RNS No 2967q
DEN DANSKE BANK A/S
19 August 1999
PART 2
Notes
Note
1 Core earnings and earnings from investment portfolios of Den Danske Bank
Group and the official presentation of accounts
1999
Earnings from
Core Investment
earnings portfolios Total*
DKr m Dkr m DKr m
Net interest income 4,074 515 4,589
Dividends from shares,
etc 63 90 153
Fee and commission income 1,758 -2 1,756
Net interest and fee income 5,895 603 6,498
Securities and foreign
exchange income 400 -519 -119
Other operating income 180 - 180
Staff costs and
administrative expenses 3,815 35 3,850
Depreciation 258 - 258
Other operating expenses 0 - 0
Provisions for bad and
doubtful debts 138 - 138
Income from associated and
subsidiary undertakings 463 137 600
Profit before tax 2,727 186 2,913
1998
Earnings from
Core Investment
earnings portfolios Total*
DKr m Dkr m DKr m
Net interest income 3,907 318 4,225
Dividends from shares,
etc 84 73 137
Fee and commission income 1,522 -3 1,519
Net interest and fee income 5,493 388 5,881
Securities and foreign
exchange income 244 835 1,079
Other operating income 161 - 161
Staff costs and
administrative expenses 3,405 33 3,438
Depreciation 233 - 233
Other operating expenses 2 - 2
Provisions for bad and
doubtful debts 183 - 183
Income from associated and
subsidiary undertakings 481 138 619
Profit before tax 2,556 1,328 3,884
*The official presentation of the Danish Financial Supervisory Authority
Core earnings comprise the result of customer-related activities, including the
trading portfolio and life and non-life business. Earnings from investment
portfolios comprise the profits on the proprietary investment portfolios of the
banking group and the non-life business. Shareholders' equity is allocated to
core earnings and earnings from investment portfolios in proportion to their
capital requirement.
NOTES
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
DKr m DKr m DKr m DKr m
Note
2 Interest income
Repo transactions with central banks 3 3 3 3
Central banks 226 400 226 400
Repo transactions with credit
institutions 629 321 633 334
Credit institutions 1,229 1,352 1,823 1,785
Mortgage credit loans 2,190 1,923 - -
Repo loans and advances 395 703 395 703
Loans and advances 7,832 7,468 6,789 6,409
Bonds 3,679 3,975 3,307 3,703
Derivative financial instruments
Currency contracts 399 171 275 104
Interest rate contracts -156 38 -78 70
Total derivative financial 243 209 197 174
Instruments
Other interest income 3 7 2 4
Total 16,429 16,361 13,375 13,515
3 Interest expense
Repo transactions with central banks 98 102 98 102
Central banks 351 122 351 122
Repo transactions with credit 653 307 690 405
institutions
Credit institutions 2,680 3,187 2,621 3,080
Repo deposits 123 227 123 227
Deposits 3,856 4,587 3,735 4,418
Mortgage credit bonds issued 2,190 1,988 - -
Other bonds issued 1,264 944 1,219 942
Subordinated debt 620 669 611 657
Other interest expense 5 3 4 3
Total 11,840 12,136 9,452 9,956
4 Fee and commission income
Guarantee commission 151 161 254 227
Securities and custody commission 951 722 835 620
Payment services 317 274 316 274
Remortgaging and loan fees 305 250 280 230
Other commission 286 340 225 244
Total 2,010 1,747 1,910 1,595
5 Securities and foreign exchange
income
Bonds -1,047 27 -951 38
Shares 434 1,761 396 1,718
Fixed rate loans and advances -27 48 21 41
Foreign exchange income 492 214 460 192
Derivative financial instruments
Currency contracts -4 49 5 62
Interest rate contracts 313 -232 241 -327
Equity contracts 9 -35 9 -35
Total derivative financial 318 -218 255 -300
instruments
Adjustment for pooled pension fund -289 -753 -277 -728
deposits
Total -115 1,079 -96 961
Securities and foreign exchange
income
After adjustment for pooled pension
fund deposits, securities and foreign
exchange income totals:
Bonds -863 -40
Shares 240 1,064
Fixed rate loans and advances -27 48
Foreign exchange income 229 226
Derivative financial instruments 302 -219
Total -119 1,079
6 Staff costs and administrative
expenses
Salaries and remuneration of Board
of Directors and Executive Board
Executive Board 6 7 6 7
Board of Directors 2 2 2 2
Total 8 9 8 9
Staff costs
Wages and salaries 2,123 1,887 1,784 1,534
Pension costs 167 173 139 145
Financial services employer, tax 241 203 210 162
etc
Total 2,531 2,263 2,133 1,841
Other administrative expenses, 1,468 1,298 1,584 1,375
gross
Consideration for administration
services from non-consolidated
subsidiaries deducted from other
administrative expenses -157 -132 -157 -132
Other administrative expenses,net 1,311 1,166 1,427 1,243
Total staff costs and
administrative expenses 3,850 3,438 3,568 3,093
7 Income from associated and
subsidiary undertakings
Associated undertakings, etc 190 84
Subsidiary undertakings,
Danica Forsikring group 410 535
Total 600 619
DANICA FORSIKRING
GROUP
Principal items
Profit and Loss Account
Technical result of ongoing business,
non-life insurance 33 15
Technical result of run-off business,
non-life insurance -2 13
Investment return, non-life insurance
companies 71 82
Extraordinary items, non-life insurance
companies 7 18
Profit from non-life insurance, excluding
gains and losses on investments 109 128
Profit from life insurance 354 353
Profit before gains and losses on investments and tax 463 481
Gains and loses on investments, non-life insurance
companies -53 54
Profit attributable to Den Danske bank 410 535
Tax, life insurance -93 -
Tax, non-life insurance -12 -
Minority interests 6 6
Profit after tax 311 541
Balance Sheet
Total assets 158,908 152,951
Shareholders' equity attributable to 9,919 9,080
Den Danske Bank
Minority interests 157 174
Life insurance provisions, net of reinsurance 120,198 122,547
Outstanding claims provisions, net of reinsuranc 2,960 2,730
Bonus equalisation provision, life insurance 19,187 12,334
Notes
Foreign branches and subsidiaries
Gross income Total assets Number of employees
1999 1998 1999 1998 1999 1998
DKr m DKr m DKr m DKr m
8 Finland 249 86 9,388 6,104 61 41
Hong Kong 445 481 13,710 11,906 47 33
Luxembourg 1,035 977 49,115 40,451 115 112
Norway 533 113 44,624 4,161 981 51
Singapore 259 284 9,834 11,933 39 44
United Kingdom 3,458 3,421 111,822 105,148 166 131
Sweden 1,222 998 49,616 39,447 809 644
Germany 287 265 12,585 13,380 48 55
United States 1,712 1,443 57,752 59,463 72 69
Gross income of foreign branches and subsidiaries
The total gross income of the foreign branches and subsidiaries comprises
interest income, dividends, fee and commission income, securities and
foreign exchange income (net) and other operating income.
Fokus Bank has been included for one month in the gross income column
under Norway.
NOTES
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
DKr m DKr m DKr m DKr m
Note
9 Due from credit institutions and
deposits with central banks
Repo transactions with central banks - - - -
Other deposits with central banks 2,505 12,674 2,505 12,674
Repo transactions with credit
institutions 40,435 36,180 40,752 39,509
Other amounts due from credit 24,448 27,508 57,138 50,176
institutions
Total 67,388 76,362 100,395 102,359
10 Loans and advances
Mortgage credit loans 69,684 56,277 - -
Repo loans and advances 26,159 28,206 26,142 28,206
Leases 8,469 6,363 5,756 5,296
Other loans and advances through
foreign units 180,825 140,548 116,297 114,424
Other loans and advances 84,580 88,658 86,735 89,958
Total 369,717 320,052 234,930 237,884
11 Accumulated provisions
Provisions against loans,
advances and guarantees at
June 30 10,227 9,040 8,353 8,833
Provisions at June 30 against
amounts due from credit 1,752 1,743 1,590 1,628
institutions and other items
involving a credit risk
Total accumulated provisions 11,979 10,783 10,125 10,461
Accumulated provisions against
loans, advances and guarantees
as a percentage of loans, advances
and guarantees at June 30 2.38 2.43 2.47 2.63
Non-accrual loans and advances to
customers and non-accrual amounts
due from credit institutions at
June 30 2,856 2,739 1,700 2,662
12 Deposits
On demand 124,899 94,678 104,972 93,368
At notice 2,156 2,344 1,158 2,341
Time deposits 76,423 80,769 74,383 79,646
Repo deposits 9,545 12,093 9,386 12,093
Special deposits 32,683 31,444 31,857 30,893
Total 245,706 221,328 221,756 218,341
13 Issued bonds
Mortgage credit bonds issued 74,366 62,660 - -
Other bonds issued 59,281 36,197 48,502 36,142
Total 133,641 98,857 48,502 36,142
14 Provisions for obligations
Provision for pensions and
similar obligations 353 213 183 213
Provision for deferred taxes 826 1,078 735 1,000
Provision for costs and investments
related to information technology 61 118 61 118
Total 1,240 1,409 979 1,331
Notes
Note
15 Subordinated debt
Subordinated debt consists of liabilities in the form of subordinated
loan capital and other capital instruments which, in case of the Bank's
voluntary or compulsory winding-up, will not be repaid until after the
claims of ordinary creditors have been met. The capital base ("liable
captial"), as calculated in accordance with sections 21a and 22 of the
Danish Banking Act, includes subordinated debt.
Subordinated loan capital
Rate of Redemption 1999 1998
Nominal amount interest Issued Maturity price DKr m DKr m
DEM 150 m 6.50 15/12 1988 repaid 100 - 571
DKK 200 m 10.30 15/12 1989 repaid 100 - 200
USD 73.5 m floating 28/6 1995 repaid 100 - 507
USD 75 m floating 8/11 1984 perpetual 100 541 517
USD 25 m floating 8/5 1985 perpetual 100 l80 172
Total subordinated loan capital issued by Den Danske Bank 721 1,967
Subordinated loan capital of subsidiaries
USD 75 m floating 29/2 1994 2004 100 541 -
USD 50 m floating 12/6 1996 2006 100 360 -
HKD 1 m floating 28/2 1995 perpetual 100 1 1
HKD 2 m floating 21/12 1993 perpetual 100 2 2
Total subordinated Loan capital of Den Danske Bank Group 1,625 1,970
Capital instruments included in the capital case
GBP 50 m floating 28/9 1993 repaid 100 - 574
GBP 50 m floating 21/12 1993 repaid 100 - 574
USD 200 m 6.55 23/9 1993 2003 100 1,441 1,378
DKK 1,200 m 9.75 16/12 1991 2004 100 1,200 1,200
USD 200 m 7.25 21/6 1995 2005 100 1,441 1,378
USD 100 m floating 14/7 1995 2005 100 721 689
GBP 100 m floating 10/5 1999 2005 100 1,134 -
USD 300 m floating 4/6 1996 2006 100 2,161 2,067
JPY 10,000 m 6.30 14/9 1992 2007 100 595 493
GBP 125 m floating 22/7 1996 2007 100 1,418 1,434
GBP 75 m floating 22/10 1996 2007 100 851 860
USD 300 m 8.375 17/6 1998 2008 100 2,161 2,067
USD 300 m floating 4/4 1997 2009 100 2,161 2,067
USD 500 m 7.40 11/6 1997 2010 100 3,602 3,445
Total value of capital instruments constituting supplementary
capital of Den Danske Bank 18,886 18,226
Capital instruments of subsidiaries included in the Group's capital base:
USD 100 m floating 3/3 1997 perpetual 100 721 -
Total subordinated debt of Den Danske Bank Group 21,232 20,196
The capital base includes subordinated debt in the amount of
Den Danske Bank Group 19,574 18,172
Den Danske Bank 18,854 18,172
The cost of repaying and issuing subordinated debt amounts
Notes
Note
16
Derivative
financial instruments Total 1999 Total 1998 Total 1999
Den Danske Bank Group Notional Net Notional Net Market value
DKr m amount market amount market Positive Negative
value value
Currency contents
Forwards/futures bought 895,253 -148 1,225,331 -6,899 12,537 12,685
Forwards/futures sold 809,768 1,581 1,121,315 7,564 11,699 10,118
Swaps 110,731 -980 95,193 822 3,564 4,544
Options bought 30,674 434 32,432 -365 434 -
Options written 34,940 -476 38,411 345 - 476
Interest rate contracts
Forwards/futuros bought 105,546 -93 57,586 - 21 114
Forwards/futures sold 72,408 -23 48,741 - 1ll 134
FRAs bought 1,046,103 -637 1,022,536 1,626 810 1,447
FRAs sold 1,044,647 562 998,798 -1,690 1,407 845
Swaps 1,256,290 -1,242 1,077,807 -1,087 32,548 33,790
0ptions bought 71,371 552 47,305 -233 552 -
Options written 41,462 -454 24,338 203 - 454
Equity contracts
Fowards/futures bought 5 - 21 - 2 2
Forward/futures sold 88 -3 53 - - 3
Options bought 1,394 240 1,087 - 240 -
Options written 608 -181 256 - - 181
Outstanding spot
transactions 94,501 67 62,102 8 218 151
Total net market value -801 294 64,143 64,944
Total after netting 22,569
Broken down as follows:
Counterparty with risk weighting of 0% 406
Counterparty with risk weighting of 20% 15,401
Counterparty with risk weighting of 100% 6,762
Notes
DEN DANSKE BANK
GROUP DEN DANSKE BANK
1999 1998 1999 1998
Note DKr m DKr m DKr m DKr m
17 Guarantees, etc.
Financial guarantees 19,756 15,413 51,535 42,603
Other guarantees 34,941 32,550 54,303 51,017
Acceptances and endorsements, etc. 5,456 3,950 5,382 3,950
Total 60,153 51,913 111,220 97,570
18 Other commitments
Irrevocable loan commitments 93,583 101,428 91,562 99,051
Other commitments 3,837 303 3,676 503
Total 97,420 101,731 95,238 99,554
Contingent liabities
Owing to its size and business volume Den Danske Bank Group is continually a
party to various lawsuits.
Legal proceedings have, for example, been initiated against the Bank as a result
of the so-called tax stripping cases raised against certain customers of the
Bank. Moreover, some investors who subscribed for shares when Hafnia Holding
A/S carried out a share issue in July 1992 or who bought shares in the summer of
1992 have brought actions for damages against the Bank, among others, totalling
DKr120m. The Bank has signed declarations lifting, for the future, the time-bar
applicable to claims in respect of the Hafnia issue for an additional amount
of DKr23m.
Proceedings have been instituted against Den Danske Bank in "the Faroese banking
affair" with claims for compensation of approximately DKr1.5bn.
The outcome of the cases pending is not expected to have a material effect on
the financial position of Den Danske Bank Group.
The Group's pension commitments are covered by payments made to insurance
companies, pension funds. etc. in a few cases, however, the Group may, following
an actuarial calculation, be ordered to make further payments. Certain foreign
pension commitments are not covered, in which case provisions are made on the
basis of an actuarial calculation.
The Bank is registered jointly with all its significant Danish subsidiaries in
relation to financial services employer tax and VAT for which it is jointly and
severally liable.
Notes
Note
Market value adjustment
Den Danske Bank Group continuously monitors the hedging of the interest rate
risk on the Group's portfolio of fixed rate assets and liabilities. The
portfolio of assets and the liabilities are hedged in full or in part by means
of derivative financial instruments so that, for each currency, the interest
rate risk on the hedged portfolio of assets and the liabilities corresponds to
the interest rate risk, for each currency, on the derivative financial
instruments employed for hedging them.
Under Danish accounting regulations applying to banks and savings banks, part of
the Group's fixed rate assets (loans and advances as well as unlisted bonds)
must be valued at cost or lower. Revaluation to a market value in excess of cost
is consequently not allowed. For some of these assets, the interest rate risk
has been hedged by derivative financial instruments (swaps) and, in accordance
with the accounting regulations, no value adjustment of these instruments has
been made. Consequently, the Group did not expense DKr680m in 1999 and DKr959m
in 1998.
The interest rate risk on the fixed rate liabilities, which are not value
adjusted under Danish accounting regulations, is hedged by derivative financial
instruments (swaps) in respect of long-term liabilites. Value adjustments of
these derivative financial instruments employed for hedging purposes is not
allowed. Consequently, the Group did not take to income DKr789m in 1999 and
DKrl,l79m in 1998.
1999 1998
DKr m DKr m
Nominal/ Nominal/
Purchase Book Market Notional Book Market Notional
Den Danske Bank Group price value value amount value value amount
Assets
Loans and advances 33,076 33,076 33,579 33,076 22,906 23,624 22,906
Bonds 4,945 4,945 5,122 5,524 10,054 10,296 10,558
Total assets 38,021 38,021 38,701 38,600 32,960 33,920 33,464
Derivative financial instruments hedging interest rate risks
Swaps 680 37,684 959 32,961
Liabilities
Deposits 1,700 1,786 1,700 2,610 2,696 2,510
Issued bonds. etc. 2,339 2,467 2,339 4,676 5,024 4,676
Subordinated debt 10,440 11,015 10,440 8,666 9,310 8,666
Total liabilities 14,479 15,268 14,479 15,852 17,030 15,852
Derivative financial instruments hedging interest rate risks
Swaps 789 14,481 1,179 15,852
Danske Kredit's fixed rate loans are funded through the issue of mortgage
credit bonds, which are not value adjusted. In accordance with a ruling given by
the Danish Financial Supervisory Authority, fixed rate mortgage credit loans are
not value adjusted either. Therefore, fixed rate assets and liabilities listed
above do not include fixed rate mortgage credit loans and mortgage credit loans
and mortgage credit bonds issued.
Den Danske Bank
Assets
Loans and advances 19,518 19,518 19,812 19,518 15,360 15,839 15,360
Bonds 4,945 4,945 5,122 5,524 10,054 10,296 10,558
Total assets 24,463 24,463 24,934 25,042 25,414 26,135 26,918
Derivative financial instruments hedging interest rate risks
Swaps 471 24,125 722 25,413
Liabilities
Deposits 1,549 1,635 1,549 2,510 2,696 2,510
Issued bonds, etc. 2,339 2,467 2,339 4,676 5,024 4,676
Subordinated debt 10,440 11,015 10,440 8,866 9,310 8,666
Total liabilities 14,328 15,117 14,328 15,852 17,030 15,552
Derivative financial instruments hedging interest rate risk
Swaps 789 14,330 1,179 15,852
Ratios
DEN DANSKE BANK
GROUP
1999 1998
The Danish Financial Supervisory Authority Ratio System
The ratios required by the Danish Financial Supervisory Authority
from Den Danske Bank Group are shown below.
1. Solvency and capital
1.1 Solvency ratio 9.56 9.80
1.2 Solvency ratio based on core capital (tier 1 capital) 6.31 6.58
1.3 Supplementary capital utilisation ratio 73.76 68.32
1.4 Weighted Items subject to market risk, etc./total
weighted items 12.24 14.42
2. Earnings
2.1 Core earnings before provisions/shareholders' equity,
beginning of year') 20.17 18.76
2.2 Core earnings/shareholders' equity, beginning of year') 19.26 17.43
2.2.a Core earnings, excluding earnings from investment
portfolios/shareholders' equity beginning of year') 17.96 18.56
2.3 Profit before tax/shareholders' equity, beginning of
year') 19.19 28.21
2.4 Operating expenses/operating income 57.30 58.71
2.4.a Operating expenses/operating income, excluding income
investment portfolios 58.71 57.O6
3. Market risk
3.1 Interest rate risk/core capital less statutory
deduction 4.26 3.42
3.2 Foreign exchange risk/core capital less statutory
deduction
Exchange rate indicator l/core capital less statutory
deduction 6.15 11.86
Exchange rate indicator 2/core capital less statutory
deduction 0.15 0.12
4. Liquidity
4.1 Loans and advances + provisions/deposits 154.44 148.42
4.2 Excess cover relative to the provisions of s.28 of
the Danish Banking Act
a. 15% 129.81 158.06
b. 10% 108.86 135.18
5. Credit risk
5.1 Non-accrual loans and advances (before deduction of
provisions)/ loan and advances, guarantees and
provisions) 0.47 0.76
5.2 A-provisions/loans and advances, guarantees and
provisions 1.74 1.85
5.3 B-provisions/loans and advances, guarantees and
provisions 0.58 0.52
5.4 Total provisions/loans and advances, guarantees and
provisions 2.32 2.37
5.5 Provisions (net)/loans and advances, guarantees and
provisions 0.04 -0.03
5.6 Loans and advances/shareholders' equity 1,376.64 1,182.50
5.7 Provisions taken earlier now written off/write-offs
for the period 90.10 96.19
5.8 Write-offs for the period as % of provisions,
beginning of year 2.94 3.99
*) Ratios have been converted to a full-year basis
**) The ratio is calculated for Den Danske, Bank -
not for Den Danske Bank Group
GROUP STRUCTURE
Share captial
Share capital held by the
June 30, 1999 Group
(thousands) %
Den Danske Bank Aktleselskab, Copenhagen DKK 5,292,500
Consolidated subsidiaries
Den Danske Bank International
S. A. Luxembourg LUF 3,625,000 100
Danske Fund Management Company S.A.
Luxembourg
Danske Finance Company S.A.
Luxembourg
Danske Kredit Realkreditaktieselskab,
Copenhagen DKK 1,000,000 100
Danica Bank A/S, Copenhagen DKK 135,000 100
Nordania A/S, Birkerad DKK 5,600 100
Nordania Finans A/S, Birkerad
Forenede Factors A/S, Glostrup DKK 9,000 100
KortFinans A/S, Copenhagen DKK 65,000 100
Dareike BO A/S, Copenhagen DKK 20,500 100
Den Danske Corporation, Delaware, USA USD 4 100
KHB V1 A/S, Copenhagen DKK 111,700 100
Danske Data A/S at 1996 Copenhagen DKK 13,000 100
Danske Ejendomme A/S, Copenhagen DKK 8,500 100
DDB-Ejendomsselskab af 1. Januar 1990 A/S,
Copenhagen DKK 35,700 100
Pro Finance (Asla) Ltd., Hong Kong HKD 1,000 51
Danske Institutional, Sicav, Luxembourg EUR 20,278 83
Danske Bank Global, Sicav, Luxembourg SEK 11,313 100
Saga Securites ASA, Norway NOK 30,000 100
Oy BAGG Holding Ab, Finland FIM 800 100
AG Bankirfirma Ab, Finland
DDB Invest AB, Sweden SEK 600,100 100
U. Myrberg AB. Sweden
Myrberg Fondkommission AB. Sweden
Ostgota Enskilda Bank (publ) in the
process of being wound up, Sweden
Ostgota Enskilda Bank CFK AB, Sweden
Ostgota Enskilda Fond AB,Sweden
Ostgota Enskilda Fastighets AB, Sweden
Art Depot 1837 AB, Sweden
Byggnads AB Slaget, Sweden
Ostgota Enskilda BFH AB, Sweden
Ostgota Enskilda Fin AB, Sweden
Ostgota Enskilda Lager II AB, Sweden
Ostgota Enskilda Lager Ill AB, Sweden
DDB Fokus Invest AS, Norway NOK 6,000,000 100
Fokus Bank ASA, Norway
Fokus Finans AS, Norway
Centralfinans AS, Norway
Eikeveien 3 AS, Norway
Fokus Forvaltning AS, Norway
Fokus Eiendomsmegling Telemark AS, Norway
Fokus Kredittforslkring AS, Norway
Skaresletta Elendom AS, Norway
7 subsidiaries without activity, all with
as share capital of DKK 500 100
Non-consolidated subsidiaries
Insurance companies
Danica Forsikring,
Skadeforsikringsaktleselskab Copenhagen DKK 1,000,000 100
Daniske Forsikring Skade,
Forsikringsaktieselskab
Danica Liv & Pension
The company has 28 subsidiaries
END
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