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Annual Report
2023
Danske Bank Group
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Contents
Management’s report
3
4
5
6
8
12
25
33
36
38
41
42
46
49
53
56
58
60
62
63
Letter to our stakeholders
Danske Bank 2023 at a glance
Financial highlights - Danske Bank Group
Executive summary
Strategy execution
Sustainability statement
Financial review
Capital and liquidity management
Investor Relations
Organisation and management
Business units
Personal Customers
Business Customers
Large Corporates & Institutions
Danica Pension
Northern Ireland
Non-core
Group Functions
Definition of alternative performance measures
Reporting principles ESG data
Financial statements
67
68
69
70
73
74
Income statement
Statement of comprehensive income
Balance sheet
Statement of capital
Cash flow statement
Notes
Statements
237 Statement by the management
238
242
Independent Auditor’s report
Independent Auditor’s assurance report on
the ESG statement
Management and directorships
244 Board of Directors
250 Executive Leadership Team
252 Supplementary information
Appendix: Management’s report (cont.)
253 Sustainability – EU Taxonomy disclosures
Annual Report 2023 consists – in accordance with the requirements of the ESEF Regulation
– of a zip file danskebank-2023-12-31-en.zip that includes an XHTML file. The XHTML file is
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2
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Letter to our stakeholders
We live in a time of global change and turbulence. In short
succession, we have experienced a global pandemic, a
breakdown in global supply chains, the Russian invasion of
Ukraine, an energy crisis, accelerating inflation, a cost-of-living
crisis and, most recently, regional conflict in the Middle East. All
of these have combined to make the world and the economic
outlook much more uncertain.
and the ability to distribute capital consistently. In line with this
commitment, we are therefore pleased that, on the basis of our
2023 financial results, we can propose a dividend payout as
well as initiate a share buy-back programme. Delivering value
for our shareholders is a key priority for us, and we can only
do so by delivering value to our customers, employees and the
societies we are part of.
At Danske Bank, our focus has been on helping our customers
navigate these challenges and the uncertainty, and we have
engaged with them closely to help them prepare financially for
more uncertainty ahead.
As a bank that serves more than three million customers
across the Nordic countries – from the young family seeking to
buy their first home to the large corporate customer planning to
expand to new markets – we have the insight and expertise to
offer a quality of advice and service that is of high value to our
customers, not least in uncertain times.
Over the past year, geopolitical risks and how to address
these risks have been a recurring topic in our discussions with
corporate customers, and we have engaged with personal
customers and business customers alike to discuss the impact
of higher interest rates and higher inflation.
Despite the challenging macroeconomic and geopolitical
environment, 2023 has been a year of significant strategic
progress at Danske Bank. With our legacy cases mostly behind
us, we are now back in a position where we can focus entirely
on the needs of our customers and on driving our strategic
development.
In recent years, we have made fundamental changes to the bank,
which have resulted in a more focused business with a lower
risk level and a stronger organisation. Simultaneously, we have
strengthened our commercial momentum, and with the closing
of the books on the financial year 2023, we conclude that, thanks
to the relentless and extraordinary efforts of our colleagues, we
have exceeded the financial targets we set out to meet by the end
of 2023. Equally important, we see rising customer satisfaction,
stronger investor confidence and strong employee engagement,
and we continue to have a positive impact on society.
Today, Danske Bank is a focused Nordic bank with a strong
market presence in Denmark, Sweden, Finland, and Norway.
With our new strategy, Forward ’28, which we announced
in June, we are changing gears with substantially increased
strategic and financial ambitions. Forward ’28 defines a
clear strategic focus for the bank and sets clear targets for
profitability and growth. As part of the strategy, we have
decided to increase investments in our digital platforms,
advisory services and sustainability, which we see as key areas
where we have the greatest potential to make a real difference
for our customers. Equally, we commit to a disciplined approach
to capital allocation, return and cost. This means that with
Forward ´28, we see a strong potential for capital generation
3
Amid the current geopolitical and macroeconomic uncertainty,
climate change and the green transition remain the biggest
challenges and the greatest opportunities for our customers
and for us. As the UN Secretary General phrased it, the
summer of 2023 became the point at which we went from
global warming to global boiling, and it is now universally
accepted and understood that climate change and the current
fossil fuel-based economy is a risk to societies, economies and
our current way of life globally.
A year ago, we published our Climate Action Plan with
a mapping of the entire carbon footprint of our and our
customers’ activities and with long-term and intermediate
targets for how we want to reduce this footprint in close
cooperation with our customers. In doing so, we support the
transition of our customers, build a more robust and resilient
bank and contribute to advancing the transition to a more
sustainable society, all of which are at the core of our Purpose:
To release the potential in people and businesses by using the
power of finance to create sustainable progress today and for
generations to come.
As we look ahead in 2024, there is now hope that inflation
may have peaked, that interest rates will trend lower and that
the global economy will experience a soft landing. However,
uncertainty remains, and at a time when one crisis is followed
by another, it is crucial to see crises and uncertainty not
as exceptions but as an integral part of how we live and do
business.
At Danske Bank, we remain committed to supporting our
customers and to enabling them to make sustainable progress
in these uncertain times while we continue to execute our
ambitious strategic agenda and unfold the full potential of
Danske Bank.
Martin Blessing
Chairman of the
Board of Directors
Carsten Egeriis
Chief Executive Officer
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Danske Bank at a glance
Net profit in 2023 of
DKK 21,262
million
Dividend
59%
of net profit for 2023
Core banking income
up 20%
Strong credit quality –
loan impairments in 2023 of
DKK 262
million
Strong capital and
liquidity position
Total capital ratio of 18.8%
LCR of 170%
Forward ’28 strategy
launched with ambitious 2026
financial targets
4
Our 2023 financial targets
Financial year 2023
Return on shareholders’ equity of 8.5-9%
Cost/income ratio in the mid-50s
Common equity tier 1 capital ratio of 16%
12.7%
48.5%
18.8%
As part of the strategy, we have decided to increase our
investments in our digital platforms as well as advisory
services and sustainability, which we see as key areas
where we have the greatest potential to make a real
difference for our customers.
2023 sustainability finance performance
(DKK billions)
Sustainable financing,
including granted green loans
and arranged sustainable
bonds
2023 target
365
0
50
100
150
200
250
300
350
400
2030 target
Investments in funds with a
sustainable investment
objective
53
50
0
Investments in the green
transition by Danica Pension
100
150
200
2023 target
2030 target
55.4
0
10
20
30
40
50
60
70
80
90
100
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Financial highlights – Danske Bank Group
Income statement
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
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 imp. chg. and provision for Estonia matter
Attributable to additional tier 1 etc.
Balance sheet (end of year)
Due from credit institutions and central banks
Repo loans
Loans
Trading portfolio assets
Investment securities
Assets under insurance contracts
Other assets (including Non-core)
Total assets
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
Additional tier 1 capital holders
Shareholders' equity
Total liabilities and equity
Ratios and key figures
Dividend per share (DKK)**
Earnings per share (DKK)
Return on avg. shareholders' equity (%)
Adj. return on avg. shareholders' equity (%)***
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)
2023
35,000
11,707
3,704
1,472
562
52,445
25,414
989
-
-
-
27,031
262
26,769
-87
26,682
5,420
21,262
21,262
-
271,434
272,841
1,779,024
548,189
283,596
496,031
119,865
3,770,981
70,774
197,140
1,137,061
741,062
341,022
454,487
482,630
132,293
38,774
-
175,739
3,770,981
14.5
24.8
12.7
12.7
1.21
48.5
48.5
23.1
18.8
180.4
204.4
20,021
2022*
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
-4,580
10,848
86
191,828
247,752
1,803,955
638,799
287,078
502,995
118,149
3,790,556
91,159
137,920
1,169,879
711,773
298,068
554,321
488,891
139,918
38,350
-
160,278
3,790,556
-
-5.4
-2.8
6.5
0.83
100.3
63.4
22.1
17.8
137.3
186.7
21,022
Index
23/22
139
93
198
-
29
125
96
103
-
-
-
-
17
-
-
-
188
-
196
-
141
110
99
86
99
98
101
99
78
143
97
104
114
82
99
95
101
-
110
99
95
2021
21,900
13,524
4,260
2,184
797
42,665
25,663
687
36
-
-
17,002
348
16,654
-2
16,652
3,651
13,001
13,001
451
320,035
253,954
1,834,372
509,425
280,590
646,613
136,094
3,981,082
101,786
193,391
1,167,638
815,087
355,757
374,958
614,107
143,040
39,321
5,497
170,500
3,981,082
2.0
14.6
7.6
7.6
0.73
60.2
60.2
22.4
17.7
113.0
198.5
21,754
2020
22,151
12,217
4,297
1,669
594
40,928
27,027
606
379
-
-
13,901
7,001
6,900
-596
6,304
1,715
4,589
4,589
551
345,938
257,883
1,838,126
682,945
296,769
545,708
141,862
4,109,231
125,267
223,973
1,193,173
775,844
360,127
499,331
591,930
138,571
32,337
8,508
160,171
4,109,231
2.0
4.7
2.6
2.6
0.76
66.0
66.0
23.0
18.3
100.7
187.6
22,376
2019
22,104
12,636
4,350
2,385
1,059
42,534
25,900
-
355
-
803
15,831
1,516
14,315
-493
13,822
-1,249
15,072
15,875
786
174,377
346,708
1,821,309
495,313
284,873
494,992
143,477
3,761,050
98,828
232,271
962,865
795,721
350,190
452,190
535,891
130,853
31,733
14,237
156,271
3,761,050
-
16.7
9.6
10.1
0.81
62.8
60.9
22.7
17.3
107.8
183.1
22,006
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 62.
*Comparative information for financial highlights has been restated as explained in note G3.
** Dividend for 2023 of a total of DKK 14.5 per share consists of a proposed dividend of DKK 7.5 per share for the second half of 2023 and an interim dividend of DKK 7.0 per share that
was paid in connection with the interim report for the first half of 2023.
***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 Performance Measures for more detail.
5
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Executive summary
As we have now closed 2023, we can look back at a year
that in many ways presented a challenging and unpredictable
environment for all to navigate in. For Danske Bank, it was a
very busy year as we supported our customers in navigating
the complex environment, yet also a successful year as we
executed on our strategic priorities and delivered satisfying
financial results. With our legacy cases mostly behind us,
we are now back in a position where we can focus entirely
on the needs of our customers and on driving our strategic
development. Our financial results in 2023 provide a platform
for us to continue to be a valuable partner for our customers,
help finance the green transition, invest in developing our
solutions and improve the return to shareholders – to the
benefit of all our stakeholders.
In terms of strategy execution, the Better Bank strategy
launched in 2019 and the fundamental changes we have
implemented in recent years have yielded results. We have
settled the Estonia matter and have come far with the
remediation of our other legacy cases. Moreover, we have
resumed dividend payouts, starting with the payout of an
accelerated interim dividend of DKK 7.0 per share in connection
with the interim report for the first half of 2023 and a proposed
dividend of DKK 7.5 per share for the second half of 2023; in
total amounting to DKK 14.5 per share, or 59% of net profit
for 2023. We have also announced our clear ambition to
make further capital distributions in the period until 2026 as
part of our Forward ’28 strategy. On the basis of the financial
results for 2023, the Board of Directors has decided to initiate
a share buy-back programme of DKK 5.5 billion, equivalent to a
total payout ratio of 85% including the dividend for 2023. The
programme, which has been approved by the Danish Financial
Supervisory Authority, will start on 5 February 2024.
At our Investor Day in June 2023, as a natural progression
of our Better Bank strategy, we announced our Forward ‘28
strategy. This included a financial target of a ROE of 13% in
2026 with a CET1 ratio above 16%. With this strategy, we
have set clear ambitions to continue our efforts to strengthen
our position as a leading bank in the Nordic region in a
digital age, with a sharpened focus on prioritised customer
segments. To support this, we will make significant investments
in customer offerings, increasing investments in our core
capabilities within digital platforms, expert advisory services
and sustainability. To this end, we have entered into a strategic
partnership with Infosys to accelerate our digital and technology
transformation as set out in Forward ’28. Additionally, in
December 2023, the Norwegian Competition Authority
approved the sale of our personal customer business in Norway
to Nordea.
Looking back at 2023, good commercial momentum in our
business, the normalised interest rate environment and
better-than-expected macroeconomic conditions leading
to low loan impairments enabled Danske Bank to deliver a
satisfying financial performance in 2023. Our customers
faced uncertainty throughout the year, but our well-capitalised
6
balance sheet enabled us to be a strong financial partner for
our stakeholders. We continued to support our customers
with risk management expertise and advisory services, and
we continued to offer attractive digital savings and deposits
products that enabled customers to take advantage of the new
interest rate environment.
Consequently, we achieved a satisfactory financial result in
2023, with a return on equity of 12.7% and a net profit of
DKK 21.3 billion.
In the fourth quarter of 2023, our financial result was impacted
by better net interest income when excluding the effect of a
DKK 0.3 billion non-recurring item in the third quarter. Also, fee
income increased, driven primarily by a strong performance
in Danske Bank Asset Management. In addition, in the fourth
quarter, insurance income improved and came in closer to a
normalised level. For the full year, we delivered a cost/income
ratio of 48.5%, with total expenses of DKK 25.4 billion,
which is in line with our guidance through the year. Asset
quality remained strong with only negligible impairments in
the fourth quarter. Full-year loan impairment charges thus
amounted to DKK 0.3 billion as communicated in our Company
Announcement dated 8 December 2023.
Compliance
Protecting society, customers, and the integrity of the financial
markets in which we operate remains central to our values
and our objective of maintaining a sound corporate culture.
In terms of strengthening the robustness of our compliance
and financial crime frameworks and getting compliance
under control as set out in the Better Bank strategy, we have
now completed our Financial Crime Plan. We view this as a
significant achievement. We will continue testing our controls
to ensure that what we have implemented is fully embedded
and operating effectively. Should the outcome of the testing
require further improvements, those will be addressed as part
of normal procedure.
Sustainability
2023 was the final year of the Group Sustainability strategy
that we launched in 2020 to support our ambition to be a
leading bank for sustainable finance in the Nordic countries.
A key objective of the strategy was to increase funding to and
investments in the sustainability transition, and over the three
years of the strategy, we have lifted sustainable financing to
DKK 365 billion (2022: DKK 273 billion) and succeeded in
investing DKK 53 billion (2022: DKK 52 billion) in funds with
sustainability objectives. In 2023, we also launched a new
ambitious Climate Action Plan that maps Danske Bank’s
total carbon emissions from all of our activities and helps to
ensure that we and our customers reduce carbon emissions
in line with the goals of the Paris Agreement. Under Forward
’28, sustainability is also among our four key focus areas, and
the new strategy sets out our overall ambition to be a leading
Nordic bank in supporting the sustainability transition of
households, businesses, and the Nordic societies in general.
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
To fulfil this ambition, we will continue to develop sustainability-
related commercial offerings and to manage sustainability-
related risks to our business.
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 December
2023, our CET1 capital ratio stood at 18.8%, leaving a buffer
of around 450 bps to the regulatory requirement, our liquidity
coverage ratio stood at 170% (31 December 2022: 151%),
with an LCR reserve of DKK 615 billion (31 December 2022:
DKK 570 billion), and our net stable funding ratio stood at
125.9%. MREL-eligible subordinated liabilities stood at DKK
239 billion.
Capital distribution
On the basis of our satisfactory performance in 2023 and strong
capital position, the Board of Directors is proposing a dividend for
the second half of 2023 of DKK 7.5 per share. This is in addition
to the interim dividend of DKK 7.0 per share paid for the first half
of 2023. In total, the dividend for 2023 will thus amount to DKK
14.5 per share, or 59% of net profit for 2023.
On the basis of the financial results for 2023, the Board of
Directors has decided to initiate a share buy-back programme
of DKK 5.5 billion, equivalent to a total payout ratio of 85%
including the dividend for 2023. The programme, which has
been approved by the Danish Financial Supervisory Authority,
will start on 5 February 2024.
Financials
Danske Bank delivered a net profit of DKK 21,262 million in
2023, against a net loss of DKK 4,580 million in 2022. The
result for 2022 was affected by the provision for the Estonia
matter of DKK 13,800 million and the goodwill impairment
charge of DKK 1,627 million.
Our core business saw good commercial momentum, with
the new interest rate environment and better-than-expected
macroeconomic conditions enabling us to improve profitability.
Net interest income showed a strong development driven by
higher income from deposits following repricing actions and
market rate developments as well as product development. A
net one-off interest compensation of DKK 222 million related to
a tax paid in previous years also contributed to the increase.
Net fee income was lower than in 2022. Net fee income did,
however, increase in the second half of the year because of
increased capital markets activity, stable investment activity
and improving, though still low, housing market activity towards
the end of the year, combined with customers switching from
mortgage loans to bank loans.
Net trading income rose, with the increase driven by customer
flows supported by the fixed income strategy implemented
7
at Large Corporates & Institutions towards the end of 2022.
The gain of DKK 327 million on the sale of shares taken
over in connection with a loan in 2023 benefited net trading
income. Net trading income was negatively impacted by 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. The
reclassification had a positive effect on Other comprehensive
income but did not affect shareholders’ equity.
Net income from insurance business recovered, especially
towards the end of the year. The increase was due primarily to
more positive developments in the financial markets, although
the effect was partly offset by an increase in health and
accident claims. Net income for 2023 includes a provision of
DKK 250 million for possible compensation to customers.
Underlying expenses continued to progress according to
full-year plan and decreased 4% from the level in 2022. The
number of FTEs continued to decrease and stood at 20,021
at the end of the year (end-2022: 21,022) due mainly to staff
in Danske IT India being transferred to Infosys in September
2023.
Impairments reflect successful restructuring activities,
mainly in the oil, gas and offshore sector and continued post-
pandemic recoveries, contributing to overall stable credit
quality. Loan impairment charges in core business segments
were low in 2023. The macroeconomic situation, mainly lower
property prices and higher interest rates, continued to impact
impairments, and the macroeconomic landscape remains
uncertain. We thus continue to apply significant post-model
adjustments related to the macroeconomic uncertainty and
remain watchful of any possible credit deterioration.
Outlook for 2024
Total income is expected to grow in 2024, driven by higher core
income, our continued efforts to drive commercial momentum
and in line with our financial targets for 2026. Income from
trading and insurance activities will be subject to financial
market conditions.
We expect operating expenses in 2024 to be in the range
of 26–26.5 billion, reflecting increased investments in line
with our financial targets for 2026 and continued focus on
cost management. The outlook includes non-recurring items
of approximately DKK 0.6 billion related to the relocation to
the new domicile and minor costs for the divestment of the
personal customer business in Norway.
Loan impairment charges are subject to an elevated level of
geopolitical and macroeconomic uncertainty and are expected
to reflect our assumptions in our financial targets for 2026 of
approximately 8 basis points p.a.
We expect net profit to be in the range of DKK 20-22 billion.
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Strategy execution
Better Bank
We have reached the end of the Better Bank strategy cycle; a
journey that has helped us improve Danske Bank since 2019
to the benefit of all stakeholders and a period during which we
fortified a robust compliance culture, including the applicable
processes, and successfully delivered on the four strategic
ambitions that we undertook to accomplish by 2023.
In terms of customer satisfaction, our ambition was to be on
average in the top two. Even though our brand perception is
still affected by our legacy cases and by the communicated
divestment of our personal customer business in Norway,
customer satisfaction scores for personal customers trended
positively in Denmark and Finland and remained at a stable level
in Sweden. Customer satisfaction remained high among our
business and large corporate customers.
Furthermore, we have tracked and benchmarked our
improvement in terms of caring about and developing our
employees by comparing Satisfaction & Motivation scores with
the scores at other financial institutions in the Nordic countries.
Our score has improved from 71 points to 75 at the end of
2023. This reflects an improvement from the bottom quartile to
the best half of financial institutions in the Nordic countries.
We set the ambition to operate sustainably, ethically and
transparently in order to have a positive impact on the societies
we are part of. In the strategy’s core focus area of sustainable
finance, we have made strong progress and have met both
of our 2023 targets. Furthermore, we have also achieved
progress in all five of the strategy’s other focus areas, although
results in a few of these areas fell slightly short of meeting the
targets that had been set.
A specific focus of the Better Bank strategy was to establish the
Group’s Compliance Under Control (CUC) programme in 2019
to strengthen compliance and financial crime risk management
frameworks, processes and systems across four key areas,
Trade & Communications Surveillance, Sanctions Compliance,
Transaction Monitoring, and Conduct.
The CUC programme is now ready to close and transition to
business as usual following significant enhancements to the
Group’s trade and communications surveillance systems and
processes (including closure of all six related DFSA orders),
recognition of the Group’s financial sanctions identification
and management capabilities in the Nordic region, increased
automation and coverage of transaction monitoring, and
establishment and embedding of both the Conduct Risk and
Code of Conduct frameworks across the Group.
In terms of further strengthening our financial crime controls,
we completed our multi-year Financial Crime Plan on target
and in doing so implemented an adequately designed control
framework that meets applicable regulatory requirements and
manages our risks. We see this as a significant achievement.
Ensuring that our framework is sustainable and demonstrates
the ability to evolve over time is a key ongoing priority for us,
and we will continue to focus on embedding and testing what
we have implemented. We also intend to enhance our controls
8
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
to make them more customer-centric while maintaining risk
management effectiveness and introducing greater automation
to reduce operational risk and increase cost effectiveness.
Throughout 2023, the commercial momentum was positive
across our core banking activities. Despite the volatile
macroeconomic environment in the Nordic economies, we
progressed towards meeting our ambitions for shareholders in
2023. The return on equity exceeded our ambition of 8.5-9%
set in 2021, reaching 12.7% at the end of 2023. The cost/
income ratio stood at 48.5% (exceeding our ambition of low
50s) at 31 December 2023, and the cost/income trajectory
is also supported by our ongoing efforts to further simplify our
business and processes.
Forward ‘28
In 2023, we spent considerable time on formulating our
new Forward ’28 strategy that we announced in June 2023.
Formulating the strategy included lessons learned from
the Better Bank strategy cycle, building on successes and
addressing areas in which we did not fully achieve the ambitious
targets we had set.
For Northern Ireland, our focus is on remaining a stable, strong
and risk-astute bank, consolidating our market-leading position
alongside pursuing simplicity and efficiency in our operations –
all of which is underpinned by ensuring high levels of employee
engagement. We remain committed to Northern Bank, which
continually achieves strong income and profitability levels, and
have ensured that our strategy in Northern Ireland is aligned
with our Forward ’28 strategy.
To support the execution of the strategy, we are significantly
increasing annual investments in our core capabilities within
digital platforms, expert advisory services and sustainability
from DKK 3 billion to DKK 4 billion. Combined with the
reprioritisation of other investments, this means that we more
than double investments in our strategic development.
Danske Bank has benefited from near- and offshoring for many
years. To build on this, we entered into a strategic partnership
with Infosys with the aim of enabling us to further scale our IT
capabilities, thus future proofing our global setup for executing
on our Forward ’28 strategy and providing us with the potential
to accelerate our efforts.
Since 1 September 2023, around 1,400 employees of Danske
IT in India have transferred to Infosys. The main benefits include
continued acceleration of our transformation by actively
•
supporting the execution of the digital agenda in the
Forward ’28 strategy via Infosys’s best practices, tooling
and capacity
improved access to talent and capabilities through Infosys’s
global capacity pool
•
• access to Infosys’s expertise and tooling
•
productivity gains achieved by Infosys offering staff
augmentation services to support our deliveries at lower
total costs
improvement of customer service standards by streamlining
lead times, accelerating time-to-market and delivering
quality solutions through access to global best practice
•
Furthermore, with Infosys’s commitment to our strategic
upscaling secured, we will be accelerating the digital and
technological transformation and delivering on our strategic
priorities. And we will be able to offer our customers better
solutions and a better experience at a faster pace.
As part of a focused Personal Customers business strategy,
Danske Bank has entered into an agreement to sell its personal
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 distributed
to personal customers in Norway. While preparations for the
transfer of the customers have commenced, the transaction is
subject to regulatory approvals. Pending these approvals, the
transaction is expected to close in the fourth quarter of 2024.
Sustainability
Further strengthen
value proposition
through strong ESG-
specific advisory
services
Simple,
Efficient & Secure
Further optimise
operational efficiency
and strengthen risk
management
Advisory
Further build proactive
customer engagement
with differentiated
expertise
Digital
Continue to improve
customer journeys, digital
self-service and third-party
integrations
Today, Danske Bank is a focused Nordic bank with a strong
market presence in Denmark, Sweden, Finland and Norway.
With our new strategy, we set clear ambitions for continuing
the efforts to strengthen our position as a leading bank in the
Nordic region and make significant investments in customer
offerings. For business and institutional customers, we want
to be a leading bank in Denmark, Sweden, Finland and Norway.
For personal and private banking customers, we sharpen the
focus in each market and continue our strategic development
to strengthen relations with existing customers and attract new
ones.
9
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Our vision is to be an organisation that offers everyone working
at Danske Bank a satisfactory and motivating experience
beyond what they can experience in comparable organisations.
Therefore, in the coming years, we will continue to prioritise
initiatives that support high levels of satisfaction among
our dedicated colleagues while also fuelling the execution of
Forward ´28. Key priorities include stimulating job content,
attractive day-to-day working conditions and engaging
leadership.
During 2023, we took several important steps to advance
our sustainability agenda, including the launch of our Climate
Action Plan and the inclusion of sustainability as one of the
strategic themes in our Forward ’28 strategy. On the business
side, we now have a number one position in sustainable
bonds and sustainability-linked loans, and our commercial
momentum recently benefited, for instance, from campaigns
for homeowners to get financing for energy efficiency
improvements and recognition by the Danish Consumer Council
for one of the market’s best loans for electric cars.
Personal Customers
During 2023, we remained committed to our ambition to
stabilise our position as the leading full-service retail and private
banking bank in Denmark, where we see budding positive
signs in regard to performance. We focused on concluding
the work related to our ‘Better Bank’ strategy by executing on
tactical initiatives within home finance, investments and our
advisory service model, while simultaneously preparing for our
future engagement model that offers a personalised banking
experience as part of the Forward ’28 strategy.
Especially in a time of considerable financial uncertainty,
the value of specialist advice can be gauged from customer
satisfaction with meetings. Satisfaction was high, scoring 9 out
of 10 across our markets. The score shows that our customers
are very satisfied with the interaction they have directly with
us. For Denmark specifically, our customers scored us 4.5 out
of 5 on Trustpilot, which positions us strongly among our key
competitors. Overall, customer satisfaction among personal
customers remained stable across markets. In Denmark,
Danske Bank held a shared fourth place at the end of 2023
among the five largest banks according to our sector competitor
benchmark survey. Even though this means that we did not
meet our Better Bank ambition of a top-two ranking by 2023
and still want to improve, we are pleased with the momentum
we have gained, considering that our brand perception
continues to be impacted by our legacy cases.
In Finland, Danske Bank was ranked third, and in Sweden and
Norway, Danske Bank retained its position as number six. For
private banking customers, Danske Bank was ranked third in
Sweden and Finland, fifth in Denmark and sixth in Norway.
In accordance with our strategy, momentum in 2024 will be
driven by focusing on three growth and profitability levers:
making relations more efficient, broadening existing relations
with customers, and developing new relations. We will continue
to strengthen and scale our private banking capabilities and
offerings, invest further in our digital solutions, and start
initiatives across markets to strengthen our marketing,
commercial, partnership and advisory capabilities.
Business Customers
In 2023, we focused on finalising the work on the Better Bank
strategy and at the same time fine-tuned and harmonised
our service model for business customers across the Nordic
countries.
In Asset Finance, we saw good commercial momentum driven
partially by the strengthened product offerings within green
transitioning.
At the beginning of 2023, we implemented a new operating
model for commercial real estate customers. These customers
are now gathered in one Nordic unit with specialised advisory
services tailored to each customer’s needs. The outcome of the
new operating model has been well received.
Customer satisfaction remained high among our business
customers. For medium-sized businesses, we were ranked
number one on customer satisfaction in Finland and number
two in Norway. In Denmark, we continued to see a positive
trend for medium-sized businesses but ended the year in third
place. In Sweden, we retained our ranking as number four. For
smaller-sized businesses, we improved to a shared number one
ranking in Sweden, remained in the top two in Denmark and
Norway, and continued to be ranked number three in Finland.
To achieve a better customer experience and faster lead time
for customer inquiries related to our everyday banking services,
we have harmonised the customer support setup across the
Nordic countries. Customers are highly satisfied with our
support, scoring it at 8.4 on a scale from 1 to 9.
Our strategy builds on a strong commercial momentum and will
steer us in the coming five years. To reach the overall objective,
we will focus on three areas: win prioritised segments, scale
our digital engagement model, strengthen and leverage our
One Corporate Bank platform and, lastly, differentiate ourselves
through leading advisory and ESG capabilities. Going into 2024,
we are planning several digital releases to support both small
and large business customers in managing their finances
frictionlessly. We will also continue to invest in ESG, focusing on
product development and upskilling of advisers to strengthen
the help we can offer businesses to achieve their sustainability
ambitions.
Large Corporates & Institutions
Throughout 2023, we progressed the development and
strengthening of our position as a leading Nordic wholesale
bank while reaching our ambitions of contributing positively to
the Group’s return on equity target and increasing our income
10
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
by above DKK 500 million. The Better Bank strategy has served
us well and provides a solid foundation for the execution of our
Forward ’28 strategy.
corporate growth journey outside Denmark, strengthening and
leveraging our One Corporate Bank platform and deepening
our relations with Nordic institutions.
Our ambition to meet the Group’s sustainability targets through
excelling in sustainable finance and responsible investments is
developing strongly.
We remain the leading Nordic adviser and bookrunner for
sustainable bonds and have ranked for four consecutive years
(2020-2023) as the largest Nordic arranger of green bonds.
We are among the ten largest arrangers in Bloomberg’s
Global Green Bonds league table, and we have arranged more
European issuer green bonds than any other arranger. A new
dedicated team in Loan Capital Markets will accelerate our
efforts within project and renewable energy finance and will
support our customers and society in the green transition.
Good traction on sustainable product development in Asset
Management resulted in the delivery of several key products
to our customers throughout 2023, such as our sustainability-
focused illiquid alternative product ’Danske Invest Alternatives
– Global Future’ and a new Nordic equity fund.
We continue to see overall strong customer satisfaction as
measured in the independent Nordic Prospera research by
Kantar. In particular, customer satisfaction with our product
offering remained high, with a Nordic number one Prospera
position in Interest Rate Swaps and DCM Investment Grade
Issuance as well as top two Prospera positions in areas such as
Foreign Exchange, Trade Finance and Cash Management.
We also maintained Nordic top three positions in Institutional
and Large Corporate Banking Prospera reports, showing the
strength of our coverage model. Moreover, we reached, for the
first time, the top position in Large Corporate Banking Sweden,
which proves our ambition of accelerating the growth journey
in Sweden. We are also proud that our increased focus on
digitalisation and process simplification resulted in the highest
customer satisfaction scores for digital solutions and KYC and
AML procedures in the Nordic Large Corporate Prospera report.
To leverage our organisational power and be even better
prepared for the Forward ’28 strategy, Large Corporates &
Institutions changed its organisational layout with effect from
1 January 2024. By moving our securities team to a new
Markets unit, we gather all markets business under the same
leadership. Also, by adding bond market competencies to
our Investment Banking unit, we create a pure, even stronger
and fully-fledged investment bank, with all the asset classes
represented on the private side in one organisation. This is a
core enabler for us – over time and within the framework of
Forward ‘28 – to grow our strategic advisory capacity.
We are confident that our Forward ’28 strategy will further
support us in becoming the leading wholesale bank in the
Nordic countries by targeting our efforts on continuing the
11
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Sustainability statement
Danske Bank has both the responsibility and the financial
ability through our core business activities* to help accelerate
and enable the transition to a more sustainable future for our
customers and the societies in which we operate.
Our strategic approach is based on a core belief that Danske
Bank and our customers must transition in parallel with the
wider economy, guided by the overarching sustainability
goals defined by society. This approach is also expressed in
Danske Bank’s purpose: to release the potential in people and
businesses by using the power of finance to create sustainable
progress today and for generations to come.
Concluding our 2023 sustainability strategy
2023 was the final year of Danske Bank’s 2023 Group
Sustainability Strategy, which was launched in 2020 to support
our ambition to be a leading bank for sustainable finance
in the Nordic countries. In the strategy’s core focus area of
sustainable finance, we have made strong progress and have
met both of our 2023 targets. Furthermore, we have also
achieved progress in all five of the strategy’s other focus areas,
although results in a few of these areas fell slightly short of
2023 Group Sustainability Strategy
meeting the targets that had been set, see overview of target
fulfilment below.
During the strategy period, the UN Principles for Responsible
Banking (PRB) served as a framework for aligning our business
with societal goals, including the UN Sustainable Development
Goals (SDGs) and the goals of the Paris Agreement. The
strategic focus areas of the strategy directly supported five of
the 17 SDGs, but our core business activities have potential
positive and negative impacts on all SDGs. In the context of
the PRB, assessments of our lending portfolio in 2022 and of
our investment portfolio in 2023 identified climate change and
biodiversity as two significant impact areas for Danske Bank.
Sustainability approach towards 2028
In our Forward ’28 strategy, one of the overall strategic
ambitions is for Danske Bank to be a leading Nordic bank
in supporting the sustainability transition of customers,
companies and Nordic societies. To meet this ambition, we are
continuously developing our sustainability-related commercial
offerings, managing sustainability-related risks to our business,
and at the same time strengthening the management of our
impact on climate, nature, biodiversity and people.
Focus area
Targets and achievements
SDG contribution
Read more
Sustainable
finance
Sustainable financing
By year-end 2023, we had arranged or granted DKK 365 billion in sustainable financing (2022: DKK 273
billion), which includes green loans and arranged sustainable bonds, thereby exceeding our 2023 target of
DKK 300 billion.
Responsible investments
With DKK 53 billion invested in funds with sustainability objectives by year-end 2023
(2022: DKK 52 billion), we continue to progress towards our target of investing DKK 150 billion by 2030.
With DKK 55.4 billion invested in the green transition by Danica Pension by year-end 2023
(2022: DKK 37.7 billion), we surpassed our 2023 interim target of investing DKK 50 billion, with an ultimate
target af allocating DKK 100 billion by 2030.
Environmental
footprint
With a 46% carbon emissions reduction from own operations since 2019 (2022: 52%), we have exceeded
our target of 40% carbon emissions reduction by 2023 and are also making progress to reach our target of
60% by 2030.
Employee well-
being & diversity
With a share of 34% women among senior leaders (2022: 34%), we have not reached our target of minimum
35% by 2023.
We achieved an employee engagement score of 75% in 2023 (2022: 76%) and therefore did not accomplish
our target of minimum 77%.
Financial
confidence
With approximately 2.4 million children, young people and parents supported with financial literacy tools
and expertise since 2018 (2022: approximately 2.1 million), we exceeded our target of supporting 2 million
individuals by 2023.
Entrepreneur-
ship
With 7,909 start-ups and scale-ups supported with growth and impact tools, services and expertise since
2016 (2022: 7,231), we have not reached our target of supporting 10,000 start-ups and scale-ups by 2023.
Governance &
integrity
97% of employees completed and passed risk and compliance training on time in 2023 (2022: 97%), which
is in line with our annual target of over 95%.
p. 16
p. 17
p. 17
p. 19
p. 21
p. 20
p. 22
p. 22
p. 23
Danske Bank’s sustainability statement, including appendix – Management’s report (cont.) Sustainability - EU Taxonomy disclosures on pages 253-287, ensures
compliance with section 135a and b of the Danish Executive Order on Financial Reports for Credit Institutions and Investment Companies, etc. and also meets
disclosure obligations related to Article 8 of the EU Taxonomy and underlying delegated acts.
* For a description of our business model, please see note G3 on Business model and business segmentation and page 41 for an overview of our business units.
12
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Sustainability governance
Danske Bank anchors the governance of sustainability at
the level of the Board of Directors (BoD) and the Executive
Leadership Team (ELT). In 2023, the BoD further developed
its sustainability competencies with a tailored digital training
course and on-site seminar covering climate change, nature,
biodiversity, and human rights.
Engaging with stakeholders on material sustainability issues
We continuously engage with a wide range of stakeholders to
increase our understanding of our impacts and to exchange
knowledge in line with our Stakeholder Policy. In 2023, we
gathered stakeholders’ perspectives by conducting dedicated
interviews on what sustainability issues the stakeholders deem
to be material for Danske Bank.
The stakeholder interviews were part of a comprehensive
double-materiality assessment initiated in view of the
EU Corporate Sustainability Reporting Directive (CSRD),
which we are required to report under from 2024. Double
materiality requires an assessment of financial implications
for Danske Bank stemming from sustainability-related risks
and opportunities (i.e. financial materiality) as well as an
assessment of actual or potential positive or negative impacts
on people or the environment caused or contributed to by
Danske Bank’s activities (i.e. impact materiality).
In 2024, we will finalise our first double-materiality assessment
and bring together our financial and impact materiality results
as part of our CSRD reporting.
Frontline employees and leaders across our Nordic markets
were trained in how to discuss the implications of sustainability
with our business customers. We also conducted tailored
sustainability training for personal customer advisers and
leaders in Denmark. To ensure that all employees know how
we are working with sustainability and how they can use this
insight when they engage in discussions with colleagues,
customers and partners, all employees must complete
an annual sustainability eLearning course that includes a
mandatory sustainable finance module. In 2023, this module
was updated to include content on biodiversity and how to avoid
the risk of greenwashing.
To ensure efficient strategy execution, we integrate
sustainability-related KPIs into our performance management
framework. All members of the ELT and all senior leaders
had sustainability-related KPIs in their short-term incentive
programme, with reference to selected 2023 Group
Sustainability Strategy targets on sustainable finance and
environment.*
In terms of risk management, the principal risks already
faced by the Group can potentially be intensified by a range
of interlinked sustainability risks. In 2023, climate risk
management remained a priority, particularly in respect of
credit risk management.** Other risk areas in focus include
practices for sustainable products and services and fair
treatment of customers.
Business Integrity Committee
Our committees and councils form part of our sustainability
governance, in which the ELT’s Business Integrity Committee
(BIC) chaired by our CEO is the overall governing body. The BIC
is mandated to set Danske Bank’s strategic direction, ambition
level, related principles and policies and to prioritise resources
across the sustainability agenda, while also overseeing the
implementation of the strategic sustainability priorities.
In 2023, areas of key decision-making included initiating
implementation of our Climate Action Plan, setting nature and
biodiversity engagement targets, publishing our first Human
Rights Report, and updating our strategic framework for
sustainability as part of our Forward ’28 corporate strategy.
* For more details, please see our Remuneration Report 2023 available at
danskebank.com/remuneration.
** For more details, please see our Risk Management 2023 report available at
danskebank.com/ir.
13
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
ESG highlights – Danske Bank Group
Overview of third-party-assured environmental, social and governance (ESG data). Data is prepared in accordance
with our ESG data reporting principles, see pages 63-65.
Sustainable finance
2023
2022
Green loans granted to customers in DB (DKK billions)*, **
Green loans granted to customers in RD (DKK billions)*, **
Bloomberg League Table share of arranged sustainable bonds (DKK billions)**
Assets under management (AuM) in funds with a sustainable objective – Article 9 (DKK billions)
Investments in the green transition by Danica Pension (DKK billions)
Environment
CO2e emissions scope 1 (tonnes)
CO2e emissions scope 2 market-based (tonnes)
CO2e emissions scope 2 location-based (tonnes)
CO2e emissions scope 3 own operations (tonnes)
Total CO2e emissions – scope 1, scope 2 market-based, scope 3 own operations (tonnes)***
Energy consumption (electricity and heat) (MWh)
Renewable energy share scope 1 and 2 (%)
Social
Gender diversity on the Board of Directors elected at the Annual General Meeting (w/m%)
Gender diversity in the Executive Leadership Team (w/m%)
Gender diversity in senior leadership positions (w/m%)
Gender diversity in leaders in general (w/m%)
Gender diversity in the workforce (w/m%)
Employee gender pay ratio (%)
Employee turnover (%)
Employee engagement (%)
41.9
27.1
82.9
53
55.4
201
1,753
6,306
7,338
9,292
34.8
21.5
62.5
52
37.7
245
2,062
7,902
6,055
8,362
70,013
82,457
53
51
38/62
44/56
22/78
25/75
34/66
34/66
41/59
39/61
51/49
50/50
79
18
75
76
15
76
Number of start-ups and scale-ups supported with growth and impact tools, services and expertise
7,909
7,231
Number of people supported with financial literacy tools and expertise
2,416,716
2,079,479
Governance
Employees trained in risk and compliance (%)
97
97
* Green loans granted by the Group include green loans issued to business and corporate customers in the Business Customers and Large Corporates & Institutions segments.
** Our 2023 sustainable financing target includes green loans on the balance sheets in Danske Bank and Realkredit Danmark and Bloomberg League Table share of arranged sustainable
bonds (excluding sustainability-linked bonds) from current year and previous years (2019-2022). Total accumulated sustainable financing in 2023 DKK 365.3 billion.
*** For our 2023 target for CO2e reductions from own operations, the baseline used is 17,302 tonnes of CO2e emissions from 2019. Our baseline and comparative figures were restated
in 2023 due to the addition of benefit cars in Denmark not previously reported, addition of data related to emissions from working from home, reclassification of emissions from car travel
between scope 1 and scope 3, and a change in accounting policies with respect to applied emissions factor for district heating in Denmark. All numbers have been restated to 2019, with
details outlined in our Sustainability Fact Book 2023. Our target of a 40% emissions reduction equates to 6,921 tonnes of CO2e in 2023, and our target of a 60% emissions reduction equates
to 10,381 tonnes of CO2e in 2030. Our total CO2e emissions from our own operations in 2023 amounted to 9,292 tonnes (scope 1, scope 2 market-based and scope 3 from own operations),
which we have fully offset with carbon credits, see page 19. Our total CO2e emissions according to the Greenhouse Gas Protocol location-based methodology amounted to 13,845 tonnes.
14
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Sustainable finance
Sustainable finance covers financial activities that support
economic growth and at the same time reduce negative
impacts and increase positive impacts on environmental,
social and governance (ESG) factors. Examples of sustainable
finance solutions include our green loans and sustainability-
linked loans, sustainable bond issuances, investments in
funds with sustainable investment objectives, and Danica
Pension’s investments in the green transition. Through
our advisory services, we aim to provide customers with a
financiers’ perspective on their own sustainability agenda, and
we focus on whether our customers’ business activities and
ESG disclosures are sufficient to meet current financial market
requirements regarding access to capital.
Sustainable finance policy
Danske Bank’s Sustainable Finance Policy lays out the
principles for sustainable finance in the Group and defines
how we work to integrate sustainability into financial solutions,
processes and governance.
Whereas our approach is governed by our Sustainable Finance
Policy, our stance on material sustainability issues across
sectors and topics is set out in further detail in our Danske Bank
Group position statements, which are regularly reviewed. In
March 2023, we published our updated Position Statement on
Fossil Fuels, see page 19, and in May 2023 we published our
updated Position Statement on Human Rights, see page 20.
Supporting our customers’ transitions
In 2023, we further developed our approach to assessing
companies’ transition plans in the areas of lending and
investment. In lending, the method we employ to drive
change typically involves having close long-term relation-
ships through which we can influence positive change.
We use a different approach to drive change in the area
of investments, where we exercise active ownership
by engaging with investee companies – either on our
own or through collaborative engagements with other
investors and/or through different initiatives. Our equity
investments also give us the opportunity to vote on
shareholder proposals, see page 17.
We prioritise engagement and dialogue with companies
over immediate exclusion. And in relation to climate
change, we seek to enable credible climate transition
action plans – not least in high-impact sectors – and
facilitate solid traction. Our main focus is to support our
customers and investee companies through the transition
to a more sustainable economy, but if our engagement
efforts are unable to secure acceptable transition plans
and actions, we may ultimately exit the relationship.
We also engage with companies about risks and
opportunities associated with the transition, and we
proactively discuss potential business-related implications
these may have.
For personal customers, we integrate sustainability
into our customer dialogues, offer a broad selection of
responsible investment solutions and provide favourable
lending for energy-efficient homes and for electrical and
plug-in hybrid vehicles.
15
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Sustainable financing
At Danske Bank, we are strongly committed to contributing to
society’s sustainability transition through our role as a trusted
lender and financial adviser to our customers. This includes
assessing the implications of the green transition as potential
credit risk drivers and collaborating with our customers to
mitigate potential ESG risks.
For the vast majority of business customers, we consider and
assess the level of ESG risks as one of the many risk factors
we consider and assess to determine creditworthiness and
to ensure that the customer is in alignment with the Group’s
position statements and with the requirements of our
Sustainable Finance Policy and Credit Policy. At the individual
customer level, we use our ESG screening tools to identify and
monitor cases with high ESG risk as part of the standard credit
assessment process.
For customers in high-carbon-emitting sectors in the LC&I
segment, we additionally assess the customers’ transition
plans. At the portfolio level, risks are monitored and managed
through sector-risk reviews and through our risk tolerance
setup, which is also informed by the mapping of our financed
emissions and climate scenario analysis. Sectors that have
a high level of exposure to ESG risks are subject to additional
oversight, as outlined in our policies.
Exceeding our 2023 financing target
In 2023, interest in our sustainable financing offerings
continued despite the fact that financial markets continued
to be affected by geopolitical circumstances. By year-end
2023, we had arranged or granted DKK 365 billion since
2019 (2022: DKK 273 billion) in sustainable financing, which
includes green loans and arranged sustainable bonds, thereby
exceeding our 2023 target of DKK 300 billion, as shown in the
graph.
Sustainable financing, including granted green loans
and arranged sustainable bonds
2023 target
365
0
50
100
150
200
250
300
350
400
(DKK billions)
Data is accumulated from 2019 and covers granted green loans and arranged
sustainable bonds. By year-end 2023, we had arranged or granted DKK 365
billion since 2019 (2022: DKK 273 billion) The increase was mainly driven by
our continuous successes in sustainable bond arranging.
Sustainable bonds include green, social and sustainability bonds, which
are use-of-proceed bonds that exclusively finance projects that have a
positive environmental and/or social impact. The data does not include
sustainability-linked loans and bonds and self-led bond issues for Danske
Bank and Realkredit Danmark.
16
The Group’s green loans are earmarked for specific green
projects in line with Danske Bank’s Green Finance Framework.
This framework broadly aligns with the Technical Screening
Criteria of the EU Taxonomy and defines the activities that may
be financed by proceeds from the issuance of green bonds. By
year-end 2023, the amount provided in Danske Bank and
Realkredit Danmark green loans stood at DKK 69 billion (2022:
DKK 56 billion), with the largest share of green loans being
provided to real estate and renewable energy initiatives.
To support customers with their own sustainability agendas,
we help them to develop their own sustainable financing
frameworks, often focused on transition and mobilisation of
debt capital towards environmentally beneficial purposes. In
2023, we acted as framework structuring adviser for large
corporations and institutions in the Nordic countries and the
EU, see page 51.
Other measures supporting customer
transitions
To help support the sustainable transition of society, we
continued to employ various measures and to engage in
partnerships throughout 2023. Examples include the following:
Digital ESG tool
ESG Profilen is a free digital tool designed to support small and
medium-sized enterprises in Denmark in their sustainability
transition by mapping ESG activities, key figures, priorities and
stakeholder expectations. ESG Profilen was launched in May
2023 by Lederne in partnership with among others, Danske
Bank.
Energy-improvement campaigns and loans
In Denmark, energy-efficiency improvements continued to be
promoted to homeowners through campaigns and by providing
service offerings in partnership with energy consultants
and by offering low interest rate loans without fees. We
also participated in the Fyr dit fyr scheme from the Danish
government and Finance Denmark encouraging homeowners
to replace oil and gas boilers with energy-efficient alternatives.
Transition-linked financing in shipping
As a member of the Norwegian Green Shipping Programme,
Danske Bank together with industry participants helped
develop guidelines for transition-linked financing for seagoing
fishing fleets. Launched in September 2023, the guidelines
aim to enable assessment of selected decarbonisation
indicators over the term of a loan or a bond to incentivise better
environmental performance.
Green fleet leasing
Via leasing, Danske Bank aims to reduce customers’ carbon
emissions from road transportation. The GreenFleet70 concept
is offered to businesses in Denmark and Sweden and includes
an extensive selection of electric vehicle models. In 2023, the
percentage of electric cars newly registered in our portfolio
stood at 33% (2022: 13%); for vans, the equivalent figure was
6% (2022: 3%), and for trucks it was 8.5% (2022: 0.8%).
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Responsible investments
As a responsible investment manager, we must remain mindful
of how sustainability-related factors affect investment per-
formance and how our investments may have positive and/or
negative impacts on society. In our Responsible Investment
Policy, we refer to this principle as double-materiality, and
we commit to integrate double-materiality considerations
into our investment processes. Supplementary to our policy
are instructions on exclusions, sustainability risk integration,
inclusions and active ownership.
We use active ownership as a measure to protect the value
of our customers’ investments, generate attractive returns
and manage societal impacts of our investments. In 2023,
our active ownership efforts* involved dialogue with 809
companies (2022: 978 companies*), in which we addressed
115 different ESG topics (2022: 114 ESG topics*). Issues
related to capital structure, Greenhouse Gas (GHG) emissions
and energy were the most common topics of engagement.
Voting activities for our equity investments are still in focus, and
we voted at 4,972 general meetings (2022: 4,957 general
meetings*), covering 61,926 proposals (2022: 61,373
proposals*) in 64 country domiciles (2022: 65 country
domiciles).
Impact measurement and reporting
By measuring and reporting on the performance of our funds
in relation to their principal adverse impacts on sustainability
factors, we are well equipped to address and, as needed,
steer portfolios in the direction of mitigating negative impacts.
The majority of our funds and other investment products are
measured against indicators on principal adverse impacts
defined in the EU Sustainable Finance Disclosure Regulation
(SFDR), and we began to report on those impacts during 2023.
With regard to measuring positive impact on sustainability
factors, we have developed a sustainable investments model:
the SDG Model. This model builds upon the definition of
sustainable investment as stated in the SFDR, and it measures
the positive impacts on the UN Sustainable Development Goals
(SDGs) resulting from our investments in actively managed
strategies. We apply this model across strategies, and a
substantial proportion of our funds are committed towards
making sustainable investments in accordance with the model,
either partially or fully. In 2023, we started reporting on these
commitments.
Progress towards our 2030 investment targets
Our 2030 investment targets cover investments in funds with
sustainable investment objectives, as defined by SFDR Article
9, and investments in the green transition by Danica Pension.
As shown in the graphs, we are making progress towards
our 2030 investment targets, and Danica Pension’s interim
target for 2023 of DKK 50 billion in investments in the green
transition was exceeded by DKK 5.4 billion.
Investments in funds with a sustainable
investment objective
2030 target
53
(DKK billions)
0
50
100
150
200
Data is accumulated from 2021 and covers investments in funds with
sustainable investment objectives, as defined by SFDR Article 9.
In 2023, our investments increased 2% from 2022 (DKK 52 billion),
ultimately allocating DKK 53 billion. The increase stems primarily from a
positive market development, seen both from an equity and a fixed income
perspective.
Investments in the green transition
by Danica Pension
2023 target
2030 target
55.4
(DKK billions)
0
10
20
30
40
50
60
70
80
90 100
Data is accumulated from 2019 and covers green infrastructure, green
bonds, certified sustainable properties, and equity and bond investments
in the green transition.
In 2023, our investments in the green transition increased 47% from
2022 (DKK 37.7 billion), and we surpassed our 2023 interim target of
investing DKK 50 billion in the green transition, ultimately allocating
DKK 55.4 billion. The green bonds market in particular has matured in
recent years, offering attractive risk/return profiles, which is why Danica
Pension has invested significantly in this asset type.
Responsible pension solution
The Danica Balance Responsible Choice pension solution
has a heightened focus on promoting sustainability, with at
least 75% of the underlying investments aiming to contribute
to one or more of the SDGs. From 2022 to 2023, Danica
Pension saw an increase of 39% in the number of customers
whose pension savings are partially or fully invested in Danica
Balance Responsible Choice. This brought the total number
of customers using this solution to approximately 22,000
in 2023 (2022: approximately 16,000 customers), and the
amount held in assets under management (AuM) at year-end
2023 stood at DKK 4.9 billion (2022: DKK 3.4 billion).
* Active ownership efforts include Danske Invest and Danica Pension. In previous years’ sustainability reports, only Danske Invest’ figures on active ownership were presented.
17
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Environment
Climate change
Danske Bank supports the transition towards net-zero carbon
emissions by 2050 or sooner and is guided by the bank’s
commitments to the net-zero alliances within banking, asset
management and asset ownership and to the Science Based
Targets initiative (SBTi). These alliances and initiatives are
aligned with the goals of the Paris Agreement to limit the
temperature increase to well below 2°C, ideally 1.5°C, above
pre-industrial levels.
submitted climate targets for SBTi validation. Our Climate
Action Plan maps our approach and sets intermediate targets
for our lending and investment portfolios as well as for our own
operations. Portfolio targets relate to high-emission sectors
that are most material in our portfolio, such as shipping, oil and
gas, power generation, steel, cement, and real estate. Progress
on our climate targets varies across sectors and activities,
as expected. Overall, we observe progress to be in line with
trajectory expectations***.
Climate change entails significant financial implications
related to transition risks and physical risks*, but it also
represents opportunities for Danske Bank and for society.
Large-scale investments are required to significantly reduce
carbon emissions from society’s production and consumption
activities, and high levels of capital are needed to finance
adaptation to the adverse effects of a changing climate.
Although carbon emissions occur across Danske Bank’s
upstream and downstream value chains and from our
own operations, the largest impact is through our financed
emissions** attributed to our lending and investment activities.
Based on a mapping of our carbon footprint, we launched
our Climate Action Plan in January 2023, which governs our
transition towards net zero. In conjunction with this, we also
Decarbonising shipping
With shipping being one of the most material sectors in our
decarbonisation trajectory, Danske Bank is a member of
the global Getting to Zero Coalition and one of the founding
signatories of the Poseidon Principles. Through these
commitments, we seek to assess and disclose the climate
alignment of our shipping lending portfolios with the IMO’s
decarbonisation ambition updated in 2023. During 2023, in
addition to engaging with our customers about their carbon
emissions, we also started to engage with them about potential
biodiversity impacts related to other air emissions, ocean
pollution, underwater noise and invasive species. In 2023,
we also continued to include responsible recycling clauses in
all of our loan agreements, in support of the Responsible Ship
Recycling Standards.
Danske Bank’s decarbonisation targets and approach
Objective
Net zero by 2050
Carbon emissions
Financed emissions
Financed emissions are indirect emissions that relate to our lending
and investment portfolios. According to our current best estimates,
financed emissions account for a significant majority of our total
footprint and fall under scope 3 category 15 in the GHG Protocol.
Own operations
Emissions from our own operations account
for a small part of our total footprint and
include scope 1, 2 and selected scope 3
categories in the GHG Protocol.
Selected carbon
emission reduction targets
Lending:
25-55% reduction across 9 sector targets by 2030
80% reduction by 2030 in scope 1 and 2
60% reduction by 2030 in scope 1, 2 and 3
Asset management:
50% reduction of the weighted average CO2e intensity by 2030
Life Insurance & Pension:
15-69% reduction across 6 sectors by 2025 and 2030
Selected actions and approaches
to reduce emissions
•
•
•
Engage with customers to provide advisory services and financing
that support decarbonisation in line with Paris Agreement goals
Engage with investee companies to guide and encourage
decarbonisation of their business activities
Restrict financial flows to carbon-intensive companies, for example
by limiting credit-risk exposures and investments
•
•
•
Increase energy efficiency at our premises
Switch to renewable and low-carbon
energy supply
Travel restrictions and low-carbon
business travel
• Offset unavoidable emissions
* Further details are available in our Risk Management 2023 report and in our Task Force on Climate-related Financial Disclosures statement, which is available as a cross-reference index in our
Sustainability Fact Book 2023.
** As methodologies, data availability and industry standards evolve, the Group’s financed emissions setup is subject to continual improvements. To ensure comparability, and when technically
possible, such changes will prompt a recalculation of previous years’ financed emissions. It will be stated clearly when and if such recalculations of historical figures have been implemented.
*** Further details are available in our Climate Action Plan Progress Report 2023.
18
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Updated position statement on fossil fuels
In March 2023, we updated Danske Bank’s Position
Statement on Fossil Fuels. To support the decarbonisation of
our economies and protect sensitive environments, we consider
it necessary to have strict guidelines covering coal, peat, and
oil and gas. Specifically, in our updated position statement, we
chose to apply stricter phase-out criteria, setting 2030 as the
target year for the complete phase-out of coal and peat power
generation companies from our financial product portfolios.
The limited number of exemptions from the above are detailed
in the position statement. We will also refrain from investing
in or providing financial services to companies and projects
expanding thermal coal mining, coal-fired power generation or
peat-fired power generation.
Danske Bank also recognises that companies expanding their
oil and gas production capacity are not aligning towards credible
no- or low-overshoot net-zero transition scenarios and will likely
be exposed to large transition risks. As such, Danske Bank will
not provide refinancing and new long-term financing for oil and
gas exploration and production companies that are expanding
such activities into new oil and gas fields.
Meeting our 2023 target for our own operations
In 2023, our emissions from own operation amounted to 9,292
tonnes (2022: 8,362 tonnes), and with a 46% (2022: 52%)
reduction from 2019 levels, we exceeded our 2023 target of
reducing carbon emissions by 40%.
Within our own operations, the categories with the highest
emission in 2023 included business-related air and road travel
and purchased heat and electricity for running our premises. Air
travel increased 56% from the 2022 level of 2,345 tonnes of
carbon emissions, with travel patterns finding a new level after
the COVID-19 pandemic. Consequently, we are strengthening
our actions towards less carbon-intense business travel. In
our endeavour to minimise the environmental footprint from
our own operations, we also focus on continuously reducing
our consumption of resources, minimising food waste and
improving waste data management*.
Since 2009, Danske Bank has offset annually reported carbon
emissions from those of our own operations that cannot yet be
eliminated, and we continued to do this in 2023.
Nature and biodiversity
Another key environmental impact area for the Group closely
interlinked with the climate change agenda is the accelerating
loss of biodiversity and degradation of ecosystems. This poses
significant risks to the global economy, to our business and to
the societies we are part of.
Our endeavour to contribute to the protection of nature and
ecosystems is guided by our commitments to the Finance
for Biodiversity Pledge and the Partnership for Biodiversity
Accounting Financials, both of which we joined in 2022.
Through these, we commit to measuring and setting
biodiversity targets for our corporate lending and investment
portfolio, and we have assessed the drivers and sectors that
have the highest potential negative impact on nature and
biodiversity in our portfolios. On this basis, we introduced
targets in September 2023 for our engagement with
customers and investee companies in prioritised high-risk
sectors. In view of our active ownership activities, Danske Bank
also joined the Nature Action 100 global investor engagement
initiative in 2023.
Engagement targets and high-risk sectors
Lending portfolio
The three sectors in our lending portfolio with the highest
potential negative impact on nature and biodiversity
are the agriculture sector, including food products and
fisheries; the forestry, pulp and paper sector; and the
shipping sector.
By the end of 2024, we aim to have engaged with 300+
business customers in the agriculture sector and 50+
large corporates across all three sectors about specific
nature and biodiversity indicators relevant for their
industry.
Investment portfolio
The energy, food and transportation sectors are the three
sectors in our investment portfolio that potentially have a
high negative impact on nature and biodiversity through
the operations of the investee companies.
By the end of 2025, Danske Bank and Danica Pension
aim to have engaged with 30 large, global investee
companies in these sectors based on considerations
such as their potential to impact key drivers of
biodiversity loss, degree of dependency on natural
resources, location of operations, and our share of
investments in the companies.
* Further details are available in our Sustainability Fact Book 2023, available at danskebank.com/sustainability
19
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Social
Human rights
At Danske Bank, we are committed to meeting our
responsibility to respect fundamental human rights and to
ensure decent working conditions within our business activities
– including in our own operations, our lending and investment
activities and our supply chain.
In May 2023, we published our updated Position Statement
on Human Rights to clarify our commitment to respect human
rights and to implement human rights due diligence in line with
the UN Guiding Principles on Business and Human Rights
and the OECD Guidelines for Multinational Enterprises on
Responsible Business Conduct, which entails taking relevant
international human rights-related standards into account. To
increase the transparency of our approach and efforts, we also
in May 2023 published our first Human Rights Report. This
report describes our processes for identifying, mitigating, and
managing risks of adverse impacts on human rights, including
decent working conditions, and it provides insights on specific
human rights risks in focus in our own operations and parts of
our value chain. These disclosures support alignment with the
Norwegian Transparency Act and the minimum safeguards
of the EU Taxonomy. In addition, Danske Bank also issues its
Statement on Modern Slavery Act on annual basis.
We work continuously to improve our human rights due
diligence processes. By year-end 2023, we had implemented
a dedicated human rights module in our ESG risk assessment,
which applies to all new and existing corporate customers
across our markets and business areas that apply for credit
facilities or have credit exposure in excess of DKK 7 million.
The module enables our advisers to identify areas where the
customer in question is at risk of adverse impacts on human
rights. The results are part of our overall credit risk assessment
of the customer. For our investment activities, we conducted
enhanced sustainability screenings of companies potentially
involved in significant human rights-related controversies. By
year-end 2023, a total of 26 companies (2022: 14 companies)
had been excluded across all investment strategies due to risks
related to forced labour.
Individual stakeholders, communities and societies that are or
could potentially be affected negatively through our business
activities are able to raise human rights concerns or grievances
through Danske Bank’s whistleblowing scheme, see page 23.
Employee well-being
At Danske Bank, we are committed to maintaining a sustainable
work environment with responsible employment practices. As
stated in our Code of Conduct Policy, all employees must act
with integrity and treat each other fairly and respectfully at all
times, and any case of harassment, discrimination or improper
use of authority is not tolerated. To ensure a vibrant workplace
that fosters a sense of belonging and inclusion for our 20,021
employees (2022: 21,022 employees), we have expanded our
traditional focus on physical and mental health into a holistic
focus on well-being under the concept of ‘total well-being’. Our
20
total well-being initiative encompasses five well-being-related
themes: mental, social, physical, purposeful and intellectual.
The prevention of work-related stress is an important focus area
within our total well-being agenda. In 2023, we introduced a
new, easy-to-use toolkit via webinars for leaders and employees
to support ongoing dialogues on how to sustain a good mental
balance and deal with symptoms of stress.
Throughout 2023, various support functions and teams
invested in strengthening psychological safety to support
validated, respected and open interaction, thereby creating a
culture that encourages collaboration and innovation.
A learning organisation
To enable opportunities for our employees to continually grow
and develop, Danske Bank seeks to make learning accessible
to everyone as part of their day-to-day work. In 2023, we
implemented a new learning module on our HR Platform. The
module provides a single point of entry for all learning activities
across the organisation.
In 2023, we also expanded our programmes on purposeful
and responsive leadership across the organisation, and we
integrated our leadership and cultural practices into the
activation of our new Forward ’28 corporate strategy.
Corporate volunteering
Danske Bank’s corporate volunteering programme, Time2Give,
gives employees the opportunity to spend three paid workdays
per year participating in voluntary work. Employees can
choose the cause they wish to support, or they can in some
countries sign up for an event organised by a local organisation
in partnership with Danske Bank. In 2023, a total of 4,459
employees (2022: 3,346 employees) across the Group
donated more than 36,400 hours (2022: more than 29,900
hours), representing a value of approximately DKK 7.1 million
(2022: approximately DKK 5.4 million).
Employee engagement score
Over the past few years, we have been working on improving
our engagement levels in a structured way and have seen
solid progress in many key areas. However, with a 2023
employee engagement score of 75% (2022: 76%) in our
Culture and Engagement Survey, we fell short of achieving
our 2023 target of 77%. Nevertheless, we saw a record-
high response rate of 95% (2022: 92%) in 2023, which
reflects employees’ willingness to share their opinions and
actively contribute to making Danske Bank an even more
attractive place to work. Employee engagement is essential
for our ability to perform as a business, and we will continue
to monitor the development, learn from the feedback and
improve together.
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Diversity and inclusion
Attaining a fully diverse workforce and an inclusive culture
remains a key ambition and priority across Danske Bank
because it will support equal opportunities for our employees
and create value for Danske Bank as a workplace and a
business.
To drive the diversity and inclusion (D&I) agenda and
demonstrate ownership in leadership and the business, we
are developing an ecosystem that is contributed to in many
ways – across the organisation through our D&I impact leads
and communities, from the bottom up by teaming up with
our employee networks, and from the top down by increased
involvement of the members of the D&I Council. We promote
connectivity and learning through initiatives and global events,
which provides a forum for and helps to leverage the diversity
of perspectives. Our work with LGBTQ+ inclusion is assessed
annually in Stonewall’s global benchmarking report, which
in 2023 highlighted progression in all seven categories and
awarded us with a total of 83 points out of 200 (2022: 51
points). Danske Bank thereby improved on the bronze employer
award it received from Stonewall in 2022 by achieving a silver
award in 2023. Stonewall commended Danske Bank’s ongoing
leadership commitment and talent development in the area of
LGBTQ+ inclusion.
Towards gender equality
In 2023, we reviewed and updated our D&I Policy to emphasise
our commitment to grow diversity and build and foster an
inclusive culture within Danske Bank and to ensure we adhere
to the continually changing regulatory environment. Steady
improvement was achieved with respect to our 2023 targets
on gender balance, although these were not fully met at all
levels. Our updated D&I Policy introduces new targets to be met
by 2028, as shown in the table.
To ensure ongoing progress towards meeting our targets, our
focus remains on developing inclusive and gender-balanced
HR processes. We do this by implementing tools that seek to
address and reduce the negative effects of biases. For example,
we scan our recruitment ads to ensure inclusive language,
drive ownership of gender balances via D&I Dashboards, and
in 2023 we implemented further transparency in, for example,
performance calibration dashboards. This gained Danske Bank
recognition in Bloomberg’s Gender Equality Index 2023, a
global benchmark for investors.
The women/men gender balance of members elected to
our Board of Directors (BoD) at the Annual General Meeting
decreased from 44/56 in 2022 to 38/62 in 2023 due to one
woman member stepping down. Nevertheless, we achieved
our 2023 target for the BoD, and with the inclusion of the four
employee-elected members of the BoD we are at full equality
at 50/50. Our Executive Leadership Team increased in size
from eight to nine members, resulting in a slight decrease in the
gender balance from 25/75 in 2022 to 22/78 in 2023. The
share of women among our level 2 and level 3 leaders* in 2023
was 31% and 36% respectively. Among senior leaders, the
share of women remained at 34% in 2023, so we did not reach
our 2023 target in this area. However, for all leaders in general,
the share of women increased from 39% to 41% in 2023,
thereby meeting our 2023 target. The overall gender balance in
our workforce is 51/49.
Our median gender pay gap decreased from 24% in 2022
to 21% in 2023. This development was mainly driven by a
continued focus on growing awareness around the impact
of biases in salary review and performance assessments
combined with increased levels of ownership in the individual
countries we operate in.
Gender balance
Leadership levels
Targets
Performance
2028
2023
2023
2022
2021
2020
2019
%W/M
%W/M
%W/M
Number
%W/M
%W/M
%W/M
%W/M
Board of Directors
40/60
38/62
38/62
Executive Leadership Team
40/60
25/75
22/78
Level 2 leaders
40/60
35/65
31/69
Level 3 leaders
40/60
35/65
36/64
8
9
13
89
44/56
43/57
33/67
25/75
25/75
13/87
13/87
11/89
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Senior leaders
40/60
35/65
34/66
803
34/66
32/68
28/72
23/77
Leaders in general
45/55
40/60
41/59
2,659
39/61
38/62
37/63
37/63
* See reporting principles on page 65 for definition of leadership levels. The total of ‘Level 2 leaders’ and ‘Level 3 leaders’ classifications is equivalent to the statutory definition ‘other
management levels’ (‘øvrige ledelsesniveauer’). For Danske Bank A/S (excluding subsidiaries), the total number of leaders in ‘other management levels’ is 90, with a women/men gender split of
31/69%. New five-year targets were first set in autumn 2023 and have therefore not yet been achieved.
21
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Financial confidence
Helping people across the markets we operate in to achieve
greater financial confidence has been a strategic focus area,
and it will continue as a societal agenda as part of Danske
Bank’s stakeholder engagement.
To positively influence the money habits that children develop
as they grow up, we engage in partnerships in Denmark and
Northern Ireland to develop school programmes and contribute
with learning materials and guest lectures on the topic of sound
money habits.
Entrepreneurship
Helping growth companies across our business and market
areas to develop into viable businesses and increase their
positive societal impact was a strategic focus area. We will
continue with this work through our centre of excellence,
Danske Bank Growth, which as well as serving tech and health
tech companies also focuses on green growth companies.
We also focus on contributing to creating equal access to
investments and opportunities for male and female growth-
company founders.
Children, young people and parents supported with
financial literacy tools and expertise
Start-ups and scale-ups supported with growth and
impact tools
2023 target
2.4
2023 target
7.9
0
0.5
1.0
1.5
2.0
2.5
3.0
0
2
4
6
8
10
12
(millions)
(thousands)
Since 2018, we have supported 2,416,715 (2022: 2,079,479), children,
young people and parents with financial literacy tools and expertise, thereby
substantially exceeding our target of supporting 2 million individuals by the
end of 2023. With more than 3 million plays in the past two years, Danske
Bank’s free digital learning tool, Moneyville, has contributed significantly to
the achievement of our target.
Since 2016, we have supported 7,909 (2022: 7,231) start-ups and
scale-ups with growth and impact tools, services and expertise. However,
we have not reached our 2023 target of supporting 10,000 start-ups in
total. This can be primarily attributed to the COVID-19 pandemic and the
sale of the Hub – a job portal specifically tailored to start-ups and which
was the main driver of supporting the broad ecosystem of start-ups.
22
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Governance
Compliance culture
The Group operates in a highly regulated environment.
Consequently, compliance is a core part of how we do business
and is critical for maintaining trust and protecting the interests
of our stakeholders. Our Code of Conduct Policy reflects our
steadfast commitment to ethical conduct, sound business
culture and the management and mitigation of risks relevant to
our business.
During 2023, we enhanced our compliance communication
to employees and updated our internal Do Right employee-
conduct site. We focused on cultivating a sound business
culture through strong leadership commitment, role modelling
and the co-creation of a leadership vision. These initiatives aim
to build self-awareness and purpose-driven, high-performing
leadership across the organisation and are promoted through
extensive training programmes.
We encourage employees to speak up about suspected
wrongdoing, and our escalation procedures and processes are
designed to help employees recognise potentially significant
issues and take immediate and appropriate action. When
regular channels of communication and escalation are
unavailable or seem inappropriate, employees can submit
their concerns anonymously without fear of retaliation
through the Group’s whistleblowing scheme. All reports
are handled in complete confidence by a dedicated team
of whistleblowing specialists, and they are addressed and
investigated in confidence by specialist teams, as appropriate.
External stakeholders can also raise their concerns via the
whistleblowing scheme.
Risk and compliance training
The Group’s mandatory eLearning training provides essential knowledge to
empower employees to do the right thing for customers, employees and society.
All employees must complete annual courses on a range of risk and compliance
topics related to our policies, processes, and applicable regulation.
In 2023, a total of 97% of employees completed and passed risk and
compliance training on time (2022: 97%), against our annual target of over
95%.
Financial crime prevention
Criminal misuse of the financial system has a detrimental
impact on society and is responsible for some of the most
serious crimes – from terrorism to human trafficking. The threat
landscape is constantly changing as new trends emerge to
exploit the financial system, and sanctions requirements are
expanding.
The Group is committed to fighting financial crime, and our work
to stop the flow of money from unlawful activities is unrelenting.
We are continuing to enhance our financial crime framework to
ensure we have the right people and controls in place*.
Anti-bribery and corruption
The Group’s Financial Crime Policy sets out the principles
for managing all financial crime risks, including bribery and
corruption, on which the Group has a zero-tolerance stance.
The principles are elaborated upon in our Anti-bribery and
Corruption Instruction, which provides employees with detailed
guidance on identifying, preventing, and managing detected
or suspected attempts or incidents of bribery and corruption.
The policy is further supported by our Conflicts of Interest
Instruction and by our Gifts and Hospitality Instruction, which
sets strict standards for the ethical provision and acceptance
of gifts, entertainment and any other benefits or items of
value. Together, the policy and instructions are set to ensure
that we remain compliant with relevant bribery and corruption
legislation for the regions the Group operates in. Furthermore,
we in 2023 conducted a Group-wide risk assessment that
provided insight into the bribery and corruption risks across
all business units. The Group will continue to remediate and
strengthen key controls related to bribery and corruption.
Sustainable supply chain
In 2023, Danske Bank had a diverse supplier portfolio of around
2,000 suppliers of operational services with active contracts,
which is on par with 2022. To manage this portfolio, comply
with relevant legislation and support our suppliers’ sustainability
efforts, we have implemented a sustainable supply chain process
which enables us to assess our suppliers’ sustainability status
and increase transparency in our supply chain.
Our sustainable supply chain process is built on three
pillars. Firstly, all our suppliers must agree to comply with
environmental, social, and ethical standards defined in Danske
Bank’s Supplier Code of Conduct, which is part of Danske
Bank’s Procurement Policy. This code is based on international
sustainability principles, including the UN Global Compact
and the UN Guiding Principles on Business and Human
Rights. Suppliers are also responsible for upholding similar
sustainability standards in their own supply chains.
Secondly, environmental requirements have been defined
for selected sourcing categories such as office services
and supplies, conference venues, furniture and textiles, IT
equipment, and merchandise.
Thirdly, we invite suppliers that have an active contract to
assess their sustainability governance on a third-party platform
called Integrity Next. On the basis of the assessment results,
we are developing customised engagement strategies for
suppliers. Our aim is to have all our suppliers through the
ESG assessment process and to support our suppliers in
improving their sustainability performance. If a supplier does
not comply with our sustainability requirements, we engage in
a constructive dialogue with the supplier. We follow up with the
supplier as part of our annual performance reviews, and each
year we also conduct independent third-party supplier audits.
Suppliers are selected for audit on the basis of their ESG profile
and their importance for our business. In 2023, we selected
five suppliers (2022: four suppliers) for audit. None of the
audits revealed any severe cases of non-compliance.
* Further details on our Financial Crime Plan are available in the section Financial Review on page 31.
23
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
EU Taxonomy reporting
The Danske Bank Group integrates the EU Taxonomy
Regulation in relation to the Group’s sustainable financial
product and investment offerings. In Danske Bank’s Green
Finance Framework, the EU’s criteria for sustainable economic
activities are included as part of the classification of green
lending. The green loan categories in the framework are
therefore broadly aligned with the technical screening criteria
as defined in the EU Taxonomy Regulation. The framework also
includes green loan categories that are either not yet covered by
or diverge from the EU Taxonomy.
Within asset management there is a dependency towards
investee company reporting against the technical screening
criteria defined in the EU Taxonomy Regulation. As companies’
transparency against the EU Taxonomy will increase, it will
enable realistic and relevant target setting against the
Taxonomy for our investments, resulting in further integration
into processes and strategies.
Furthermore, Danske Bank continues to integrate ESG data into
the bank’s systems and solutions to enable Danske Bank to
comply with sustainable finance statutory reporting obligations
and support the integration of ESG data into business-related
processes throughout the bank. The adoption of the Corporate
Sustainability Reporting Directive (CSRD) and European
Sustainability Reporting Standards (ESRS) will support the
further implementation of the EU Taxonomy Regulation into
our business strategy, IT systems, and investment and lending
processes.
Green asset ratio (GAR)
(DKK billions)
GAR for financial undertakings
(total of climate mitigation and climate adaptation)
GAR for non-financial undertakings
(total of climate mitigation and climate adaptation)
GAR for residential real estate exposures
(climate change mitigation)
GAR for retail car loans (climate change mitigation)
GAR for loans to local governments for house financing and
other specialised lending
Total
Coverage ratio
Total covered assets (DKK billions)
Total assets (DKK billions)
Consolidated Group-level KPI turnover (%)
Consolidated Group-level KPI CAPEX (%)
Taxonomy-aligned
exposures based on
turnover
Green asset ratio
based on turnover
(%)
Taxonomy-aligned
exposures based on
CAPEX
Green asset ratio
based on CAPEX
(%)
0
0.15
1.09
0
0
1.24
0
5.9
25.5
0
0
31.4
0.95
0
0.25
1.09
0
0
1.34
0
3.6
25.5
0
0
29.1
0.88
2,346
3,299
1.35
1.43
The above metrics are unaudited and have been prepared to the best of our ability. Please refer to the appendix on pages 253-287, which includes the Danske Bank Group’s Taxonomy
reporting. Danica Pension’s Taxonomy reporting is available on danicapension.dk/årsrapporter.
For the first time, the Danske Bank Group is reporting on
Taxonomy KPIs and green asset ratios. Reporting is based on
input from non-financial counterparties, and includes input
on turnover from Taxonomy KPIs and CAPEX. As at reporting
date, financial counterparties had not reported their Taxonomy
KPIs. Taxonomy-eligible and non-eligible activities related to the
additional four EU environmental objectives are not reported for
the financial year 2023 due to lack of data.
The Danske Bank Group’s total green asset ratio based on
turnover amounted to 1.24% of total covered assets, and
total green asset ratio based on CAPEX amounted to 1.34%
of total covered assets as at year-end 2023. The total green
asset ratios cover the two climate-related EU environmental
objectives.
Taxonomy-aligned activities relate to lending to households
collateralised by residential property and lending to
undertakings subject to the Non-Financial Reporting Directive
(NFRD). The Taxonomy KPIs do not include lending activities
with small and medium-sized enterprises.
Gross carrying amount of total covered assets amounted to
DKK 2,346 billion as at year-end 2023 against DKK 2,345
billion in 2022.
Consolidated Group-level KPIs for the Danske Bank Group
including Danica Pension amounted to 1.35% and 1.43% for
turnover and CAPEX respectively.
The Danske Bank Group has limited exposures to customers
that have economic activities related to the production of
electricity or heating using nuclear installations or using
gaseous fossil fuels in combined heating/cooling and power
generation facilities. The Taxonomy-aligned activities amounted
to DKK 0.8 billion at year-end 2023.
24
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Financial review
Income statement
(DKK millions)
Net interest income
Net fee income
Net trading income
Net income from insurance business
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Provision for Estonia matter
Impairment charges on goodwill
2023
2022*
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
35,000
25,108
11,707
12,590
3,704
1,472
1,875
280
562
1,936
139
93
198
-
29
9,134
9,326
3,148
2,867
757
550
238
174
233
431
52,445
41,789
125
13,827
13,031
25,414
26,478
989
962
-
-
13,800
1,627
96
103
-
-
-
6,592
6,204
248
245
-
-
-
-
7,235
6,827
98
110
-
236
55
106
106
101
-
-
106
-
112
107
112
127
108
108
-
Profit before loan impairment charges
27,031
-116
Loan impairment charges
262
1,568
17
-32
322
Profit before tax, core
Profit before tax, Non-core
Profit before tax
Tax
Net profit
26,769
-1,684
-87
-13
26,682
-1,697
-
-
-
7,267
6,505
-32
-30
7,235
6,475
5,420
2,883
188
1,470
1,156
21,262
-4,580
-
5,765
5,319
Net profit before goodwill imp. chg. and provision for Estonia matter
21,262
10,848
196
5,765
5,319
Attributable to additional tier 1 etc.
-
86
-
-
-
* Comparative information for the Income statement has been restated as explained in note G3.
25
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
results on insurance products where Danica Pension has the
investment risk, an improved investment result in the health
and accident business 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 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 562 million (2022:
DKK 1,936 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, Other income in 2022 saw
a positive effect from a one-off gain of DKK 421 million on
the sale of our activities in Luxembourg and from a gain of
DKK 415 million from the sale of our shares in MobilePay.
Operating expenses
Operating expenses amounted to DKK 25,414 million (2022:
DKK 26,478 million) as underlying expenses continued
to develop according to plan due to our dedicated cost
management and the run-off of remediation costs. Furthermore,
costs in 2022 were affected by a one-off amount of DKK 910
million in the form of an increase in provisions for compensation
to customers. Operating expenses benefited from exchange
rate developments, with the effect being partly offset by rising
inflation.
Finally, the Resolution fund, Swedish bank tax etc. item
continued to increase and stood at DKK 989 million (2022:
DKK 962 million).
Loan impairment charges
Loan impairment charges in core business segments were low
in 2023, amounting to DKK 262 million (2022: DKK 1,568
million). Loan impairments in 2022 were affected by a provision
of DKK 650 million related to the debt collection case that
impacted Group Functions.
Impairments reflect successful restructuring activities mainly
in the oil, gas and offshore sector and continued post-pandemic
recoveries, contributing to overall stable credit quality. The
macroeconomic situation, mainly lower property prices and
higher interest rates, continues to impact impairments,
and the macroeconomic landscape remains uncertain. We
continue to apply significant post-model adjustments related
to the macroeconomic uncertainty and remain watchful of any
possible credit deterioration.
2023 vs 2022
Net profit increased to DKK 21,262 million (2022: a net loss
of DKK 4,580 million) as a result of significant increases in
net interest income, net trading income and net income from
insurance business. Good commercial momentum, low loan
impairment charges on the back of better-than-expected
macroeconomic conditions, and dedicated cost management
along with a run-off of remediation costs also supported the
satisfactory financial result for 2023. Net profit for 2022 was
affected by the provision for the Estonia matter of DKK 13,800
million and the goodwill impairment charge of DKK 1,627
million.
Income
Net interest income increased to DKK 35,000 million (2022:
DKK 25,108 million). The increase was driven by higher
income from deposits following repricing actions and market
rate developments as well as product development initiatives. A
net one-off interest compensation of DKK 222 million related to
tax paid in previous years also contributed to the increase.
Net fee income was down and stood at DKK 11,707 million
(2022: DKK 12,590 million). Service fees increased due to
repricing actions and the continued transfer of customers to a
subscription fee service model implemented in mid-2022. The
increase in service fees was, however, offset by a decline in
financing fees due to lower customer activity throughout 2023
in the wake of the general slowdown in the housing market
combined with customers switching from mortgage loans to
bank loans. A switch from mortgage loans to bank loans results
in fee income being accrued over the expected maturity of the
loan instead of at origination. Performance fees from Asset
Management also increased during the year.
Net trading income increased to DKK 3,704 million (2022:
DKK 1,875 million), with the increase driven by the fixed
income strategy implemented at Large Corporates &
Institutions 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
the challenging market environment. The gain of DKK 327
million on the sale of shares taken over in connection with a
loan in 2023 benefited net trading income. Net trading income
was negatively impacted by 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. The reclassification had a
positive effect on Other comprehensive income but did not
affect shareholders’ equity.
Net income from insurance business recovered, especially
towards the end of the year, and amounted to DKK 1,472
million (2022: DKK 280 million) due primarily to more positive
developments in the financial markets in 2023, although the
effect was partly offset by an increase in health and accident
claims. The increase was driven mainly by positive investment
26
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Q4 2023 vs Q3 2023
Net profit increased to DKK 5,765 million (Q3 2023: DKK 5,319
million). Increases in net fee income, net trading income and net
income from insurance business had a positive effect on the
result.
•
•
•
•
•
•
•
•
Net interest income decreased to DKK 9,134 million (Q3 2023:
DKK 9,326 million) due to one-off interest regarding tax related
to previous years of DKK 85 million paid in the fourth quarter
and the positive effect in the third quarter of the 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 3,148 million (Q3 2023:
DKK 2,867 million), mainly as a result of higher performance
fees from Asset Management and higher income from mortgage
fees due to higher activity in the fourth quarter of 2023.
Net trading income increased to DKK 757 million (Q3 2023:
DKK 174 million), due primarily to the third quarter being
negatively affected by 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. The reclassification had a positive effect on Other
comprehensive income but did not affect shareholders’ equity.
Lower customer activity and the interest rate volatility had a
negative effect on net trading income in the fourth quarter.
Net income from insurance business saw a strong uplift
at the end of the fourth quarter and increased to DKK 550
million (Q3 2023: DKK 233 million). The insurance service
result decreased DKK 5 million as a result of a rise in new
health and accident claims, with the effect being offset by an
increase in fees from the life insurance business due to the
positive developments in the financial markets. The net financial
result increased due to a positive development in investment
results on insurance products where Danica Pension has the
investment risk and an improved investment result in the health
and accident business. The third quarter of 2023 also included
the provision of DKK 250 million for possible compensation to
customers.
Other income decreased to DKK 238 million (Q3 2023:
DKK 431 million) due to the third quarter benefiting from a
one-off gain of DKK 104 million related to the sale of Danske IT
in India.
Operating expenses amounted to DKK 6,592 million (Q3 2023:
DKK 6,204 million). The increase was driven by seasonality,
increased provisions for holiday costs and higher IT expenses.
Loan impairments for core business segments amounted to a
net reversal of DKK 32 million (Q3 2023: charges of DKK 322
million). The low level of impairments was driven by reductions
in the exposure to the oil and gas sector, which were partly
countered by new impairment charges against single-name
exposures. Overall, credit quality remained resilient.
Tax amounted to DKK 1,470 million (Q3 2023: DKK 1,156
million) and was affected by a lower level of taxes regarding prior
years (income). The effective tax rate was 20.3% (Q3 2023:
17.9%). The third quarter saw a positive effect from a payment
of DKK 670 million from the tax authorities due to a correction
of tax paid in previous years on certain financial assets and
liabilities measured at amortised cost.
Net profit
DKK 5,765 million
for the fourth quarter of 2023
Loan impairment
charges
(DKK millions)
Personal Customers
Business Customers
Large Corporates &
Institutions
Northern Ireland
Group Functions
2023
2022
% of
net credit
exposure*
Charges
312
431
-367
-113
-1
0.04
0.07
-0.10
-0.21
-0.06
% of
net credit
exposure*
0.10
0.09
Charges
927
578
-774
-0.25
168
669
0.30
17.37
Total core
262
0.01
1,568
0.08
* 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 lower than those
in 2022. Charges for 2023 were driven by a combination of
updated macroeconomic scenarios and falling property prices,
however to a lesser degree than in 2022. Underlying credit
quality remained stable.
Business Customers had lower impairment charges than in
2022, while Large Corporates & Institutions continued to see
a net reversal owing to successful restructuring in the shipping,
oil and gas sectors and post-pandemic recoveries, resulting
in a decline in charges made against facilities to individual
customers. Underlying credit quality remained solid.
A low GDP, higher interest rates and a 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 5,420 million (2022: DKK 2,883
million) corresponds to an effective tax rate of 20.3%. The
effective tax rate in 2023 saw a positive effect from a payment
of DKK 670 million from the tax authorities 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 22.0% in 2022.
27
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Balance sheet
Lending (end of period)
(DKK billions)
Personal Customers
Business Customers
Large Corporates & Institutions
Northern Ireland
Group Functions incl. eliminations
Allowance account, lending
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
775.5
654.2
308.6
58.6
-1.0
17.0
805.1
639.6
322.5
53.8
-0.1
16.9
96
102
96
109
-
101
775.5
764.8
654.2
639.6
308.6
298.7
58.6
-1.0
17.0
59.4
-2.0
16.8
Total lending
1,779.0
1,804.0
99
1,779.0
1,743.7
Deposits (end of period)
(DKK billions)
Personal Customers
Business Customers
Large Corporates & Institutions
Northern Ireland
Group Functions incl. eliminations
Total deposits
Covered bonds
(DKK billions)
Bonds issued by Realkredit Danmark
Own holdings of bonds*
Total Realkredit Danmark bonds*
Other covered bonds issued
Own holdings of bonds
408.0
257.1
382.6
97.4
-8.0
410.8
285.2
389.5
94.6
-10.2
99
90
98
103
-
408.0
408.4
257.1
264.0
382.6
362.0
97.4
-8.0
97.7
-8.7
1,137.1
1,169.9
97
1,137.1
1,123.4
741.1
711.7
15.2
15.6
756.3
129.4
126.9
727.3
156.7
99.0
104
97
104
83
128
741.1
716.0
15.2
13.5
756.3
729.5
129.4
145.8
126.9
126.4
Total other covered bonds
256.4
255.8
100
256.4
272.2
Total deposits and issued mortgage bonds etc.
2,149.7
2,152.9
100
2,149.7
2,125.2
101
Lending as % of deposits and issued mortgage bonds etc.
82.8
83.8
82.8
82.0
* Includes only bonds issued to fund lending. For further information, see the Definition of alternative performance measures section.
28
101
102
103
99
-
101
102
100
97
106
100
-
101
104
113
104
89
100
94
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
At Business Banking, deposit volumes were negatively affected
by our decision to reduce deposits in the public sector in
Norway. Combined with the depreciation of the Norwegian
currency, total deposit volumes decreased 10% from the level
at the end of 2022.
Credit exposure
Credit exposure from lending activities in core business
segments increased to DKK 2,547 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 was caused mainly by depreciation of the
currency and a slowdown in activity in Norway due to Danske
Bank’s announced exit from the personal customer market in
Norway as part of the Forward ’28 strategy.
Risk Management 2023, section 3, which is available at
danskebank.com/ir, provides details on Danske Bank’s credit
risk management.
Credit quality
Credit quality remained strong in 2023 for all business units,
and 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)
31 December
2023
31 December
2022
Gross exposure
Allowance account
32,686
32,132
9,062
8,251
Net exposure
23,624
23,881
Collateral (after haircut)*
20,642
22,442
Stage 3 coverage ratio (%)*
75
85
* Collateral (after haircut) and Stage 3 coverage ratio have been restated. The stage 3 cover-
age 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 was stable at DKK 32.7
billion (end-2022: DKK 32.1 billion), corresponding to 1.3% of
total gross exposure. Stage 3 exposure was concentrated on
personal customers, commercial property, shipping, oil and gas
and agriculture, which combined accounted for 59% 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 being driven mainly by single-name exposures.
Lending
Lending stood at DKK 1,779 billion (end-2022: DKK 1,804
billion). Mortgage lending at nominal value at Realkredit
Danmark amounted to DKK 806 billion (end-2022: DKK 802
billion). Lending volumes in Norway saw a negative effect from
the depreciation of the Norwegian currency.
At Large Corporates & Institutions, we saw a decrease in
lending volumes in General Banking of 7% from the level at the
end of 2022 as the operating environment and capital markets
conditions 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 4% due mainly to a decrease in
lending volumes in Norway as a result of the depreciation of the
Norwegian krone.
Lending at Business Customers increased 2% from the
level at the end of 2022, with the increase being attributable
primarily to higher mortgage lending in Denmark driven by our
commercial real estate business. Despite a positive inflow of
bank lending volumes in Finland and Norway, total bank lending
volumes decreased, due to a decrease in bank lending volumes
in Denmark and Sweden as well as the depreciation of the
Norwegian krone.
At Personal Customers, we saw an increase in bank lending
volumes in Denmark of 14%. The general slowdown on the
housing market had a negative effect on mortgage volumes in
all four Nordic countries, however. In Denmark, the low level of
mortgage lending growth was caused primarily by the effect
of the rising interest rates and a lower level of supplementary
lending. Total lending across markets decreased 4% from the
level at the end of 2022, due mainly to the depreciation of the
Norwegian currency.
In Denmark, new gross lending, excluding repo loans, amounted
to DKK 113 billion. Lending to personal customers accounted
for DKK 28 billion of this amount.
Lending equalled 82.8% of the total amount of deposits,
mortgage bonds and other covered bonds (2022: 83.8%).
Deposits
Deposits amounted to DKK 1,137 billion at the end of 2023
(end-2022: DKK 1,170 billion). Deposit volumes in Norway
decreased, due mainly to the depreciation of the currency.
Deposit volumes at Personal Customers in Denmark increased
4% 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 Swedish and
Norwegian currencies and the announcement of Danske Bank
exiting the personal customer market in Norway.
29
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Total gross exposure in stage 2 decreased DKK 31.8 billion
from the level at the end of 2022, primarily in the business
and personal customers segments, due mainly to portfolio
developments and macroeconomic expectations.
The allowance account amounted to 1.07% (end-2022:
1.02%) of credit exposure.
Bond portfolio
(%)
31 December
2023
31 December
2022
Government bonds and bonds guaranteed by
central or local governments
Bonds issued by quasi-government institutions
Danish mortgage bonds
Swedish covered bonds
Other covered bonds
42
3
41
7
6
1
45
4
35
7
7
2
Allowance account
by business units
(DKK millions)
31 December 2023
31 December 2022
Corporate bonds
Accum.
impairm.
charges
% of credit
exposure*
Accum.
impairm.
charges
% of credit
exposure*
Personal Customers
5,306
0.68
5,427
Business Customers
10,705
1.58
10,235
Large Corporates &
Institutions
3,308
Northern Ireland
794
Group Functions
26
0.92
1.34
3.89
3,050
863
31
0.66
1.58
0.76
1.56
0.78
Total
20,140
1.07
19,605
1.02
* Relating to lending activities in core segments.
Trading and investment activities
Credit exposure from trading and investment activities
amounted to DKK 1,100 billion at the end of 2023 (end-
2022: DKK 1,174 billion). The decrease was due primarily to a
decrease in derivatives with positive fair value.
The Group has made netting agreements with many of its
counterparties concerning positive and negative market values
of derivatives. The net exposure was DKK 89.5 billion (end-
2022: DKK 89.1 billion).
The value of the bond portfolio was DKK 461 billion (end-
2022: DKK 487 billion). Of the total bond portfolio, 66% was
recognised at fair value and 34% at amortised cost.
Total holdings
100
100
Bonds at amortised cost included in total
holdings
34
31
The financial highlights on page 5 provide information about the
balance sheet.
Trading portfolio assets and trading portfolio liabilities increased
to net assets of DKK 93.7 billion (end-2022: net assets of
DKK 84.5 billion). The increase in net assets was due mainly to
changes in the fair value of the derivatives portfolio.
Other balance sheet items
Due from credit institutions and central banks increased to
DKK 271.4 billion (end-2022: DKK 191.9 billion). The increase
was due to general liquidity management. More information on
this is provided under the Funding and liquidity heading in the
Capital and liquidity management section.
Personal customer business in Norway
Following the Forward ’28 strategy announcement in June,
Danske Bank entered into an agreement to sell its personal
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 distributed
to personal customers in Norway. The transaction is subject to
regulatory approvals. Pending these approvals, the transaction
is expected to close in the fourth quarter of 2024.
Strategic partnership with Infosys
As part of our Forward ’28 strategy, we announced our
ambition to be a leading bank in a digital age. To support us
in this digital and technology transformation, we entered into
a strategic partnership with Infosys, a global leader in digital
services and consulting.
30
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
As at 1 September 2023, Danske Bank sold Danske IT, a
whollyowned subsidiary of Danske Bank headquartered in
Bengaluru, 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 transferred to Infosys, which employs
more than 300,000 people globally.
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 99% of the debt in
approximately 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 due to the issues
in the historical debt collection systems.
The work involved in paying compensation to the debt collection
customers who may have been subject to overcollection
began in 2023. Throughout 2023, Danske Bank has paid or
attempted to pay out compensation to approximately 80%
of the customers in scope for the accelerated data-driven
solution (excluding estate case customers). The remaining
approximately 20% of the customers in scope are expected to
receive compensation in 2024.
As previously announced, Danske Bank has been working
towards restarting its debt collection in respect of personal
customer cases in Denmark in collaboration with a debt
collection agency, Lowell Danmark A/S. We have now reached
this milestone as we have started up the new debt collection
system and transferred the first cases for collection to Lowell
Danmark A/S in December 2023. Danske Bank will initially
transfer only the least complex debt collection cases to Lowell
Danmark A/S for collection. Later on, the new IT system will
gradually be enhanced and tested to handle all case types in a
secure and compliant manner.
Danske Bank continues to have a dialogue with and report its
progress in the debt collection case to the impartial reviewers
appointed by the Danish FSA.
Group Financial Crime Plan
Having a sustainable Financial Crime control framework
remains one of our strategic priorities. Four years ago, the
Group launched the Financial Crime Plan, a comprehensive
transformation programme, with the ambitious target of
completion by the end of December 2023.
The purpose of the Financial Crime Plan has been to design and
implement a financial crime control framework that (i) meets
31
the regulatory requirements applicable to the Group; and (ii) is
reasonably designed to manage the Group’s inherent financial
crime risk in line with the Group’s risk tolerance by harnessing
global best practice as appropriate.
The Group has now completed its Financial Crime Plan, and
sees this as a significant achievement. We will continue testing
our controls to ensure that what we have implemented is fully
embedded and operating effectively. Should the outcome of the
testing require further improvements, those will be addressed
as part of normal procedures.
In recent years, the Group has focused significantly on its
financial crime control framework. This has included
•
spending more than DKK 12 billion on delivery of the
Financial Crime Plan, remediation and ongoing business-as-
usual risk management
hiring significant resources, including senior subject matter
experts, who have previous experience with designing and
implementing effective controls
continuously enhancing the governance structures
across the Group, including monitoring the progress of
enhancements to the financial crime control framework
and embracing senior management sponsorship, scrutiny
and effective ongoing governance, up to and including the
Executive Leadership Team and the Board of Directors
providing regular updates to external stakeholders, including
the Danish FSA and the US Department of Justice, on the
scope of the Group’s work and the progress being made
•
•
•
•
Also, the Group has substantially reduced its inherent risk by
closing down all banking activities in Latvia, Lithuania,
•
Estonia and Russia to focus primarily on the Nordic markets
(announced in February 2019)
winding down in and divesting from other non-Nordic
regions (for example winding down business in Germany,
as per decision in December 2020, divesting international
private banking activities in Luxembourg, as announced in
July 2021, and closing down Danske Bank’s representative
office in China in early 2022)
Progress on Regulatory Orders
During 2019-2023, the Group has been subject to ongoing
supervisory oversight and has remained focused on addressing
feedback from its regulators. Throughout this time, the Group
has received 14 Regulatory Orders (or equivalents) relating
to financial crime risk. Of these, only one remains open. It
has been addressed by the Group, and is now with one of our
regulators to also confirm closure.
Embedding our controls and testing operational effectiveness
Through delivery of the Financial Crime Plan, the Group has
implemented controls which are adequately designed to meet
our regulatory requirements and to manage our financial crime
risks. These controls were designed by subject matter experts
with assistance, in some instances, from external consultancy
third parties. Many of the controls were implemented in the
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
earlier years of the plan, and therefore, the Group’s day-to-day
operational management of those controls shows that they are
operating as intended.
Throughout the duration of delivering on the Financial Crime
Plan, the Group’s second and third lines of defence (and, in
some cases, with the assistance of independent specialist
third parties) have tested a substantial number of the controls
to validate that what we have implemented is appropriately
embedded and working as expected. In some cases, the
validation work has identified areas requiring adjustment, which
have been, or will be, addressed as part of normal procedures.
In 2024, the Group will continue to further test the control
framework and focus on those areas that require adjustment.
For such a large and complex remediation programme delivered
within a relative short timeframe, further testing of controls
may reveal areas of improvement and refinement – this is to
be anticipated – but we do not expect material issues to be
revealed.
Continued investment in sustainable control effectiveness,
efficiency and customer experience
Ensuring that our control framework is sustainable and
demonstrates the ability to improve and evolve is a key priority
for the Group. As part of the Financial Crime Plan, the Group
has implemented governance structures and business-as-
usual processes to ensure that our controls remain adequate
and respond to changes in the external threat landscape and
evolutions in our business. The Group also intends to enhance
our controls to make them more customer-centric whilst
maintaining risk management effectiveness. In the coming
years, the Group will continue to invest in and enhance existing
controls by introducing greater automation, which will reduce
operational risk and increase cost effectiveness, resulting in a
fall in the Group’s financial crime risk management costs in line
with previous forecasts.
Estonia matter
As announced on 13 December 2022, Danske Bank 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 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 the DoJ, Danske Bank
is placed on corporate probation for three years from 13
December 2022 until 13 December 2025, and the Bank
committed to comply with certain Post-Resolution Obligations
agreed with the DoJ. The completion of the Financial Crime
Plan constitutes a significant part of these Post-Resolution
Obligations. The assurance and further testing work the Group
32
will be undertaking in 2024 in relation to the Bank’s financial
crime programme is one of these obligations and will be a focus
area for the Group.
In 2021, the Danish FSA appointed an Independent Expert
whose role, amongst other things, was to monitor and report
on the progress in delivering on the Financial Crime Plan. The
Danish FSA has extended the appointment for an additional
period to monitor the further embedding and testing of the
operational effectiveness of the Financial Crime Plan. Following
this period, further reappointments of the Independent Expert
may be expected.
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 the 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.
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Capital and liquidity management
The main purposes of our capital management practices are to
support our business strategy and to ensure a sufficient level of
capital to withstand even severe downturns without breaching
regulatory requirements.
At the end of 2023, the Group’s solvency need ratio was
10.7%, a minor increase of 0.1 percentage points from the
level at the end of 2022.
Capital ratios and requirements
At the end of 2023, the Group’s total capital ratio was 23.1%,
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 2023 was driven by an increase in net profit
after dividends and a decrease in REA. These effects were
partly countered by an increase in the capital deduction for
Danica Pension and a decline in the IFRS 9 add-back.
During 2023, the total REA decreased approximately DKK 10
billion due mainly to a decline in the REAs for credit risk and
market risk, which was partly countered by an increase in the
REA for operational 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 total REA)
2023
Fully
phased-in*
A combined buffer requirement (CBR) applies to financial
institutions in addition to the solvency need ratio. At the end
of 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 in Denmark, which took
effect on 4 August 2023.
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 decision 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 2023, the point-in-time requirement including the
CBR was equivalent to DKK 245 billion, or 35.5% of the total
REA adjusted for Realkredit Danmark. Taking the deduction of
capital and debt buffer requirements for Realkredit Danmark
into account, MREL-eligible liabilities amounted to DKK 288
billion. In addition, an MREL of 6% of the leverage ratio
exposure (LRE) is in place. The LRE-based requirement equalled
22.5% of the total REA adjusted for Realkredit Danmark,
making the REA-based requirement the binding constraint.
Capital ratios
CET1 capital ratio
Total capital ratio
18.8
23.1
18.6
22.9
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.
Capital requirements (incl. buffers)
CET1 requirement
14.2
14.2
- portion from countercyclical buffer
- portion from capital conservation buffer
- portion from Norwegian systemic risk buffer
- portion from SIFI buffer
Solvency need ratio
Total capital requirement**
Excess capital
CET1 capital
Total capital
2.0
2.5
0.5
3.0
10.7
18.7
4.6
4.3
2.0
2.5
0.5
3.0
10.7
18.7
4.4
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 2023.
At the end of 2023, the subordination requirement was
equivalent to DKK 203 billion. The backward-looking
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 239 billion.
MREL requirement and eligible funds; end-2023
(DKK billions) (% of total REA)
Preferred senior debt > 1year
Non-preferred senior debt > 1year
CET, AT1, T2
245 (35.5%)
288 (41.8%)
49 (7.2%)
79 (11.4%)
160 (23.2%)
MREL including CBR
MREL funds
Note: The requirement and eligible funds are adjusted for Realkredit Danmark’s capital and
debt buffer requirements.
33
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Leverage ratio
At the end of 2023, the Group’s leverage ratio was 5.1% under
both the transitional rules and 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 requirement.
Danske Bank fully meets this capital target.
The Board of Directors will continue to adapt the capital targets
to regulatory developments in order to ensure a strong capital
position.
As our capital position continues to be strong, the Board of
Directors is proposing a dividend of DKK 7.5 per share for
the second half of 2023, in addition to the interim dividend
of DKK 7.0 per share paid for the first half of 2023, in total
amounting to DKK 14.5 per share, corresponding to 59% of
net profit for the year. The interim dividend was paid out in July
2023.
Danske Bank’s dividend policy remains unchanged, targeting a
dividend of 40-60% of net profit.
On the basis of the financial results for 2023, the Board of
Directors has decided to initiate a share buy-back programme
of DKK 5.5 billion, equivalent to a total payout ratio of 85%
including the dividend for 2023. The programme, which has
been approved by the Danish Financial Supervisory Authority,
will start on 5 February 2024.
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
account the expected REA impact of the initial 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.
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, including final calibration, is, however,
pending and subject to prior approval by the EU Commission.
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 Fitch 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
its outlook on Danske Bank to Positive from Stable, while
affirming all ratings.
Danske Bank has strong capital and liquidity positions, and the
Board of Directors remains committed to our capital distribution
policy.
In 2023, S&P Global (S&P) ratings and outlook on Danske
Bank were unchanged.
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 2023, Danske Bank was in compliance with
all threshold values. A separate report is available at
danskebank.com/reports.
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 final rules are not
expected to be adopted before end of the first quarter 2024 at
the earliest.
34
Danske Bank’s credit ratings, 31 December 2023
Counterparty rating
Fitch
AA-
Moody’s
S&P
A1/P-1
AA-/A-1+
Deposits
AA-/F1+
Preferred senior debt
AA-/F1+
Issuer rating
Outlook
Non-preferred senior
debt
Tier 2
AT1
A+/F1
Stable
A+
A-
BBB
A2/Positive
/P-1
A3/P-2
A3/P-2
Positive
-
A+/A-1
A+/A-1
Stable
Baa2
BBB+
-
-
BBB
BB+
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Despite the uncertainty, the credit markets stayed active with
stable investor appetite for Danske Bank issues, which we
continued to take advantage of in the fourth quarter. In early
January 2024, we followed up with a DKK 750 million non-
preferred senior 8nc7 EUR benchmark issue.
At the end of December 2023, the Group had issued covered
bonds of DKK 33 billion, preferred senior debt of DKK 39.7
billion and non-preferred senior debt of DKK 22.5 billion, thus
bringing total long-term wholesale funding to DKK 95.2 billion.
Our strategy is to be a regular issuer in the EUR benchmark
format and in the domestic USD market for preferred senior and
non-preferred senior bonds in the Rule 144A format. We also
maintain the strategy of securing funding directly in our main
lending currencies, including the NOK and SEK. The benchmark
issues are expected to be supplemented by private placements
of bonds.
From time to time, we will make issues in GBP, JPY, CHF and
other currencies when market conditions allow. Issuance plans
for subordinated debt in either the additional tier 1 or tier 2
formats will depend on balance sheet growth and redemptions
on the one hand and our capital targets on the other. Any
issuance of subordinated debt may cover part of our funding
need. Note G22 provides more information about bond issues
in 2023.
Danske Bank’s liquidity position remained robust. At the end
of December 2023, our liquidity coverage ratio stood at 170%
(31 December 2022: 151%), with an LCR reserve of DKK
615 billion (31 December 2022: DKK 570 billion), and our net
stable funding ratio stood at 125.9%.
At 31 December 2023, the total nominal value of outstanding
long-term funding, excluding debt issued by Realkredit
Danmark, was DKK 337 billion (31 December 2022: DKK 357
billion).
Covered bonds issued by Realkredit Danmark (RD) are rated
‘AAA’ (Stable outlook) by Fitch, S&P and Scope Ratings.
Covered bonds issued by Danske Bank A/S are rated ‘AAA’
(Stable outlook) by both Fitch and S&P. Covered bonds issued
by Danske Hypotek AB are rated ‘AAA’ (Stable outlook) by S&P
and ‘AAA’ by Nordic Credit Rating. Covered bonds issued by
Danske Mortgage Bank Plc are rated ‘Aaa’ by Moody’s.
Danske Bank’s ESG ratings
Score at
31 December
2023
Score at
31 December
2022
CDP Worldwide, UK
B
B
ISS ESG, USA
C+ Prime
C+ Prime
MSCI ESG Ratings, USA
BBB
BBB
Sustainalytics, USA
Medium Risk
Medium Risk
Moody’s ESG Solutions, USA
60
61
Environmental, Social and Governance (ESG) ratings
In April 2023, Moody’s ESG Solutions downgraded Danske
Bank to 60 from 61 due to a lowering of the social assessment,
partially offset by an improvement in environment and
governance.
All other ESG ratings remained unchanged in 2023.
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 5.2.3 of Risk Management
2023).
As part of managing the interest rate risk in the banking book,
the Group holds high quality liquid bonds which are part of the
Group’s LCR. 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
During 2023, following a number of central bank rate hikes,
market expectations shifted towards a lower inflation outlook,
peaking interest rates and expectations of several central
bank rate cuts in 2024. The very tense geopolitical situation
persisted and even worsened in the last quarter with the
situation in the Middle East.
35
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Investor Relations
Danske Bank operates in an attractive, stable and innovative
region. As a Nordic leader, Danske Bank has a diversified
business composition with a strong financial position and
sound risk profile. This unique position underpins the long-term
ability to generate profitable growth and return to steady capital
distribution and creation of shareholder value.
An eventful year for Danske Bank investors
The year 2023 was truly eventful and exciting for Danske Bank.
While we navigated the financial market volatility, including
the external liquidity events impacting US regional banks,
our investment case was supported by the strong financial
performance and three profit upgrades during the year.
As we have largely put the legacy cases behind us in step with
the execution of our 2023 Better Bank strategy, we have built
a more resilient and efficient organisation – a strong foundation
for sustainable profitability enhancement and further growth
potential.
Forward ’28
At the beginning of the summer, we hosted an investor
update and presented our new Forward ’28 strategy, which
includes new 2026 financial targets: an ROE of 13%, a cost/
income ratio around 45% and a CET1 capital ratio above
16%. Ambitious, yet realistic targets. We also announced
the resumption of capital distribution and initiated this with
an accelerated dividend paid in connection with the release of
our results for the first six months of 2023. With our 40-60%
dividend policy, we see a potential for more than DKK 50 billion
in ordinary dividend payouts through 2026. Furthermore, we
see a potential for additional capital distribution subject to our
capital position and market conditions.
Danske Bank is now once again an accessible and attractive
investment case. For both debt and equity investors, perception
has improved significantly among existing and potential new
investors.
We facilitated a large number of investor events during the year,
which, in addition to interaction with our Nordic investor base
included roadshows to many other European countries as well
as the UK, US and Asia. Across jurisdictions, our efforts are
reflected in an increasingly positive perception of Danske Bank.
We facilitated a large number of investor events during the year,
which, in addition to interaction with our Nordic investor base
included roadshows to many other European countries as well
as the UK, US and Asia. Across jurisdictions, our efforts are
reflected in an increasingly positive perception of Danske Bank.
ESG
2024 will mark the year of the introduction of the European
Sustainability Reporting Standards (ESRS), as stipulated by
the EU, setting new requirements for reporting parameters and
transparency. In September 2023, Danske Bank received an
A rating from Position Green, addressing the top 100 Nordic
companies’ readiness for the new reporting requirements. Our
top score indicates our readiness for and commitment to the
ESG agenda, which we have proven throughout 2023.
Investor interest in our Climate Action Plan, launched in January
2023, further supports our observation that commitment to
ESG responsibilities is increasingly a fundamental requirement
for investors’ interest in Danske Bank rather than an interesting
add-on. Our commitment to the ESG agenda will continue in
2024.
Investor engagement
With the legacy cases mostly behind us and with the
presentation of our Forward ’28 strategy, the response from the
investor community has been pronounced. For many investors,
Danske Bank shares
With the share price increase of 31% through 2023, Danske
Bank’s market cap increased approximately 33% to DKK 155
billion. Danske Bank now has an index weighting of the OMX
Copenhagen 25 CAP Index of 6.8%, up from 4.8% last year.
Danske Bank shares
(DKK)
Share capital (millions)
Share price (end of year)
Total market capitalisation (end of year) (billions)
Net profit for the period (billions)
Dividends (billions)*
Share buybacks (billions)
Book value per share
Price/book value per share
2023
8,622
180
155
21.3
14.5
-
204
0.9
2022
8,622
137
118
-4.6
-
-
187
0.7
2021
8,622
113
96
13.0
1.8
-
201
0.6
2020
8,622
101
86
4.6
1.8
-
188
0.5
2019
8,622
108
92
15.1
-
-
183
0.6
2018
8,960
129
110
15.2
7.6
7.8
174
0.7
* Dividend for 2023 of a total of DKK 14.5 per share consists of a proposed dividend of DKK 7.5 per share for the second half of 2023 and an interim dividend
of DKK 7.0 per share that was paid in connection with the interim report for the first half of 2023.
36
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Danske Bank’s share price increased from DKK 137 at 30
December 2022 to DKK 180 at 30 December 2023, an increase
of 31%. In comparison, the OMXC25CAP Index increased 7%,
while the Europe 600 Banks Index increased 20%.
Danske Bank is covered by 25 sell-side analysts, who regularly
publish research reports and sector reports. A list of the
analysts and other relevant information, including financial
reports, investor presentations, share and bond information,
is available at danskebank.com/investor-relations/reports.
Investor Relations collects and distributes consensus estimates
from sell-side analysts for external and internal stakeholders.
Sell-side analysts’ expectations and buy recommendations for
Danske Bank shares improved steadily and throughout the year.
The average expected price target for Danske Bank’s shares
ended the year at DKK 208, reflecting an additional upside
potential of more than 15% relative to the year-end trading
level.
12-month target price (analyst avg.)
250
200
150
100
50
2020
2021
2022
2023
2024
Source: Bloomberg, based on 25 analysts’ consensus estimates
Shareholders
At the end of 2022, Danske Bank had about 273,000
shareholders. The 10 largest shareholders together
owned about 40% of the share capital. During 2023, the
geographical diversification of our shareholder base increased
slightly, and we have generally seen more interest from the
global investor community since the settlement with US and
Danish authorities in December 2022.
We estimate that shareholders outside Denmark, mainly in
the US, EU and UK, hold around 47% of the share capital, an
increase from the level of around 42% in 2022.
Danske Bank shareholders
2023
2022
2021
37 36
32
21 21 21
21
19 19
12
9 8
7
5
4
5 4 4
A.P. Møller
Holding
Group
Rest of
Denmark
Other
Nordic
countries
UK
Rest of
Europe
55
4
USA
Other
According to the Danish Companies Act, shareholders must
notify the company if the voting rights of their shares represent
5% or more of the voting rights of the company’s share capital
or if the nominal value of their shares represents 5% or more of
the share capital. Shareholders must also disclose changes in
shareholdings if they exceed or fall below specified percentage
thresholds.
The average daily trading volume of Danske Bank shares was
around 1.5 million during 2023. The Danske Bank share was
the seventh most actively traded share on Nasdaq Copenhagen
during 2023.
One shareholder has notified Danske Bank of holding 5% or
more of the share capital:
The A.P. Møller Holding Group holds about 21% of the share
capital.
Danske Bank shares
Index 2017 = 100
Danske Bank Europe 600 Banks
140
120
100
80
60
40
20
0
2017
2018
2019
2020
2021
2022
2023
37
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Organisation and management
General meeting
The general meeting is Danske Bank’s highest decision-making
authority.
and note G36 in the Financial statements provides information
on the remuneration of the Board of Directors.
In 2023, the annual general meeting was held on 16 March.
Danske Bank’s Articles of Association are available at
danskebank.com/about-us/corporate-governance and contain
information about the notice convening the general meeting,
the shareholders’ admission and voting rights as well as the
shareholders’ right to submit proposals and have specified
business transacted at the meeting.
All shareholders have voting rights according to the number
of shares held at the date of registration and each share of
DKK 10 carries one vote at the general meeting. No share has
any special rights attached to it.
Only the general meeting can amend – or authorise the Board
of Directors to amend – Danske Bank’s Articles of Association.
Any amendment requires not less than a two-thirds majority of
the votes cast and not less than two-thirds of the share capital
represented at the general meeting and entitled to vote.
A resolution to wind up Danske Bank by merger or voluntary
liquidation can be passed only if adopted by not less than three-
quarters of the votes cast and not less than three-quarters
of the share capital represented at the general meeting and
entitled to vote.
Board of Directors
The Board consists of twelve members, eight elected by the
general meeting and four elected by and among the employees.
Board members elected by the general meeting stand for
election each year. As prescribed by Danish law, members
elected by and among the employees serve on the Board of
Directors for a four-year term, with the next election to be held
prior to the annual general meeting in 2026.
The Nomination Committee operates as a preparatory
committee for the Board of Directors with respect to the
nomination and appointment of candidates to the Board of
Directors and to the Executive Leadership Team of Danske
Bank. Board candidates are nominated by the Board of
Directors or the shareholders and are elected by the general
meeting.
The members of the Board of Directors were re-elected at the
annual general meeting on 16 March, except for Bente Avnung
Landsnes, who did not seek re-election.
Pages 244-249 of Annual Report 2023 provide information
about the individual members of the Board of Directors,
including their directorships. Note G37 in the Financial
statements provides information on the number of Danske
Bank shares held by the members of the Board of Directors,
38
Work of the Board of Directors in 2023
In 2023, the Board of Directors held 19 meetings, of which
3 were extraordinary meetings. As to committee meetings
(ordinary and extraordinary), the Audit Committee held 6
meetings, the Risk Committee held 11 meetings, of which
three were extraordinary meetings, the Conduct & Compliance
Committee held 6 meetings, the Nomination Committee held 8
meetings, of which one was an extraordinary meeting, and the
Remuneration Committee held 7 meetings, of which one was
an extraordinary meeting.
The members’ participation in Board and Committee meetings
in 2023 is illustrated below.
Board
Committees
Audit
CCC
Nomi-
nation
Remu-
neration
Risk
Martin Blessing
19/19
6/6
7/7
7/7
Jan Thorsgaard Nielsen 19/19
6/6
7/7
Lars-Erik Brenøe
19/19
6/6
7/7
Jacob Dahl*
19/19
4/4
10/11
Raija-Leena Hankonen
18/19
6/6
Allan Polack**
18/19
5/5
3/3
11/11
Carol Sergeant
Helle Valentin
Bente Bang
19/19
19/19
18/19
6/6
11/11
6/7
7/7
Kirsten Ebbe Brich
19/19
6/6
Aleksandras Cicasovas 19/19
Louise Aggerstrøm
Hansen***
13/19
Bente Avnung
Landsnes****
2/3
1/1
6/9
*Jacob Dahl joined the Remuneration Commitee in March 2023.
**Allan Polack stepped down from the Remuneration Committee in
March 2023.
***Louise Aggerstrøm Hansen joined the Risk Committee in March 2023.
**** Bente Avnung Landsnes stepped down from the Board of Directors in March
2023.
The Board of Directors evaluates its performance annually, and
the evaluation process is led by the Nomination Committee. In
2023, the Board of Directors’ evaluation focused in particular
on the Forward ’28 strategy process and the key strategic
enablers: technology and people. As part of the overall
evaluation, separate evaluations were conducted pertaining
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
to each Board committee and the Chairman of the Board of
Directors. Moreover, an upward review of the Board of Directors
by the Executive Leadership Team was conducted. To ensure
the objectivity and quality of the evaluation, an external adviser
facilitated the evaluation, which consisted of questionnaires
completed by all members of the Board of Directors and the
Executive Leadership Team as well as interviews conducted
with all members of the Board of Directors and the Chief
Executive Officer. The outcome of the evaluation was
subsequently presented to and discussed by the Board of
Directors.
The Board evaluation showed that real strides were made in
2023, notably in terms of the process followed in developing
and communicating the Forward ’28 strategy, oversight of
people and organisational capacity, of senior leadership stability
and capabilities as well as of the relationship between the CEO
and the Board of Directors.
The Board of Directors has agreed on and will work on specific
actions aimed at addressing identified development areas.
The actions centre around, for example, technology and
partnerships, customers and competitors, and the format and
length of Board papers.
Executive Leadership Team
Team members
Title
Carsten Rasch Egeriis
Chief Executive Officer
Magnus Agustsson
Chief Risk Officer
Joachim Alpen*
Head of Large Corporates & Institutions
Christian Bornfeld
Head of Personal Customers and Financial Crime
Risk & Prevention
Karsten Breum
Chief People Officer
Stephan Engels
Chief Financial Officer
Johanna Norberg
Head of Business Customers & Country Manager,
Danske Bank Sweden
Dorthe Tolborg**
Chief Compliance Officer
Frans Woelders
Chief Operating Officer
Berit Behring***
Head of Large Corporates & Institutions
* Joachim Alpen joined the Executive Leadership Team on 1 August 2023.
** Dorthe Tolborg joined the Executive Leadership Team on 1 June 2023.
***Berit Behring retired on 31 July 2023.
The Board of Directors’ collective competencies and experience
are the sum of the individual board members’ competencies
and experience as the Board operates as a collegial body. The
composition of the Board of Directors aims at ensuring that the
members collectively possess the required competencies as
described in the competency profile of the Board of Directors,
which is available at danskebank.com/Management. Pages
39
244-249 of Annual Report 2023 provide information on the
competencies of the individual Board members.
On 16 January 2023, Danske Bank announced that Berit
Behring had decided to retire from her position on 31 July
2023 and that Joachim Alpen was appointed new Head of
Large Corporates & Institutions and member of the Executive
Leadership Team as of 1 August 2023.
On 20 March 2023, Danske Bank announced changes to the
Executive Leadership Team, as Dorthe Tolborg was appointed
new Chief Compliance Officer and member of the Executive
Leadership Team as of 1 June 2023.
Commercial Leadership Team
Team members
Title
Lars Alstrup
Nordic Head of Advisory Banking,
Business Customers
Erlend Angelfoss
Country Manager Norway
Jakob Bøss
Michel van Drie
Paul Gregory
Head of Group Sustainability, Stakeholder
Relations, Communications & Marketing
Head of Technology & Services,
Large Corporates & Institutions
Global Head of Corporate & Institutional
Banking
Claus Harder
Global Head of Markets & Transaction Banking
Christoffer Møllenbach Head of Group Finance
Atilla Olesen
Linda Olsen
Head of Investment Banking & Securities
COO of Technology & Services,
Personal & Business Customers
Mark Wraa-Hansen
Head of Personal Customers Denmark
Danske Bank also has a Commercial Leadership Team, which
consists of 10 experienced leaders who undertake important
commercial roles in the Danske Bank Group. The Commercial
Leadership Team is responsible for ensuring strong cooperation
across the Group and focuses on developing Danske Bank’s
customer offerings. The team is the key driver behind the
Group’s Forward ’28 strategy.
Corporate governance recommendations
Corporate governance recommendations issued by the
Danish Committee on Corporate Governance are available
at corporategovernance.dk. The recommendations are best
practice guidelines for the management of companies with
shares admitted for trading on a regulated market in Denmark,
including Nasdaq Copenhagen A/S. If a company fails to
comply with a recommendation, it must explain why it has
chosen a different approach. Danske Bank complies with all
recommendations.
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
The statutory corporate governance report issued in accordance
with section 134 of the Danish FSA’s Executive Order on
Financial Reports for Credit Institutions and Investment Firms,
etc., section 107b of the Danish Financial Statements Act and
the Nasdaq Nordic Main Market Rulebook for Issuers of Shares
(“Nordic Main Market Rulebook”) is available at danskebank.
com/corporate-governance. The report includes an explanation
of Danske Bank’s status on all recommendations.
The Danish Bankers Association, which is now part of Finance
Denmark, has issued a Corporate Governance Code, which
Danske Bank must comply with or explain why it does not
comply. Danske Bank complies with all recommendations set
out in the Code. Danske Bank’s explanation of the status on
all recommendations is included in section C of its Corporate
Governance Report 2023.
Data ethics
Danske Bank’s data ethics principles define how Danske Bank
strives to act with regard to data use across the Group and in its
business relations.
Danske Bank strives to be transparent about the purposes for
which data is used and to communicate this clearly. We aim to
ensure that processes are clearly understood in terms of risk
as well as the social, ethical and societal consequences of our
use of data. We assess and evaluate the impact of the use of
advanced technologies, analytics and computational methods
on the parties involved.
2023 saw Danske Bank establish an official policy for its Data
Ethics principles as well as continue its focus on the training of
colleagues and development of how Danske Bank collects and
uses personal and customer information.
In 2024, Danske Bank will initiate work to translate the policy
into detailed data ethics instructions and a standardised data
ethics framework, which will cover not only personal and
customer information but also data use in general.
The principles are available at
danskebank.com/corporate-governance.
40
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business units
Personal Customers
Our Personal Customers unit provides advisory services to personal customers and Private Banking customers in Denmark,
Sweden, Norway and Finland. Our advisers and experts are there to help customers when and how it best suits the
individual customer – at online meetings, via our websites or, if so required, over the phone or at a branch.
When our customers need to make important financial decisions about, for example, their home, investments or pension,
we offer customised advice that is based on their current situation and needs. And with our intuitive digital solutions, we
aim to make it as easy as possible for our customers to do most of their banking business whenever and wherever they
want.
Business Customers
We offer our customers advice that adds value to their business, no matter whether the customer is a sole proprietor
or an entity in a multinational group. Our strategic advisory services are always based on the needs of the business,
for example in connection with growth, an acquisition, a change of ownership, strategic development or international
expansion.
Our business customers have access to the market’s most innovative digital solutions that make day-to-day banking
easy and pave the way for new insights and opportunities.
Large Corporates & Institutions
Large Corporates & Institutions caters to the most complex financing and transaction needs of large corporate and
institutional customers, and we help them to prosper and grow.
We offer expertise in financing, risk management, investments and financial advisory services, and our customers have
access to our award-winning transaction banking solutions.
Thanks to our extensive network and our many years of experience, we serve as intermediary between issuers and
investors with a view to creating financing and investment opportunities. Our goal is to be an inspirational partner that
understands the customers’ strategic agendas and offers tailored solutions to meet their needs.
Danica Pension
Danica Pension’s strategy is based on our ambition to be our customers’ financial security provider and thereby
enhance customer satisfaction. We focus on proactively helping our customers – both personal and business
customers – to ensure that they have the right pension, insurance and healthcare solutions, while we also generate
attractive returns after costs and contribute to creating a more sustainable society.
Northern Ireland
Danske Bank is the leading bank in Northern Ireland, serving personal, business and corporate customers. The
business is also a growing bank in targeted sectors across the rest of the United Kingdom. We support our customers
through face-to-face, online and mobile solutions. Our focus in Northern Ireland is on remaining a stable, strong and
risk-astute bank, consolidating our market-leading position alongside pursuing prudent low-cost growth opportunities in
the rest of the UK.
41
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Personal Customers
In 2023, Personal Customers saw an increase in net interest
income of 61% from the level in 2022, mainly as a result of
repricing actions and diversification of our savings products
offering supported by market developments. Customer activity
within especially investments as well as financing picked up
in the second half of 2023, but total fee income for 2023 still
decreased 15% relative to the level in 2022. The decrease was
driven primarily by a general slowdown in the housing market
across our markets, especially in the first half of 2023, as
well as customers de-risking their investment portfolios as a
consequence of the rise in interest rates and volatile markets.
In June 2023, we announced that we had entered into an
agreement to sell our personal customers business in Norway.
The transaction is subject to regulatory approvals. Pending
these approvals, the transaction is expected to close in the
fourth quarter of 2024.
Profit before tax amounted to DKK 8,160 million in 2023,
an increase of 209% from the level in 2022. The increase
was driven by higher net interest income and lower operating
expenses as a result of efficiency initiatives resulting in fewer
FTEs. 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 down 66% from the level in 2022.
Personal Customers
(DKK millions)
2023
2022
Index
23/22
Q4
2023
Q3
2023
3,669
161
3,481
85
75
-
120
94
105
175
34
209
96
99
99
1,023
998
76
18
85
23
4,597
4,775
2,625
2,373
42
42
1,973
2,402
-20
-145
1,993
2,547
775,525
764,753
4,679
4,687
408,018
408,350
-
-
-
-
1.21
1.27
27.4
32.8
27.7
34.8
57.1
49.7
Index
Q4/Q3
95
103
89
78
96
111
100
82
14
78
101
100
100
100
98
-
-
-
-
Net interest income
Net fee income
Net trading income
Other income
Total income
Operating expenses
of which resolution fund, bank tax etc.
Profit before loan impairment charges
Loan impairment charges
Profit before tax
14,166
4,043
331
-608
8,778
4,730
444
987
17,932
14,939
9,460
10,104
169
161
8,473
4,836
312
927
8,160
3,909
Loans, excluding reverse transactions before impairments
775,525
805,120
Allowance account, loans
Deposits, excluding repo deposits
Covered bonds issued
Allocated capital (average)
4,679
4,727
408,018
410,806
613,370
612,997
100
613,370
615,878
29,306
30,898
95
28,809
29,274
Net interest income as % p.a. of loans and deposits
1.21
0.71
Profit before loan impairment charges as % p.a. of allocated capital
28.9
15.7
Profit before tax as % p.a. of allocated capital (avg.)
27.8
12.7
Cost/income ratio (%)
Full-time-equivalent staff
52.8
67.6
4,064
4,262
95
4,064
4,179
97
Fact Book Q4 2023 provides financial highlights at customer type level for Personal Customers, Fact Book Q4 2023 is available at danskebank.com/ir.
42
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business initiatives
During 2023, the central banks in our core markets hiked
market rates numerous times. This increased demand from
customers for additional support in navigating the high market
rate environment by offering specialist advice based on the
individual customer’s overall financial situation, especially in
relation to home financing and investments.
Following the rise in the market rates, an attractive customer
rate of 0.25% was introduced on transaction accounts in the
fourth quarter of 2023 for our customers in Denmark and
Finland in addition to the positive rates on several types of new
savings products. One of these products is the Danske Toprente
account, which allows customers in Denmark to get favourable
rates on fixed-term deposits and has been recommended by the
Danish Consumer Council.
Customer activity in the housing market picked up in the
second half of 2023, driven primarily by activity in Denmark
due to improved macroeconomic conditions combined with the
anticipated effect of new property tax regulation in the Danish
market that took effect on 1 January 2024. The number of
customer meetings and home showings increased, as did
valuation activity. We also saw a pickup in the housing market
in Sweden after the launch in October of a competitive 2-year
fixed-rate mortgage loan to partnership customers. We have
further made efforts to optimise our home finance processes
to ensure that customers experience a faster time to decision
when applying for loan offers.
In the investment area, our customers continued to face
uncertainty in the financial markets in 2023. The net flow
into assets under management increased DKK 13.8 billion in
2023. The increase was driven both by low-risk, low-margin
products following the rise in market rates and by a number of
large new investment agreements. Investment activity saw a
pick-up in the second half of 2023, which was also reflected in
an increase in the retail fund market share for Danske Invest,
but fees continued to be under pressure as a result of the shift
towards low-margin products.
Through focused Through focused efforts, we significantly
upgraded convenience for our customers in terms of managing
their day-to-day finances via seamless mobile solutions, while
simultaneously improving our advisory services regarding
customer life events calling for specialist advise, which we
provide primarily via online meetings. We launched several
new features across our markets in the Danske Mobile
Banking solution across account management, cards and
digital investment propositions. Examples of the new features
in Danske Mobile Banking include our customers now being
able to open a custody account and getting easy and quick
access to investing in funds via Danske Monthly Investment. In
the fourth quarter, we also moved the June digital investment
universe into Danske Mobile Banking, while adding a
competitive sustainable alternative to our digital investment
recommendations, thereby improving the customer experience
for our customers in Sweden and Denmark, as they can
access all self-service investment solutions in one platform.
43
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
was due primarily to higher income from deposits driven by the
rise in market rates and repricing actions as well as product
development initiatives. Some of the increase was offset by the
allocation 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 4% from the level at the
end 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 2022, due mainly to the depreciation
of the Norwegian krone and the announcement of Danske Bank
exiting the personal customer market in Norway.
We saw an increase in bank lending volumes in Denmark of 14%
from the level at the end of 2022, driven by customers looking
for a flexible way to finance their homes in an uncertain interest
rate environment as well as by electric and hybrid car lending.
The general slowdown on the housing market in 2023 had a
negative effect on mortgage volumes in all four Nordic countries.
In Denmark, the low level of mortgage lending growth was caused
primarily by the effect of the rising interest rates and a lower level
of supplementary lending. The depreciation of the Norwegian
krone had a negative effect of DKK 7 billion. Total lending across
markets decreased 4% from the end of 2022.
Net fee income decreased to DKK 4,043 million (2022:
DKK 4,730 million), primarily as a result of lower activity but
also of the divestment of MobilePay. Fee income from financing
activity decreased due to lower customer activity throughout
2023 in the wake of the general slowdown in the housing market.
For Denmark, the market improved during 2023 and ended the
Specifically for customers in Denmark, an overview of pension
products from Danica is now available, and they can access
their healthcare offerings directly from Danske Mobile Banking.
While these examples are shaping our journey towards making
Danske Mobile Banking the digital front door for our customers,
we are also becoming more proactive towards customers
and have increased our 1-1 communication efforts across
all channels. Together, our digital front door and proactive
engagement is making day-to-day banking intuitive and hassle-
free, while maintaining a personal touch in our customers’ lives.
In addition to our digital efforts, other key focus areas for 2023
centred around developing new products internally and with
partners, while also further scaling our sustainability efforts.
Through our partnership with Danish insurance company Tryg
Forsikring, we launched a new product, Tryg Lånesikring, which
covers home loan payments if our customers lose their regular
income. In November 2023, we introduced a new concept
called ‘Tæt På’ (Closer). The concept offers customers and
potential new customers in Denmark access to a wide range of
livestreamed content on everything from day-to-day finances to
investments, and it is thus an initiative aimed at sharpening our
digital presence and proactively reaching far more people with
our knowledge and expertise.
On the sustainability front, our loans for electric and plug-
in hybrid cars were also named ’Best in test’ by the Danish
Consumer Council. Further, with our training efforts in
‘Sustainability in practice’, our advisers are able to bring up
relevant sustainable offerings in their dialogue with customers,
making it easier for the customers to make more sustainable
choices. Finally, in Sweden, our Power of Equality initiative has
reached over 70,000 participants, advocating for financial
equality, and has been nominated for the Swedish Equality
Award.
As announced in July 2023, we have entered into an
agreement to sell our personal customer business in Norway.
The transaction is subject to regulatory approvals. Pending
these approvals, the transaction is expected to close in the
fourth quarter of 2024.
2023 vs 2022
Profit before tax amounted to DKK 8,160 million (2022:
DKK 3,909 million) and was driven by higher net interest
income on deposits and lower operating expenses as a result
of efficiency gains in terms of fewer FTEs. The combined effect
of these was, however, partly offset by a provision for prudent
valuation and expected transaction costs related to the sale of
our personal customer portfolio in Norway. The financial results
were adversely affected by the depreciation of currencies.
Net interest income increased to DKK 14,166 million
(2022: DKK 8,778 million), driven largely by our activities
in Denmark, which contributed DKK 4.5 billion. The increase
44
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
year reasonably, both in relation to prices and sales activity.
Throughout 2023, customers switched from mortgage loans to
bank loans, although at a slower pace than in 2022. A switch to
bank loans results in lower fee income as a result of fee income
accruing over the expected maturity of the loans instead of
at origination. Income from investment fees decreased as a
result of the uncertainty in the financial markets and customers
shifting to 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 331 million (2022:
DKK 444 million) as a result of lower FX trading activity.
Other income amounted to a negative DKK 608 million (2022:
DKK 987 million). The decrease was due mainly to the decision
to exit the market for personal customers in Norway, 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 the one-off gains from the sale of our
customer portfolio in Luxembourg and the sale of MobilePay.
Operating expenses decreased to DKK 9,460 million (2022:
DKK 10,104 million). The decrease was driven by fewer FTEs
and the divestment of MobilePay as well as prudent cost
control.
Credit quality remained solid in 2023. This was despite the rise
in interest rates and the cost of living during the year as the rise
was largely mitigated by household savings and strong labour
markets. Average loan-to-value levels remained low.
Loan impairment charges amounted to DKK 312 million in
2023 (2022: DKK 927 million), which was lower than the level
in 2022, when impairments were to a higher degree impacted
by the updated macroeconomic scenarios.
Credit exposure
Credit exposure decreased to DKK 844 billion at the end
of 2023 (end-2022: DKK 883 billion), mainly because of
lower exposure in Personal Customers Norway due to lower
customer activity and a weaker NOK exchange rate.
Q4 2023 vs Q3 2023
Profit before tax decreased to DKK 1,993 million in the fourth
quarter of 2023 (Q3 2023: DKK 2,547 million) due to lower
income from deposits and higher operating expenses.
•
•
•
•
•
•
•
Net interest income decreased 5% as income from deposits fell
due to the introduction in the fourth quarter of 2023 of positive
rates for our customers also on transaction accounts.
Net fee income increased 3% from the preceding quarter driven
by higher lending activity.
Operating expenses increased 11% due to seasonality in IT
expenses as well as bonus and restructuring costs.
The fourth quarter of 2023 saw low loan impairment reversals
of DKK 20 million, against reversals of DKK 145 million in
the third quarter of 2023. Reversals continued to be driven
by improved collateral values and updated macroeconomic
scenarios.
Credit exposure increased to DKK 844 billion in the fourth
quarter from DKK 842 billion at the end of September 2023,
due mainly to increased exposure to the Public Institutions
segment.
Lending volumes in Denmark increased 8%. The increase
in Denmark was offset by a decrease in Norway as well as a
decrease in nominal mortgage volumes in Denmark resulting in
an increase in total lending of 1%.
Deposit volumes were on par with the preceding quarter, driven
by a positive inflow of volumes in Denmark but offset by an
outflow of volumes in Norway, Sweden and Finland.
Profit before tax
DKK 1,993 million
for the fourth quarter of 2023
45
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business Customers
Business Customers continued to see good momentum driven
by the market rate development and repricing actions. Despite
general economic improvement in the Nordic region and a more
positive outlook, customer activity was subdued relative to
2022, and this affected especially activity-driven fee income.
During 2023, we supported our customers across segments
and markets, and we focused on providing the best possible
advice tailored to our customers’ needs. As a result, we saw
generally high customer satisfaction across our business
customer portfolio. With the aim of further improving the
customer experience, the digital agenda continued to have high
priority. We implemented several digital solutions across all
four Nordic countries, for example District Marketplace, which
not only meets customer expectations of easier and faster
access to products, but also increases customer self-service
and improves efficiency for our advisers.
In 2023, profit before tax amounted to DKK 9,267 million,
an improvement of 44% from the level in 2022. The increase
was driven by higher net interest income from deposits as a
result of the market environment and related repricing actions.
The sale of used assets in our leasing organisation as well as
lower operating expenses also contributed to the overall profit
improvement.
Business Customers
(DKK millions)
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
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
11,684
1,737
507
1,024
9,175
1,825
517
847
14,952
12,364
5,255
5,356
255
224
9,698
7,008
431
578
127
3,079
2,742
95
98
121
121
98
114
138
75
456
144
228
387
102
259
3,907
3,491
1,546
1,253
64
64
2,361
2,237
185
104
Profit before tax
9,267
6,430
144
2,176
2,133
Loans, excluding reverse transactions before impairments
654,246
639,557
102
654,246
639,620
Allowance account, loans
9,511
8,938
106
9,511
9,166
Deposits, excluding repo deposits
257,076
285,177
90
257,076
264,033
Covered bonds issued
Allocated capital (average)
371,605
344,445
108
371,605
358,685
39,644
39,623
100
40,205
39,450
Net interest income as % p.a. of loans and deposits
1.29
0.99
Profit before loan impairment charges as % p.a. of allocated capital
24.5
17.7
Profit before tax as % p.a. of allocated capital (avg.)
23.4
16.2
-
-
-
-
1.37
1.23
23.5
22.7
21.6
21.6
39.6
35.9
Cost/income ratio (%)
Full-time-equivalent staff
35.1
43.3
1,646
1,635
101
1,646
1,652
100
Fact Book Q4 2023 provides financial highlights at customer type level for Business Customers. Fact Book Q4 2023 is available at danskebank.com/ir.
46
112
118
141
88
112
123
100
106
178
102
102
104
97
104
102
-
-
-
-
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business initiatives
Overall, the Nordic region, in which we operate, saw economic
improvement in 2023, particularly towards the end of the year,
however with considerable differences between the various
sectors. Inflation stabilised across all market areas, and
market rates seem to have peaked for now. Despite the more
stable economic environment, customer activity in 2023 was
subdued relative to the level in 2022. We continued to support
our customers across segments and to focus on providing the
best possible advice tailored to their needs.
The subdued customer activity resulted in a decrease in
activity-driven fees of 15% relative to the level in 2022. We
saw a reduction in everyday banking activities but also in fee
income from lending activities. However, there was an increase
of 5% in portfolio fees, with the development driven especially
by the subscription fee service model implemented in mid-
2022 for Business Direct customers.
During the entire year, we worked consistently on optimising
pricing by executing several repricing actions, for example
fees for manual services and trade finance, and by continuing
to transfer customers to the subscription fee service model.
Throughout the year, we also saw several rate hikes from
central banks across Europe, which resulted in the repricing of
loan and deposit products.
In the fourth quarter of 2023, we launched a marketing
campaign in Denmark to increase awareness of Danske Bank
and cement our position as the biggest business bank in
Denmark. The campaign targets businesses of all sizes under
the key message “Businesses grow and develop – and we are
with them all the way”. The campaign centres around three
main messages: 1) Danske Bank can help businesses of all
sizes – and help small businesses all the way to becoming large
businesses; 2) Danske Bank has a great deal of experience with
helping businesses that are entering a new phase in their life
cycle; And 3) Danske Bank can help businesses when things
do not go according to plan. We also launched a campaign in
Norway to increase our visibility and consolidate our presence
in the market. We aim to increase the focus on the expertise of
our advisers who on a daily basis support the realisation of our
customers’ ambitions.
47
Several new digital solutions were launched in 2023 with
the aim of making banking easier and more convenient for
our customers, and also to encourage more self-service and
improve efficiency for our advisers. District Marketplace was
launched across all our market areas to enable our customers
to buy the most popular products digitally through self-service at
any time they find convenient. 18% of the products available in
Marketplace are now ordered online in Sweden, and we expect
the adoption of the self-service option to increase in all market
areas as we continue to add new products and improve the
user experience. Sole traders in Denmark can now onboard
themselves and order basic banking products online. For
District users in Finland and Denmark, the logon solution was
improved as we replaced the physical token with the Danske
ID app, which makes the logon process both safer and more
efficient. We expect to launch the same solution in Sweden and
Norway in 2024. We also continued the development of our
tool that supports the automation of the credit decision-making
process by including a broader scope of products and enabling
self-service regarding overdraft facilities for small businesses.
Finally, we launched a live chat in District, ensuring that
customers can get support easily in their preferred channel.
Through widgets in District our customers are able to access
several of our partnership offerings, such as AltaPay, Swish
Företagsapp and Zenegy. In the first half of 2023, we entered
into a new partnership with Axeptia, a credit intelligence
platform suited for customers who wish to mitigate the risk
associated with selling goods and services on credit.
Sustainability remained an important agenda item for our
customers and for us, and throughout 2023, 750 advisers
across the Nordic markets completed ESG upskilling training
to equip them with the knowledge and tools required to bring
sustainability into the customer dialogue and to support our
customers in their transition. In addition, we saw continued
interest in our green loan offerings. For example, we facilitated
the largest sustainability-linked loan in Norway. In total, the
green loan volume increased 26% year-on-year at Business
Customers.
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
2023 vs 2022
Business Customers delivered a good financial result in 2023.
Profit before tax amounted to DKK 9,267 million (2022:
DKK 6,430 million). The increase was driven by income from
deposits as a result of repricing actions and rising market rates,
increased sales of used lease assets as well as lower operating
expenses. The financial performance was adversely affected by
the depreciation of currencies.
Net interest income increased 27%, driven by higher income
from deposits following repricing actions and market rate
developments. 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 rise in
market rates.
Deposit volumes were negatively affected by our decision to
reduce public sector deposits in Norway. Combined with the
depreciation of the Norwegian krone, total deposit volumes
decreased 10% from the level at the end of 2022.
Total lending volumes increased 2% from the level at the end
of 2022, with the increase attributable primarily to mortgage
lending in Denmark, where the nominal value of lending
increased 5%, driven by our commercial real estate business.
Despite a positive inflow of bank lending volumes in Finland and
Norway, bank lending volumes decreased 2%, due mostly to a
decrease in bank lending volumes in Denmark and Sweden as
well as the depreciation of the Norwegian krone.
Net fee income decreased to DKK 1,737 million (2022:
DKK 1,825 million). Service fees increased due to repricing
actions as well as the continued transfer of customers to a
subscription 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 real estate market.
Net trading income decreased to DKK 507 million (2022: DKK
517 million) due to more normalised FX trading levels than in
2022, when trading income was extraordinarily high on the
back of high customer activity and wider spreads.
Other income increased to DKK 1,024 million (2022: DKK 847
million). The increase was the result of higher sales of assets in
our leasing company.
Operating expenses amounted to DKK 5,255 million, a
decrease of 2% from the level in 2022. The decrease was
driven by lower remediation costs.
Credit quality remained solid throughout 2023, however, there
was a slightly negative rating trend driven by a few select
customers, primarily in Construction and Building Materials
segment in Sweden, following higher cost inflation and interest
rates.
48
Loan impairment charges amounted to DKK 431 million in
2023, which was lower than in 2022, supported by solid credit
quality.
Credit exposure
Credit exposure stood at DKK 745 billion at the end of 2023
and remained stable relative to the end of 2022. However,
the amount covers an increase in the exposure to the Private
Housing Co-ops and Non-profit Associations and Commercial
Property segments that was countered by a decrease in the
exposure to the Construction and Building Materials, and
Utilities and Infrastructure segments.
Q4 2023 vs Q3 2023
Profit before tax increased to DKK 2,176 million in the fourth
quarter of 2023 (Q3 2023: DKK 2,133 million). The increase
was driven by higher income that was partly offset by higher oper-
ating expenses and loan impairment charges.
•
•
•
•
•
•
•
•
Net interest income increased to DKK 3,079 million (Q3
2023: DKK 2,742 million). The increase was driven by a
year-end correction between Business Customers and Group
Functions.
Net fee income increased 18% and was driven by higher
income from mortgage fees due to higher activity in the fourth
quarter of 2023.
Net trading income increased to DKK 144 million (Q3 2023:
DKK 102 million) due to a correction of termination fees from
swaps.
Other income decreased 12% due to a decrease in sales of
assets in our leasing operations.
Operating expenses increased 23%. The increase was due
primarily to seasonality in IT expenses, bonus payments and
severance pay.
Deposit volumes decreased 3% due to an outflow of volumes
in Sweden, Norway and Finland.
Lending volumes increased 2% and were driven by mortgage
volumes as well as the appreciation of currencies, primarily in
Sweden.
The fourth quarter of 2023 saw loan impairment charges
of DKK 185 million (Q3 2023: DKK 104 million). Credit
exposure was stable at DKK 745 billion in the fourth quarter of
2023 (Q3 2023: DKK 734 billion), due primarily to increased
exposure to the private housing sector.
Profit before tax
DKK 2,176 million
for the fourth quarter of 2023
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Large Corporates & Institutions
Notwithstanding the challenging operating environment in
2023, we came to the completion of the Better Bank strategy,
and we are well-placed to continue to actively support our
customers with advisory services backed by our strong product
portfolio and balance sheet. This provides a solid foundation for
delivering on our new Forward ’28 strategic ambitions over the
coming five years. To leverage our organisational power and
be even better prepared for the Forward ’28 strategy, Large
Corporates & Institutions changed its organisational layout with
effect from 1 January 2024.
We continued to see successful results of our strategic
commercial strengths within digital everyday banking solutions,
sustainable finance products and advisory services, which
enabled a continued inflow of new customers in Sweden, an
increased market share of cash management services and
the maintaining of our leading market position within capital
markets transactions, thereby enhancing our value proposition
as the leading wholesale bank in the Nordic countries.
Profit before tax amounted to DKK 8,747 million, an increase of
32% from 2022, driven primarily by higher net interest income
and net trading income.
Large Corporates & Institutions
(DKK millions)
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
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
6,938
5,700
3,125
15
5,605
5,732
1,489
2
15,777
12,828
7,397
6,966
492
504
8,380
5,861
-367
-774
124
99
210
-
123
106
98
143
47
1,795
1,728
1,643
1,416
572
3
592
-
4,014
3,736
2,125
1,730
123
123
1,889
2,006
-205
359
Profit before tax
8,747
6,635
132
2,094
1,647
Loans, excluding reverse trans. before impairments
308,617
322,539
of which loans in General Banking
262,741
281,266
Allowance account, loans (incl. credit institutions)
1,665
2,048
96
93
81
98
97
308,617
298,655
262,741
267,546
1,665
1,799
382,596
362,049
326,147
297,585
382,596
389,486
326,147
336,580
28,580
27,495
104
28,580
29,391
40,270
42,138
96
40,145
40,597
Net interest income as % p.a. of loans and deposits
1.06
0.81
Profit before loan impairment charges as % p.a. of allocated capital
20.8
13.9
Profit before tax as % p.a. of allocated capital (avg.)
21.7
15.7
-
-
-
-
1.10
1.09
18.8
19.8
20.9
16.2
52.9
46.3
46.9
54.3
2,085
2,054
102
2,085
2,098
99
104
116
97
-
107
123
100
94
-
127
103
98
93
106
110
97
99
-
-
-
-
Deposits, excluding repo deposits
of which deposits in General Banking
Covered bonds issued
Allocated capital (average)
Cost/income ratio (%)
Full-time-equivalent staff
49
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Total income
(DKK millions)
General Banking
Markets
of which xVA*
Asset Management
of which performance fees
Investment Banking & Securities (IBS)
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
2,156
2,068
104
8,378
3,963
21
6,936
2,387
-48
2,334
2,313
302
174
1,102
1,193
121
166
-
101
-
92
780
76
778
268
300
821
-16
558
21
289
95
-
139
-
104
107
Total income
15,777
12,828
123
4,014
3,736
*The xVA acronym covers Credit (CVA), Debit (DVA), Funding (FVA) and Collateral (ColVA) Valuation Adjustments to the fair value of the derivatives portfolio. From 2023, FVA is calculated to
include both funding cost and funding benefit, and therefore DVA is offset to avoid double counting between DVA and the funding benefit. Danske Bank has a centralised xVA desk responsible for
quantifying, managing and hedging xVA risks. The PnL result of the xVA desk is thus the combined effect of the net xVA position and funding and collateral costs of the trading book.
Assets under management
(DKK millions)
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
Institutional clients*
Retail clients
442,473
366,005
121
442,473
387,268
328,584
300,848
109
328,584
310,657
Total assets under management**
771,056
666,853
116
771,056
697,925
* The split of assets under management between institutional and retail customers was adjusted in Q2 2023, and comparative information has been restated accordingly.
** Includes assets under management from Group entities.
114
106
110
Business initiatives
The uncertainty that characterised 2023 affected investment
appetite throughout the year, and we saw increased price
sensitivity and selectiveness among investors. However, the
capital markets became more constructive in the second half
of the year, and we are pleased to have helped our customers
capitalise on the opportunities this offered. In Debt Capital
Markets, we saw solid activity during the year, and we remained
the leading Nordic bank in the European debt capital markets
in terms of volumes supported. Notably, we acted as Joint
Bookrunner on Carlsberg’s strategically important EUR 1.3
billion dual tranche bond issue. Furthermore, we supported
Nordic Semiconductor in their highly successful inaugural
bond issue of NOK 1 billion – the first ever bond issue from a
semiconductor company in the Nordic bond market.
In Equity Capital Markets, we saw increasing volumes and
deal activity during the second half of the year, and we were
the leading ECM adviser in Denmark in 2023. Among other
transactions, one of the highlights in 2023 was Coloplast’s
raising of DKK 9.2 billion in new shares, which was the largest
primary bookbuild offering from a Nordic company in 15 years.
This gives us confidence in our ability to be a top capital markets
adviser for our Nordic customers.
Nordic M&A activity picked up in the second half of the year
and recovered after a first half characterised by historically
low volumes due to continuous market uncertainty and an
increasing cost of capital. As activity increased, we managed to
strengthen our M&A market position in Sweden and Finland.
50
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
In Asset Management, we continued our roll-out of ESG
education throughout 2023 with the aim of ensuring a high
level of sustainability competencies among our investment
professionals. We also continued to upskill our employees, and
Danske Bank is a leader in external certifications among asset
managers in the Nordic countries.
We continued to deliver on our sustainability-related ambitions
and proved our strong position in sustainable finance during the
year by maintaining our Nordic lead position in the Bloomberg
League Tables for both sustainable bonds and sustainability-
linked loans. Furthermore, we remain dedicated to further
developing and strengthening our sustainable finance offering,
exemplified by the launch of our new sustainability-related
investment products, Nordic Sustainable Focus and the Global
Future fund, in the third quarter. In 2023, we arranged more
than 150 sustainable bond issues and acted as framework
structuring adviser on more frameworks than ever before.
Among other things, we acted as framework structuring adviser
to Danfoss, Northvolt and Stockholm Exergi. Moreover, we are
honoured to have acted as Joint Lead Manager on green bonds
issued by the sovereigns Denmark, Germany and Ireland.
In 2023, Danske Bank coordinated important sustainability-
linked and green transactions across our main markets.
Selected names include Ambea in Sweden, Public Property
Invest in Norway, Citycon in Finland, as well as Copenhagen
Infrastructure Partners’ green loan in Denmark. With the
growth of sustainability-linked loans, we want to play an active
role in improving the integrity of sustainable financing and have
therefore defined stricter internal standards for sustainability-
linked loans. This was well received by our customers.
2023 vs 2022
Profit before tax increased to DKK 8,747 million (2022:
DKK 6,635 million), driven by higher net trading income and
higher net interest income.
Net interest income increased to DKK 6,938 million (2022:
DKK 5,605 million) as a result of higher deposit margins.
Lending volumes in General Banking decreased 7% from the
level at the end of 2022, as the operating environment 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 welcomed more new large
corporate customers after reaching our ambition of 40 new
customers already in the second quarter of 2023. Furthermore,
we increased our market share in cash management by adding
new house bank mandates in all Nordic countries.
Net fee income decreased to DKK 5,700 million (2022:
DKK 5,732 million), with the decline due primarily to lower
M&A activity and fees from assets under management
following the decreasing asset prices and negative net sales
in the second half of 2022. This meant that we entered 2023
with a lower level of assets under management.
51
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Q4 2023 vs Q3 2023
Profit before tax increased to DKK 2,094 million (Q3 2023:
DKK 1,647 million) due primarily to higher net fee income and
loan impairment reversals in the fourth quarter.
•
•
•
•
•
Net interest income increased to DKK 1,795 million (Q3 2023:
DKK 1,728 million) as a result of an increase in other interest
items.
Net fee income increased and stood at DKK 1,643 million
(Q3 2023: DKK 1,416 million), mainly as a result of higher
performance fees from Asset Management.
Net trading income decreased to DKK 572 million (Q3 2023:
DKK 592 million), due primarily to lower customer activity and
interest rate volatility.
Operating expenses increased to DKK 2,125 million (Q3 2023:
DKK 1,730 million), with the increase caused primarily by higher
provisions for severance and performance-based compensation.
Loan impairment charges amounted to a net reversal of
DKK 205 million (Q3 2023: charges of DKK 359 million).
Reversals in the fourth quarter were due to continued successful
restructuring related to oil and gas exposures.
Profit before tax
DKK 2,094 million
for the fourth quarter of 2023
Assets under management increased during 2023, partly
on the back of recovering financial markets, but also due to
strong net sales developments in the institutional segment,
which contributed to positive net sales. Higher performance
fees on the back of a strong investment performance relative
to both peers and benchmark, which should also support
future sales, contributed to an increase in total income in Asset
Management from the level in 2022.
Net trading income increased to DKK 3,125 million (2022:
DKK 1,489 million) as we saw an improved result in our
fixed income business in 2023. In addition, 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
7,397 million (2022: DKK 6,966 million). The increase was
driven primarily by higher provisions for performance-based
compensation, with the effect being slightly offset by lower
underlying costs. The number of full-time equivalent staff
increased to 2,085 (2022: 2,054).
Overall credit quality remained strong in 2023, however,
with a slightly negative rating trend caused by a few, single-
name exposures. Loan impairments in 2023 amounted to a
net reversal of DKK 367 million (2022: net reversal of DKK
774 million) due to continued post-pandemic recoveries
and successful restructuring within the shipping, oil and gas
sectors.
Credit exposure
Net credit exposure from lending activities amounted to
DKK 633 billion at the end of 2023 (end-2022: DKK 648
billion), driven primarily by a decrease in exposure to the
Utilities and Infrastructure and Public Institutions industries,
partially countered by a positive development in exposure to
the Financials industry. Furthermore, we have actively reduced
net oil-related exposure (excluding oil majors) by 63% since the
fourth quarter of 2019.
52
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Danica Pension
Danica Pension
The financial year 2023 was characterised by a generally
positive trend on the financial markets, particularly towards the
end of 2023, which resulted in strong returns on our pension
customers’ savings, in most cases double-digit returns for the
year. Expectations of lower inflation and interest rates resulted
in a rally for equities towards the end of the year, supported
by continually solid numbers from job markets on the largest
markets. Danica Pension’s investment strategy remains
focused on delivering competitive returns to customers over a
long period of time.
Net income at Danica Pension amounted to DKK 1,472 million
in 2023 and recovered from the level in 2022 (excl. goodwill
impairment) 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
2023
2022
779
615
78
1,478
-1,263
-1,562
1,472
-1,347
-
1,627
Net income from Danica Pension excl. goodwill
1,472
280
Index
23/22
53
-
-
-
-
-
170
372
8
550
-
550
175
2
57
233
-
233
Q4
2023
Q3
2023
Index
Q4/Q3
Liabilities under insurance contracts
493,544
507,146
97
493,544
506,094
Liabilities under pooled unit-linked investment contracts
23,113
20,469
113
23,113
20,784
Allocated capital (average)
19,738
20,326
97
20,015
19,825
Net income as % p.a. of allocated capital
7.5
-6.6
Solvency coverage ratio
Full-time-equivalent staff
170
187
912
881
-
-
-
11.0
4.7
170
213
912
905
97
-
14
236
-
236
98
111
101
-
-
-
Assets under management
(DKK millions)
Insurance
440,319
403,789
109
440,319
412,451
107
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.
53
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business initiatives
Danica Pension’s two new healthcare initiatives in the shape of
family counselling and job coaching were well received by our
customers. By year-end 2023, more than 100 families had
made use of the counselling solution, which aims to address the
increase in the number of families in Denmark who experience
problems related to the well-being of their children or parenting.
Danica Pension has taken the initiative to be part of a
new umbrella organisation within health prevention called
‘Forebyggelsesalliancen’ (prevention alliance). The alliance was
founded by 21 organisations that represent a wide coalition
ranging from patient associations within mental health and
arthritis to trade associations for midwives and opticians.
The purpose of the alliance is to formulate binding targets for
improving public health.
Omission to provide advice concerning indexation of the state
pension age
In 2023, Danica Pension informed 35,000 customers about
an issue related to the indexation of the state pension age
since 2015. In essence, we have found that we have omitted
to provide 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.
New CEO
As planned, Mads Kaagaard took up the position as CEO of
Danica Pension on 1 November. Mads Kaagaard’s previous
experience includes positions as interim Group CEO and
as Group Director at PFA. Mads Kaagaard replaced Søren
Lockwood, who has retired.
Customer satisfaction
According to the November 2023 Aalund Research survey,
Danica Pension improved from a joint third place to a first
place in Aalund’s personal customer rating. The lead position
is testament to the hard work being made at Danica Pension
to give customer satisfaction top priority. The relative
improvement in customer satisfaction can, among other
aspects, be attributed to our efforts to shorten customer waiting
time. In Aalund’s business customer rating, Danica Pension
placed third for 2023.
Climate ambitions – DKK 50 billion target reached
Danica Pension has joined the Net-Zero Asset Owner Alliance
global investment initiative and has thus committed itself to
achieving a net-zero investment portfolio in 2050 in line with
the Paris Agreement on limiting the global temperature rise to a
maximum of 1.5° C.
54
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Q4 2023 vs Q3 2023
Net income in Danica Pension increased to DKK 550
million (Q3 2023: DKK 233 million). The net financial result
improved towards the end of the fourth quarter due to positive
developments in the financial markets and because the third
quarter included a provision of DKK 250 million.
•
•
•
•
•
The insurance service result saw a decrease of DKK 5 million
caused by a rise in new health and accident claims, which was
offset by an increase in fees from the life insurance business due
to the positive developments in the financial markets.
The net financial result increased in the fourth quarter and
amounted to DKK 372 million (Q3 2023: DKK 2 million) due
to a positive development in investment results on insurance
products where Danica Pension has the investment risk and an
improved investment result in the health and accident business.
The third quarter of 2023 also included the provision of
DKK 250 million for possible compensation to customers.
Other income included a reversal of provisions of DKK 50 million
in the third quarter related to the sale of Danica Norway.
Total premiums decreased 2% due primarily to a decrease in
single premiums.
Assets under management increased DKK 28 billion due
primarily to the developments in the financial markets in the
fourth quarter of 2023, which generated an increase in assets
under management.
Net income in Danica Pension
DKK 550 million
for the fourth quarter of 2023
Our ambition was to have invested a minimum of DKK 50 billion
in the green transition by the end of 2023. Investments include
investments in businesses with activities in renewable energy,
alternative investments in renewable energy, energy-certified
properties and green bonds. Danica Pension’s investments in
the green transition rose from DKK 38 billion at 31 December
2022 to DKK 55 billion at 31 December 2023, and we thus
exceeded our 2023 target. Danica Pension’s ambition is now to
increase investments to DKK 100 billion by 2030 at the latest.
2023 vs 2022
Net income at Danica Pension amounted to DKK 1,472 million
(2022: DKK 280 million excl. goodwill impairments). The
increase was due primarily to more positive developments in
the financial markets particularly towards the end of 2023. The
increase was partly offset by an increase in health and accident
claims, however. Net income for 2023 includes a provision of
DKK 250 million for possible compensation to customers.
The insurance service result decreased to DKK 779 million
(2022: DKK 1,478 million) as Danica Pension continued to
see a rise in new health and accident claims, which, however,
was also a general trend in society. 2022 also benefited from
a reduction of technical provisions related to the health and
accident business.
The net financial result increased to DKK 615 million (2022:
loss of DKK 1,263 million). The increase was driven mainly
by positive investment results on insurance products where
Danica Pension has the investment risk, an improved
investment result in the health and accident business and
positive investment returns on Danica Pension’s equity capital.
The net financial result for 2023 includes the effect of the
above-mentioned provision of DKK 250 million, whereas the
2022 result included a provision of DKK 150 million.
Assets under management increased DKK 37 billion from the
level at the end of 2022 following the positive development in
the financial markets in 2023.
Premiums increased 10% from 2022 following an increase
in both single and regular premiums due to an inflow of new
business customers.
55
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Danica Pension
Northern Ireland
Northern Ireland
Our focus in Northern Ireland is to remain a stable, strong and
risk-astute bank, consolidating our market-leading position
alongside pursuing select low-cost growth opportunities in the
rest of the UK. The strong 2023 financial performance reflects
business growth in a higher interest rate environment.
Profit before tax increased to DKK 1,917 million with a strong
underlying income performance based on lending growth
and actions taken in response to higher UK interest rates,
supplemented by trading income.
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
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
2,549
1,900
134
661
319
288
15
3,171
1,368
1,804
-113
1,917
335
-342
21
1,914
1,290
623
168
456
95
-
71
166
106
290
-
-
72
90
2
825
372
453
6
447
652
80
145
3
880
339
541
13
528
101
90
62
67
94
110
84
46
85
99
101
100
106
Loans, excluding reverse transactions before impairments
58,600
53,761
109
58,600
59,353
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)*
755
824
97,396
94,562
6,750
6,080
92
103
111
755
745
97,396
97,696
7,592
7,177
Net interest income as % p.a. of loans and deposits
1.61
1.19
1.64
1.63
Profit before tax as % p.a. of allocated capital (avg.)
28.4
7.5
23.6
29.4
Cost/income ratio (%)
Full-time-equivalent staff
* Allocated capital equals the legal entity’s capital.
43.1
67.4
45.1
38.5
1,267
1,288
98
1,267
1,261
100
Business initiatives
The strategy in Northern Ireland aligns with the Group’s
key focus areas, including digitisation, customer journeys,
sustainability, and simplicity and efficiency, all underpinned by
ensuring high levels of employee engagement.
We are a leading bank in Northern Ireland, serving personal,
business and corporate customers, and the Northern Ireland
market remains our regional focus in the UK, while we also seek
growth in targeted sectors across the rest of the UK.
We increasingly cater to our customers’ everyday banking
needs through our digital channels and continue to invest in
our digital offerings. We have thus achieved a 25% increase in
customer logons to our digital channels over the past two years
and are now recording over seven million logons per month.
56
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Customers can open new savings accounts through our Mobile
Banking app and apply for personal loans digitally.
Customer demand for residential mortgages remained resilient
despite higher UK interest rates, supporting continued growth
in lending (up 6% in local currency). Around half of new
mortgage lending approved across the UK in 2023 was through
our carbon-neutral mortgage product.
While loan arrears levels continued 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 have set ourselves a target to be operationally ‘net zero’
in Northern Ireland, however, it will be through supporting the
sustainability approach of customers that we will make the
greatest impact. In 2023, we saw increased interest among
local businesses in taking part in a climate action programme
co-developed with Business in the Community. We were also
delighted to receive external benchmarking awards, which
named us Northern Ireland’s best company for both Climate
Action and Diversity & Inclusion.
Customer satisfaction
We were very pleased to once again finish the year in first
place across both Corporate & Business Banking and Personal
Banking.
2023 vs 2022
Profit before tax increased to DKK 1,917 million (2022:
DKK 456 million), with a strong underlying income performance
based on lending growth and actions taken in response to
higher UK interest rates, supplemented by trading income.
Net interest income increased to DKK 2,549 million (2022:
DKK 1,900 million), driven by growth in both personal and
business lending, and higher UK interest rates.
Net fee income decreased to DKK 319 million (2022:
DKK 335 million), due primarily to the sale of our offsite ATM
network, with underlying transactional activity and related fees
remaining strong.
Net trading income reflects mark-to-market movements on
the bank’s hedging portfolio. The positive movements in 2023
reflect a combination of changing market expectations 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 significant, adverse
mark-to-market movements on the portfolio.
Operating expenses stood at DKK 1,368 million (2022:
DKK 1,290 million), up 6% year-on-year. The increase was lower
than UK inflation for 2023, reflecting the bank’s continued cost
and efficiency focus. Staff numbers fell year-on-year.
There was a net reversal of loan impairments in 2023,
reflecting continually strong credit quality despite challenging
economic conditions.
57
Q4 2023 vs Q3 2023
The fourth quarter of 2023 saw a profit before tax of DKK 447
million (Q3 2023: DKK 528 million).
•
•
•
•
•
Net interest income increased to DKK 661 million (Q3 2023:
DKK 652 million), reflecting growth in lending and pricing
actions taken in response to higher UK interest rates.
Net fee income amounted to DKK 72 million (Q3 2023: DKK
80 million), including seasonal fluctuations, with underlying
activity levels being strong.
Net trading income of DKK 90 million (Q3 2023: DKK
145 million) reflected continuing, positive mark-to-market
movements on the hedging portfolio.
Operating expenses were DKK 372 million (Q3 2023: DKK
339 million).
Loan impairment charges amounted to DKK 6 million in the
quarter and remained low overall.
Profit before tax
DKK 447 million
for the fourth quarter of 2023
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Danica Pension
Non-core
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 2023 amounted to a loss of DKK 87 million, against a
loss of DKK 13 million in 2022.
-
-
107
-
107
99
-
105
99
Non-core
(DKK millions)
Total income
Operating expenses
Profit before loan impairment charges
Loan impairment charges
Profit before tax
2023
2022
Index
23/22
Q4
2023
Q3
2023
Index
Q4/Q3
-24
63
-87
-
-87
23
101
-78
-66
-13
-
62
112
-
-
-
32
-32
-
-32
-22
8
-30
-
-30
Loans, excluding reverse transactions before impairments
1,533
1,207
127
1,533
1,541
Allowance account, loans
Deposits, excluding repo deposits
Allocated capital (average)
-
39
2,436
2,112
658
668
-
115
99
-
-
2,436
2,319
671
681
Net interest income as % p.a. of loans and deposits
-0.70
-0.11
-1.30
-0.88
Profit before tax as % p.a. of allocated capital (avg.)
-13.2
-1.9
-19.1
-17.6
Cost/income ratio (%)
Full-time-equivalent staff
-
-
-
-
7
25
28
7
12
58
58
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
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
proceeding according to plan. Residual portfolios in Luxembourg
and Lithuania have been fully exited, resulting in a steady
decrease in operating expenses.
The subsidiary bank in Luxembourg was closed, and the
voluntary solvent liquidation of the company was completed
according to plan in 2023.
2023 vs 2022
Profit before tax amounted to a loss of DKK 87 million (2022:
a loss of DKK 13 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 2023, total lending stood at DKK 1.5 billion (end-
2022: DKK 1.2 billion).
Q4 2023 vs Q3 2023
The Non-core unit posted a loss before tax of DKK 32 million in
the fourth quarter of 2023 (Q3 2023: loss of DKK 30 million).
•
•
•
Total income amounted to DKK 0 million (Q3 2023: loss of
DKK 22 million). The third quarter of 2023 was affected by
negative value adjustments of the non-strategic private equity
investments.
Operating expenses increased to DKK 32 million (Q3 2023:
DKK 8 million) due to expected operating costs following the
closure of business activities.
Total lending amounted to DKK 1.5 billion (end of September
2023: DKK 1.5 billion).
Profit before tax
DKK -32 million
for the fourth quarter of 2023
59
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Group Functions
Group Functions includes Group Treasury, Technology &
Services and other Group functions. In addition, Group
Functions includes eliminations.
In 2023, the loss before tax decreased to DKK 2,794 million
from a loss of DKK 17,767 million in 2022. Net interest
income amounted to a net expense of DKK 337 million, largely
unchanged from 2022. 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 loss in 2022 was affected by
the provision for the Estonia matter of DKK 13,800 million and
the provision of DKK 1,560 million related to the compensation
of debt collection customers for potential overcollection of debt.
2023
2022
Index
23/22
-337
-92
-547
117
-860
-350
-32
-232
78
-536
1,935
2,762
72
-
-
74
24
13,800
-2,795
-17,098
-1
669
-2,794
-17,767
Q4
2023
118
-47
-124
-14
-67
-76
18
-
-
9
2
6
Q3
2023
Index
Q4/Q3
536
-14
-750
145
-84
509
16
-
-
-592
-9
-583
22
-
17
-
80
-
113
-
-
-
-
-
10,039
9,989
101
301
-38
1
-490
60
1
-257
-154
6
-583
-
-
100
167
-
96
288
236
150
160
70
97
-
-
16
-
16
92
81
32
-
12
16
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
10,039
10,878
Profit before tax
(DKK millions)
Group Treasury
Own shares and issues
Additional tier 1 capital
Group support functions
Total Group Functions
Comparative information for Group Functions has been restated as explained in note G2.
-752
-933
23
-
71
89
-2,065
-16,993
-2,794
-17,767
60
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Business initiatives
Group Functions supports, among other things, 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 other
things, the Group’s liquidity bond portfolio and the investment
of shareholders’ 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
throughout the Group.
2023 vs 2022
Group Functions posted a loss before tax of DKK 2,794 million
(2022: loss of DKK 17,767 million). Excluding the provision
for the Estonia matter of DKK 13,800 million and provisions
related to the compensation of debt collection customers of
DKK 1,560 million, the loss amounted to DKK 2,407 million.
Net interest income increased slightly to a net expense of
DKK 337 million (2022: net expense of DKK 350 million) and
was affected by an increase in interest rate risk management
costs that related primarily to the hedging of the interest rate
risk related to deposits – which from 2023 is accounted for as
net interest income instead of net trading income – and lower
bond portfolio income. From May 2023, these costs have
been allocated to the business units as an internal deduction
from deposit margins. Furthermore, a net one-off interest
compensation of DKK 222 million related to tax paid in previous
years also contributed to the increase.
Net trading income decreased to a loss of DKK 547 million
(2022: a loss of DKK 232 million) due to the negative impact
of the reclassification through profit and 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 on net trading income. The reclassification had a
positive effect on Other comprehensive income but did not
affect shareholders’ equity. The loss more than offset the gain of
DKK 327 million on the sale of shares taken over in connection
with a loan in 2023.
Other income increased to DKK 117 million (2022: DKK 78
million) due mainly to a gain on the sale of Danske IT in India to
Infosys.
Operating expenses, after allocation to the business units,
decreased from the level in 2022 and amounted to DKK
1,935 million (2022: DKK 2,762 million). Operating expenses
in 2022 were affected by the decision to compensate debt
collection customers for potential overcollection of debt,
which led to a provision of DKK 910 million. Furthermore, an
additional provision of DKK 13,800 million for the Estonia
matter was made in 2022.
61
Loan impairment charges amounted to a net reversal of DKK 1
million (2022: DKK 669 million). Impairment charges in 2022
were affected by the decision 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 to 10,039
(end-2022: 10,878) as a result of the sale of Danske IT in India
to Infosys.
Q4 2023 vs Q3 2023
Group Functions posted a profit before tax of DKK 6 million (Q3
2023: loss of DKK 583 million). Net interest income decreased
as a result primarily of one-off interest income of DKK 307
million on a tax payment in the third quarter. Net trading income
increased relative to the third quarter, which was impacted by the
release of a loss of DKK 786 million from Other comprehensive
income.
•
•
•
•
•
Net interest income decreased to DKK 118 million (Q3 2023:
DKK 536 million) due primarily to one-off interest regarding
tax related to previous years of DKK 85 million paid in the
fourth quarter and the third quarter being positively affected
by an interest compensation of DKK 307 million from the tax
authorities that was owing to a correction of taxes for earlier
years on certain financial assets and liabilities measured at
amortised cost.
Net trading income increased to a loss of DKK 124 million
(Q3 2023: a loss of DKK 750 million). Net trading income in
the third quarter 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. The
reclassification had a positive effect on Other comprehensive
income but did not affect shareholders’ equity.
Other income decreased to an expense of DKK 14 million (Q3
2023: income of DKK 145 million) due mainly to a gain on the
sale of Danske IT in India to Infosys in the third quarter.
Operating expenses, after allocation to the business units,
amounted to a net income of DKK 76 million (Q3 2023:
expense of DKK 509 million) due to the allocation of costs to
the business units.
Loan impairment charges amounted to DKK 2 million (Q3
2023: a net reversal of DKK 9 million).
Profit before tax
DKK 6 million
for the fourth quarter of 2023
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
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 5 and in other
sections of the Management’s report:
Ratios and key figures
Definition
Dividend per share (DKK)
The dividend per share consists of the proposed dividend to be paid to shareholders in the subsequent year and any interim
dividend payment that was paid during the year.
Return on average shareholders’
equity (% p.a.)
Net profit as disclosed in the financial highlights divided by the average of the quarterly average shareholders’ equity
(beginning and end of each quarter) within the year. Net profit and shareholders’ equity are stated as if the equity-accounted
additional tier 1 capital was classified as a liability. In the numerator, net profit is reduced by interest expenses of DKK 0
million (full-year 2022: DKK 86 million). The denominator represents equity, excluding additional tier 1 capital and other non-
controlling interests equal to an increase in the average of the quarterly average equity of DKK 540 million (2022: reduction
of DKK 2,340 million) compared to a simple average of total equity (beginning and end of the period).
Adjusted return on average
shareholders’ equity (% p.a.)
Net profit, excluding the provision for the Estonia matter and the goodwill impairment charge, divided by the average of the
quarterly average shareholders’ equity (beginning and end of each quarter) within the year. The numerator and denominator
are adjusted as per Return on average shareholders’ equity above.
Net interest income as % p.a. of loans
and deposits
Net interest income in the financial highlights divided by the daily average of the sum of loans and deposits. If the ratio was
calculated applying the sum of loans and deposits 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 31.1 billion lower (2022: DKK 39.9 billion higher) than if
calculating the ratio by applying the end-of-period sum of loans and deposits. 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 income. All
amounts are from the financial highlights.
Adjusted cost/income ratio (C/I) (%)
Operating expenses divided by total income. All amounts are from the financial highlights.
Book value per share
Shareholders’ equity (that is, excluding equity-accounted additional tier 1 capital) divided by the number of shares outstanding
at the end of the period.
Loan impairment charges as % of net
credit exposure
Allowance account 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 262 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 activities – core” in the “Breakdown of credit exposure” table in the notes to the
financial statements. The ratio is calculated for each business unit.
This ratio is calculated on the basis of the allowance account and loans and guarantees in core segments. The numerator is
the allowance account of DKK 20.1 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 917.1 billion (2022: DKK 1,081.7 billion), Loans at fair value of DKK 753.3 billion (2022:
DKK 724.1 billion) and guarantees of DKK 75.9 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.
62
Danske Bank / Annual Report 2023 Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Reporting Principles ESG Data
Environmental, social and governance (ESG) data on page 14
covers the Danske Bank (DB) Group (the Group). We believe
that the reporting provides a fair and balanced representation
of our performance within the areas of sustainable finance and
environment, social perspectives and governance. To ensure
data consistency, data has been defined and described in
business procedures. Internal control procedures have been
established to ensure that the data is reported in accordance
with the definitions.
Sustainable Finance
Green loans – Danske Bank and Realkredit Danmark
Green loans granted by the Group to business and corporate
customers in the Business Customers and Large Corporates &
Institutions (LC&I) segments, as defined in our Green Finance
Framework.
Bloomberg League Table share of arranged sustainable bonds
Volume accredited to Danske Bank in the Bloomberg Global
Sustainable Bonds – Corporate & Government League Table
(green, social and sustainability bonds). We use the Deal
Size (USD) and League Credit (USD) for all sustainable bonds
arranged and exchange into DKK. Sustainability-linked bonds
are not included. Self-lead Sustainable Bonds from issuers
such as Danske Bank A/S and Realkredit Danmark A/S are
excluded.
Investments in the green transition by Danica Pension
Investments in the green transition are defined as investments
that contribute to the transition to a low-carbon, resilient
and resource-efficient economy such as investments where,
for example, products, services, or activities contribute to
environmental adaption, mitigation, prevention, control or
restoration. Data includes: 1) investments in companies
through listed equity and credit bonds with revenue relating
to environmental objectives and investments in green
bonds through credit, government, and mortgage bonds; 2)
alternative investments in renewable energy; 3) investments in
sustainability certified buildings; and 4) sustainability certified
buildings owned indirectly in real estate entities internationally.
The reporting period for number 2, 3 and 4 runs from Q4 2022
to Q3 2023.
AuM in funds with a sustainable objective – Article 9
Assets under management (AuM) in funds with a sustainable
investment objective (Article 9 funds) as defined in the EU
Sustainable Finance Disclosure Regulation. Data covers all
Danske Invest-branded funds and is presented as DKK billion.
The reported AuM reflects the market value of the funds in
scope at the end of each reporting year and is a gross measure
of AuM. Hence, it does not account for fund of funds and allows
for double counting.
Environment
Environmental data covers the actual consumption from the
Group’s operations in Denmark, Finland, Ireland, Northern
63
Ireland, Norway, Sweden, Lithuania and India, and it also
covers the estimated consumption from the Group’s remaining
operations without registered data for which Danske Bank has
operational control. Emissions and energy consumption from
head offices, branches and finance centres are included in the
reporting. The reporting period for the year 2023 runs from Q4
2022 to Q3 2023. Due to Danske Bank’s sale of Danske IT, a
fully owned subsidiary encompassing our Indian operations, the
data includes India until the effective date 1 September 2023.
Similarly, MobilePay ceased to be a part of Danske Bank from
1 November 2022 and has been excluded from reporting after
the effective date. We report our CO2e emissions based on the
Greenhouse Gas Protocol, and numbers are rounded to the
closest integer.
CO2e emissions scope 1
Scope 1 covers CO2e emissions from heating using oil and
gas and from the usage of Danske Bank-controlled company
cars. The emissions from heating are calculated on the basis of
heating consumption, using specific emission factors from the
Department of Environment, Food and Rural Affairs (DEFRA).
In accordance with the Greenhouse Gas Protocol Guidance, the
emissions from gas consumption in Denmark were omitted in
scope 1 owing to the purchase of biogas certificates of origin.
Biogenic emissions from use of biogas are reported outside
scopes. For transport by company cars, the emissions are
calculated on the basis of the mileage from our leasing company
Nordania and emission factors from DEFRA.
CO2e emissions scope 2
Scope 2 covers CO2e emissions from district heating, district
cooling and electricity supplied by external suppliers. The
emissions from district heating are calculated on the basis of
heating consumption, using either specific emission factors
from energy companies or average emission factors for
heating for the country from IEA. For Denmark, two emissions
factors are used to account for district heating. Emissions
from district heating in the Copenhagen area are calculated
using emissions factors developed by district heating
companies CTR, VEKS and HOFOR (Miljødata for fjernvarme
i Hovedstadsområdet), whereas emissions from district
heating outside the Copenhagen area are calculated using
emissions factors from the Danish Energy Agency. For district
heating in Sweden, emission factors from the local supplier
are used if available. If not available, an average of supplier-
specific emission factors is used. Similarly, emissions from
district cooling are calculated on the basis of district cooling
consumption and the specific emissions factor used for district
heating, due to a system problem not allowing Danske Bank
to separately calculate emissions from cooling from heating.
Scope 2 emissions are reported in accordance with the market-
based and location-based methodology from the Greenhouse
Gas Protocol Guidance. For the location-based approach, the
emission factors from electricity consumption are calculated
using average emission factors for the country from the
IEA. For the market-based methodology, the emissions from
electricity consumption were omitted owing to the purchase of
Danske Bank / Annual Report 2023 Letter to stakeholders
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renewable electricity certifications under Guarantees of Origin
(GoO), The Renewable Energy Guarantees of Origin (REGO) and
International Renewable Energy Certificates (I-RECs).
CO2e emissions scope 3
Scope 3 covers CO2e emissions from scope 3.1. purchased
goods and services (limited to paper consumption), scope
3.6. business travel (road and air) and scope 3.7. employee
commuting (emissions from working from home). Emissions
from our financed emissions under 3.15. are not included in
these figures.
Scope 3.1.: The emissions from paper are calculated on the
basis of paper consumption provided by the suppliers or from
the Group’s internal ordering system (webshop) and emission
factors from DEFRA.
Scope 3.6.: For business travel by road, the emissions are
calculated on the basis of the mileage and fuel specific emission
factors from DEFRA when fuel type is available. Mileage is
provided either from registered distances from our leasing
company Nordania, expense management, HR systems or
allowance paid. For mileage without known fuel type, we apply
emissions factor for unknown fuel from DEFRA. For business
travel by air, the emissions are reported directly by our travel
agency, American Express, and are calculated on the basis of
mileage data multiplied by the emission factor from DEFRA.
Scope 3.7.: Emissions from working from home are as of 2023
calculated on the basis of homeworking hours per quarter per
FTE and emission factors from DEFRA and IEA. The number
of homeworking hours per quarter is established using office
occupancy data per country multiplied by working hours and
FTE number as per end of each quarter. Office occupancy is
established by data from speed-gates in premises. Northern
Ireland and the Republic of Ireland do not have speed-gate
data, and the number from Denmark is applied instead. For the
Nordic countries and Lithuania, only electricity consumption for
office equipment is incorporated, using the DEFRA emissions
factor. For Northern Ireland and the Republic of Ireland,
emissions from incremental heating are incorporated, using the
DEFRA emissions factor. For India, incremental emissions from
fan cooling are incorporated, using the IEA electricity emissions
factor.
Estimated CO2e from operations without registered data
For operations that do not have any measured consumption, we
estimate CO2e emissions on the basis of the average number of
FTEs as provided by Group Finance and the average emissions
per employee in the Group. These estimates represent 2% of
total emissions in 2023 and are distributed across the three
scopes based on the share of the individual scope.
Total CO2e emissions from own operations
Consists of the sum of scope 1 CO2e emissions, scope 2 CO2e
emissions (market-based) and scope 3 CO2e emissions.
Energy consumption
Data for energy consumption from electricity and heat is
either based on automatic data transfers from smart meters
or quarterly meter readings, or it is calculated on the basis
of statements received regularly during the year from energy
companies and lessors. Data on electricity consumption is
calculated mainly on the basis of invoices from electricity
suppliers and automatic meter readings. Data on heat
consumption is based on invoices from heat suppliers and
on-account (aconto) invoices. If no reading or statement is
available, we estimate consumption based on the average
electricity or heat consumption per square meter for the
country and site type. Data on floor space covers all properties
used by the Group and its subsidiaries, including the Group’s
own premises and leased premises, for own operations in
various countries. In Sweden, heat consumption data is
calculated on the basis of information from boverket.se (energy
labelling of buildings). The consumption figure is calculated on
the basis of the Group’s share of floor space in the buildings
in Sweden. Similarly, data on heat consumption at properties
without actual consumption in Finland is calculated by using
the key figures for Sweden because consumption patterns
for locations in Finland are similar to sites in Sweden. The
data does not include fuel use from company cars due to the
small number (four) of company cars. Energy consumption
for operations without registered data is not estimated and
therefore not included.
Renewable energy share scope 1 and 2
Renewable energy share within scope 1 and 2 is calculated
on the basis of the total energy consumption and the amount
of renewable electricity certified by guarantees of origin and
international renewable energy certificates. Natural gas
consumption covered by biogas certificates of origin is not
considered renewable energy for the purpose of calculating
this Key Performance Indicator (KPI). The calculation does
not include fuel use from company cars. With limited data on
the energy mix for heating, it is assumed that the energy mix
is made up of a variety of different fossil sources. This is a
conservative approach.
Outside scopes
Biogenic emissions from the use of biogas are calculated on the
basis of gas consumption in Denmark, for which we purchase
biogas certificates, and using emissions factor from DEFRA.
Social
For all social KPIs, permanent employees are included, and
external and temporary employees are excluded. All gender
balances are based on data from the HR platform at the end of
2023.
Gender diversity on the Board of Directors (AGM-elected)
Number of Annual General Meeting (AGM) elected women/
men who are members of the Board of Directors (BoD) divided
by the total number of AGM-elected members on the BoD.
64
Danske Bank / Annual Report 2023 Letter to stakeholders
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Gender diversity in the Executive Leadership Team
Number of women/men in the Executive Leadership Team (ELT)
divided by the total number of members of the ELT.
Gender diversity in senior leadership positions and in
leadership positions
Leadership positions: Number of women/men with staff
responsibility as a percentage of total headcount with
staff responsibility. Senior leadership positions: Number
of senior leaders who are women/men as a percentage of
total headcount of senior leaders. Senior leaders are defined
as employees with job titles that include: any VP title (e.g.
First Vice President, Senior Vice President), CEOs, Leader of
Business, Leader of Function, Leader of leaders (if at least L5),
and Leader of Team (if at least L3).
Gender balance in supervisor level 2 & 3 leadership positions
Number of women/men with staff responsibility at supervisor
level 2 and 3 as a percentage of total headcount with staff
responsibility at supervisor level 2 and 3. The CEO is at
supervisor level 1.
Gender diversity in the workforce
Number of women/men as a percentage of total headcount.
Employee gender pay ratio
The difference in median total FTE-corrected compensation
(salary, bonus payments and any other monetary benefits) for
women/men, without adjusting for factors such as job function,
level, education, etc. The calculation is based on data from the
HR platform and the payroll systems from Q1-Q4 2023
Employee turnover
Number of leavers (retired and resigned employees – head
count) over a 12-month period divided by the average number
of employees (headcount) at the end of each month over a
12-month period, which gives the turnover rate. The calculation
is based on data from the HR platform from Q1-Q4 2023.
Employee engagement
Data on employee engagement for Danske Bank comes from
the Danske Bank Culture and Engagement Survey, managed
by our external provider Ennova. The survey covers the entire
Group. The index score is an average based on replies to
four questions in the survey: two on satisfaction and two on
motivation. The survey is conducted two times a year.
Number of start-ups and scale-ups supported with growth
and impact tools, services and expertise
The support can be via the digital platform, thehub.io, advice
from DB Growth Advisers, invitations to investor events Canute
programmes or other Growth and Impact initiatives in DB. The
KPI is measured using the number of start-ups and scale-ups
that posted a job on The Hub as a proxy. The start-up or scale-
up supported is counted at the time it has posted the first job
on The Hub. Data for the KPI covers companies registered in
Denmark, Sweden, Norway and Finland. Data covers all types of
corporate structures (ApS, AS, AB, Inc. etc.). Data is retrieved
from the backend system) of The Hub.
Number of people supported with financial literacy tools and
expertise
Data includes active unique users of DB educational tools
(digital and analogue) developed to support financial confidence.
Data has been accumulated from 2018 and onwards.
Governance
Employees trained in risk and compliance
The risk and compliance eLearning courses are mandatory
for all employees of the Group and must be completed once a
year and on time. In addition, all new employees of the Group
must complete the module within the first 14 days of their
employment. All temporary employees and external consultants
with access to the Group’s IT systems must also complete
training. The completion data has been extracted at the end of
2023.
65
Danske Bank / Annual Report 2023 Letter to stakeholders
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Financial statements
159 G33. Fair value information for financial instruments
165 G34. Related parties
166 G35. Remuneration of management and material
risk takers
170 G36. Danske Bank shares held by the Board of
Directors and the Executive Leadership Team
171 G37. Group holdings and undertakings
173 G38. Interests in associates and joint arrangements
174 G39. Interests in unconsolidated structured entities
175 G40. Risk management notes
– Danske Bank Group
175 Risk management
177 Total capital
178 Credit risk
201 Market risk
204 Liquidity risk
206 Life insurance risk
211 Non-financial risk
213 Highlights and ratios
214 Definitions of ratios
215 Financial statements – Danske Bank A/S
Financial Statements
67 Income statement – Danske Bank Group
68 Statement of comprehensive income
– Danske Bank Group
69 Balance sheet – Danske Bank Group
70 Statement of capital – Danske Bank Group
73 Cash flow statement – Danske Bank Group
74 Notes – Danske Bank Group
G1. Basis of preparation
74
G2.
83
G3.
88
94
G4.
96 G5.
G6.
99
101 G7.
G8.
103
Changes and forthcoming changes to
accounting policies and presentation
Business model and business segmentation
Activities by country
Net interest and net trading income or loss
Fee income and expenses
Net insurance result
Gain or loss on sale of disposal groups
and Other income
G11. Loan impairment charges
104 G9. Operating expenses
105 G10. Audit fees
106
107 G12. Trading portfolio assets and liabilities
112 G13. Investment securities
114 G14. Due from credit institutions and central banks
115 G15. Loans at amortised cost
122 G16. Loans and issued bonds at fair value
125
G17. Assets and deposits under pooled schemes
and unit-linked investment contracts
126 G18. Assets and liabilities under insurance contracts
132
136 G20. Due to credit institutions and central banks and
G19. Intangible assets
Deposits
137 G21. Tax
141 G22. Issued bonds
145 G23. Assets held for sale and Liabilities in disposal
groups
146 G24. Other assets and Other liabilities
149 G25. Equity
151 G26. Note to the cash flow statement
152 G27. Guarantees, commitments and contingent
liabilities
154 G28. Balance sheet items broken down by expected
due date
155 G29. Contractual due dates of financial liabilities
156 G30. Transferred financial assets that are not
derecognised
157 G31. Assets provided or received as collateral
158 G32. Offsetting of financial assets and liabilities
66
Danske Bank / Annual Report 2023
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Financial statements
Income statement – Danske Bank Group
Note
(DKK millions)
2023
2022*
G5
G5
G5
G6
G6
G5
G7
G7
G7
G7
G8
G8
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
Operating expenses
G9
G24, G27 Provision for Estonia matter
G19
Impairment charges on goodwill
Profit before loan impairment charges
Loan impairment charges
Profit before tax
Tax
Net profit
Portion attributable to
Shareholders of Danske Bank A/S (the Parent Company)
Additional Tier 1 capital holders
Net profit
Earnings per share (DKK)
Diluted earnings per share (DKK)
Dividend per share (DKK)**
60,842
18,752
47,325
32,269
16,111
4,481
11,630
6,590
5,735
5,094
35,228
-34,613
216
1,472
-555
4,446
3,891
55,852
28,908
-
-
26,944
262
26,682
5,420
21,262
21,262
-
21,262
24.8
24.7
14.5
31,697
18,288
24,634
25,351
17,305
4,824
12,481
1,581
5,126
3,604
-60,302
58,624
21
-135
1,420
4,785
6,206
45,484
30,252
13,800
1,627
-195
1,502
-1,697
2,883
-4,580
-4,666
86
-4,580
-5.4
-5.4
-
* Comparative information has been restated, as described in note G2(a).
** Dividend for 2023 of a total of DKK 14.5 per share consists of a proposed dividend of DKK 7.5 per share for the second half of 2023 and an interim dividend of DKK 7.0 per
share that was paid in connection with the interim report for the first half of 2023.
G11
G21
67
Danske Bank / Annual Report 2023
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Sustainability
Financial review
Business units
Financial statements
2023
2022**
21,262
-4,580
-1,220
-301
-919
-1,404
589
806
1,220
-
306
905
-14
21,248
21,248
-
-968
-179
-789
-4,481
2,463
-
-1,546
-14
-674
-2,904
-3,693
-8,273
-8,359
86
21,248
-8,273
Statement of comprehensive income – Danske Bank Group
Note
(DKK millions)
Net profit
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurement of defined benefit pension plans
Tax*
Items that will not be reclassified to profit or loss
Items that are or may be reclassified subsequently to profit or loss
Translation of units outside Denmark
Hedging of units outside Denmark
Reclassification 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).
*** Reclassified to the income statement on disposal of units outside Denmark includes a reduction in the structural FX hedge. See note G12.
G21
G12
G21
68
Danske Bank / Annual Report 2023
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Financial statements
Balance sheet – Danske Bank Group
Note
(DKK millions)
31 December 2023 31 December 2022* 1 January 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
259,156
114,813
548,189
283,914
918,628
928,239
70,900
496,031
110,704
6,064
3,264
31,079
175,052
60,786
638,799
287,423
1,082,818
932,677
66,739
502,995
350
6,045
5,199
31,673
293,386
71,149
509,426
280,942
1,027,442
1,024,461
76,805
622,634
28,800
6,191
4,510
35,336
Total assets
3,770,981
3,790,556
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
154,608
454,487
1,222,203
748,780
214,234
71,253
482,630
56,476
1,557
57,046
93,194
38,774
138,777
554,321
1,262,293
723,923
192,682
66,725
488,891
-
2,103
68,978
93,235
38,350
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
Total liabilities
3,595,242
3,630,278
3,805,085
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
* Comparative information has been restated, as described in note G2(a).
8,622
-2,639
-306
163,596
6,466
175,739
-
175,739
8,622
-2,630
-1,526
155,812
-
160,278
-
8,622
-612
34
160,732
1,724
170,500
5,497
160,278
175,997
3,770,981
3,790,556
3,981,082
G14
G14
G12
G13
G15
G16
G17
G18
G23
G19
G21
G24
G20
G12
G20
G22
G22
G17
G18
G23
G21
G24
G22
G22
G25
G25
69
Danske Bank / Annual Report 2023
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Strategy
Sustainability
Financial review
Business units
Financial statements
Statement of capital – Danske Bank Group
Changes in equity
(DKK millions)
Shareholders of Danske Bank A/S (the Parent Company)
Foreign
currency
translation
reserve
Reserve for
bonds at fair
value (OCI)
Share
capital
Retained
earnings
Proposed
dividends
Additional
tier 1 capital
Total
Total
Total equity as at 1 January 2022
8,622
-612
34 161,439
1,724 171,207
5,497 176,704
Effects of changes in accounting policy*
Restated total equity as at 1 January 2022
Net profit*
Other comprehensive income
Remeasurement of defined benefit pension plans
Translation of units outside Denmark
Hedging of units outside Denmark
Unrealised value adjustments
Realised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Paid interest on additional tier 1 capital
Dividends paid**
Redemption of additional tier 1 capital
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Share based payments
Tax
8,622
-
-612
-
-707
34 160,732
-4,666
-
-707
1,724 170,500
-4,666
-
-707
5,497 175,997
-4,580
86
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-4,481
2,463
-
-
-
-
-
-
-1,546
-14
-
-968
-
-
-
-
853
-2,018
-1,560
-115
-2,018
-1,560
-4,781
-
-
-
-
-
-
-
-
-968
-4,481
2,463
-1,546
-14
853
-3,693
-8,359
-
-
-
-
-
-
-
-968
-4,481
2,463
-1,546
-14
853
-3,693
86
-8,273
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19
-
-18,021
17,773
57
33
-
-1,724
-
-
-
-
-
-
-1,705
-
-18,021
17,773
57
33
-164
-
-5,419
-
-
-
-
-164
-1,705
-5,419
-18,021
17,773
57
33
Total equity as at 31 December 2022
8,622
-2,630
-1,526 155,812
- 160,278
- 160,278
Total equity as at 1 January 2023
Effects of changes in accounting policy*
Restated total equity 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 Denmark
Unrealised value adjustments
Tax
Total other comprehensive income
Total comprehensive income
Transactions with owners
Dividends paid**
Proposed dividends**
Acquisition of own shares and additional tier 1 capital
Sale of own shares and additional tier 1 capital
Share based payments
8,622
-2,630
-1,526 155,852
-
-
-
-40
8,622
-2,630
-1,526 155,812
- 160,318
-
-40
- 160,278
- 160,318
-
-40
- 160,278
-
-
21,262
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-1,404
589
806
-
-
-9
-9
-
-
-
-
-
-
-
-
-
1,220
-
-1,220
-
-
-
-
-5
1,220
-1,225
1,220
20,037
-
-
-
-
-
-
-
-
-
21,262
-1,220
-1,404
589
806
1,220
-5
-14
21,248
-
-
-
-
-
-6,011
-6,466
-23,030
23,082
172
-
6,466
-
-
-
-6,011
-
-23,030
23,082
172
-
-
-
-
-
-
-
-
-
-
-
-
-
-
21,262
-1,220
-1,404
589
806
1,220
-5
-14
21,248
-6,011
-
-23,030
23,082
172
Total equity as at 31 December 2023
8,622
-2,639
-306 163,596
6,466 175,739
- 175,739
* See note G2(a) for details on changes in accounting policy.
** Dividend for 2023 of a total of DKK 14.5 per share consists of a proposed dividend of DKK 7.5 per share for the second half of 2023 and an interim dividend of DKK 7.0 per share that
was paid in connection with the interim report for the first half of 2023. Dividends paid is net of dividends on own shares.
70
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Statement of capital – Danske Bank Group
Dividend
The Board of Directors proposes a dividend of DKK 7.5 per share, totalling DKK 6,466 million to be paid out of the net profit for the Parent Company. Dividen d
for 2023 of a total of DKK 14.5 per share consists of a proposed dividend of DKK 7.5 per share for the second half of 2023 and an interim dividend of DKK
7.0 per share that was paid in connection with the interim report for the first half of 2023.
Earnings per share (DKK millions)
Net profit attributable to the shareholders of the parent company
Number of shares issued at 1 January
Average number of own shares held by the Group (including share buy-back programme)
Average number of shares outstanding
Number of dilutive shares issued for share-based payments
2023
2022*
21,262
-4,666
862,184,621
862,184,621
3,400,761
3,852,779
858,899,954
1,143,355
858,331,842
4,590,464
Adjusted average number of shares outstanding after share capital reduction, including dilutive shares
860,043,309
862,922,306
Earnings per share (DKK)
Diluted earnings per share (DKK)
* Comparative information has been restated, as described in note G2(a).
24.8
24.7
-5.4
-5.4
The share capital consists of shares of a nominal value of DKK 10 each. All shares carry the same rights; there is thus only one class of shares.
Number of shares outstanding
Issued at 1 January
Holding of own shares
Shares outstanding at 31 December
* Comparative information has been restated, as described in note G2(a).
2023
2022*
862,184,621
2,410,915
862,184,621
3,791,869
859,773,706
858,392,752
(DKK millions)
Holding of own shares
Holding as at 1 January
Acquisition of own shares
Sale of own shares
Value adjustment
Holding as at 31 December
* Comparative information has been restated, as described in note G2(a).
Number
Number
2023
2022*
3,791,869
3,001,737
148,409,820 160,892,469
149,790,774 160,102,337
-
-
Value
2023
521
23,030
23,082
-33
Value
2022*
340
18,021
17,773
-67
2,410,915
3,791,869
435
521
Holdings of own shares disclosed above are those held in the Group’s trading portfolio. In addition, the Group holds DKK 1,299 million of own shares on behalf
of customers which are not deducted from equity, comprising DKK 199 million of own shares in Assets under pooled schemes, DKK 60 million of own shares
in Assets under unit-linked investment contracts, and DKK 1,040 million of own shares in Assets under insurance contracts. Details on acquisitions and
sales of shares under Assets under unit-linked investment contracts and Assets under insurance contracts are presented under Statement of Capital of
Danske Bank A/S.
The Board of Directors is authorised to let Danske Bank A/S acquire own shares up to a total nominal amount of 10% of the share capital. The shares may
be held for ownership or provided as collateral. If shares are acquired for ownership, the acquisition price may not deviate by more than 10% from the price
quoted at the time of acquisition. Danske Bank A/S has obtained permission from the Danish Financial Supervisory Authority to acquire own shares for
market-making purposes etc. and this amount is deducted from the Group’s common equity tier 1 capital.
71
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Statement of capital – Danske Bank Group
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 (%)
31 December
2023
31 December
2022*
175,739
211
-27
160,318
217
-28
175,923
160,506
175,923
-914
1,634
-890
-
160,506
-222
3,063
-1,338
-567
-6,466 -
-5,529
-5,690
-500
-916
242
316
-352
-733
-1,424
-845
-4,683
-6,111
155,308
14,805
170,113
20,790
149,197
15,300
164,497
20,765
190,902
185,261
827,882
838,193
18.8%
20.5%
23.1%
17.8%
19.6%
22.1%
* Comparative information has not been restated. See note G2(a) for more detail.
** Common equity tier 1 capital instruments is equal to Total equity in accordance with the rules of the Danish FSA .
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.
Risk Management 2023 provides more details about the Group’s total capital, the total risk exposure amount and the Group’s solvency need. The report
is available at danskebank.com/reports and is not covered by the statutory audit.
72
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Cash flow statement – Danske Bank Group
2023
2022*
26,682
-4,565
8,426
-1,697
-3,025
21,459
30,543
16,737
10,778
-9,225
53
3,509
57,952
-9,490
73,513
1,903
-18,036
-35,969
49,989
-249
-6,481
34,905
-29,737
-150,465
16,156
-4,243
141,500
-109,357
45
-540
-841
7
-1,329
22,425
-23,696
-6,011
-
-
-605
2,032
-560
-826
4
650
20,052
-30,590
-1,705
-5,419
-164
-611
-7,887
-18,437
232,531
794
132,284
362,997
-3,322
-127,144
365,609
232,531
6,419
252,737
106,453
6,630
168,422
57,479
365,609
232,531
(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
G26
G26
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
G14
G14
G14
Total
* Comparative information has been restated, as described in note G2(a).
Note G26 provides further information on the cash flow statement.
73
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Notes – Danske Bank Group
G1. Basis of preparation
(a) General
Danske Bank Group prepares its consolidated financial statements in accordance with the IFRS Accounting Standards (IFRSs) and applicable
interpretations (IFRIC) issued by the International Accounting Standards Board (IASB), as adopted by the EU. Furthermore, the consolidated financia l
statements comply with the Danish FSA’s Executive Order No. 1306 dated 16 December 2008 on the use of IFRSs by undertakings subject to the Danis h
Financial Business Act.
On 1 January 2023, the Group implemented IFRS 17, and the amendments to IAS 1, IAS 8 and IAS 12. Implementation of IFRS 17 resulted in a decrease
of DKK 0.7 billion in the Group’s equity as at the transition date of 1 January 2022, and a net decrease of DKK 40 million in the Group’s equity as at 31
December 2022.
As a result of IFRS 17 implementation, the Group has changed the presentation of the Income statement to include material lin e items as required by
IAS 1 and new sub-totals.
In addition, the Group has adopted EU’s carve out to IAS 39 in 2023 to hedge the interest rate risk on a portfolio of non -maturing core deposits at its
subsidiary Northern Bank Ltd.
Further information on the changes to accounting policies and presentation in 2023 can be found in note G2. Except for these changes, the Group has
not changed its material accounting policies from those applied in the Annual Report 2022.
For changes in the financial highlights and segment reporting, see note G3.
Financial statement figures are stated in Danish kroner and whole millions, unless otherwise stated. As a result, rounding discrepancies may occur
because totals have been rounded off and the underlying decimals are not presented to financial statement users.
Monetary assets and liabilities in foreign currency are translated at the exchange rates at the balance sheet date. Exchange rate adjustments of monetary
assets and liabilities arising as a result of differences in the exchange rates at the transaction date and at the balance sheet date are recognised in the
income statement. Non-monetary assets and liabilities in foreign currency that are subsequently revalued at fair value are translated at the exchange
rates at the date of revaluation. Exchange rate adjustments are included in the fair value adjustment of an asset or liability. Other non-monetary items in
foreign currency are translated at the exchange rates at the transaction date. The accounting treatment of foreign currency translation of units outside
Denmark is described in note G25.
For the purpose of clarity, the primary financial statements and the notes to the financial statements are prepared using the concepts of materiality and
relevance. This means that line items not considered material in terms of quantitative and qualitative measures or relevant to financial statement users
are aggregated and presented together with other items in the primary financial statements. Similarly, information not considered material is not
presented in the notes.
The material accounting policies are incorporated into the notes to which they relate.
(b) Significant accounting estimates and judgements
The preparation of financial information requires, in some cases, the use of judgements and estimates by management. This includes judgements made
when applying accounting policies. The most significant judgements made when applying accounting policies relate to the classification of financial assets
and financial liabilities under IFRS 9, especially related to the business model assessment, and the solely payments of principal and interest (SPPI) test
(further explained in note G15) 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). An overview of the classification and measurement basis for financial instruments can be found in
section (c) of this note.
Further, 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 premises may be incomplete, unexpected future events or situations may occur, and other parties may arrive at other estimate d
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 financial year could differ from those on which management’s estimates are based.
Measurement of expected credit losses on loans, financial guarantees and loan commitments, and bonds measured at amortised cost or fair value
through other comprehensive income
The three-stage expected credit loss impairment model in IFRS 9 depends on whether the credit risk has increased significantly since initial recognition .
If the credit risk has not increased significantly, the impairment charge equals the expected credit losses resulting from default events that are possible
within the next 12 months (stage 1). If the credit risk has increased significantly, the loan is more than 30 days past due, or the loan is in default or
otherwise impaired, the impairment charge equals the lifetime expected credit losses (stages 2 and 3). In determining the impairment for expected credit
losses, management exercises judgement and uses estimates and assumptions as explained below.
74
Danske Bank / Annual Report 2023
Letter to stakeholders
Financial highlights
Executive summary
Strategy
Sustainability
Financial review
Business units
Financial statements
Notes – Danske Bank Group
G1. Basis of preparation continued
(b) Significant accounting estimates and judgements
The expected credit loss is calculated for all individual facilities as a function of probability of default (PD), exposure a t default (EAD) and loss given default
(LGD) and incorporates 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 uncert ainty 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), includ ing an assessment of the
probability for each scenario. The purpose of using multiple scenarios is to model the non -linear impact of assumptions about macroeconomic factors on
the expected credit losses.
The base case scenario enters with a probability of 60% (2022: 70%), the upside scenario with a probability of 20% (2022: 10%) and the downside
scenario with a probability of 20% (2022: 20%). On the basis of these assessments, the allowance account at the end of 2023 amounted to DKK 20.1
billion (2022: DKK 19.6 billion). If the base case scenario was assigned a probability of 100%, the allowance account would decrease DKK 2.0 billio n
(2022: 2.1 billion). Compared to the base case scenario, the allowance account would increase DKK 10.2 billion (2022: DKK 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 an d increased expected
credit losses within stage 2. If instead the upside scenario wa s assigned a probability of 100%, the allowance account would decrease DKK 0.2 billio n
(2022: DKK 0.4 billion) compared to the base case scenario.
In determining the expected credit losses, management is required to exercise judgement in defining what is considered a sign ificant increase in credit
risk. According to the Group’s definition of a significant increase in credit risk, i.e. when a loan is transferred from stage 1 to stage 2, facilities with an
initial PD below 1% are transferred to stage 2 if the facility’s 12 -month PD has increased by at least 0.5 of a percentage point and the facility’s lifetim e
PD has doubled since origination. The allowance account is relatively stable in terms of changes to the definition of significant increase in credit risk. At
the end of 2023, the allowance account would increase by DKK 0.3 billion (2022: DKK 0.3 billion), if instead an increase in the facility’s 12-month PD by
at least 0.25 of a percentage point combined with a doubling of the lifetime PD was considered a significant increase in cred it risk.
Management applies judgement when determining the need for post-model adjustments. At the end of 2023, the post-model adjustments amounted to
DKK 6.7 billion (2022: DKK 6.6 billion). They mainly cover the increasing macroeconomic risk due to the uncertainty related to the elevated inflation and
severity of an economic downturn as well as the global tension uncertainty. See further in the separate sections below. Further information on the types
of risks covered by post-model adjustments and the allocation of post-model adjustments to the underlying exposures can be found in the section
Forward-looking information in note G40.
Loan impairment charges for 2023 amounted to DKK 262 million (2022: DKK 1,502 million). Low impairments were driven by robust credit quality
driven by successful restructurings within oil and offshore and post-pandemic recoveries.
The applied macroeconomic scenarios in 2023 differ from those used at 31 December 2022. The downside scenario continues to capture the severe
recession scenario with high interest rates (reflecting a stagflation scenario) applied in the Group’s Internal Capital Adequacy Assessment Process 8
(ICAAP) processes and is similar in nature to regulatory stress tests. The severe recession scenario reflects negative growth , increasing interest rates,
and falling property prices for a longer period. The use of the downside scenario has been made to better capture the increasing risk from high interes t
rates and high inflation, and in order for the ECL calculation to include potential downside risks due to the elevated asset prices across the Nordics.
Except as described above, all other policies and principles remain in place. Staging criteria are unchanged, including the 3 0 days past due criteria and
PD-based criteria for transfer to stage 2.
Sustainability risk
The Group m