RNS No 2440t
DEN DANSKE BANK A/S
19 August 1999
PART 1
Den Danske Bank reports
interim profit of
DKr2,913m
Core earnings up by 7%
Den Danske Bank Group recorded a pre-tax profit of DKr2,913m for the first six
months of 1999, against DKr3,884m for the same period of last year. Core
earnings rose by DKr17lm to DKr2,727m. Earnings from investment portfolios fell
to DKrl86m from DKr1,328m the year before when an exceptionally large gain was
posted against shares.
The Group raised core earnings by 7% from the first half of 1998, when core
earnings were the highest ever recorded by Den Danske Bank. The earnings
performance was better than was anticipated at the publication of the 1998
Annual Accounts and business developments were favourable in the first half
year.
Provisions for bad and doubtful debts - at DKr138m, against DKrl83m in 1998 -
are still very low owing to the general economic conditions.
Core income advanced by 9% from DKr6,379m to DKr6,938m and expenses developed as
expected. The increase in expenses of 12% can primarily be attributed to the
expansion of the Group's activities, particularly in the Nordic retail banking
markets and within IT. If these factors are excluded, expenses rose by just over
3%.
The Group strengthened its Nordic profile by acquiring and integrating into its
organisation Fokus Bank and Saga Securities in Norway, Myrberg Fondkommission
and Bokredit in Sweden, and AG Bankirfirma in Finland. The Fokus Bank group was
included in the Group accounts as from June 1, 1999.
The total assets of the consolidated Group were DKr678bn at June 30, against
DKr623bn a year earlier. Fokus Bank accounted for DKr39bn of Group assets at
June 30, 1999. The assets of the insurance companies which are not consolidated
in the Group accounts, amounted to DKr159bn. Hence the Group held total assets
worth DKr837bn at June 30, 1999.
Loans and advances grew by DKr50bn to DKr370bn at June 30, 1999, while deposits
rose by DKr25bn to DKr246bn. Fokus Bank accounted for DKr33bn of the increase in
lending and DKr21bn of that in deposits. Mortgage lending grew by DKr14bn.
The write-off of goodwill on the acquisition of Fokus Bank and other
acquisitions in the first half year reduced shareholders' equity by DKr3.5bn.
The Group's solvency ratio (interim results not incorporated) was 9.6% at June
30, 1999, against 10.4% at the end of 1998 and 9.8% at the end of June 1998.
The Group expects core earnings for the whole of 1999 to exceed the amount of
DKr4,504m generated last year. The rate of growth in expenses (excluding Fokus
Bank) will slow down in the second half year and core income is expected to be
at a similar level to the first half.
DEN DANSKE BANK
Communications
Steen Reeslev
For further details, phone Peter Straarup - Chief Executive - Thursday, August
19, from 2pm on +45 33 44 01 07
For information on accounting issues (also before 2pm), phone
Jesper Ovesen, Chief Financial Officer, on +45 33 44 25 00
Inge Beicher, Senior Vice President, Finance Department, on +45 33 44 14 01
INTERIM REPORT
First Half of 1999
for
Den Danske Bank Group
* Den Dauske Bank Group recorded a pre-tax profit of DKr2,913m for the first
six months of 1999, against DKr3,884m for the same period of 1998.
* Core earnings*) rose by DKr171m to DKr2,727m, while earnings from investment
portfolios*) fell from DKr1,328m to DKr186m.
The Group's core activities showed a positive development in the first half
year. Earnings from investment portfolios were influenced by modest gains on
shares in the first six months of 1999, whereas an exceptionally large gain
was posted against shares in the same period of 1998.
* Total assets were DKr678bn at June 30, 1999, against DKr623bn a year earlier.
* The Group's solvency ratio stood at 9.6% at June 30, 1999, against 10.4% at
the end of 1998 and 9.8% at June 30, 1998. The core capital ratio was 6.3%,
against 7.7% at the end of 1998 and 6.6% at June 30, 1998. The fall in the
solvency and core capital ratios was mainly attributable to the acquisition
of the Norwegian bank, Fokus Bank, since goodwill of approximately DKr3.4bn
on the acquisition was written off against equity capital.
* Although core earnings in the second half of 1999 are not expected to reach
their first-half level, the Group believes that core earnings for the whole
of 1999 will be higher than in 1998. Earnings from investment portfolios in
the second half year will, as usual, depend on market trends towards the
year-end. The core capital ratio is expected to be not lower than 6.5% at the
end of 1999.
The information in this Interim Report covers Den Danske Bank Group, i.e. Den
Danske Bank (the Parent Bank) and all its subsidiaries within banking, mortgage
finance, leasing and other specialised finance, as well as life and non-life
insurance.
Under Danish banking law, insurance subsidiaries are not consolidatcd in the
Group Accounts. The value of the Parent Bank's holdings in insurance
subsidiaries included in the Group's Balance Sheet under the item "Holdings in
subsidiary undertakings". Profits generated by the insurance companies are
included in the Group's Profit and Loss Account under the item "Income from
associated and subsidiary undertakings".
*) The presentation and calculation of Group core earnings have been changed
compared with previous years. The terms "core earnings" and "earnings from
investment portfolios are now applied (see page 4 and note 1).
Core earnings and profit before tax 1st half 1st half Full year
(DKr million) 1999 1998 1998
Net interest income, excluding income
from Investment portfolios 4,074 3,907 7,911
Share dividends 63 64 87
Fee and commission income (net) 1,758 1,522 2,984
Trading income 400 244 366
Operating income 180 161 392
Core insurance income 463 481 920
Total core income 6,938 6,379 12,660
Operatng expenses and depreciation 4,073 3,640 7,645
Core earnings before provisions 2,865 2,739 5,015
Provisions for bad and doubtful debts 138 183 511
Core earnings 2,7Z7 2,556 4,504
Earnings from Investment portfolios 186 1,328 738
Profit before tax 2,913 3,884 5,242
Summary Balance Sheet lst half 1st half Full year
at June 30 (DKr billion) 1999 1998 1998
Assets
Cash in hand and due from credit
institutions, etc. 73.2 78.8 67.5
Loans and advances 369.7 320.1 303.1
Bonds and shares, etc. 146.9 141.8 140.0
Holdings in associated and subsidiary
undertakings 10.7 9.8 10.2
Other assets 77.8 72.3 72.0
Total assets 678.3 622.8 592.6
Liabilities
Due to credit institutions and central
banks 155.0 163.9 140.4
Deposits 245.7 221.3 213.5
Issued bonds 133.6 98.9 107.5
Other liabilities 93.0 87.1 84.4
Subordinated debt 21.2 20.2 16.6
Profit for the year to date 2.9 3.9
Shareholders' equity 26.9 27.5 30.4
Total liabilities 678.3 622.8 592.8
Off-balance-sheet items
Guarantees, etc. 60.2 51.9 58.2
Other commitments 97.4 101.7 94.0
Total off-balance-sheet items 157.6 153.6 152.2
Ratios and key figures
Profit before tax as % of shareholders'
equity at January 1 19.2 28.2 19.0
Core earnings as % of shareholders'
equity at January 1 18.0 18.6 16.4
Cost/core income ratio. % 58.7 57.1 60.4
Solvency ratio. % 9.6 9.8 10.4
Core capital ratio. % 6.3 6.6 7.7
Book value per share (excl. first-half
profits), DKr 507 520 574
Number of full-time employees in:
Den Danske Bank and consolidated
subsidiaries 12,406 11,479 11,881
Non-consolidated subsidiaries (insurance
companies) 1,439 1,414 1,436
Report for the six months to June 30, 1999
Den Danske Bank Group recorded a pre-tax profit of DKr2,913m for the first six
months of 1999, against DKr3,884m for the same period of last year.
Core income grew slightly more than was anticipated at the publication of the
1998 Annual Accounts. Operating expenses and depreciation developed as
expected. The charge for bad and doubtful debts was lower than expected owing to
better cyclical conditions. As a consequence, core earnings showed a slightly
bigger increase than had been anticipated.
First-half highlights for
Den Danske Bank Group 1999 1998
Profit before tax, DKr million 2,913 3,884
Total assets, DKr billion 678.3 622.8
Loans and advances, DKr billion 369.7 320.1
Deposits, DKr billion 245.7 221.3
Shareholders' equity, DKr billion 26.9 27.5
Core capital ratio, % 6.3 6.6
Solvency ratio, % 9.6 9.8
Share price at June 30, DKr 782 831
Significant events
In May 1999, Den Danske Bank was given permission by the Norwegian authorities
to take over the Norwegian bank, Fokus Bank, through a wholly-owned subsidiary,
DDB Fokus Invest. Den Danske Bank then acquired 99% of the shares in Fokus Bank
and made a bid for the remaining outstanding shares. At the end of June, the
remaining shares were taken over by compulsory redemption. Hence, Den Danske
Bank Group had full ownership of Fokus Bank by the end of June. The Fokus Bank
group has been included in the Group accounts as from June 1, 1999.
In March, Den Danske Bank acquired the remaining 49% of the shares in the
Norwegian brokerage company, Saga Securities, and, in June, the Group made an
agreement to take over, as at August 2, 1999, the Swedish company, Bokredit i
Sverige AB, which provides mortgage loans to private individuals.
Total goodwill on acquisitions in the first half year, which amounted to
DKr3.5bn, was written off against equity capital. Most of this amount relates to
Fokus Bank.
Core earnings and earnings from investment portfolios
The calculation and presentation of Group core earnings have been changed
compared with previous years; core earnings now include trading income, but
exclude gains on proprietary investment portfolios. Moreover, maturity related
value adjustments of securities are no longer specified. Core earnings, as
presented according to the new practice, showed an increase of DKr171m. If the
previous layout had been maintained, core earnings would have grown by
DKr189m. Note 1 provides an overview of core earnings, earnings from investment
portfolios and the official presentation of accounting figures required by the
Danish Financial Supervisory Authority.
Core earnings totalled DKr2,727m for the first six months of 1999, against
DKr2,556m the year before. The components of core earnings showed the
following movements:
* Net interest income rose by DKr167m to DKr4,074m.
* Fees and commissions grew by DKr236m to DKr1,758m.
* Trading income was up by DKr156m.
* Core insurance income included DKr93m of income relating to changes in tax
allocation.
* Expenses rose by DKr433m to DKr4,073m.
Earnings from investment portfolios declined from DKr1,328m in 1998 to DKr186m
in 1999.
Core earnings and profit before tax 1st half 1st half Full year
(DKr million) 1999 1998 1998
Net interest income, excluding
income from investment portfolios 4,074 3,907 7,911
Share dividends 63 64 87
Fee and commission income (net) 1,758 1,522 2,984
Trading income 400 244 366
Other operating income 180 161 392
Core insurance income 463 481 920
Total core income 6,938 6,379 12,660
Operating expenses and depreciation 4,073 3,640 7,645
Core earnings before provisions 2,865 2,739 5,015
Provisions for bad and doubtful debts 138 183 511
Core earnings 2,727 2,556 4,504
Earnings from investment portfolios 186 1,328 738
Profit before tax 2,913 3,884 5,242
Developments within the individual business areas of Den Danske Bank were as
follows:
Retail Banking had a declining return because of low interest rate levels in
Denmark. Loan and deposit volumes continued to grow, as did the customer base.
More over, larger sales of securities generated rising fees and commissions.
Danske Kredit, the Group's mortgage finance arm, stepped up its activities in
the first half of 1999. Mortgage refinancing activity remained strong in the
early months of the year. Danske Bo started its operations in the residential
real estate market in the first quarter and had a satisfactory development.
Activities in Sweden produced an increasing return, and the Group expanded its
branch network in the major Swedish towns as planned. The charge for bad and
doubtful debts in Denmark rose marginally.
Corporate and Institutional Banking raised its return. Business volume with
Nordic corporates grew at a satisfactory rate. Profits increased in other
international markets even though the Group has reduced the capital allocated to
Corporate and Institutional Banking to mantain a satisfactory core capital ratio
after the acquisition of Fokus Bank. But profitability is still not satisfactory
in all business segments. In response, the Group has increased its requirements
for customer profitability. The charge for bad and doubtful debts in the
corporate and institutional banking market was lower than expected.
Investment Banking continued to reinforce its Nordic profile. Investment Banking
is integrating and adjusting its organisation after the acquisition of Saga
Securities, AG Bankirfirma and Myrberg Fondkommission to emerge as a
strengthened Nordic entity. This has already produced visible results in equity
sale and trading. Income grew during the first half of 1999. Profits in
Investment Banking, which outgrew expectations, were influenced by the
significant cost of expanding this business area.
Asset Management and Fixed Income, Money Markets and Foreign Exchange Trading
advanced well. Asset Management, in particular, showed a positive development.
At June 30, Den Danske Bank Group managed DKr260bn worth of funds, an increase
of 8% in the first half year. Earnings from Fixed Income, Money Markets and
Foreign Exchange Trading declined from 1998 but aggregate net interest and
trading income remained at a satisfactory level.
Insurance saw a decline in its return, as had been anticipated. Pre-tax profit
was favourably affected by changes in the method whereby taxes are allocated
among the jointly-taxed subsidiaries of the Group (see Accounting policies).
Considering the uncertainty about pension savings that has been caused by the
fiscal measures which the Danish parliament introduced in June 1998, life
premium volume showed an acceptable trend. Premium income from non-life
business rose 9%. The claims experience was satisfactory.
Earnings from investment portfolios, which comprise the gains on the proprietary
investment portfolios of the banking group and the non-life business, showed a
decline from DKrl,328m in 1998 to DKr186m in 1999. In 1998, earnings from
investment portfolios were favourably affected by increases in the prices of
shares, in particular. No significant share price gains have been recorded in
1999. The portfolio of shares has been reduced as planned.
The results of the Group
Summary Profit and Loss Account 1st half 1st half
(DKr million) 1999 1998
Net interest income 4,589 4,225
Dividends from shares, etc. 153 137
Fee and commission income (net) 1,756 1,519
Net interest and fee income 6,498 5,881
Securities and foreign exchange income -119 1,079
Other operating income 180 161
Operating expenses and depreciation 4,108 3,673
Provisions for bad and doubtful debts 138 183
Income from associated and
subsidiary undertakings 600 619
Profit before tax 2,913 3,884
Net interest income rose from DKr4,225m a year ago to DKr4,589m for the first
six months of 1999.
Fee and commission income grew from DKr1,519m to DKr1,756m. The increase was
mainly attributable to the expansion of activities in the Nordic financial
markets, securities trading and mortgage refinancing business.
The Group posted a loss against securities and foreign exchange of DKr119m for
the first half of 1999, against a profit of DKr1,079m last year. The total
securities and foreign exchange result comprised a gain on shares of DKr240m
(DKrl,064m in 1998), foreign exchange income of DKr229m (DKr226m) and a loss on
bonds, mortgages and financial derivatives of DKr588m (minus DKr211m).
The Group increased its total interest rate risk during the first half of 1999.
This meant that a one percentage point rise in interest rates would have caused
a valuation loss of DKr1,135m at June 30, 1999, against DKr919m, a year earlier.
Operating expenses and depreciation were up by 12% to DKr4,108m. The increase
had been anticipated because of continued growth in IT costs, the expansion of
investment banking activities, and the enlargement of the Swedish operation.
Moreover, the acquisition of Fokus Bank contributed to the increase in expenses.
If the cost increases related to the expansion of activities and acquisitions
are excluded, expenses rose by just over 3%.
The charge for bad and doubtful debts amounted to DKr138m, against DKr183m in
1998. Provisions are still very low owing to the general economic conditions. At
June 30, 1999, the accumulated provisions against lendings, credit institutions
and guarantees amounted to DKr11,979m. Non-accrual debt was DKr2,856m
Income from associated and subsidiary undertakings was DKr600m, against DKr619m
the year before.
Group assets and liabilities, solvency, etc.
The total assets of the consolidated Group were DKr678bn at June 30, 1999,
against DKr623bn a year earlier. Fokus Bank accounted for DKr39bn of Group
assets at June 30, 1999. The assets of the insurance companies, which are not
consolidated in the Group accounts, amounted to DKr159bn. Hence, the Group held
total assets worth DKr837bn.
Loans and advances grew by DKr50bn from a year earlier to DKr370bn at June 30,
1999, while deposits rose by DKr25bn to DKr246bn. Fokus Bank accounted for
DKr33bn of the increase in loans and advances and DKr21bn of that in deposits.
Mortgage lending grew by DKrl4bn. The increase in loans and advances was mainly
funded by the issue of bonds.
The shareholders' equity of Den Danske Bank Group (excluding the half-year
results) amounted to DKr26.9bn at June 30, 1999, against DK30.4bn at December
31, 1998. The write-off of goodwill on the acquisition of shares in Fokus Bank
(Norway), Saga Securities (Norway) and Bokredit i Sverige (Sweden) reduced
shareholders' equity by DKr3.5bn.
The Group's solvency ratio (the half-year results not incorporated) stood at
9.6% of risk weighted assets at June 30, 1999, of which 6.3 percentage points
came from core capital. At December 31, 1998, the solvency ratio was 10.4% and
the core capital ratio 7.7%.
On May 10, 1999, Den Danske Bank raised #100m nominal value of subordinated debt
in the form of supplementary capital by an issue of six-year notes.
Half-year results and activities of subsidaries
Danica, the insurance group, generated gross premium of DKr4,107m in the first
half of 1999, against DKr6,879m the year before. The reason for the decline was
a fall in single premiums the life business.
Danica's pre-tax profit was DKr410m for the first half of 1999, against DKr535m
a year ago. The insurance group had assets worth DKr159bn at June 30, 1999,
against DKr153bn a year earlier.
Non-life business produced a pre-tax profit of DKr56m after a loss on securities
of DKr53m, against a profit of DKr182m for the fist half of 1998 after
securities gains of DKr54m. Non-life gross premiums rose by 9% to DKr1,034m.
Sales of commercial policies were satisfactory, whereas business with personal
customers did not meet expectations.
Life business generated a pre-tax profit of DKr354m. After allowing for the
anticipated tax charge, the profit represents a return on shareholders' equity
equal to that on policy holders' savings after real-interest-rate tax plus two
percentage points. As had been expected, the half-year profit for 1999 was
significantly lower than the profit a year ago owing to a fall in the return
pension savers obtain on life policies.
There was an increase in premiums from company pension schemes, whereas single
premiums did not reach their very high level of 1998. Regular premiums rose by
6% to DKr2,382m, but single premiums fell from DKr3,692m a year ago to DKr691m
for the first half of 1999.
The regrettable situation that the life insurance industry has been put in owing
to increased taxation of insurance policies with minimum return criteria has not
yet been clarified. The authorities are considering a number of possible
solutions to the problem, but have not yet decided on one.
Danske Kredit recorded an increase in mortgage lending from DKr56bn a year ago
to DKr70bn at June 30, 1999. Pre-tax profit was DKr192m, against DKr189m for the
first half of 1998.
Den Danske Bank International, Luxembourg, generated a pre-tax profit of DKr98m
and saw a satisfactory increase in activities.
Fokus Bank, Norway, contributed a profit of DKr16m - generated in June - to
the first-half results, as stated according to Danish accounting standards. The
bank's pre-tax profit for the first half year amounted to NKr243m, as stated
according to Norwegian accounting standards.
The other subsidiaries of Den Danske Bank made satisfactory progress.
Preparing for the Year 2000
In the first half of 1999, Den Danske Bank completed its Year 2000 activities in
a special testing environment. The testing processes covered both the millennium
change and any leap-year problems. The Bank has undertaken extensive
activities in collaboration with business partners in Denmark and abroad to
ensure that the infrastructure of the sector remains operational into the new
millennium. In the months ahead, the Bank will concentrate its efforts on
keeping its Year 2000 safeguards intact and establishing extensive contingency
plans over the turn of the millennium to minimise the errors that may arise
despite all efforts.
With the measures already taken and the contingency plans that will be in place
over the turn of the year, Den Danske Bank Group expects that its own systems
will be fully compliant with the requirements of the millennium change.
Litigation
The commission set up to investigate "the Faroese banking affair" published its
report in mid-January 1999. The publication and the following debate in the
Danish parliament have given rise to criticism of inter alia Den Danske Bank.
In April 1998, the Faroese regional government instituted legal proceedings
against the Danish government and Den Danske Bank, claiming compensation of
approximately DKr1.5bn. The Faroese regional government and the Danish
government settled out of court in June 1998. As part of the settlement, the
regional government waived any claims for further compensation and discontinued
proceedings against the Danish government, but it continued the proceedings
against the Bank, the costs being borne by the Danish government.
Finansieringsfonden af 1992 has also instituted proceedings against the Bank,
claiming compensation in the same matter.
It is still Den Danske Bank's opinion that there are no just grounds for
criticism and, consequently, no legal grounds for claims against it.
A number of investors who bought shares in Hafnia Holding in the summer of 1992
have brought actions for damages against Hafnia, its management, its auditors
and the Bank. The first judgement is expected on September 2, 1999.
Den Danske Bank expects that neither these nor other cases will have a material
impact on the financial position of the Group
Outlook for the second half of 1999
The Group believes that core income in the second half of 1999 will be at a
similar level to the first half as a decline in income from Retail Banking in
Denmark should be offset by rising income from other business areas and the
consolidation of Fokus Bank.
Expenses and depreciation will be higher in the second half of 1999 than in the
first six months because Fokus Bank will be included for a full period in the
second-half accounts, against one month in the first half. The rate of growth in
expenses for the whole of 1999, excluding Fokus Bank, will, however, be lower
than that seen in the first six months.
The Group expects to keep the charge for bad and doubtful debts for the whole of
1999 at a similar level to 1998.
Although core earnings in the second half of 1999 are not expected to reach
their first-half level, the Group believes that core earnings for the whole of
1999 will exceed the amount of DKr4,504m generated in 1998 (see table page 4).
Earnings from investment portfolios in the second half year will, as usual,
depend on market trends towards the year-end.
The Group expects its tax charge to come close to the Danish corporation tax
rate of 32%.
The core capital ratio is expected to be not lower than 6.5% at the end of 1999.
The Group expects to announce its 1999 financial results on February 24, 2000,
and to hold its Annual General Meeting on March 28, 2000.
Copenhagen, August 19, 1999
Den Danske Bank Akrieselskab
2-12 Holmens Kanal
DK-1092 Copenhagen K
Reg.No.28472 Copenhagen
www.danskebank.dk
Profit and Loss Account
for the six months ended June 30
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
--------------------------------------------------------------------------------
Note DKr m DKr m DKr m DKr m
--------------------------------------------------------------------------------
2,8 Interest income 16,429 16,361 13,375 13,515
3 Interest expense 11,840 12,136 9,462 9,956
--------------------------------------------------------------------------------
Net interest income 4,589 4,225 3,923 3,559
--------------------------------------------------------------------------------
8 Dividends from shares, etc. 163 137 144 132
4,8 Fee and commission income 2,010 1,747 1,910 1,595
Fees and commissions paid 254 228 229 225
--------------------------------------------------------------------------------
Net Interest and fee income 6,498 5,881 5,748 5,061
--------------------------------------------------------------------------------
5,8 Securities and foreign exchange income -119 1,079 -96 961
8 Other operating income 180 161 115 115
6 Staff costs and administrative expenses 3,850 3,438 3,568 3,093
Depreciation 258 233 209 188
Other operating expenses - 2 - -
Provisions for bad and doubtful debts 138 183 90 131
7 Income from associated and subsidiary 600 619 1,012 1,076
undertakings
--------------------------------------------------------------------------------
Profit before tax 2,913 3,884 2,912 3,801
--------------------------------------------------------------------------------
Attributable to minority interests 1 4
Attributable to shareholders of Den 2,912 3,880
Danske Bank
Balance Sheet at June 30
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
--------------------------------------------------------------------------------
Note DKr m DKr m DKr m DKr m
--------------------------------------------------------------------------------
ASSETS
Cash in hand and demand deposits with 5,771 2,442 5,529 2,439
central banks
9 Due from credit institutions and 67,388 76,362 100,395 102,359
with central banks
10,11 Loans and advances 369,717 320,052 234,930 237,884
Bonds 136,457 129,333 123,287 121,833
Shares, etc. 10,316 12,048 9,422 11,655
Holdings in associated undertakings, 829 757 287 606
etc.
Holdings in subsidiary undertakings 9,919 9,050 18,912 15,470
Tangible assets 4,487 4,214 3,607 3,611
Own shares 198 441 187 433
16 Other assets 72,838 67,662 70,251 66,563
Prepayments and accrued income 468 415 429 327
--------------------------------------------------------------------------------
Total assets 678,388 622,776 567,236 563,180
--------------------------------------------------------------------------------
LIABILITIES
Due to credit institutions and central 154,972 163,897 158,447 171,842
banks
12 Deposits 246,706 221,328 221,756 218,341
13 Issued bonds 133,647 98,857 48,502 36,142
16 Other liabilities 91,546 85,577 87,861 84,055
Accruals and deferred income 278 97 255 1
14 Provisions for obligations 1,240 1,409 979 1,331
15 Subordinated debt 21,232 20,196 19,608 20,193
Profit for the year to date 2,913 3,884 2,912 3,801
Shareholders' equity 26,856 27,531 26,818 27,474
--------------------------------------------------------------------------------
Attributable to minority interests 38 57
Attributable to shareholders of Den 26,818 27,474
Danske Bank
--------------------------------------------------------------------------------
Total liabilities 678,388 622,776 567,236 563,180
--------------------------------------------------------------------------------
OFF-BALANCE-SHEET ITEMS
17 Guarantees, etc. 60,153 51,913 111,220 97,570
18 Other commitments 97,420 101,731 95,238 99,554
--------------------------------------------------------------------------------
Total off-balance-sheet items 157,573 153,644 206,458 197,124
--------------------------------------------------------------------------------
Shareholders' equity
Movements in Den Danska Bank Group's shareholders' equity between January 1
and June 30
1999 1998
--------------------------------------------------------
DKr m DKr m
--------------------------------------------------------
Shareholders' equity at January 1 30,312 27,525
Goodwill fully written off at the time 3,494 51
of acquisition
----------------
Shareholders' equity, Den Danska Bank, 26,818 27,474
at June 30 ----------------
Minority interests at January 1 54 14
Foreign exchange revaluation 2 6
Addition of minority interests 37
Redemption of minority interests -18
----------------
Minority interests at June 30 38 57
--------------------------------------------------------
Shareholders' equity, Den Danske Bank 26,856 27,531
Group, at June 30
--------------------------------------------------------
Shareholders' equity
The share capital is made up of 52,925,000 shares, totalling DKr5,293m.
All shares carry the same rights. Consequently, there is only one class of
shares.
Solvency
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
---------------------------------------------------------------------------
DKr m DKr m DKr m DKr m
---------------------------------------------------------------------------
Capital base and solvency ratio
Capital base:
Core capital, less statutory 26,606 26,890 26,579 26,841
deduction for own shares
---------------------------------------------------------------------------
Eligible subordinated debt and 19,626 18,372 18,905 18,372
revaluation reserve
Statutory decution for insurance -5,411 -5,100 -5,411 -5,100
subsidiaries
Other statutory deductions -482 -100 -101 -100
---------------------------------------------------------------------------
Supplementary capital, less statutory 13,733 13,172 13,393 13,172
deductions
---------------------------------------------------------------------------
Total capital base, less statutory 40,339 40,062 39,972 40,103
deductions
---------------------------------------------------------------------------
Weighted items not included in trading 370,235 350,025 324,995 333,364
portfolio
Weighted items with market risk 51,647 58,953 48,280 57,700
included in trading portfolio
---------------------------------------------------------------------------
Total weighted items 421,882 408,978 373,275 391,064
---------------------------------------------------------------------------
Solvancy ratio (%) 9.56 9.80 10.71 10.23
- based on core capital alone (%) (tier 6.31 6.58 7.12 6.86
1 capital)
The solvency ratio is subject to a 8.00 8.00 8.00 8.00
minimum requirement of (%)
The solvency ratio is calculated in accordance with the rules on capital
adequacy for banks and contain credit institutions.
The rules also stipulate that the Group's insurance subsidiaries are not to
be consolidated into the Group accounts. Hence, the solvency margin of
these companies is deducted from the Bank's capital base before the capital
base is included in the calculation of the Group's solvency ratio.
Accounting policies
The Accounts for the first half of 1999 have been prepared in compliance with
the Danish Banking Act the Executive Order on Bank Accounts, the Copenhagen
Stock Exchange guidelines for issuers of listed securities, and Danish
accounting standards, except where otherwise provided by Danish banking
regulations.
The accounting policies are unchanged from previous years.
With effect from 1999, the Group has decided to change the method of allocating
the years tax charge within the jointly taxed Group from the "parent company
method" to the "full allocation method". The reason is that the taxation
rules applying to insurance companies were revised significantly in 1998.
In the Accounts, the change means that jointly taxed subsidiaries, including the
Insurance group, will themselves expense the tax charge on their profit for the
year. Previously, the Parent Bank expensed their tax charge on behalf of the
jointly taxed companies.
As a consequence of the change of method, the "Profit before tax" of the
insurance group will be included in "Income from associated and subsidiary
undertakings" in the official presentation of accounts and similarly in the
presentation of core earnings, while the tax charge for the period will be
Included in the tax for the year.
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