.9
1,271
98
128
95
-
100
-
106
-
-
-
1,900
335
-342
21
1,914
1,290
623
168
456
109 53,761
107
824
102 94,562
6,080
118
1.19
7.5
67.4
1,288
99
Q1-Q3 2023 vs Q1-Q3 2022
Profit before tax increased to DKK 1,469 million (Q1-Q3
2022: DKK 7 million), with a strong underlying income per-
formance based on lending growth and actions taken in re-
sponse to higher UK interest rates supplemented by trading
income.
Net interest income increased to DKK 1,888 million (Q1-Q3
2022: DKK 1,332 million), driven by growth in both personal
and business lending (lending was 4% higher in local cur-
rency) and higher UK interest rates.
Net fee income was maintained at DKK 248 million (Q1-Q3
2022: DKK 248 million).
Net trading income reflects mark-to-market movements on
the bank’s hedging portfolio. The positive movements in the
year to date reflect a combination of changing market expec-
tations for UK interest rates and the remaining life cycle of
the hedging portfolio. With market expectations continuing to
fluctuate, trading income remains volatile. 2022 saw signifi-
cant, adverse mark-to-market movements on the portfolio.
Operating expenses stood at DKK 995 million (Q1-Q3 2022:
DKK 943 million), up 6% year-on-year, but less than the infla-
tion rate, as a result of the bank’s continued cost focus. Staff
numbers were reduced quarter-on-quarter.
Loan impairment charges remained low overall, amounting to
a net reversal in the first nine months of 2023. The loan
portfolio remains strong, driven by a conservative risk
appetite and astute handling of existing and new lending
opportunities.
Danske Bank / Interim report – first nine months 2023 26/75
Q3 2023 vs Q2 2023
The third quarter of 2023 saw a profit before tax of
DKK 528 million (Q2 2023: DKK 435 million).
•
•
•
•
•
Net interest income increased to DKK 652 million (Q2
2023: DKK 637 million), reflecting growth in lending
and pricing actions taken in response to higher UK
interest rates.
Net fee income amounted to DKK 80 million (Q2 2023:
DKK 85 million), reflecting underlying activity levels.
Net trading income of DKK 145 million (Q2 2023: a
negative DKK 61 million) reflected mark-to-market
movements on the hedging portfolio given ongoing
market volatility.
Operating expenses were broadly unchanged at
DKK 339 million (Q2 2023: DKK 338 million).
Loan impairment charges amounted to DKK 13 million
in the quarter and remained low overall.
DKK 528 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 27/75
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 2023 amounted to a loss of DKK 55
million, against a loss of DKK 10 million in the first nine months of 2022.
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
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
2022
Index Full year
2022
23/22
-23
31
-55
-
-55
1,541
-
2,319
653
-0.47
-11.2
-
12
21
95
-74
-63
-10
1,235
40
2,105
693
-0.18
-1.9
-
36
-
33
74
-
-
125
-
110
94
-22
8
-30
-
-30
16
12
4
-
5
1,541
-
2,319
681
1,145
-
1,896
634
-0.88
-17.6
-
12
-0.24
3.2
-
12
33
-
67
-
-
-
135
-
122
107
100
1
30
-29
-2
-28
1,235
40
2,105
662
-
-16.9
-
36
-
27
103
-
107
125
-
110
103
33
23
101
-78
-66
-13
1,207
39
2,112
668
-0.11
-1.9
-
25
Loan impairment charges
(DKK millions)
Non-core banking
Non-core conduits etc.
Total
-
-
-
-1
-63
-63
-
-
-
-
-
-
-
-
-
-
-
-
-
-2
-2
-
-
-
-1
-64
-66
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 of the remaining Non-core activities is pro-
ceeding according to plan. Residual portfolios in Luxembourg
and Lithuania have been fully exited, resulting in a steady de-
crease in operating expenses.
The closing of the subsidiary bank in Luxembourg is well un-
derway, and the voluntary solvent liquidation of the company
was completed according to plan in the third quarter of 2023.
Q1-Q3 2023 vs Q1-Q3 2022
Profit before tax amounted to a loss of DKK 55 million (Q1-
Q3 2022: loss of DKK 10 million). Total income was affected
by negative value adjustments of the non-strategic private
equity investments, while the decrease in expenses reflects
the general progress made with the winding-up activities
across Non-core.
At the end of September 2023, total lending stood at
DKK 1.5 billion.
Q3 2023 vs Q2 2023
The Non-core unit posted a loss before tax of DKK 30 million
in the third quarter of 2023 (Q2 2023: profit of DKK 5 mil-
lion).
•
•
•
Total income amounted to a loss of DKK 22 million (Q2
2023: income of DKK 16 million). Total income in the
third quarter of 2023 was affected by negative value
adjustments of
the non-strategic private equity
investments.
Operating expenses amounted to DKK 8 million (Q2
2023: DKK 12 million).
Total lending amounted to DKK 1.5 billion (end of June
2023: DKK 1.1 billion).
DKK -30 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 28/75
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 2023, the loss before tax decreased to DKK 2,800 million from a loss of DKK 17,016 million in the first
nine months of 2022. Net interest income decreased to a net expense of DKK 455 million due to higher interest rate risk
management costs and lower bond portfolio income at Group Treasury. Net trading income was impacted by the release from Other
comprehensive income of a loss of DKK 786 million on a NOK structural CET1 FX branch hedge following the announcement of the
exit from the personal customer market in Norway. The third quarter of 2022 was affected by the provision for the Estonia matter
of DKK 14,000 million and the provision of DKK 1,250 million related to the compensation of debt collection customers for potential
overcollection of debt.
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
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Full-time-equivalent staff
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
2022
Index Full year
2022
23/22
-455
-46
-423
131
-793
2,011
54
-
-
-195
-24
152
4
-63
2,284
59
24
14,000
-2,804
-4
-16,347
669
-2,800
-17,016
233
192
-
-
-
88
92
-
-
17
-
16
536
-14
-750
145
-84
509
16
-
-
-409
-24
243
-21
-211
792
12
-
-
-
58
-
-
40
64
133
-
-
-176
-4
112
-
-68
1,368
15
-
14,000
-
-
-
-
124
37
107
-
-
-350
-32
-232
78
-536
2,762
74
24
13,800
-592
-9
-1,002
4
59
-
-15,436
659
-583
-1,006
58
-16,094
4
-
4
-17,098
669
-17,767
9,989
10,802
92
9,989
11,077
90
10,802
92
10,878
Q1-Q3
2023
Q1-Q3
2022
Index
23/22
Q3
2023
Q2
2023
Index
Q3/Q2
Q3
2022
Index Full year
2022
23/22
-1,053
61
-1
-1,808
-340
306
88
-17,069
-2,800
-17,016
-
20
-
11
16
-490
60
1
-154
22
-97
-1
-930
-
-
-
17
-214
207
2
-16,089
229
29
50
1
-933
71
89
-16,993
-583
-1,006
58
-16,094
4
-17,767
Comparative information for Group Functions has been restated as explained in note G2.
Initiatives
Group Functions supports, among others, the business units
by allocating capital, interest-bearing capital costs and long-
term funding costs through Group Treasury’s Internal Bank
setup. Group Treasury also manages among others the
Group’s liquidity bond portfolio and the investment of share-
holders’ equity for Realkredit Danmark as well as the interest
rate risk on the non-trading book. Operating expenses related
to the sub-units within Group Functions are allocated to the
business units. This is done to ensure cost efficiency through-
out the Group.
Q1-Q3 2023 vs Q1-Q3 2022
Group Functions posted a loss before tax of DKK 2,800 mil-
lion (Q1-Q3 2022: loss of DKK 17,016 million. Excluding the
provision for the Estonia matter of DKK 14,000 million and
provisions related to the compensation of debt collection
customers of DKK 1,250 million, the loss amounted to
DKK 1,766 million).
Net interest income decreased to a net expense of DKK 455
million (Q1-Q3 2022: net expense of DKK 195 million) due to
an increase in interest rate risk management costs primarily
related to the hedging of the interest rate risk related to de-
posits – which from 2023 is accounted for as net interest in-
come instead of net trading income – and lower bond portfolio
income. From May 2023, these costs were allocated to the
business units as an internal deduction from deposit mar-
gins. Furthermore, an interest compensation of DKK 307 mil-
lion from the tax authorities was booked in the third quarter
due to a correction of tax paid in earlier years on certain fi-
nancial assets and liabilities measured at amortised cost.
Net trading income decreased to a loss of DKK 423 million
(Q1-Q3 2022: DKK 152 million) due to the release from
Other comprehensive income of a loss of DKK 786 million on
a NOK structural CET1 FX branch hedge following the an-
nouncement of the exit from the personal customer market
in Norway. The loss more than offset the gain of DKK 327
million on the sale of shares taken over in connection with a
loan in the second quarter of 2023.
Other income increased to DKK 131 million (Q1-Q3 2022:
DKK 4 million) due mainly to a gain on the sale of Danske IT in
India to Infosys.
Operating expenses, after allocation to the business units, de-
creased from the level in the first nine months of 2022 and
amounted to DKK 2,011 million (Q1-Q3 2022: DKK 2,284
million). Operating expenses in the third quarter of 2022
were affected by the decision to compensate debt collection
customers for potential overcollection of debt, which led to a
provision of DKK 600 million.
Loan impairment charges amounted to a net reversal of
DKK 4 million (Q1-Q3 2022: DKK 669 million). Impairment
charges in the third quarter of 2022 were affected by the de-
cision to compensate debt collection customers for potential
overcollection of debt, which led to a provision of DKK 650
million.
The number of full-time-equivalent staff decreased from
10,802 at the end of the third quarter of 2022 to 9,989 at
the end of the third quarter as a result of the sale of Danske
IT in India to Infosys.
Danske Bank / Interim report – first nine months 2023 29/75
Q3 2023 vs Q2 2023
Group Functions posted a loss before tax of DKK 583 mil-
lion (Q2 2023: loss of DKK 1,006 million). Net interest in-
come improved, driven by increased Internal Bank cost allo-
cation to the business units and one-off interest income of
DKK 307 million on a tax payment. Net trading income was
impacted by the release of a loss of DKK 786 million from
Other comprehensive income.
•
•
•
•
•
increased
Net interest income improved to a net income of
DKK 536 million (Q2 2023: net expense of DKK 409
million) due primarily to
Internal Bank
interest-bearing capital cost allocation to the business
units. Furthermore, an
interest compensation of
DKK 307 million from the tax authorities was booked
due to a correction of taxes for earlier years on certain
financial assets and liabilities measured at amortised
cost.
Net trading income decreased to a loss of DKK 750
million (Q2 2023: DKK 243 million). Net trading income
was impacted by the release of a loss from Other
comprehensive income of DKK 786 million on a NOK
structural CET1 FX branch hedge
following the
announcement of the exit from the personal customer
market in Norway. Net trading income in the second
quarter was affected by a gain of DKK 327 million on
the sale of shares taken over in connection with a loan.
Other income amounted to DKK 145 million (Q2 2023:
a negative DKK 21 million) due mainly to a gain on the
sale of Danske IT in India to Infosys.
Operating expenses, after allocation to the business
units, amounted to DKK 509 million (Q2 2023:
DKK 792 million).
Loan impairment charges amounted to a net reversal
of DKK 9 million (Q2 2023: DKK 4 million).
DKK -583 million
Profit before tax
for the third quarter of 2023
Danske Bank / Interim report – first nine months 2023 30/75
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. Notes G1 and G3 to the financial statements describe 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, and any
interim dividends that are approved during the year by the Board of Directors.
Return on average shareholders’ equity (% p.a.)
Net profit as disclosed in the financial highlights divided by the average of the quarterly average shareholders’
equity (beginning and end of each quarter) within the year. Net profit and shareholders’ equity are stated as if the
equity-accounted additional tier 1 capital was classified as a liability. In the numerator, net profit is reduced by
interest expenses of DKK 0 million (full-year 2022: DKK 86 million). The denominator represents equity, exclud-
ing additional tier 1 capital and other non-controlling interests equal to an increase in the average of the quarterly
average equity of DKK 1,434 million (2022: reduction of 2,340 million) compared to a simple average of total
equity (beginning and end of the period).
Adjusted return on average shareholders’ equity (%
Net profit, excluding the provision for the Estonia matter and the goodwill impairment charge, divided by the av-
p.a.)
erage of the quarterly average shareholders’ equity (beginning and end of each quarter) within the year. The nu-
merator 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 at the end of the period, the ratio for 2023 would be
1.20% (2022: 0.84%) due to the daily average of the sum of loans and deposits being DKK 26.3 billion higher
(2022: DKK 39.9 billion higher) than if calculating the ratio by applying the end-of-period sum of loans and de-
posits. The purpose of the ratio is to show whether 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 charges on goodwill divided by total in-
come. All amounts are from the financial highlights.
Adjusted cost/income ratio (%)
Operating expenses divided by total income. All amounts are from the financial highlights.
Book value per share
Shareholders’ equity (that is, excluding equity-accounted additional tier 1 capital) divided by the number of shares
outstanding at the end of the period.
Loan impairment charges as % of net credit exposure
This ratio is calculated on the basis of loan impairment charges and loans and guarantees in core segments. The
numerator is the loan impairment charges of DKK 294 million (2022: DKK 1,568 million) from the financial
highlights annualised. The denominator is the sum of Loans at amortised cost of DKK 1,081.7 billion (2022:
DKK 1,026.1 billion), Loans at fair value of DKK 724.1 billion (2022: DKK 809.9 billion) and guarantees of
DKK 81.4 billion (2022: DKK 81.0 billion) at the beginning of the year, as disclosed in the column “Lending activ-
ities – core” in the “Breakdown of credit exposure” table in the notes to the financial statements. The ratio is
calculated for each business unit.
Allowance account as % of net credit exposure
This ratio is calculated on the basis of the allowance account and loans and guarantees in core segments. The
numerator is the allowance account of DKK 19.9 billion (2022: DKK 19.6 billion) at the end of the period, as
disclosed in the “Allowance account in core activities broken down by segment” table in the notes to the financial
statements. The denominator is the sum of Loans at amortised cost of DKK 900.8 billion (2022: DKK 1,081.7
billion), Loans at fair value of DKK 726.4 billion (2022: DKK 724.1 billion) and guarantees of DKK 81.9 billion
(2022: DKK 81.4 billion) at the end of the period, as disclosed in the column “Lending activities – core” in the
“Breakdown of credit exposure” table in the notes to the financial statements. The ratio is calculated for each
business unit.
Danske Bank / Interim report – first nine months 2023 31/75
Income statement – Danske Bank Group
Statement of comprehensive income – Danske Bank Group
Balance sheet – Danske Bank Group
Statement of capital – Danske Bank Group
Cash flow statement – Danske Bank Group
32
33
34
35
37
Notes
38
Note G1: Significant accounting policies and estimates
Note G2: Changes in accounting policies,
40
financial highlights and segment reporting
45
Note G3: Business segments
Note G4: Income
48
Note G5: Loan impairment charges and reconciliation of total allowance account 49
50
Note G6: Issued bonds, subordinated debt and additional tier 1 capital
51
Note G7: Assets held for sale and Liabilities in disposal groups held for sale
51
Note G8: Other assets and Other liabilities
52
Note G9: Foreign currency translation reserve
53
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
60
Note G13: Risk management notes
Breakdown of credit exposure
Credit exposure from core lending activities
Credit exposure from Non-core lending activities
Counterparty credit risk & credit exposure from trading and investment
securities
Bond portfolio
60
61
70
71
71
Danske Bank / Interim report – first nine months 2023 32/75
Income statement – Danske Bank Group
Note
(DKK millions)
G4
G4
G4
G4
G4
G4
G4
G4
Interest income calculated using the effective interest method**
Other interest income
Interest expense**
Net interest income from banking activities
Fee income
Fee expenses
Net fee income
Net trading income or loss
Insurance revenue
Insurance service expenses
Net return on investments backing insurance liabilities
Net finance income or expense from insurance
Other insurance related income
Net insurance result
Gain or loss on sale of disposal groups
Other income
Total other income
Total income
G8,G10
G5
Operating expenses
Provision for Estonia matter
Impairment charges on goodwill
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Tax
Q1-Q3
2023
43,553
13,812
33,420
23,945
11,737
3,236
8,501
4,954
4,198
3,551
9,193
-8,949
31
922
-590
3,399
2,809
41,131
21,390
-
-
19,741
294
19,447
3,950
Q1-Q3
2022*
20,376
13,562
15,353
18,584
13,147
3,663
9,484
15
3,599
2,540
-70,188
68,450
23
-656
836
3,579
4,415
31,842
22,444
14,000
1,627
-6,229
730
-6,959
2,177
Q3
2023
15,942
5,118
11,710
9,350
4,002
1,173
2,829
179
1,436
1,253
-3,833
3,835
49
233
103
1,163
1,266
13,858
7,061
-
-
6,797
322
6,475
1,156
Q3
2022*
Full year
2022*
7,865
4,317
6,023
6,158
4,095
1,133
2,962
727
1,015
683
-11,767
11,303
-6
-139
-
1,163
1,163
10,871
7,718
14,000
1,627
-12,475
366
-12,841
834
31,697
18,288
24,634
25,351
17,305
4,824
12,481
1,581
5,126
3,188
-60,302
58,208
21
-135
1,420
4,785
6,206
45,484
30,251
13,800
1,627
-195
1,502
-1,697
2,883
Net profit
15,497
-9,136
5,319
-13,674
-4,580
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)
15,497
-
-9,222
86
5,319
-
-13,674
-
-4,666
86
15,497
-9,136
5,319
-13,674
-4,580
18.0
18.0
-10.7
-10.7
6.2
6.2
-15.9
-15.9
-5.4
-5.4
* Comparative information has been restated, as described in note G2(a).
** Q3 2023 is affected by adjustments made for Q1 – Q2 2023 between Interest income calculated using the effective interest method and Interest expense.
Danske Bank / Interim report – first nine months 2023 33/75
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
Reclassified to the income statement on disposal of units outside Denmark***
Unrealised value adjustments of bonds at fair value (OCI)
Realised value adjustments of bonds at fair value (OCI)
Tax*
Items that are or may be reclassified subsequently to profit or loss
Total other comprehensive income
Total comprehensive income
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Total comprehensive income
* A positive amount is a tax expense, and a negative amount is a tax income.
** Comparative information has been restated, as described in note G2(a).
Q1-Q3
2023
Q1-Q3
2022**
Q3
2023
Q3
2022**
Full year
2022**
15,497
-9,136
5,319
-13,674
-4,580
-1,019
-259
-760
-2,794
1,313
806
105
19
-101
-449
-1,209
-615
-104
-511
-3,820
2,101
-
-2,028
-12
-752
-3,008
-3,519
14,287
-12,655
14,287
-
-12,741
86
14,287
-12,655
-905
-244
-661
1,738
-947
806
166
33
438
1,358
697
6,016
6,016
-
6,016
-189
-28
-162
-1,207
677
-
-705
-32
-268
-968
-179
-789
-4,481
2,463
-
-1,546
-14
-674
-999
-2,904
-1,160
-3,693
-14,835
-8,273
-14,835
-
-8,359
86
-14,835
-8,273
*** Reclassified to the income statement on disposal of units outside Denmark includes a reduction in the structural FX hedge. See note G9.
Danske Bank / Interim report – first nine months 2023 34/75
Balance sheet – Danske Bank Group
Note
(DKK millions)
30 September
2023
31 December 30 September
2022*
2022*
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
272,280
134,158
602,915
279,830
902,384
905,580
66,847
506,426
118,408
6,069
3,930
30,371
175,052
60,786
638,799
287,423
1,082,818
932,677
66,739
502,995
350
6,045
5,199
31,673
200,515
133,692
784,555
280,967
1,120,703
916,854
63,753
805,863
248
6,273
5,531
28,346
Total assets
3,829,199
3,790,556
4,347,301
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
Total equity
Total liabilities and equity
* Comparative information has been restated, as described in note G2(a).
172,183
529,337
1,202,929
726,799
224,102
67,410
487,225
57,750
3,009
64,613
86,147
39,053
138,777
554,321
1,262,293
723,923
192,682
66,725
488,891
-
2,103
68,978
93,235
38,350
184,281
716,472
1,314,036
704,187
206,469
64,521
769,757
-
2,056
81,836
107,706
40,008
3,660,557
3,630,278
4,191,329
8,622
-3,305
-1,402
164,726
168,642
8,622
-2,630
-1,526
155,812
160,278
8,622
-2,331
-2,006
151,687
155,972
3,829,199
3,790,556
4,347,301
G7
G8
G6
G6
G7
G8
G6
G6
G9
Danske Bank / Interim report – first nine months 2023 35/75
Statement of capital – Danske Bank Group
Changes in equity
Shareholders of Danske Bank A/S (the Parent Company)
(DKK millions)
Total equity as at 1 January 2023
Effect of changes in accounting policy*
Restated total equity as at 1 January 2023
Net profit
Other comprehensive income
Remeasurement of defined benefit pension plans
Translation of units outside Denmark
Hedging of units outside Denmark
Reclassification on disposal of units outside Den-
mark
Unrealised value adjustments
Realised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Dividends paid**
Acquisition of own shares and additional tier 1
capital
Sale of own shares and additional tier 1 capital
Share
capital
8,622
-
8,622
-
-
-
-
-
-
-
-
-
-
-
-
-
Total equity as at 1 January 2022
Effect of changes in accounting policy*
Restated total equity as at 1 January 2022
8,622
-
8,622
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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Foreign
currency
translation
reserve
Reserve for
bonds at fair
value (OCI)
Retained
earnings
Proposed
dividends
Additional
tier 1
Total
capital
Total
-2,630
-
-2,630
-
-
-2,794
1,313
806
-
-
-
-675
-675
-
-
-
-1,526
-
-1,526
-
155,852
-40
155,812
15,497
- 160,318
-40
-
- 160,278
15,497
-
-
-
-
-
105
19
-
124
124
-
-
-
-1,019
-
-
-
-
-
361
-659
14,838
-6,011
-17,349
17,437
-
-
-
-
-
-
-
-
-
-
-
-
-1,019
-2,794
1,313
806
105
19
361
-1,209
14,287
-6,011
-17,349
17,437
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
160,318
-40
160,278
15,497
-1,019
-2,794
1,313
806
105
19
361
-1,209
14,287
-6,011
-17,349
17,437
168,642
161,439
1,724 171,207
5,497
176,704
-612
-
-612
-
-
-3,820
2,101
-
-
-
34
-
34
-
-
-
-
-2,028
-12
-
-1,719
-2,040
-707
160,732
-9,222
-615
-
-
-
-
856
241
-1,719
-2,040
-8,982
-
-707
1,724 170,500
-
5,497
-707
175,997
-
-
-
-
-
-
-
-
-
-9,222
86
-9,136
-615
-3,820
2,101
-2,028
-12
856
-3,519
-
-
-
-
-
-
-
-615
-3,820
2,101
-2,028
-12
856
-3,519
-12,741
86
-12,655
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
-
-1,724
-
-
-1,705
-
-164
-
-5,419
-164
-1,705
-5,419
-12,992
12,933
-23
-
-
-
-12,992
12,933
-23
-
-
-
-
-12,992
12,933
-23
155,972
Total equity as at 30 September 2023
8,622
-3,305
-1,402
164,726
- 168,642
Total equity as at 30 September 2022
8,622
-2,331
-2,006
151,687
- 155,972
* See note G2(a) for details on changes in accounting policy.
** Dividends paid is net of dividends on own shares.
Dividend
As announced in Interim report – first half 2023, the Board of Directors approved an interim dividend of DKK 7 per share, which was paid out in July
2023.
Statement of capital – Danske Bank Group
Danske Bank / Interim report – first nine months 2023 36/75
(DKK)
Share capital
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
* Comparative information has been restated, as described in note G2(a).
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
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
2023
31 December
2022*
8,621,846,210
862,184,621
858,851,911
858,652,772
859,913,271
8,621,846,210
862,184,621
858,392,752
858,331,842
859,511,104
30 September
2023
31 December
2022*
168,642
216
-28
168,829
168,829
-689
1,859
-957
-434
-3,263
-5,594
-1,120
291
-441
-982
-2,912
154,586
14,909
169,496
20,846
190,342
160,318
217
-28
160,506
160,506
-222
3,063
-1,338
-567
-
-5,529
-500
242
-352
-1,424
-4,683
149,197
15,300
164,497
20,765
185,261
820,923
838,193
18.8%
20.6%
23.2%
17.8%
19.6%
22.1%
* Comparative information has not been restated. See note G2(a) for more detail.
Total capital and the total risk exposure amount are calculated in accordance with the rules applicable under the Capital Requirements Regulation (CRR),
taking transitional rules into account as stipulated by the Danish Financial Supervisory Authority.
In terms of the transitional arrangements for the impact of IFRS 9 on regulatory capital, the Group applies the so-called dynamic approach in accordance
with the CRR.
The Internal Capital Adequacy Assessment Report provides more details about the Group’s solvency need.
The report is available at danskebank.com/investorrelations/reports.
Cash flow statement – Danske Bank Group
(DKK millions)
Cash flow from operations
Profit before tax
Tax paid
Adjustment for non-cash operating items
Cash flow from operations before changes in operating capital
Changes in operating capital
Amounts due to/from credit institutions and central banks
Trading portfolio
Acquisition/sale of own shares and additional tier 1 capital
Investment securities
Loans at amortised cost and fair value
Deposits
Issued bonds at amortised cost and fair value
Assets/liabilities under insurance contracts
Other assets/liabilities
Cash flow from operations
Cash flow from investing activities
Sale of businesses
Acquisition of intangible assets
Acquisition of tangible assets
Sale of tangible assets
Cash flow from investing activities
Cash flow from financing activities
Issue of 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
* Comparative information has been restated, as described in note G2(a).
Danske Bank / Interim report – first nine months 2023 37/75
Q1-Q3
2023
19,447
-1,908
8,592
26,131
27,632
10,899
88
7,593
89,154
-27,446
60,316
-5,129
-10,567
Q1-Q3
2022*
Full Year
2022*
-6,959
-3,779
19,736
-1,697
-3,025
21,459
8,998
16,737
8,965
66,384
-59
-26
13,616
22,006
-152,097
-5,354
14,871
-35,969
49,989
-249
-6,481
34,905
-29,737
-150,465
16,156
-4,243
178,671
-22,696
-109,357
45
-391
-721
5
-1,062
16,101
-23,377
-6,011
-
-
-450
-13,737
232,531
954
163,872
1,314
-637
-233
3
447
20,052
-20,438
-1,705
-5,419
-164
-464
2,032
-560
-826
4
650
20,052
-30,590
-1,705
-5,419
-164
-611
-8,137
-18,437
362,997
-2,280
-30,386
362,997
-3,322
-127,144
397,357
330,331
232,531
6,275
266,005
125,077
6,231
194,285
129,815
6,630
168,422
57,479
397,357
330,331
232,531
Danske Bank / Interim report – first nine months 2023 38/75
Notes – Danske Bank Group
G1. Significant accounting policies and estimates
(a) General
The report has been prepared in accordance with IAS 34, Interim Financial Reporting, as adopted by the EU, and additional Dan ish disclosure require-
ments for listed financial companies. The report is condensed and should be read in conjunction with the Grou p’s Annual Report 2022.
On 1 January 2023, the Group implemented a new standard, IFRS 17, and the amendments to IAS 1, IAS 8 and IAS 12. Further info rmation on the
changes to accounting policies and presentation in 2023 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 2022. Annual Report 2022 provides a full description of the significa nt accounting policies.
Financial statement figures are stated in Danish kroner and whole millions, unless otherwise stated. As a result, rounding di screpancies may occur
because totals have been rounded off and the underlying decimals are not presented to financial statement users. The interim report for the first nine
months of 2023 has not been audited or reviewed.
(b) Significant accounting estimates and judgements
The preparation of financial information requires, in some cases, the use of judgements and estimates by management. This inc ludes 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 2022) 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 2022). An overview of the classification and measurement basis for financ ial instruments can be
found in note G1(c) of the Annual Report 2022.
The determination of the carrying amounts of some assets and liabilities requires the estimation of the effects of uncertain future events on those assets
and liabilities. The estimates are based on premises that management finds reasonable, but which are inherently uncertain and unpredictable. The prem-
ises may be incomplete, unexpected future events or situations may occur, and other parties may arrive at other estimated values. In view of the inherent
uncertainties and the high level of subjectivity and judgement involved in the recognition and measurement of the items listed below, it is possible that
the outcomes in the next reporting period could differ from those on which management’s estimates are based.
Measurement of expected credit losses on loans, financial guarantees and loan commitments, and bonds measured at amortised co st 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 in itial 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), exposur e at default (EAD) and loss given
default (LGD) and incorporate forward-looking information. The estimation of expected credit losses involves forecasting future economic conditions over
a number of years. Such forecasts are subject to management judgement and those judgements may be sources of measurement uncertainty that have
significant risk of resulting in a material adjustment to a carrying amount in future periods. The incorporation of forward-looking elements reflects the
expectations of the Group’s senior management and involves the creation of scenarios (base case, upside and downside), including an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on
the expected credit losses. Note G13 provides information on the scenarios as at 30 September 2023.
Management applies judgement when determining the need for post-model adjustments. As at 30 September 2023, the post-model adjustments
amounted to DKK 6.7 billion (31 December 2022: DKK 6.6 billion) which are predominantly linked to macroeconomic uncertain ties related to inflation
and increasing interest rates, and other sector-specific factors that ensure prudent coverage of expected credit losses for the Group’s credit exposures.
On the types of risks covered by post-model adjustments, more information can be found in note G13.
Note G15 of the Annual Report 2022 and the section on credit risk in note G13 in the Interim report – first nine months 2023 provide more details on
expected credit losses. As at 30 September 2023, financial assets covered by the expected credit loss model accounted for a bout 53.3% of total assets
(31 December 2022: 55.7%).
Danske Bank / Interim report – first nine months 2023 39/75
Notes – Danske Bank Group
G1. Significant accounting policies and estimates continued
(b) Significant accounting estimates continued
Fair value measurement of financial instruments
At the end of September 2023, 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 signific ant 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 2023, the adjustments totalled DKK 0.1 billion (31 December 2022: DKK 0.2 billion), includ ing the adjustment for credit risk on
derivatives that are credit impaired. Note G12 of this report and note G33(a) of the Annual Report 2022 provides more details on the fair value meas-
urement of financial instruments.
The Group uses derivatives to hedge the fixed interest rate on some financial assets and liabilities, thus converting the fix ed interest rates on the financial
instruments to variable interest rates by the use of swaps. The Group continues to monitor the ongoing Interest Rate Benchmark Reform, which focuses
on replacing existing benchmark interbank offered rates (IBORs) with alternative risk-free rates, to ensure continued compliance, including the potential
need for cessation / transition work in the future. Following IASB’s project ‘Interest Rate Benchmark Reform’ for the assessment of effectiveness of such
hedges, it is assumed that the interest rate benchmark is not altered as a result of the reform. For further information, see note G12(d) of the Annual
Report 2022.
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 2023, goodwill amounted to DKK 4.4 billion (31 December 2022: DKK 4.4 bil lion).
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. No indications of impairment have been noted at the end of September 20 23.
Goodwill mainly consists of DKK 2.1 billion (31 December 2022: DKK 2.1 billion) in Markets, DKK 1.8 billion (31 December 2022 : DKK 1.8 billion) in
Asset Management and DKK 0.5 billion (31 December 2022: 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 2022.
Note G19 of the Annual Report 2022 provides more information about impairment testing and sensitivity to changes in assumptio ns.
Measurement of liabilities under insurance contracts
Liabilities under insurance contracts are measured using either the General Measurement Model (GMM), Variable Fee Approach (V FA) or Premium
Allocation Approach (PAA). GMM and VFA both comprise fulfilment cash flows, which are estimates of the present value of future cash flows for insur-
ance contracts, adjusted for time value of money and financial risks related to future cash flows, and a risk adjustment for non-financial risk. Such esti-
mates include actuarial computations, that rely on a number of variables, including mortality and disability rates, as well as discount rates. Note G2
provides more information on the measurement of insurance liabilities.
Danske Bank / Interim report – first nine months 2023 40/75
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting
(a) Changes to accounting policies and presentation during the year
On 1 January 2023, the Group implemented IFRS 17, and the amendments to IAS 1, IAS 8 and IAS 12. In addition, the Group has changed the presentation
of the Income statement to include material line items as required by IFRS 17. At the same time, sub-totals for Net fee income, Net insurance result,
Total other income and Total income have been included in the Income statement.
The sections below explain in further details the changes to accounting policies implemented.
IFRS 17, Insurance contracts
On 1 January 2023, the Group implemented IFRS 17, Insurance Contracts. Under IFRS 17, insurance contracts are contracts under which the Group
accepts significant insurance risk from a policyholder, by agreeing to compensate the policyholder if a specified uncertain future event adversely affects
the policyholder. Insurance contracts with direct participation features are those which, at inception, (i) the contractual t erms specify that the policy-
holder participates in a share of a clearly identified pool of underlying items, (ii) the entity expects to pay to the policyholder an amount equal to a sub-
stantial share of the fair value returns on the underlying items, and (iii) the entity expects a substantial proportion of any change in the amounts to be paid
to the policyholder to vary with the change in fair value of the underlying items.
In Danske Bank Group, insurance contracts are held by the wholly owned subsidiary Danica Pension (Danica).
Insurance contracts are divided into portfolios and groups. Each portfolio of insurance contracts are contracts that are subj ect to similar risks and are
managed together. The Group has four portfolios of insurance contracts, based on an assessment of similar risks and whether they are managed together:
•
•
•
•
an average-rate portfolio
a unit-linked portfolio
a portfolio of legacy life insurance product in run-off
a portfolio containing health and accident insurance contracts.
Each portfolio of contracts is divided into (i) groups of contracts that are onerous at initial recognition (ii) groups of co ntracts that at initial recognition,
have no significant possibility of becoming onerous subsequently, and (iii) groups of remaining contracts in the portfolio. Groups of insurance contracts
issued are initially recognised from the earliest of the (i) the beginning of the coverage period of the group, (ii) the date when the first payment from a
policyholder becomes due, or (iii) for a group of onerous contracts, when the group becomes onerous. Furthermore, each group is divided into annual
cohorts so that each group only includes contracts issued no more than one year apart.
The Group measures insurance contracts using the General Measurement Model (GMM, or Building Block approach, BBA), Variable Fee Approach (VFA)
or Premium Allocation Approach (PAA). Groups of insurance contracts under GMM or VFA are initially measured as the total of fulfilment cash flows
(which comprise estimated future cash flows, an adjustment for time value of money and financial risks related to future cash flows, and a risk adjustment
for non-financial risk) and contractual service margin (CSM; unearned profit that will be recognised as the Group provides insurance contract services).
An insurance contract is onerous at the date of initial recognition if the fulfilment cash flows, any previously recognised i nsurance acquisition cash flows
and any cash flows arising from the contract at the date of initial recognition are in total a net outflow. The loss from onerous insurance contracts is
recognised immediately in profit or loss, and no CSM is recognised on the balance sheet on initial recognition.
At each reporting date, the group of insurance contracts is subsequently measured as the sum of the liability for remaining c overage (comprising fulfil-
ment cash flows relating to future service and CSM) and liability for incurred claims (comprising fulfilment cash flows relating to past service).
VFA is applied to the majority of insurance contracts, since they meet the definition of insurance contracts with direct part icipation features. Legacy life
insurance products in run-off are measured using BBA.
Health and accident insurance contracts are measured under PAA, which means the liability for remaining coverage is measured on initial recognition
at premiums received less any acquisition cash flows paid and any amounts arising from the derecognition of insurance acquisition cash flows asset. The
Group will apply the annual cohort exemption from the EU to the average-rate portfolio.
IFRS 17 has not changed the method of discounting cash flows for insurance contracts, and the Group will continue to apply th e European Insurance and
Occupational Pension Authority (EIOPA) yield curve including a volatility adjustment.
The risk adjustment for non-financial risk under IFRS 17 corresponds to the risk margin under IFRS 4. However, changes in the risk adjustment are
recognised either in the Income statement or in the CSM, whereas changes in the risk margin under IFRS 4 were recognised only in the Income statement.
Danske Bank / Interim report – first nine months 2023 41/75
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
The key impacts of the implementation of IFRS 17 are:
•
•
•
•
•
•
•
Life insurance products and Health and Accident products have been disaggregated, as they are subject to different risks and therefore cannot
be managed together under IFRS 17. This has resulted in a decrease of DKK 1.4 billion in the Group’s equity as at 1 January 2022
Premiums are no longer recognised in profit or loss at their due dates. Instead, the CSM is recognised in insurance revenue a s services are
provided over the expected coverage period of the group of insurance contracts.
Benefits are no longer recognised in profit or loss when paid. Instead, insurance service expenses are recognised when incurr ed, comprising
incurred claims and other incurred insurance expenses.
Changes in insurance obligations during the year due to additional provisions for benefit guarantees and the tax on pension r eturns are no
longer under Net trading income or loss.
The return on assets earmarked for insurance contracts is no longer carried under Net interest income and Net trading income or loss. This
is now presented as Net return on investments backing insurance liabilities.
The Group has simplified its reporting of Danica, and now reports the majority of Danica’s assets and liabilities under Assets under insurance
contracts and Liabilities under insurance contracts respectively in the Balance sheet. Previously, an allocation of Danica’s assets and liabilities
(equating to Danica’s equity) were consolidated on a line-by-line basis in the Balance sheet.
The presentation of the Income statement has been changed from 2023: the line items Net premiums and Net insurance benefits are removed,
and new lines in relation to insurance are added: Insurance revenue, Insurance service expenses, Net return on investments backing insurance
liabilities, Net finance income or expense from insurance and Other insurance related income. The Income statement has thus been restated
for 2022.
Changes in accounting policies as a result of IFRS 17 have been applied using the fair value approach, since the full retrosp ective approach is impracti-
cable to apply due to relevant data not being available or high resource consumption.
In addition, the following changes have been made to accounting policies as a result of IFRS 17 implementation:
• When, and only when, the Group reacquires its own equity instruments (i.e. own shares) to be included in investment funds tha t provides
investors with benefits determined by units in the fund, and for which financial liabilities are recognised for the amounts to be paid to those
investors, IAS 32 has been amended with an optional election not to deduct these shares from equity, and account for them as financial assets
held at fair value through profit or loss. The Group has applied this election to its own shares in Pooled schemes and Unit-linked investment
contracts which meet the IAS 32 election criteria. The same election applies to the Group’s own shares that are included as underlying items
of direct participation contracts (Assets under insurance contracts).
• When, and only when the Group repurchases its own financial liabilities to be included in investment funds that provides investors with benefits
determined by units in the fund, and for which financial liabilities are recognised for the amounts to be paid to those investors, or includes the
own financial liabilities as underlying items of direct participating contracts, IFRS 9 has been amended with an optional election to not derec-
ognise the financial liabilities, and to account for the repurchased instruments as financial assets held at fair value through profit or loss. The
Group has applied this election to own bonds in Assets under insurance contracts which meet the IFRS 9 election criteria.
The impact of the changes in IAS 32 and IFRS 9 accounting policies resulted in an increase of DKK 0.7 billion in the Group’s equity and the Group’s assets
as at 1 January 2022.
At the transition date of 1 January 2022, the Group:
•
•
•
•
•
•
Identified, recognised and measured each group of insurance contracts and reinsurance contracts according to IFRS 17
Derecognised previously reported balances that would not have existed if IFRS 17 had always been applied
Reclassified Danica’s assets and liabilities to Assets under insurance contracts and Liabilities under insurance contracts respectively where
relevant
Recognised own shares and own bonds as assets that were underlying items of direct participating contracts at fair value
Recognised own shares that were reacquired to be held in investment funds on behalf of customers
Recognised the resulting net differences in equity.
The DKK 1.4 billion decrease in the Group’s equity from IFRS 17 implementation and DKK 0.7 billion increase from the IAS 32 a nd IFRS 9 accounting
policy changes result in a net decrease in equity of DKK 0.7 billion as at 1 January 2022, which is presented in the Statement of changes in equity. The
impact of these changes increases the Group’s 2022 result by DKK 0.5 billion. The impact on the Group’s equity as at 31 Decem ber 2022 is a net
decrease of DKK 40 million, as result of the increase in the Group’s 2022 result and the direct impact on equity from the change in treatment of own
shares.
A reconciliation of balances between 31 December 2021 and 1 January 2022 is presented below, showing the impact of IFRS 17 (including the reclassifi-
cation of Danica’s assets and liabilities), the change in treatment of the Group’s own shares, and the change in treatment of the Group’s own bonds.
Ratios for regulatory requirements in 2022 have not been restated as a result of the changes described above. The overall impact on equity at 31
December 2022 of DKK 40 million is immaterial, and therefore the Group’s total capital and capital ratios for 2022 will not be revised nor resubmitted
to regulators, and remains as published in the Annual Report 2022.
Danske Bank / Interim report – first nine months 2023 42/75
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
Amendment to IAS 1, Presentation of financial statements
The amendment to IAS 1 requires disclosure of material accounting policy information, rather than significant accounting poli cies. Accounting policy
information is considered to be material if users of the financial statements need it to understand other material information in the financial statements.
If immaterial accounting policy information is disclosed, it should not obscure material accounting policy information.
The amendment has no impact on the financial statements.
Amendment to IAS 8, Accounting policies, changes in accounting estimates and errors
The amendments introduce a definition of accounting estimates – monetary amounts in financial statements that are subject to measurement uncer-
tainty – and clarifies that a change in accounting estimate that results from new information or new developments is not the correction of an error.
Similarly, the effects of a change in an input or a measurement technique used to develop an accounting estimate are changes in accounting estimates
if they do not result from the correction of prior period errors.
The amendments have no impact on the financial statements.
Amendment to IAS 12, Income taxes
The first amendment to IAS 12 clarifies how entities should account for deferred tax on assets and liabilities arising from a single transaction such as
leases and decommissioning obligations.
The main change is that the initial recognition exemption in IAS 12 does not apply to transactions in which equal amounts of deductible and taxable
temporary differences arise on initial recognition. The amendment has no impact on the financial statements.
The second amendment introduces an exception to the requirement of IAS 12 that an entity does not recognise and does not disc lose information about
deferred tax assets and liabilities related to the OECD Pillar Two income taxes. The amendment is not expected to have a material impact on the financial
statements.
Danske Bank / Interim report – first nine months 2023 43/75
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
The table below shows a reconciliation of the Group’s balances between 31 December 2021 and 1 January 2022, showing the impact of IFRS 17 (in-
cluding the reclassification of Danica’s assets and liabilities), the change in treatment of the Group’s own shares, and the change in treatment of the
Group’s own bonds.
Effect of changes in accounting policy as at 1 January 2022
(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
31 December
2021
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
IFRS 17
-
-7
-164
-22,835
-
-
-
29,731
-
-2,628
-
-4,097
Remeasurements
IAS 32 –
own shares
IFRS 9 –
own bonds
1 January
2022
-
-
-
-
-
-
151
507
-
-
-
-
293,386
-
71,149
-
509,426
-
-
280,942
- 1,027,442
- 1,024,461
76,805
-
622,634
44,590
28,800
-
6,191
-
4,510
-
35,336
-
Total assets
3,935,834
-
658
44,590 3,981,082
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
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
-
-
-
-
-
-
2,247
-
-460
-422
-
-
3,759,130
1,365
8,622
-612
34
161,439
1,724
171,207
5,497
-
-
-
-1,365
-
-1,365
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
658
-
658
-
176,704
-1,365
658
172,976
-
374,959
-
- 1,292,030
839,335
223,854
76,982
590,983
29,577
1,404
56,010
107,654
39,321
44,426
-
-
-
-
-
164
-
-
44,590 3,805,085
-
-
-
-
-
-
-
-
8,622
-612
34
160,732
1,724
170,500
5,497
175,997
3,935,834
-
658
44,590 3,981,082
Danske Bank / Interim report – first nine months 2023 44/75
Notes – Danske Bank Group
G2. Changes in accounting policies, financial highlights and segment reporting continued
b) Changes in financial highlights and segment reporting
On 1 January 2023, the Group implemented IFRS 17, Insurance contracts, resulting in the restatement of 2022. See note G2(a) for details of the changes
in accounting policy. At the same time, the Group has simplified its reporting of Danica Pension, by stopping the allocation of Danica’s equity to Group
Treasury (within Group Functions). The table below shows the restated amounts in the financial highlights and segment reporting for first nine months of
2022:
Changes in financial highlights and segment reporting – first nine months of 2022 restated
(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,
of which impairment charges, other intangible assets
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
Loans, excluding reverse transactions
Other assets (including Non-core)
Total assets
Deposits, excluding repo deposits
Other liabilities (including Non-core)
Allocated capital
Total liabilities and equity
Profit before tax as % p,a, of allocated capital (avg,)
Cost/income ratio (%)
Adjusted cost/income ratio (%)
Full-time-equivalent staff, end of period
Financial
Highlights
first nine
months 2022
17,746
9,536
679
-323
1,203
Implemen-
tation of
IFRS 17
-80
-
332
81
-
Elimination
of own
shares
-
-
-132
-
-
Elimination
of own
bonds
-
-
-
-
-
Adjusted
Financial
Highlights
17,666
9,536
879
-241
1,203
28,840
19,570
728
24
14,000
1,627
-6,357
794
-7,151
-10
333
-
-
-
-
-
333
-
333
-
-132
-
-
-
-
-
-132
-
-132
-
-
-
-
-
-
-
-
-
-
-
29,042
19,570
728
24
14,000
1,627
-6,155
794
-6,949
-10
-7,161
333
-132
-
-6,959
1,824,278
2,487,899
-
-
-
711
- 1,824,278
34,413 2,523,023
4,312,177
-
711
34,413 4,347,301
1,187,316
2,968,472
156,389
-
1,128
-1,128
-
-
711
- 1,187,316
34,413 3,004,013
155,972
-
4,312,177
-
711
34,413 4,347,301
-5.6
122.0
-
21,528
-
-
-
-
-
-
-
-
-
-
-
-
-5.6
121.2
67.4
21,528
Danske Bank / Interim report – first nine months 2023 45/75
Notes – Danske Bank Group
G3. Business segments
a) Business model and business segmentation
The Group’s commercial activities are organised in five reporting business units:
•
•
•
•
•
Personal Customers, which serves personal customers across all markets
Business Customers, which serves small and medium-sized business customers across all markets, and includes the Group’s Asset Finance operations
Large Corporates & Institutions, which serves large corporates and institutional customers across all Nordic markets
Danica Pension, which specialises in pension schemes, life insurance policies and health insurance policies in Denmark
Northern Ireland, which serves retail and commercial customers through a network of branches and business centres in Northern Ireland alongside
digital channels.
Besides the five commercial business units, the Group’s reportable segments under IFRS 8 include Non-core and Group Functions.
Business segments
first nine months 2023
(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,
Profit before loan impair-
ment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Personal
Customers
10,686
3,020
256
Business
Customers
8,605
1,281
363
Large Cor-
porates &
Institutions
5,142
4,057
2,552
Danica
Pension
-
-
-
Northern
Ireland
1,888
248
198
Non-
core
-
-
-
Group
Functions Eliminations
-131
140
-19
-324
-186
-404
Financial
highlights
25,866
8,560
2,946
Reclas-
sifica-
tion
-1,921
-58
2,008
IFRS
financial-
statements
23,945
8,501
4,954
-
-627
-
796
-
12
13,335
6,835
11,045
3,708
11,763
5,273
922
-
922
-
-
13
2,346
995
127
191
368
-
-
6,500
333
6,167
-
7,337
246
7,091
-
6,491
-163
6,653
-
922
-
922
-
1,351
-119
1,469
-
-
-
-
-
-
-
-
-
-55
-
2,246
1,332
4,075
-
-2,116
-2,125
-2,064
922
324
38,618
18,822
-
2,485
2,513
2,568
922
2,809
41,131
21,390
54
-
741
-741
-
-2,743
-4
-2,739
-
-61
-
-61
-
19,796
294
19,502
-55
-55
-
-55
55
19,741
294
19,447
-
Profit before tax
6,167
7,091
6,653
922
1,469
-55
-2,739
-61
19,447
-
19,447
Loans, excluding reverse
transactions
Other assets
(including Non-core)
760,066
630,455
296,855
-
58,608
-
25,703
-28,025 1,743,662
1,541 1,745,203
347,099
189,239 3,807,369
551,834
65,479 1,892 4,507,885
-7,385,261 2,085,537
-1,541 2,083,996
Total assets
1,107,165
819,693 4,104,224 551,834 124,087 1,892 4,533,589
-7,413,286 3,829,199
- 3,829,199
Deposits, excluding repo
deposits
Other liabilities (including
Non-core)
Allocated capital
408,350
264,033
362,049
-
97,696
-
1,253
-9,934 1,123,448
2,319 1,125,767
669,903
28,912
516,339 3,701,948
40,227
39,321
551,834
-
20,817 2,762 4,476,858
54,607
5,574
-
-7,403,352 2,537,110
168,642
-
-2,319 2,534,791
168,642
-
Total liabilities and equity
1,107,165
819,693 4,104,224 551,834 124,087 2,762 4,532,719
-7,413,286 3,829,199
- 3,829,199
Profit before tax as % p,a, of
allocated capital (avg,)
Cost/income ratio (%)
Full-time-equivalent staff,
end of period
27.9
51.3
24.0
33.6
22.0
44.8
6.3
-
30.3
42.4
-
-
-10.5
-
4,179
1,652
2,098
905
1,261
12
9,989
-
-
-
15.8
48.7
20,097
-
-
-
15.8
52.0
20,097
* Net income from insurance business in the financial highlights is equivalent to Net insurance result in the IFRS financial statements.
**Other income in the financial highlights is equivalent to Total other income in the IFRS financial statements.
Danske Bank / Interim report – first nine months 2023 46/75
Notes – Danske Bank Group
G3. Business segments continued
Business segments
First nine months 2022
(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,
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
Business
Custom-
ers
6,476
1,353
372
Large
Corporates
& Institu-
tions
4,015
4,296
622
Personal
Customers
6,039
3,662
343
Danica
Pension*
-
-
-
Northern
Ireland
1,332
248
-611
Non-
core
-
-
-
Group
Functions*
-128
-39
151
Elimina-
tions*
-67
15
1
Financial
highlights*
17,666
9,536
879
Reclas-
sifica-
tion*
918
-52
-863
IFRS
financial
state-
ments*
18,584
9,484
15
-
547
10,592
7,334
-
632
8,833
3,919
-
2
8,936
5,090
-241
-
-241
-
-
18
986
943
121
168
379
-
-
-
-
-
-
-
-
-
3,258
334
2,924
-
4,914
-90
5,004
-
3,846
-155
4,001
-
-
-
-
1,627
-1,869
-
-1,869
-
-
-
-
1
-
-
-
-
-
-
-
1,990
1,974
4,327
59
24
14,000
-
-16,353
669
-
-10
-17,022
-
-10
-17,022
-
-1,986
-2,037
-2,043
-241
1,203
29,042
19,570
-415
3,212
2,800
2,874
-656
4,415
31,842
22,444
-
-
-
-
6
-
6
-
6
728
-728
-
24
14,000
-24
-
-
14,000
1,627
-
1,627
-6,155
794
-6,949
-10
-74
-63
-10
10
-6,229
730
-6,959
-
-6,959
-
-6,959
-
-
-
-
43
36
7
-
7
Profit before tax
2,924
5,004
4,001
-1,869
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
-7,700,467 2,523,023
-1,196 2,521,827
Total assets
1,117,831 817,708 4,633,743 840,782 113,783 1,786 4,551,319
-7,729,652 4,347,301
- 4,347,301
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 4,193,469 820,963
19,819
41,023
39,485
12,338 2,446 4,529,939
18,680
5,213
-
-7,717,267 3,004,013
155,972
711
-2,105 3,001,909
- 155,972
Total liabilities and equity
1,117,831 817,708 4,633,743 840,782 113,783 2,446 4,550,660
-7,729,652 4,347,301
- 4,347,301
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
-12.0
-
0.2
95.6
-
-
-72.1
-
4,749
1,689
2,109
872
1,271
36
10,802
-
-
-
-5.6
121.2
21,528
-
-
-
-5.6
119.6
21,528
* Comparative information has been restated, as described in note G2(a) and G2(b).
** Net income from insurance business in the financial highlights is equivalent to Net insurance result in the IFRS financial statements.
*** Other income in the financial statements is equivalent to Total other income in the IFRS financial statements.
Danske Bank / Interim report – first nine months 2023 47/75
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 highligh ts 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 85 in Annual Report 2022. 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 2023
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business*
Other income**
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax, core
Profit before tax, Non-core
Profit before tax
IFRS financial
statements
23,945
8,501
4,954
922
2,809
41,131
21,390
19,741
294
19,447
-
19,447
Operating
leases
-
-
-
-
-2,537
-2,537
-2,537
-
-
-
-
-
Markets,
Investment
Banking &
Securities and
Group
Treasury
1,909
58
-2,019
-
52
-
-
-
-
-
-
-
Danica
Pension
-
-
-
-
-
Non-core
12
-
12
-
-
-
-
-
-
-
-
-
23
-31
55
-
55
-55
-
Total
reclassifica-
tion
1,921
58
-2,008
-
-2,485
-2,513
-2,568
55
-
55
-55
-
Financial
highlights
25,866
8,560
2,946
922
324
38,618
18,822
19,796
294
19,502
-55
19,447
* Net income from insurance business in the financial highlights is equivalent to Net insurance result in the IFRS financial statements.
** Other income in the financial highlights is equivalent to Total other income in the IFRS financial statements.
Reclassification first nine months 2022
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business**
Other income***
IFRS financial
statements*
18,584
9,484
15
-656
4,415
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
31,842
22,444
14,000
1,627
-6,229
730
-6,959
-
-6,959
Operating
leases
-
-
-
-
-2,779
-2,779
-2,779
-
-
-
-
-
-
-
Markets,
Investment
Banking &
Securities and
Group
Treasury
-923
57
875
-
-8
-
-
-
-
-
-
-
-
-
Danica
Pension*
-
-
-
415
-415
Non-core
5
-5
-12
-
-9
Total reclassi-
fication*
-918
52
863
415
-3,212
Financial
highlights*
17,666
9,536
879
-241
1,203
-
-
-
-
-
-
-
-
-
-21
-95
-
-
74
63
10
-10
-
-2,800
-2,874
-
-
74
63
10
-10
-
29,042
19,570
14,000
1,627
-6,155
794
-6,949
-10
-6,959
* Comparative information has been restated, as described in note G2(a) and G2(b).
** Net income from insurance business in the financial highlights is equivalent to Net insurance result in the IFRS financial statements.
*** Other income in the financial highlights is equivalent to Total other income in the IFRS financial statements.
Danske Bank / Interim report – first nine months 2023 48/75
Notes – Danske Bank Group
G4. Income
(a) Interest income and interest expense
Negative interest income during first nine months of 2023 amounted to DKK 2 million (30 September 2022: DKK 1,289 million). N egative interest ex-
penses amounted to DKK 5 million (30 September 2022: DKK 2,742 million). In the income statement, negative interest income is recognised as interest
expenses and negative interest expenses are recognised as interest income.
(b) Fee income
Note G6 of the Annual Report 2022 provides additional information on the Group’s accounting policy for fee income, including the description by fee type.
Fee income Q3 2023
(DKK millions)
Investment
Activity-driven fees
Lending and Guarantees
Capital markets
Total
Fee income Q3 2022
(DKK millions)
Investment*
Money transfers, account fee, cash management and other fees
Lending and Guarantees
Capital markets
Total
* Comparative information has been restated, as described in note G2(a) and G2(b).
(c) Gain or loss on sale of disposal groups
Financial
highlights - net
fee income Reclassifications
IFRS -
net fee income
Fee expense
IFRS - gross fee
income
3,136
2,911
1,588
925
8,560
517
-174
414
-815
-58
3,653
2,737
2,001
110
8,501
2,385
748
103
-
3,236
6,037
3,485
2,104
110
11,737
Financial
highlights -
net fee income Reclassifications
IFRS -
net fee income
Fee expense
IFRS - gross fee
income
3,715
2,869
2,065
886
9,536
427
-181
399
-697
-52
4,143
2,688
2,464
189
9,484
2,593
985
86
-
3,663
6,736
3,673
2,549
189
13,147
Gain or loss on sale of disposal groups for the nine months ending 30 September 2023 includes a loss of DKK 0.7 billion in relation to the prudent
valuation and expected costs directly attributable to the sale of the personal customer business in Norway, as announced on 19 July 2023, and a gain of
DKK 0.1 billion on the sale of Danske IT. See note G7 for more detail. During the first nine months of 2022, Gain or loss on sale of disposal groups included
a gain of DKK 421 million on the sale of business activities in Luxembourg and a gain of DKK 415 million on the sale of Danica Pensjon forsikring AS
(Danica Pension business segment in Norway).
(d) Other income
Other income amounted to DKK 3,399 million for the nine months ending 30 September 2023 (30 September 2022: DKK 3,579 million). Other income
includes income from lease assets, investment property and real estate brokerage, and income from holdings in associates.
Danske Bank / Interim report – first nine months 2023 49/75
Notes – Danske Bank Group
G5. Loan impairment charges and reconciliation of total allowance account
Loan impairment charges include impairment charges for expected credit losses on loans, lease receivables, bonds at amortised cost and fair value
through other comprehensive income, certain loan commitments and financial guarantee contracts as well as fair value adjustments of the credit risk on
loans measured at fair value.
Loan impairment charges
(DKK millions)
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs charged directly to income statement
Received on claims previously written off
Interest income, effective interest method
Total
Reconciliation of total allowance account
(DKK millions)
ECL allowance account as at 1 January 2022
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
ECL allowance account as at 1 January 2023
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl, changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
30 September
2023
30 September
2022
2,201
-2,160
682
467
-676
-220
294
3,442
-5,169
1,321
1,510
-189
-186
730
Stage 1
Stage 2
Stage 3
Total
2,717
1,094
-332
-20
703
-653
-493
-
-38
-16
6,807
-1,023
709
-555
1,228
-1,048
1,066
-2
-80
-
13,223
-71
-376
575
1,511
-3,468
748
-3,594
139
64
22,746
-
-
-
3,442
-5,169
1,321
-3,596
22
49
2,961
7,102
8,751
18,814
3,273
8,082
8,290
19,645
2,023
-198
-19
492
-391
-1,781
-2
-29
-1
-1,924
487
-355
843
-957
1,779
-
-85
-1
-99
-289
374
867
-811
685
-318
-37
12
-
-
-
2,201
-2,160
682
-320
-152
11
ECL allowance account as at 30 September 2023
3,366
7,868
8,673
19,907
The movements on the allowance account are determined by comparing the classification and amount in the balance sheet at the beginning and the end
of the period. For further information on the decomposition of the allowance account on facilities in stages 1-3 under IFRS 9, see note G13.
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
* Comparative information has been restated, as described in note G2(a).
Issued bonds at amortised cost
(DKK millions)
Commercial papers and certificates of deposits
Preferred senior bonds*
Covered bonds
Structured retail notes*
Issued bonds at amortised cost, total
Non-preferred senior bonds
Danske Bank / Interim report – first nine months 2023 50/75
30 September 31 December
2022*
2023
716,009
8,364
2,426
711,773
9,119
3,032
726,799
723,923
30 September 31 December
2022
2023
21,040
71,931
129,197
1,935
-
48,356
140,829
3,498
224,102
192,682
86,147
93,235
* DKK 3,498 million of Structured retail notes that were included in Preferred senior bonds as at 31 December 2022 is now presented in a separate line.
Further information on issued bonds at fair value through profit or loss can be found in note G16 of the Annual Report 2022. The issuance and redemption of
bonds (including commercial papers and certificates of deposits at fair value) during the year are presented in the tables below.
Nominal value
(DKK millions)
Commercial papers and certificate of deposits
Preferred senior bonds*
Covered bonds
Non-preferred senior bonds
1 January
2023
9,128
59,348
156,740
100,586
Issued Redeemed**
53,570
38,700
28,900
16,146
31,436
18,120
35,030
23,380
Foreign
currency 30 September
2023
translation
-1,860
-153
-4,805
340
29,401
79,775
145,806
93,691
Other issued bonds
325,801
137,316
107,966
-6,478
348,674
* Preferred senior bonds includes structured retail notes.
** Redeemed covered bonds includes DKK 25.8 billion of covered bonds reclassified to Liabilities in disposal groups held for sale during the third quarter of 2023. See note G7 for more detail.
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
13,445
1,400
39,600
20,100
26,709
14,630
39,605
30,530
Foreign
currency 31 December
2022
translation
-1,321
4,854
-8,322
2,913
9,128
59,348
156,740
100,586
Other issued bonds
364,607
74,545
111,475
-1,876
325,801
* Preferred senior bonds includes structured retail notes.
Subordinated debt and additional tier 1 capital
As at 30 September 2023, the nominal value of subordinated debt, including liability accounted additional tier 1 capital, amounted to DKK 40,719 million (31
December 2022: DKK 40,514 million). During the nine months ended 30 September 2023, the Group did not issue or redeem any additional tier 1 or tier 2
capital instruments. During 2022, the Group redeemed EUR 750 million of additional tier 1 capital accounted for as equity.
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 2022
for further information). As at 30 September 2023, distributable items for Danske Bank A/S amounted to DKK 130.2 billion (31 December 2022: DKK
126.7 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 2023 the common
equity tier 1 capital ratio was 22.0% (31 December 2022: 20.3%) for Danske Bank A/S. The ratios for the Danske Bank Group are disclosed in the Statement
of capital.
Danske Bank / Interim report – first nine months 2023 51/75
Notes – Danske Bank Group
G7. Assets held for sale and Liabilities in disposal groups held for sale
Assets held for sale and Liabilities in disposal groups held for sale include assets and liabilities that fall under IFRS 5.
(DKK millions)
Assets held for sale
Loans held for sale
Other
Total
Liabilities in disposal groups
Deposits held for sale
Issued bonds at amortised cost
Total
30 September 31 December
2022
2023
118,084
324
118,408
31,917
25,834
57,750
-
350
350
-
-
-
As announced in July 2023, Danske Bank has entered into an agreement to sell our personal customer business Norway. The sale will include loans, deposits
and issued bonds at amortised cost. On reclassification to held for sale, a loss of DKK 0.7 billion was recognised in relation to prudent valuattion and expected
costs directly attributable to the sale, and is included in Gain or loss on sale of disposal groups.
In June 2023, Danske Bank also announced that it will sell Danske IT, a fully-owned subsidiary of Danske Bank, to Infosys. The sale, which included approxi-
mately DKK 0.3 billion of assets and DKK 0.2 billion of liabilities, settled in the third quarter of 2023.
Assets held for sale also includes lease assets (where the Group acts as a 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 acqui-
sition. The properties comprise properties in Denmark and in other countries.
G8. Other assets and Other liabilities
(A) Other assets and other liabilities (DKK millions)
Other assets*
Accrued interest and commissions due
Prepayments, accruals and other amounts due
Defined benefit pension plan, net assets
Investment property
Tangible assets
Right of use lease assets
Holdings in associates
Total
Other liabilities*
Sundry creditors
Estonia settlement
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
Provisions, including litigations
Total
* Comparative information has been restated, as described in note G2(a).
30 September 31 December
2022
2023
8.297
8.795
934
158
7.468
4.147
573
2.256
17.048
1.486
146
7.586
2.615
536
30.371
31.673
37.777
-
15.585
332
1.000
4.078
3.125
4
2.711
35.823
15.300
7.634
366
1.804
2.743
2.627
4
2.676
64.613
68.978
In the table above, Provisions, including litigations at as 30 September 2023 includes customer relations (DKK 1.9 billion), regulatory and legal proceed-
ings (DKK 0.1 billion), restructuring costs (DKK 0.1 billion) and other provisions (DKK 0.6 billion).
Danske Bank / Interim report – first nine months 2023 52/75
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 37,425 million (31
December 2022: DKK 34,573 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. The Group’s net investment in its subsidiaries Danske Hypotek AB (Sweden) and Danske Mortgage Bank Plc (Finla nd) is 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 2023, the structural FX hedge position totalled DKK 36,464 million (31 December 2022: DKK 41,350 million), and a loss of DKK 1.397
million has been recognised in Other comprehensive income during the first nine months of 2023 due to a weakening of both the NOK and the SEK against
the DKK throughout the first nine months of 2023, of which, a loss of DKK 786 million has been realised and reclassified from Other comprehensive
income to the Income statement. This is due to an adjustment made for the structural FX hedge position held in NOK, to reflect the reduction in long term
risk exposure amount (REA) in NOK coming from the announced sale of personal customer business in Norway. For comparison, a loss of DKK 1,771
million was recognised in Other comprehensive income during the first nine months of 2022 due mainly to a weakening of both the NOK and the SEK
against the DKK.
Danske Bank / Interim report – first nine months 2023 53/75
Notes – Danske Bank Group
G10. Guarantees, commitments and contingent liabilities
Contingent liabilities consist of possible liabilities arising from past events. The existence of such liabilities will be co nfirmed only by the occurrence or
non-occurrence of one or more uncertain future events not wholly within the Group’s control. Contingent liabilities that can, but are not likely to, result in
an outflow of economic resources are disclosed.
The Group uses a variety of loan related financial instruments to meet customers’ financial requirements. Instruments include loan offers and other
credit facilities, guarantees and instruments not recognised in the balance sheet. If an instrument is likel y 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
2022
2023
5,235
76,701
81,937
5,512
75,884
81,396
30 September 31 December
2022
2023
219,276
211,300
16,149
236,062
199,888
15,196
446,725
451,146
In addition to credit exposure from lending activities, loan offers made and uncommitted lines of credit granted by the Group amounted to DKK 209 billion
(31 December 2022: DKK 216 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
As announced on 13 December 2022, Danske Bank has reached final coordinated resolutions with the US Department of Justice (DoJ), the US Securities
and Exchange Commission (SEC) and the Danish Special Crime Unit (SCU) following the investigations into failings and misconduct related to the non-resident
portfolio at Danske Bank’s former Estonia branch. The aggregate amounts payable to the US and Danish authorities were paid in January 2023. The coordi-
nated resolutions marked the end of the criminal and regulatory investigations into Danske Bank by the authorities in Denmark and the United States.
As part of the Bank’s agreement with DoJ, Danske Bank was placed on corporate probation for three years from 13 December 2022 until 13 December
2025 and Danske Bank committed to continue improving its compliance programs. Danske Bank has taken extensive remediation action to address those
failings to prevent any similar occurrences, and Danske Bank remains in contact with DoJ as a matter of post-resolution obligations set forth in the agreement
with DoJ.
Danske Bank remains subject to a criminal investigation by authorities in France and has posted bail in the amount of DKK 80 million. The Bank continues to
cooperate with the authorities.
The civil claims filed against Danske Bank by institutional investors can be summarised to six case complexes with a current total claim amount of approxi-
mately DKK 12.8 billion. One of the case complexes has partly been referred to the Eastern High Court, while the remaining case complexes are stayed or
pending before the Copenhagen City Court. The civil claims were not included in the coordinated resolutions with DoJ, SEC, and SCU. Danske Bank will continue
to defend itself vigorously against these claims. The timing of completion of such civil claims (pending or threatening) and their outcome are uncertain and
could be material.
Danske Bank has been procedurally notified in two claims filed against Thomas F. Borgen. 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. The first case was dismissed in the first instance and subsequently
appealed by the claimants. The original claim amount for both claims was approximately DKK 3.2 billion but has been reduced to approximately DKK 1.7
billion.
An action has been filed in the United States District Court for the Eastern District of New York against Danske Bank and others. The complaint sought
unspecified punitive and compensatory damages. On 29 December 2022, the action was dismissed by the court and on 27 January 2023, the complainants
filed an appeal of the dismissal. 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 authorities,
such as the Danish FSA and the Danish Tax Agency on other matters. In general, Danske Bank does not expect the outcomes of any of these other pending
lawsuits and disputes, or its dialogue with public authorities to have any material effect on its financial position. Provisions for litigations are included in Other
liabilities, see note G8.
Danske Bank / Interim report – first nine months 2023 54/75
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 a ge, grant them a sever-
ance and/or pension payment in excess of their entitlement under ordinary terms of employment. As the sponsoring employer, the Group is also liable
for the pension obligations of a number of company pension funds.
The Group participates in the Danish Guarantee Fund and the Danish Resolution Fund. The funds’ capital must amount to at 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 i ndividual institution’s
covered deposits may be required. Extraordinary contributions above this percentage require the consent of the Danish FSA. The first contribution to the
Danish Resolution Fund was made in December 2015. Danske Bank A/S and Realkredit Danmark A/S make contributions to the Resolu tion 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 oper ating
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 ma de payment commitments
totalling DKK 1 billion to cover losses incurred by the Danish Restructuring Fund for the withdrawal of distressed banks from data centres etc. Payments
to the Danish Restructuring Fund are calculated on the basis of the individual credit institution’s share of covered deposits relative to other credit insti-
tutions in Denmark. However, each institution’s contribution to the Danish Restructuring Fund may not exceed 0.2% of its covered deposits.
The Group is a member of deposit guarantee schemes and other compensation schemes in Norway and the UK. As in Denmark, the co ntributions to the
schemes in these countries are annual contributions combined with extraordinary contributions if the means of th e 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 2023 55/75
Notes – Danske Bank Group
G11. Assets provided or received as collateral
As at 30 September 2023, the Group had deposited securities (including bonds issued by the Group) worth DKK 13.3 billion as c ollateral with Danish
and international clearing centres and other institutions (31 December 2022: DKK 30.6 billion).
As at 30 September 2023, the Group had provided cash and securities (including bonds issued by the Group) worth DKK 78.2 bill ion as collateral for
derivatives transactions (31 December 2022: DKK 90.4 billion).
As at 30 September 2023, the Group had registered assets (including bonds and shares issued by the Group) under insurance con tracts and unit-linked
investment contracts worth DKK 429.5 billion (31 December 2022: DKK 417.5 billion) as collateral for policyholders’ savings of DKK 412.4 billion (31
December 2022: DKK 404.6 billion).
As at 30 September 2023, the Group had registered loans at fair value and securities (including bonds issued by the Group) worth a total of DKK 731.4
billion (31 December 2022: DKK 728.6 billion) as collateral for bonds issued by Realkredit Danmark. Similarly, the Group had registered loans and other
assets worth DKK 308.4 billion (31 December 2022: DKK 306.3 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 2023
31 December 2022
(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
Total
Own issued bonds
-
189,065
-
-
28,516
51,231
726,380
320,157
28,516
240,297
726,380
320,157
-
-
405,141
-
405,141
-
189,065
30,360
1,531,426
29,166
1,720,491
59,525
-
139,807
-
-
-
-
139,807
31,064
22,917
72,697
724,051
328,800
347,673
93
22,917
212,504
724,051
328,800
347,673
93
1,496,231
76,754
1,636,038
107,818
Total, including own issued bonds
219,425
1,560,591
1,780,016
170,871
1,572,985
1,743,856
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 189.1 billion as at 30 September 2023 (31 December 2022: DKK 139.8 billion).
As at 30 September 2023, the Group had received securities worth DKK 338.2 billion (31 December 2022: DKK 303.8 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 2023, the Group had sold securities or provided
securities as collateral worth DKK 131.2 billion (31 December 2022: DKK 119.2 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. Note G41 of the Annual Report 2022 provide more details on assets received as collateral in connection with ordinary lending
activities.
Danske Bank / Interim report – first nine months 2023 56/75
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 held at amortised cost
Investment securities held at fair value
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 2023
31 December 2022*
Instruments held
at Fair value
Instruments held
at Amortised cost
Instruments held
at Fair value
Instruments held
at Amortised cost
-
99,786
602,915
-
123,557
-
905,580
66,847
457,658
-
272,280
34,372
-
156,274
-
902,384
-
-
-
118,084
-
38,147
638,799
-
135,850
-
932,677
66,739
465,720
-
175,052
22,639
-
151,573
-
1,082,818
-
-
-
-
Total
2,256,343
1,483,394
2,277,932
1,432,082
Financial liabilities
Due to credit institutions and central banks
Trading portfolio liabilities
Deposits
Issued bonds at fair value
Issued bonds at amortised cost
Deposits under pooled schemes and unit-linked investment contracts
Liabilities held for sale
Non-preferred senior bonds
Subordinated debt
Loan commitments and guarantees
106,754
529,337
120,602
726,799
-
67,410
-
-
-
-
65,429
-
1,082,327
-
224,102
-
57,750
86,147
39,053
3,125
52,252
554,321
97,917
723,923
-
66,725
-
-
-
-
86,525
-
1,164,375
-
192,682
-
-
93,235
38,350
2,627
Total
1,550,902
1,557,933
1,495,138
1,577,795
* Comparative information has been restated, as described in note G2(a).
Liabilities under insurance contracts are measured using the General Measurement Model, Variable Fee Approach or Premium Allocation Approach as
defined by IFRS 17. Liabilities under insurance contracts are therefore not included in the table above.
Investment securities at fair value includes bonds measured at fair value through other comprehensive income, see the table o n bonds in note G13. 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 at fair value 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 2022 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 valu e 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 th e 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.
Danske Bank / Interim report – first nine months 2023 57/75
Notes – Danske Bank Group
G12. Fair value information for financial instruments continued
Financial instruments at amortised cost
The liquidity portfolio managed by Group Treasury includes different portfolios with different business models (see note G13 in Annual Report 2022 for
further description of business models). Bonds held within a business model for the purpose of collecting contractual cash flows (hold to collect) and with
cash flows that are solely payments of principal and interest on the principal amount outstanding are measured at amortised c ost. For bonds classified
as hold-to-collect, amortised cost exceeded fair value as at 30 September 2023 with DKK 11,357 million (31 December 2022: DKK 11,758 million).
This portfolio mainly contains Danish mortgage bonds and central and local government bonds and has a weighted average rating factor of 4,8 following
Moody’s numerical rating factor to scale, which corresponds to a strong Aa1 rating. The interest rate risk duration for the portfolio is 3.3 years. Without
any reinvestments, respectively 15%, 65% and 20% of this portfolio will reach maturity within a period of 1 year, between 1 to 5 years, and after 5 years.
The difference between amortised cost and fair value will reduce along with time to maturity of the bonds running off. Note G 13 and G33 (b) in Annual
Report 2022 provides information on the business models and the difference between the carrying amount and the fair value of financial instruments
recognised at amortised cost, respectively
Danske Bank / Interim report – first nine months 2023 58/75
Notes – Danske Bank Group
G12. Fair value information for financial instruments continued
(DKK millions)
30 September 2023
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
-
6.457
159.392
10.379
95.296
-
-
66.847
169.012
143.055
1.940
99.786
411.736
13.611
-
27.771
-
905.580
-
30.860
5.142
68.917
-
1.257
-
83
-
489
-
-
2.756
35.125
851
Total
99.786
419.450
173.003
10.462
123.067
489
905.580
66.847
202.628
183.322
71.708
Total
652.378
1.563.403
40.561
2.256.343
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 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
-
7.321
127.587
-
726.799
-
106.754
389.846
3.541
120.602
-
67.410
-
988
55
-
-
-
106.754
398.155
131.183
120.602
726.799
67.410
861.707
688.153
1.043
1.550.902
Quoted prices
Observable input
Non-observable
input
-
6,942
183,205
8,198
97,209
-
-
66,739
188,260
124,338
817
38,147
421,917
17,190
-
37,454
-
932,677
-
23,834
4,788
72,406
-
1,263
-
83
-
1,187
-
-
3,369
47,045
863
Total
38,147
430,123
200,395
8,281
134,663
1,187
932,677
66,739
215,463
176,171
74,086
Total
675,708
1,548,413
53,810
2,277,932
Financial liabilities
Due to credit institutions and central banks
Derivatives
Obligations to repurchase securities
Deposits
Issued bonds at fair value
Deposits under pooled schemes and unit-linked investment contracts
-
4,967
113,830
-
723,923
-
52,252
429,138
5,327
97,917
-
66,725
Total
842,721
651,358
* Comparative information has been restated, as described in note G2(a).
-
1,036
23
-
-
-
1,059
52,252
435,141
119,180
97,917
723,923
66,725
1,495,138
Danske Bank / Interim report – first nine months 2023 59/75
Notes – Danske Bank Group
G12. Fair value information for financial instruments continued
Financial instruments valued on the basis of non-observable input
The tables below shows financial instruments valued on the basis of non-observable input.
(DKK millions)
30 September 2023
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
31 December 2022
Unlisted shares
allocated to insurance contract policyholders
other
Illiquid bonds
Derivatives, net fair value
Carrying amount
Increase
Decrease
Sensitivity (change in fair value)
Gains/losses for the period
Realised
Unrealised
35,125
517
2,756
1,120
47,045
1,247
3,369
1,090
-
52
56
-
-
125
67
-
-
52
56
-
-
125
67
-
1,293
274
1
-
6,423
175
-128
-
-824
-89
-172
188
-706
-31
-61
-420
For unlisted shares allocated to insurance contract policyholders, the policyholders assume most of the risk on the shares. Therefore, changes in the fair
value of those shares will only to a limited extent affect the Group’s net profit. The Group’s remaining portfolio of unlisted shares consists primarily of
banking-related investments and holdings in private equity funds. The sensitivity of the fair value measurement to changes in the uno bservable input
disclosed in the table is calculated as a 10% increase or 10% decrease in fair value. Under current market conditions, a 10% decrease in the fair value
is considered to be below a possible alternative estimate of the fair value at the end of the period. The unrealised adjustments in the nine month period
ended 30 September 2023 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 2023
31 December 2022
(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
48,292
654
2,049
-15,353
-
-
3,369
-171
95
-537
-
-
1,090
188
45
-274
-3
74
46,573
5,861
20,800
-24,942
-
-
5,300
-189
107
-1,849
-
-
2,504
-420
186
-42
-
-1,136
Fair value end of period
35,643
2,756
1,120
48,292
3,369
1,090
The value adjustment through profit or loss is recognised under Net trading income or loss. The transfer of derivatives to th e Observable input category
consists primarily of maturity reductions, implying that the yield curves have become observable.
Danske Bank / Interim report – first nine months 2023 60/75
Notes – Danske Bank Group
G13. Risk management notes
The consolidated financial statements for 2022 provide a detailed description of the Group’s risk management practices.
Breakdown of credit exposure
Lending activities
Total
Core
Non-core
Counterparty
credit risk
Trading and
investment
securities
Customer-
funded in-
vestments
(DKK billions)
30 September 2023
Balance sheet items
Demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Assets held for sale
Off-balance-sheet items
Guarantees
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
Total
31 December 2022*
Balance sheet items
Demand deposits with central banks
Due from credit institutions and central banks
Trading portfolio assets
Investment securities
Loans at amortised cost
Loans at fair value
Assets under pooled schemes and unit-linked investment contracts
Assets under insurance contracts
Assets held for sale
Off-balance-sheet items
Guarantees
Loan commitments shorter than 1 year
Loan commitments longer than 1 year
Other unutilised commitments
266.0
134.2
602.9
279.8
902.4
905.6
66.8
506.4
118.1
81.9
219.3
211.3
16.1
266.0
34.4
-
-
900.8
726.4
-
-
118.1
81.9
218.3
211.3
-
4,310.9
2,557.3
168.4
60.8
638.8
287.5
1,082.8
932.7
66.7
503.0
-
81.4
236.1
199.9
15.2
168.4
22.7
-
-
1,081.7
724.1
-
-
-
81.4
234.8
199.9
-
-
-
-
-
1.5
-
-
-
-
-
0.9
-
-
2.5
-
-
-
-
1.2
-
-
-
-
-
1.3
-
-
2.5
-
99.8
419.4
-
-
179.2
-
-
-
-
-
-
-
-
-
183.5
279.8
-
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
66.8
506.4
-
-
-
-
16.1
698.4
463.4
589.3
-
38.1
430.1
-
-
208.6
-
-
-
-
-
-
-
-
-
208.7
287.5
-
-
-
-
-
-
-
-
0.1
-
-
-
-
-
-
66.7
503.0
-
-
-
-
15.1
676.9
496.2
584.8
Total
4,273.2
2,512.8
* Comparative information has been restated, as described in note G2(a).
In addition to credit exposure from lending activities, Danske Bank had made uncommitted loan offers and granted uncommitted lines of credit of DKK
209 billion at 30 September 2023 (31 December 2022: DKK 216 billion). These items are included in the calculation of the tota l risk exposure amount
in accordance with the Capital Requirements Directive.
Danske Bank / Interim report – first nine months 2023 61/75
Notes – Danske Bank Group
Credit exposure
Credit exposure from core lending activities
Credit exposure from lending activities in the Group’s core banking business includes loans, amounts due from credit institut ions 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 No n-core lending activities is
disclosed further on in these notes.
The Group’s definition of default for accounting aligns with the regulatory purposes. All exposures in stage 3 are considered default. This includes all non-
performing loans. 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. The stage 3 coverage
ratio is 68% (31 December 2022: 85%).
For further details about the Group’s credit risk management and the use of information on expected credit losses for risk ma nagement purposes, see
Risk Management 2022.
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 173 in Annual report 2022.
30 September 2023
PD level
Gross exposure
Expected credit loss
Net exposure
Net exposure,
ex collateral
(DKK billions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
Upper
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
-
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
87.6
356.8
518.7
605.5
446.7
275.3
90.3
11.8
1.0
0.5
0.1
0.1
0.2
0.6
1.5
8.6
36.8
50.1
29.1
6.4
13.1
0.5
-
-
0.1
0.1
0.1
0.1
0.1
0.5
0.2
3.7
31.0
-
-
0.1
0.2
0.4
0.7
1.1
0.8
-
-
-
-
-
-
-
0.1
0.6
2.0
2.5
1.6
1.1
-
-
-
-
-
-
-
-
0.4
0.1
0.6
7.5
87.6
356.8
518.6
605.2
446.3
274.6
89.3
11.0
1.0
0.5
0.1
0.1
0.2
0.6
1.5
8.5
36.2
48.1
26.6
4.8
12.0
0.5
-
-
0.1
0.1
0.1
0.1
0.1
-
0.1
3.1
23.5
69.0
249.8
249.2
285.4
142.9
89.7
28.4
2.7
0.2
0.2
-
-
0.1
0.3
0.4
5.8
20.9
18.7
7.3
1.2
3.4
0.2
2,394.4 147.0
35.7
3.4
7.9
8.7 2,391.1
139.1
27.1 1,117.5
58.4
-
-
-
-
-
-
-
-
-
-
4.0
4.1
31 December 2022
(DKK billions)
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
PD level
Gross exposure
Expected credit loss
Net exposure
Net exposure,
ex collateral*
Upper
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
-
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
135.9
233.5
540.9
630.6
463.1
235.8
75.5
7.3
0.9
0.6
0.2
0.1
0.2
0.8
1.9
14.0
54.3
59.5
29.9
3.1
12.0
0.4
-
-
-
-
-
-
-
-
0.1
0.2
31.6
-
-
0.1
0.6
0.4
0.5
0.9
0.4
-
-
0.3
-
-
-
-
0.1
0.9
2.6
2.8
0.7
0.9
-
-
-
-
-
-
0.1
-
-
-
0.1
8.1
135.9
233.5
540.8
630.0
462.7
235.3
74.6
6.8
0.9
0.6
-
0.1
0.2
0.8
1.9
13.9
53.3
56.9
27.0
2.4
11.1
0.4
-
-
-
-
-
-
-
-
0.1
0.1
23.5
115.2
116.8
262.9
298.0
148.1
76.1
24.2
1.7
0.2
0.3
-
-
0.1
0.3
0.9
7.7
21.4
20.7
4.3
0.2
2.1
0.1
-
-
-
-
-
-
-
-
0.1
-
1.3
2,324.2
176.0
32.1
3.3
8.1
8.3 2,321.0
168.0
23.9 1,043.5
58.0
1.4
*Net exposure, ex collateral as at 31 December 2022 has been restated.
Danske Bank / Interim report – first nine months 2023 62/75
Notes – Danske Bank Group
Credit exposure continued
Credit portfolio in core activities broken down by industry (NACE) and stages
The table below breaks down credit exposure by industry. The industry segmentation is based on the classification principles of the Statistical Classifi-
cation of Economic Activities in the European Community (NACE) standard that has been adapted to the Group’s business risk approach used for the
active management of the credit portfolio.
30 September 2023
(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
315.3
Financials
142.0
Agriculture
55.1
Automotive
24.4
Capital goods
87.9
Commercial property*
256.6
Construction and building materials 43.5
Consumer goods
68.1
Hotels, restaurants and leisure
11.9
Metals and mining
13.9
Other commercials
12.5
Pharma and medical devices
44.4
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
182.7
43.5
28.8
60.2
36.5
27.8
22.0
14.4
82.5
820.5
1.1
5.3
5.0
2.7
12.0
31.9
6.9
8.3
2.4
2.2
0.4
3.0
4.7
4.0
4.5
8.3
1.3
0.9
1.2
2.3
1.2
37.5
0.3
0.4
2.2
0.2
1.4
6.9
1.9
1.2
0.7
-
0.3
-
1.1
0.7
1.8
0.6
3.1
0.7
2.0
0.3
-
10.0
-
0.1
0.3
-
0.1
0.5
0.3
-
-
-
0.1
-
0.1
-
0.1
0.2
-
-
-
-
-
1.4
-
0.1
0.7
0.1
0.3
1.9
0.9
0.4
0.1
-
-
0.1
0.4
0.1
0.3
0.3
-
0.1
0.1
0.1
-
1.7
-
0.1
0.6
0.1
0.5
1.0
0.7
0.4
0.2
-
0.1
-
0.2
0.2
0.5
0.3
0.5
0.1
0.5
0.1
-
2.5
315.3
141.9
54.8
24.4
87.8
256.0
43.2
68.1
11.9
13.9
12.4
44.4
182.6
43.4
28.7
60.0
36.5
27.7
22.0
14.4
82.5
819.1
1.1
5.1
4.3
2.6
11.7
30.0
5.9
7.8
2.3
2.2
0.4
2.9
4.3
3.9
4.2
8.1
1.2
0.8
1.2
2.2
1.2
35.8
0.3
0.2
1.6
0.1
0.9
5.9
1.2
0.8
0.5
-
0.2
-
0.9
0.5
1.3
0.3
2.5
0.5
1.5
0.2
-
7.5
312.8
126.1
14.2
19.3
79.2
36.5
30.7
55.0
2.9
11.8
8.9
41.4
23.3
32.8
18.5
49.7
21.9
12.2
16.8
6.5
60.7
136.5
0.1
4.4
1.0
1.5
10.0
5.4
3.1
5.5
0.8
1.9
0.1
2.5
1.6
2.9
3.3
6.6
0.5
0.3
0.9
0.8
1.0
4.1
-
0.2
-
-
0.5
0.7
0.6
0.2
0.1
-
-
-
0.1
0.2
0.6
-
-
0.3
0.5
-
-
-
Total
2,394.4
147.0
35.7
3.4
7.9
8.7 2,391.1
139.1
27.1 1,117.5
58.4
4.1
*As at 30 September 2023, DKK 136 billion of the net exposure in Commercial property is towards residential assets.
As at 30 September 2023, oil and gas exposures (within the Shipping, oil and gas industry) represent a gross exposure of DKK 18.5 billion (31 December
2022: DKK 19.3 billion) and expected credit losses of DKK 0.4 billion (31 December 2022: DKK 0.7 billion). Those exposures represent the majority of
the exposures in stage 3 within the Shipping, oil and gas industry at the end of September 2023.
Danske Bank / Interim report – first nine months 2023 63/75
Notes – Danske Bank Group
Credit exposure continued
31 December 2022
(DKK billions)
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral*
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
Stage 1 Stage 2 Stage 3
Stage 1 Stage 2 Stage 3
Public institutions
225.8
Financials
116.6
Agriculture
54.9
Automotive
25.4
Capital goods
87.3
Commercial property
250.6
Construction and building materials 43.6
Consumer goods
72.4
Hotels, restaurants and leisure
10.3
Metals and mining
13.9
Other commercials
15.4
Pharma and medical devices
42.3
Private housing co-ops and non-profit as-
sociations
Pulp, paper and chemicals
Retailing
Services
Shipping, oil and gas
Social services
Telecom and media
Transportation
Utilities and infrastructure
Personal customers
187.4
47.5
30.3
59.7
34.6
26.9
23.1
13.7
103.4
839.3
1.3
3.9
5.9
2.3
9.2
46.9
8.6
7.6
4.2
1.1
0.8
3.7
3.8
3.9
3.1
6.8
1.2
0.8
1.0
2.6
4.3
52.8
-
0.3
2.9
0.2
1.3
3.6
1.2
0.9
1.0
-
0.2
-
0.6
0.3
1.7
0.8
5.4
0.7
0.2
0.5
-
10.3
-
0.1
0.2
-
0.1
0.4
0.1
0.1
-
-
0.3
-
0.1
-
0.1
0.3
-
-
-
-
0.1
1.2
-
0.2
0.9
0.1
0.3
2.2
0.5
0.4
0.1
-
-
0.1
0.1
0.1
0.1
0.2
-
0.1
-
0.1
0.2
2.0
-
0.1
0.8
0.1
0.7
0.7
0.5
0.2
0.3
-
0.1
-
0.1
0.1
0.6
0.3
1.0
0.1
0.1
0.1
-
2.3
225.8
116.5
54.6
25.4
87.2
250.3
43.5
72.3
10.3
13.9
15.1
42.2
187.3
47.5
30.2
59.4
34.6
26.8
23.1
13.6
103.2
838.1
1.3
3.7
5.1
2.2
8.9
44.7
8.1
7.2
4.0
1.1
0.8
3.6
3.7
3.8
3.0
6.6
1.2
0.7
0.9
2.4
4.1
50.8
-
0.2
2.1
0.1
0.7
2.9
0.7
0.6
0.8
-
0.2
-
0.5
0.1
1.1
0.4
4.4
0.6
0.1
0.3
-
8.0
223.1
104.0
14.1
20.7
79.0
44.9
32.4
57.1
5.1
11.8
11.9
39.6
26.9
35.8
19.0
49.1
22.5
12.9
17.8
6.3
80.4
129.2
-
2.7
0.8
0.9
7.2
7.9
4.6
5.2
0.8
0.8
0.3
3.2
0.8
2.7
2.2
4.8
0.9
0.3
0.6
0.9
3.6
7.0
-
0.1
-
-
-
-
0.1
0.3
0.1
-
-
-
-
-
0.2
0.1
-
-
-
0.1
-
-
Total
2,324.2
176.0
32.1
3.3
8.1
8.3 2,321.0 168.0
23.9
1,043.5
58.0
1.4
*Net exposure, ex collateral as at 31 December 2022 has been restated.
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 2022, a table showing collateral by type (after haircut) is included. The mitigating effect from collateral at the end of September 2023 can
be found as the difference between the columns ‘Net exposure’ and ‘Net exposure, ex collateral’ and amounted to DKK 1,377.3 billion at 30 September
2023 (31 December 2022: DKK 1,409.9 billion).
30 September 2023
(DKK billions)
Personal Customers
Personal Customers
Denmark
Personal Customers
Nordic
Global Private Banking
Total
Danske Bank / Interim report – first nine months 2023 64/75
Notes – Danske Bank Group
Credit exposure continued
The table below breaks down credit exposure by core business unit and underlying segment.
Gross exposure
Stage 2
Stage 1
Stage 3 Stage 1
Expected credit loss
Stage 2
Stage 3
Net exposure
Stage 1
Stage 2 Stage 3
Net exposure, ex collateral
Stage 1
Stage 2
Stage 3
413.8
18.1
5.9
0.9
1.0
1.3
412.8
17.1
4.7
54.2
1.8
315.1
75.1
12.8
3.2
2.9
0.6
0.3
-
0.5
0.1
0.8
0.2
314.8
75.1
12.3
3.0
2.0
0.4
70.0
16.2
1.3
1.0
-
-
-
-
Personal Customers
804.1
34.1
9.5
1.3
1.7
2.3
802.8
32.5
7.1
140.5
4.1
Business Customers
Asset Finance
Business Customers
Commercial Real Estate
Business Customers
Other
Total
51.5
303.1
300.5
10.2
38.1
24.5
1.2
10.5
4.6
0.1
1.0
0.3
0.6
2.9
1.5
0.4
3.5
0.3
51.3
302.1
300.3
9.6
35.1
23.0
0.8
6.9
4.2
19.5
93.1
50.7
1.9
14.5
5.0
-
0.8
0.2
0.3
-
-
-
-
-
0.3
-
-
0.3
-
-
Business Customers
655.4
72.8
16.2
1.4
5.0
4.2
654.0
67.8
12.0
163.6
21.4
0.9
Large Corporates &
Institutions
Northern Ireland
Group Functions
596.8
35.8
93.9
244.1
4.1
0.1
8.2
1.8
-
0.4
0.3
-
1.1
0.1
-
1.7
0.4
596.4
34.7
6.5
516.4
32.2
93.7
-
244.1
4.0
0.1
1.4
53.0
-
244.0
0.7
0.1
2.9
0.2
-
Total
2,394.4
147.0
35.7
3.4
7.9
8.7
2,.391.1
139.1
27.1
1,117.5
58.4
4.1
31 December 2022
(DKK billions)
Personal Customers**
Personal Customers
Denmark
Personal Customers
Nordic
Global Private Banking
Total Personal
Customers
Business Customers
Asset Finance
Business Customers
Commercial Real Esate
Business Customers
Other
Total
Business Customers
Large Corporates & In-
stitutions
Northern Ireland
Group Functions
Total
Gross exposure
Stage 2
Stage 1
Stage 3 Stage 1
Expected credit loss
Stage 2
Stage 3
Net exposure
Net exposure, ex collateral*
Stage 1
Stage 2 Stage 3
Stage 1
Stage 2
Stage 3
404.3
25.5
6.1
0.9
1.4
1.2
403.3
24.0
4.9
45.8
2.2
349.4
76.1
15.9
7.1
3.2
0.6
0.2
0.1
0.3
0.2
0.8
0.2
349.2
76.0
15.6
6.9
2.4
0.4
72.2
16.0
2.0
2.9
829.8
48.5
9.9
1.3
2.0
2.2
828.5
46.5
7.7
134.1
7.1
-
-
-
-
47.6
324.0
279.1
12.9
56.4
22.1
1.2
11.1
1.3
0.1
0.9
0.2
0.5
3.9
0.6
0.3
3.5
0.3
47.4
323.1
278.9
12.4
52.5
21.5
0.8
7.5
1.0
18.6
119.7
43.4
2.4
17.8
3.9
-
1.0
0.2
0.1
-
-
-
-
-
0.1
-
-
0.1
-
-
650.7
91.4
13.6
1.2
4.9
4.2
649.5
86.4
9.4
181.7
24.1
1.2
615.2
29.1
81.4
147.1
6.9
0.2
7.0
1.7
-
0.5
0.3
-
1.0
0.2
-
1.5
614.7
28.1
5.5
535.3
25.5
0.4
81.1
6.7
1.2
45.4
-
147.1
0.2
-
146.9
1.1
0.2
-
0.1
-
2,324.2
176.0
32.1
3.3
8.1
8.3
2,321.0
168.0
23.9
1,043.5
58.0
1.4
* Net exposure, ex collateral as at 31 December 2022 has been restated.
** Global Private Banking is a new sub-segment in Personal Customers in 2023. Comparatives have been reclassified from other sub -segments of Personal Customers.
Danske Bank / Interim report – first nine months 2023 65/75
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 inte rest-reduction schedules,
interest-only schedules, temporary payment holidays, term extensions, cancellation of outstanding fees, waiver of covenant enforcement and debt
forgiveness. Forbearance plans must comply with the Group’s 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, o r are used for minimising losses
in the event of default.
If it proves impossible to improve the customer’s financial situation by forbearance measures, the Group will consider whether to subject the customer’s
assets to a forced sale or whether the assets could be realised later at higher net proceeds. At the end of the first nine months of 2023, the Group had
recognised properties taken over in Denmark at a carrying amount of DKK 15 million (31 December 2022: DKK 4 million), and the re were no properties
taken over in other countries (31 December 2022: DKK 0 million). The properties are held for sale and included under Assets held for sale in the balance
sheet.
The Group applies the European Banking Authority’s (the EBA’s) definition of loans subject to forbearance measures. The EBA definition states that a
probation period of a minimum of two years must pass from the date when forborne exposures are considered to be performing again. Forbearance
measures lead to changes in staging for impairment purposes, and impairments relating to forborne exposures are handled according to the principles
described in note G15 in Annual Report 2022.
Exposures subject to forbearance measures
(DKK millions)
Stage 1
Stage 2
Stage 3
Total
Allowance account in core activities
(DKK millions)
ECL allowance account as at 1 January 2022
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
ECL allowance account as at 1 January 2023
Transferred to stage 1 during the period
Transferred to stage 2 during the period
Transferred to stage 3 during the period
ECL on new assets
ECL on assets derecognised
Impact of net remeasurement of ECL (incl. changes in models)
Write-offs debited to the allowance account
Foreign exchange adjustments
Other changes
30 September
2023
31 December
2022
224
4,765
6,580
11,569
367
3,029
6,165
9,561
Stage 1
Stage 2
Stage 3
Total
2,733
1,087
-332
-20
703
-646
-512
-
-38
-14
6,804
-1,016
707
-551
1,228
-1,026
1,068
-2
-80
-33
12,397
-71
-375
571
1,511
-3,386
755
-2,775
65
22
21,935
-
-
-
3,442
-5,058
1,312
-2,778
-53
-25
2,961
7,100
8,713
18,774
3,273
8,082
8,251
19,605
2,023
-198
-19
492
-391
-1,781
-2
-29
-1
-1,924
487
-355
843
-957
1,779
-
-85
-1
-99
-289
374
867
-807
720
-318
-37
12
-
-
-
2,201
-2,156
717
-320
-152
11
ECL allowance account as at 30 September 2023
3,366
7,868
8,673
19,906
Danske Bank / Interim report – first nine months 2023 66/75
Notes – Danske Bank Group
Credit exposure continued
Allowance account in core activities broken down by segment
(DKK millions)
ECL allowance account as at 1 January 2022
ECL on new assets
ECL on assets derecognised
Impact on remeasurement of ECL (incl. change in models)
Write-offs debited to allowance account
Foreign currency translation
Other changes
ECL allowance account as at 30 September 2022
ECL allowance account as at 1 January 2023
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
Personal
Customers
Business
Customers
Large
Corporates &
Institutions
Northern
Ireland
Group
Functions
Allowance
account Total
5,654
450
-603
265
-928
-27
15
4,827
5,427
387
-547
201
-134
-25
-16
10,186
1,339
-1,613
260
-434
-131
-25
5,227
1,608
-2,734
660
-1,295
143
-13
9,582
3,595
10,235
3,050
1,343
-1,531
677
-142
-109
20
421
-41
-47
-33
-42
8
850
43
-104
108
-120
-38
-1
738
863
58
-33
-121
-11
25
1
781
17
2
-4
19
-
-
-1
32
31
-7
-4
8
-
-1
-2
21,935
3,442
-5,058
1,312
-2,778
-53
-25
18,774
19,605
2,201
-2,156
718
-321
-152
11
25
19,906
ECL allowance account as at 30 September 2023
5,291
10,494
3,315
The method used for calculating expected credit losses is described in detail in note G15 of the Annual Report 2022.
Forward-looking information
The incorporation of forward-looking information reflects the expectations of the Group’s senior management and involves both macroeconomic scenar-
ios (base case, upside and downside scenarios), including an assessment of the probability for each scenario, and post-model adjustments. The purpose
of using multiple scenarios is to model the non-linear impact of assumptions about macroeconomic factors on the expected credit losses. Post-model
adjustments are used to capture specific risks which are not fully covered by the macroeconomic scenarios, as well as the process related risk, which
could lead to an underestimation of the expected credit losses.
Macroeconomic scenarios
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 2023 have been updated with the latest macroeconomic
data. Compared to the end of 2022, the base case and upside scenarios have been revised to reflect expectations of higher inflation, declining house
prices and interest rate hikes. The scenario weighting has been updated to increase the weight on the upside scenario to 20% (10% in 2022), by de-
creasing the weight on the base case scenario to 60% (70% in 2022). The weight on the downside scenario remains at 20% (20% in 2022) despite the
use of a severe stagflation scenario.
The base case is an extension of the Group’s official view of the Nordic economies (the Nordic Outlook report). At 30 September 2023, the base case
scenario reflects an expectation of high inflation and high interest rates. This results in a slowdown in the Nordic economies with a weaker GDP growth.
House prices are expected to stabilise in 2024.
The upside scenario represents a slightly better outlook than the base case scenario across the macroeconomic parameters. In this scenario, there is a
consumer driven recovery which increases GDP and supports the property market. However inflation and interest rates remain elevated for longer.
In the fourth quarter of 2022, the downside scenario was changed to the severe recession with high interest rates scenario (r eflecting a stagflation
scenario) applied in the Group’s ICAAP processes, and is similar in nature to regulatory stress tests. The severe recession scenario reflected negative
growth, increasing interest rates, and falling property prices for a longer period. The change of the downside scenario was made to better capture the
increasing risk from high interest rates and high inflation. A trigger of the economic setback could be continued macroeconomic worsening and challenges
linked to high business costs while inflation remains elevated. This adversely impacts the labour market, results in higher and more persistent unemploy-
ment. This would lead to a severe slowdown in the economies in which the Group is represented.
The main macroeconomic parameters in the base case, upside and downside scenario entering the ECL calculation for the forecas t horizon across the
Group’s Nordic markets are included below.
Danske Bank / Interim report – first nine months 2023 67/75
Notes – Danske Bank Group
Credit exposure continued
Denmark
30 September 2023
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Sweden
30 September 2023
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Norway
30 September 2023
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Finland
30 September 2023
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Base-case
2024
2023
1.7
2.9
4.0
-3.0
4.0
1.2
3.2
3.2
-
3.3
Base-case
2024
2023
-0.2
7.5
8.4
-8.0
4.0
1.7
7.8
1.8
1.0
3.0
Base-case
2024
2023
1.2
1.9
5.8
-2.5
4.8
1.4
2.3
2.5
-1.0
3.5
Base-case
2024
2023
-0.2
7.2
6.5
-6.0
4.0
0.8
7.0
2.3
2.5
3.4
2025
1.5
3.5
2.2
2.5
2.3
2025
1.8
7.5
1.7
2.0
2.3
2025
1.5
2.5
1.8
4.0
2.8
2025
1.3
6.6
2.0
3.0
2.5
Downside
2024
2023
2025
2023
-3.4
6.3
4.0
-19.7
5.4
-2.0
7.5
3.0
-11.0
6.4
-
7.9
2.0
-6.0
3.9
1.8
2.9
4.0
-3.0
4.3
Downside
2024
2023
2025
2023
-3.5
9.4
4.9
-22.0
5.7
-3.4
10.3
3.9
-13.0
5.7
-1.0
10.7
2.9
-7.0
3.7
-0.1
7.5
8.4
-8.0
4.5
Downside
2024
2023
2025
2023
-2.7
5.5
4.5
-19.0
6.3
-1.1
6.4
3.0
-13.0
6.3
0.6
6.5
2.0
-7.0
4.3
1.3
1.9
5.8
-2.5
5.3
Downside
2024
2023
2025
2023
-2.4
9.9
4.0
-14.2
5.1
-2.0
10.9
3.0
-7.0
5.1
-0.3
10.9
2.0
-5.0
3.1
-0.1
7.2
6.5
-6.0
4.3
Upside
2024
2.7
2.8
3.6
2.0
4.4
Upside
2024
3.1
7.5
1.9
3.0
4.5
Upside
2024
2.8
2.0
2.7
-
5.0
Upside
2024
1.8
6.8
2.6
3.5
4.5
2025
1.7
2.8
2.8
3.5
3.8
2025
2.1
7.0
2.0
3.0
3.8
2025
1.8
2.0
2.1
5.0
4.0
2025
1.6
6.3
2.3
4.0
4.0
Danske Bank / Interim report – first nine months 2023 68/75
Notes – Danske Bank Group
Credit exposure continued
At 31 December 2022, the following base case, upside and downside scenarios were used:
Denmark
31 December 2022
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Sweden
31 December 2022
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Norway
31 December 2022
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Finland
31 December 2022
GDP
Unemployment
Inflation
Property prices - Residential
Interest rate - 3 month
Base-case
2024
2023
-0.6
3.2
4.9
-5.9
2.8
0.5
3.8
2.5
-4.0
2.5
2025
1.5
3.8
1.8
1.5
2.0
Downside
2024
2023
2025
2023
-3.7
6.0
4.0
-19.7
3.3
-2.1
7.0
3.0
-12.7
4.3
-
7.4
2.0
-8.0
3.8
0.4
3.0
4.0
-2.9
2.3
Base-case
2024
2023
2025
2023
Downside
2024
2025
2023
-1.2
8.2
6.2
-8.0
2.8
1.1
8.0
1.5
-
2.5
1.8
7.5
1.7
2.0
2.0
-3.8
8.9
4.9
-23.6
3.8
-3.6
9.9
3.9
-14.6
4.8
-1.0
10.3
2.9
-10.0
4.3
-0.6
8.2
5.4
-5.0
2.3
Base-case
2024
2023
2025
2023
Downside
2024
2025
2023
0.9
2.4
3.4
-2.1
3.1
1.7
2.5
1.8
2.0
2.9
1.5
2.2
2.0
2.5
2.4
-2.9
5.2
4.5
-20.5
4.4
-1.2
6.1
3.0
-14.5
5.4
0.6
6.2
2.0
-8.0
4.9
1.5
2.3
2.4
0.9
2.6
Base-case
2024
2023
2025
2023
Downside
2024
2025
2023
-0.2
7.3
3.7
-1.0
2.6
1.0
7.4
2.1
1.0
2.3
1.3
7.0
1.8
2.0
1.8
-2.7
9.4
4.0
-14.2
3.2
-2.2
10.4
3.0
-9.2
4.2
-0.3
10.4
2.0
-5.0
3.7
0.5
7.3
2.9
1.0
2.1
Upside
2024
1.6
3.3
1.9
-2.0
1.8
Upside
2024
2.1
7.8
0.9
2.0
1.8
Upside
2024
2.5
2.2
1.3
3.0
2.1
Upside
2024
2.0
7.3
1.4
2.0
1.6
2025
1.1
3.3
1.9
2.5
1.8
2025
1.7
7.3
1.3
3.0
1.8
2025
1.7
1.9
1.9
3.5
2.1
2025
1.3
6.9
1.6
3.0
1.6
The base case scenario enters with a probability of 60% (31 December 2022: 70%), the upside scenario with a probability of 20% (31 December 2022:
10%) and the downside scenario with a probability of 20% (31 December 2022: 20%). On the basis of these assessments, the allo wance account as at
30 September 2023 amounted to DKK 19.9 billion (31 December 2022: 19.6 billion). If the base case scenario was assigned a probability of 100%, the
allowance account would decrease DKK 2.1 billion (31 December 2022: 2.1 billion). Compared to the base case scenario, the allowance account would
increase DKK 10.5 billion (31 December 2022: 10.9 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 0.1 billion (31 December 2022: 0.4 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).
Notes – Danske Bank Group
Credit exposure continued
Danske Bank / Interim report – first nine months 2023 69/75
Post-model adjustments
Management applies judgement when determining the need for post-model adjustments. At 30 September 2023, the post-model adjustments amounted
to DKK 6.7 billion (31 December 2022: 6.6 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 to ensure sufficient impairment coverage. This also includes post-model adjustments relating
to secondary effects from the war in Ukraine or the macroeconomic uncertainty.
non-linear downside risk, for instance on the property market in Copenhagen and other high growth areas for which the macroeconom ic 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.
•
•
Following the significant impact on the expected credit losses from post-model adjustments, the table below provides more information about the adjust-
ments.
Post-model adjustments by type and mostly impacted industries
(DKK billions)
Coverage of individual industries and types
Agriculture
Commercial Property
Construction and building materials
Personal customers (including other retail exposures)
Others*
Total
30 September
2023
31 December
2022
0.8
1.9
1.0
1.6
1.4
6.7
0.8
1.8
0.5
1.4
2.1
6.6
*No individual industry included in Others exceeds DKK 0.2 billion at 30 September 2023 (31 December 2022: DKK 0.3 billion).
In first nine months of 2023, the total balance of post-model adjustments displayed a very modest increase compared to the end of 2022.
The Group continues to have significant post-model adjustments related to the current macroeconomic uncertainties characterised by the slowing
growth environment, labour shortages, interest rate hikes and inflation giving rise to a new set of challenges that affect economic and business activity.
The post-model adjustments cut across industries that are sensitive to price rises on energy, e.g. agriculture and metals, and industr ies vulnerable to
business cycles and increasing interest rates, which have been assessed for idiosyncratic risks to ensure a prudent coverage of expected credit loss in
the Group’s portfolios.
Danske Bank / Interim report – first nine months 2023 70/75
Notes – Danske Bank Group
Credit exposure from Non-core lending activities
Credit portfolio in non-core activities broken down by industry (NACE) and stages
30 September 2023
(DKK millions)
Non-core banking
Non-core conduits etc.
Total
31 December 2022
(DKK millions)
Non-core banking
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
-
2,481
2,481
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,480
2,480
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Gross exposure
Expected credit loss
Net exposure
Net exposure, ex collateral
Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3
1
2,444
2,445
-
-
-
-
94
94
-
-
-
-
-
-
-
39
1
2,444
39
2,445
-
-
-
-
55
55
-
24
24
-
-
-
-
15
15
Credit portfolio in non-core activities broken down by rating category and stages
30 September 2023
(DKK millions)
Upper
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
1
2
3
4
5
6
7
8
9
10
11 (default)
Total
-
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
571
911
998
-
-
-
-
-
-
-
-
2,481
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
571
911
998
-
-
-
-
-
-
-
-
- 2,480
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31 December 2022
(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
817
1,163
453
-
-
12
-
-
-
-
-
2,445
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94
94
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
39
817
1,163
453
-
-
12
-
-
-
-
-
39
2,445
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
55
55
-
24
-
-
-
-
-
-
-
-
-
24
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15
15
Danske Bank / Interim report – first nine months 2023 71/75
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
*Comparative information has been restated, as described in note G2(a).
30 September 31 December*
2022
2023
419.4
279.0
452.3
11.0
0.1
430.1
246.8
486.7
10.2
-
1,161.8
1,173.7
**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 278.5 billion (31 December 2022: DKK 246.0 billion), of which DKK 99.3 billion relates to credit institutions and central banks (31 December 2022: DKK 37.4 billion), and other primarily
short-term loans of DKK 0.5 billion (31 December 2022: DKK 0.8 billion), of which DKK 0.5 billion (31 December 2022: DKK 0.8 billion) relates 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
Total
Bond portfolio
30 September
2023
31 December
2022
1,160,756
741,306
1,202,931
772,809
419,450
320,692
98,758
88,821
9,937
307,989
110,630
832
430,123
340,984
89,139
78,549
10,590
306,248
122,848
1,027
419,450
430,123
(DKK millions)
30 September 2023
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
98,914
1,806
20,054
50,707
2,225
281
3,738
9,456
21,556
15,559
50,913
90,246
Swedish
covered
bonds
38,257
956
4,655
4,709
Other
covered
bonds
6,170
282
23,273
1,006
Corporate
bonds
5,881
-
1,550
150
Total
173,003
18,884
104,183
156,274
Total
171,482
15,700
178,274
48,577
30,731
7,581
452,344
31 December 2022*
Held-for-trading (FVPL)
Managed at fair value (FVPL)
Held to collect and sell (FVOCI)
Held to collect (AMC)
149,059
2,339
15,730
53,681
3,452
594
4,597
9,292
13,729
13,577
63,108
81,991
19,753
1,011
6,695
5,599
5,543
409
25,045
1,011
8,859
304
1,253
-
200,395
18,233
116,429
151,573
Total
220,809
17,935
172,405
33,057
32,007
10,417
486,630
* Comparative information has been restated, as described in note G2(a).
At 30 September 2023, the Group had an additional bond portfolio, including bond-based unit trust certificates, worth DKK 202,628 million (31 Decem-
ber 2022: DKK 173,393 million) recognised as assets under insurance contracts and thus not included in the table above. The s ection on insurance risk
in Annual Report 2022 provides more information. For bonds classified as hold-to-collect, amortised cost exceeded fair value as at 30 September 2023
and 31 December 2022, see note G12 for more information.
Danske Bank / Interim report – first nine months 2023 72/75
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by geographical area
(DKK millions)
30 September 2023
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
29,488
32,873
10,607
3,389
16,187
1,620
6,224
10,374
860
1,804
4
3,062
2,877
50,690
1,422
-
-
-
388
-
4,019
-
18
5,459
3,379
-
-
-
-
2
-
1,792
643
178,274
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
48,577
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,781
26,053
-
1
225
-
690
-
-
-
63
15
304
1
598
851
2,376
1,230
1,196
15
-
114
122
603
60
1
-
178
671
79
-
86
Total
208,613
83,825
15,005
30,638
20,221
1,621
6,582
5,582
15,046
920
1,806
4
3,303
3,566
51,073
3,214
1,327
Total
171,482
15,700
178,274
48,577
30,731
7,581
452,344
31 December 2022*
Denmark
Sweden
UK
Norway
USA
Spain
France
Luxembourg
Finland
Ireland
Italy
Portugal
Austria
Netherlands
Germany
Belgium
Other
46,390
77,432
6,795
3,902
16,534
2,372
11,163
-
8,293
1,120
1,322
14
4,393
3,261
37,142
676
-
-
-
-
-
4,361
-
17
6,123
4,637
-
-
-
-
2
-
2,195
600
172,405
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
33,057
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,680
28,163
-
1
229
-
362
-
-
-
13
16
290
1
253
4,573
2,628
897
-
-
-
96
82
1,253
26
2
-
61
512
288
-
-
223,369
113,117
10,371
32,065
20,895
2,372
11,505
6,205
14,544
1,145
1,324
14
4,467
3,791
37,719
2,872
853
Total
220,809
17,935
172,405
33,057
32,007
10,417
486,630
* Comparative information has been restated, as described in note G2(a).
Danske Bank / Interim report – first nine months 2023 73/75
Notes – Danske Bank Group
Bond portfolio continued
Bond portfolio broken down by external ratings
(DKK millions)
30 September 2023
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub. "investment-grade" or unrated
Central and
local govern-
ment bonds
Quasi-
government
bonds
Danish
mortgage
bonds
Swedish
covered
bonds
Other
covered
bonds
Corporate
bonds
115,070
24,032
12,114
16,837
-
1,513
-
108
372
1,435
-
-
-
-
14,008
1,663
-
29
-
-
-
-
-
-
-
-
-
-
177,857
-
-
-
-
411
-
-
6
-
-
-
-
-
48,575
-
1
-
-
-
-
-
-
-
-
-
-
-
30,208
19
411
-
-
93
-
-
-
-
-
-
-
-
1,534
4
752
283
233
1,283
309
501
1,587
488
139
259
38
169
Total
387,252
25,718
13,279
17,150
233
3,300
309
609
1,966
1,923
139
259
38
169
Total
171,482
15,700
178,274
48,577
30,731
7,581
452,344
31 December 2022*
AAA
AA+
AA
AA-
A+
A
A-
BBB+
BBB
BBB-
BB+
BB
BB-
Sub. "investment-grade" or unrated
180,479
9,542
19,234
6,727
1,120
2,204
-
167
230
1,106
-
-
-
-
15,513
2,207
215
-
-
-
-
-
-
-
-
-
-
-
172,222
-
-
-
-
179
-
-
5
-
-
-
-
-
33,048
-
10
-
-
-
-
-
-
-
-
-
-
-
31,728
64
117
-
-
98
-
-
-
-
-
-
-
-
1,521
222
1,292
27
267
2,207
368
863
2,242
336
650
247
15
161
434,510
12,035
20,868
6,754
1,387
4,688
368
1,030
2,477
1,443
650
247
15
161
Total
220,809
17,935
172,405
33,057
32,007
10,417
486,630
* Comparative information has been restated, as described in note G2(a).
Danske Bank / Interim report – first nine months 2023 74/75
Statement by the management
The Board of Directors and the Executive Leadership Team (the management) have considered and approved Interim report – first
nine months 2023 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 2023 and of the results of the Group’s operations and the consolidated cash flows for the period starting
on 1 January 2023 and ending on 30 September 2023. 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 2023
Executive Leadership Team
Carsten Egeriis
CEO
Magnus Agustsson
Joachim Alpen
Christian Bornfeld
Karsten Breum
Stephan Engels
Johanna Norberg
Dorthe Tolborg
Frans Woelders
Board of Directors
Martin Blessing
Chairman
Jan Thorsgaard Nielsen
Vice Chairman
Lars-Erik Brenøe
Jacob Dahl
Raija-Leena Hankonen-Nybom
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 2023 75/75
Supplementary information
Financial calendar
2 February 2024
21 March 2024
3 May 2024
19 July 2024
31 October 2024
Contacts
Claus Ingar Jensen
Head of Investor Relations
Links
Danske Bank
Denmark
Finland
Sweden
Norway
Northern Ireland
Realkredit Danmark
Danske Capital
Danica Pension
Annual Report 2023
Annual general meeting
Interim report – first quarter 2024
Interim report – first half 2024
Interim report – first nine months 2024
+45 45 12 84 83
danskebank.com
danskebank.dk
danskebank.fi
danskebank.se
danskebank.no
danskebank.co.uk
rd.dk
danskecapital.com
danicapension.dk
Danske Bank’s financial statements are available online at danskebank.com/Reports.