RNS Number:1485G
Den Danske Bank A/S
24 February 2000
Den Danske Bank reports net profit of DKr5,028m - up 27%
Den Danske Bank Group has today published its 1999 financial statements.
Highlights are shown below:
- Den Danske Bank Group had a strong year in 1999. Earnings surpassed the
level the Group had expected at the beginning of the year. Core earnings
before provisions rose by 13% to DKr5,648m. Earnings from investment
portfolios were DKr459m, against DKr738m the year before.
- The Group reinforced its position on its Nordic home markets by
acquisitions and organic growth. Moreover, non-core insurance operations
were sold off, which contributed DKr703m in one-off income to profit.
- Pre-tax profit on ordinary operations was DKr6,321m, against DKr5,242m in
1998. Net profit rose by DKrl,078m to DKr5,028m.
- The Board of Directors is proposing a dividend of DKr25 per share. In 1998,
the dividend pay-out was DKr18 per share.
- Return on equity increased from 13.6% to 16.5%.
- The Group raised core income by 17% to DKr14,821m in 1999. Much of the
improvement came from an increase in net interest and commission income of
DKr1,447m and from higher trading income.
- Expenses rose by 20% to DKr9,173m, mainly because Den Danske Bank
expanded activities and acquired new businesses. Expenses rose by 10% not
counting the cost increases related to acquisitions, including Fokus Bank, which
has been included in the Accounts since June 1, 1999.
- The charge for bad and doubtful debts, at DKr489m, was at a similar level
to the year before.
- Den Danske Bank Group expects business volume to show generally good
growth in 2000. Core earnings are forecast to exceed their 1999 level of
DKr5,159m.
- As from the autumn of 2000, Den Danske Bank will adopt a unified identity
for all its products on all markets. The unified corporate identity will
be signalled by a new design and extensive use of the name "Danske". A
proposal to change Den Danske Bank's name into Danske Bank will be
submitted for the approval of the Annual General Meeting.
- The 1999 financial statements are the first segmental accounts to be
published by Den Danske Bank Group. Moreover, the Group will release
quarterly reports as from the first quarter of 2000.
DEN DANSKE BANK
Communications
Steen Reeslev
For further details, phone Peter Straarup, Chief Executive,
Thursday, February 24, 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
See also www.danskebank-dk:
------------------
Announcement of 1999 Financial Results
1999 Annual Report
Press conference transmission at 2pm (in Danish)
Presentation of suggested new design - available from about 2pm
Announcement of Financial Results 1999
for
Den Danske Bank Group
Den Danske Bank Group Highlights
Core earnings and net profit for the year
(DKr million) 1999 1998 1997 1996 1995
Net interest income,
excluding income from
investment portfolios 8,593 7,911 7,085 6,543 7,312
Fee and commission income (net) 3,749 2,984 2,443 2,035 1,694
Trading income 967 366 -413 559 1,048
Other core income 537 479 383 313 247
Core insurance income 975 920 698 594 213
Total core income 14,821 12,660 10,196 10,044 10,514
Operating expenses and depreciation 9,173 7,645 7,081 6,960 7,258
Core earnings before provisions 5,648 5,015 3,115 3,084 3,256
Provisions for bad and doubtful debts 489 511 614 637 1,254
Core earnings 5,159 4,504 2,501 2,447 2,002
Profit on sale of subsidiaries 703 0 0 0 1,132
Earnings from investment portfolios 459 738 2,133 2,195 1,954
Profit on ordinary operations
before tax 6,321 5,242 4,634 4,642 5,088
Tax 1,293 1,292 429 989 1,457
Net profit for the year 5,028 3,950 4,205 3,653 3,631
The division between core earnings and earnings from investment portfolios is
based in part on estimates for the period from 1995 up to and including 1997
Balance Sheet Highlights
at December 31 (DKr billion) 1999 1998 1997 1996 1995
Loans and advances 381.0 303.1 290.7 232.5 194.4
Bonds and shares, etc. 147.1 140.0 136.2 117.6 110.3
Due to credit institutions
and central banks 157.6 140.4 138.5 130.6 114.8
Deposits 266.1 213.5 225.2 195.9 172.4
Issued bonds 149.7 107.5 78.6 54.0 44.2
Subordinated debt 21.4 16.6 18.4 13.4 11.3
Shareholders' equity 30.5 30.4 27.5 25.9 23.1
Total assets 701.4 592.8 554.8 451.8 390.0
Ratios and key figures,
Net profit for the year
per share, DKr 95.0 74.6 79.5 69.0 68.6
Net profit for the year as % of average
shareholders' equity 16.5 13.6 15.7 14.9 16.7
Core earnings as % of average
shareholders' equity 16.9 15.6 9.4 10.0 9.2
Cost/core income ratio, % 61.9 60.4 69.4 69.3 69.0
Solvency ratio, % 11.0 10.4 10.2 9.8 10.0
Core (tier 1) capital ratio, % 7.4 7.7 7.2 7.7 8.7
Dividend per share, DKr 25 18 18 16 16
Share price at December 31, DKr 809 857 914 473 383
Book value per share, DKr 577 574 520 489 436
Number of full-time employees
at December 31:
Den Danske Bank and
consolidated subsidiaries 12,397 11,691 11,365 11,111 11,514
Non-consolidated subsidiaries
(insurance companies) 1,128 1,451 1,442 1,642 1,620
Den Danske Bank Group had a strong year in 1999. Earnings surpassed the
level the Group had expected at the beginning of the year. Core earnings
before provisions rose by 13% to DKr5,648m. Provisions for bad and doubtful
debts remained low. After-tax profit was up by DKrl,078m to DKr5,028m. The
return on equity increased to 16.5%.
The Group reinforced its position on its Nordic home markets by
acquisitions and organic growth. Moreover, non-core insurance operations
were sold off, which contributed DKr703m in one-off income to profit.
Although the Group invested heavily in expanding its activities in the
Nordic financial markets. It had a core (tier 1) capital ratio of 7.4% at
the end of the year.
Den Danske Bank Group raised core income by DKr2,161m to DKr14,821m
in 1999. Much of the improvement came from an increase in net interest and
commission income of DKr1,447m and from higher trading income.
Expenses in 1999 mirrored the continuing expansion of chosen business
areas. Moreover, the Group incurred substantial IT costs as it continued
to enhance information technology, including Internet services.
Expenses rose by 20% to DKr9,173m. Expenses rose by 10% not counting the
cost increases related to the acquisition of new operations, including
Fokus Bank, which has been included in the Accounts since June 1, 1999.
The total charge for bad and doubtful debts was virtually unchanged, at
DKr489m for 1999, against DKr511m the year before. Provisioning needs
remained modest because of the Bank's continuing efforts to maintain the
high quality of its loan portfolio and because of generally favourable
economic conditions. The international economy, in particular, proved in
better shape than had been expected at the beginning of the year.
Investment portfolios generated earnings of DKr459m for 1999, against
DKr738m the year before.
Den Danske Bank Group's total risk-weighted items amounted to DKr411bn
at the end of 1999, up DKr21bn on a year earlier. Fokus Bank accounted
for DKr30bn.
Den Danske Bank spent a total of DKr5.6bn on acquiring financial services
firms in 1999 as it continued to expand activities in its Nordic home
markets. Of this amount, goodwill accounted for DKr3.6bn, which was
written off against equity capital in accordance with Group accounting
policies.
At the year-end, the Group had a solvency ratio of 11.0%, of which core
capital accounted for 7.4%, against 7.7% a year earlier. Hence, the
core capital ratio was consistent with the Bank's long-term objective
despite the substantial acquisitions made during the year.
The Board of Directors is proposing a dividend of DKr25 per share. In
1998, the dividend payout was DKr18 per share. Subject to the approval of
the Annual General Meeting, DKr3,705m will be allocated to shareholders'
equity, bringing equity capital to DKr30.5bn.
Expansion of business areas and sale of operations
Den Danske Bank works continually to strengthen its position on the Nordic
financial markets. Therefore, the Bank welcomed the permission granted by the
Norwegian authorities on May 7 to take over Fokus Bank. Norway's fourth-largest
bank.
In June, the Group entered into an agreement to take over the Swedish
mortgage finance company, Bokredit AB. This acquisition will support Den
Danske Bank's activities on the Swedish residential mortgage finance
market.
Den Danske Bank significantly reinforced its position on the Danish
credit and payment cards market in 1999, when it bought the franchising
rights for the American Express card in Denmark.
In November, the Bank sold its non-life insurance operation to
Topdanmark, a Danish insurer. The sales proceeds of DKrl.3bn produced a
net gain of DKr703m after providing for restructuring associated with the
sale. It was agreed at the same time that the Bank would market non-life
products on behalf of Topdanmark under the brand name of Danske
Forsikring, for which it will charge a commission. Den Danske Bank's life
and pensions activities will continue without any changes.
The reasons for the sale were that Den Danske Bank does not consider
non-life insurance a core activity and that quality and competitiveness
in non-life insurance require operations of scale and market share beyond
what the Bank could reasonably expect to attain. Therefore, the non-life
business could not be expected to yield a satisfactory long-term return
on allocated capital.
After its expansion in recent years, Den Danske Bank Group now conducts
business under a number of separate corporate identities, even when the
Group's products are marketed to the same group of customers. As from the
autumn of 2000, Den Danske Bank will adopt a unified identity for all its
products on all markets.
The unified corporate identity will be signalled by a new design and
extensive use of the name "Danske", which is what the Bank is called for
short in the international financial markets. Consequently, a proposal to
change Den Danske Bank's name into Danske Bank will be submitted for the
approval of the Annual General Meeting of Shareholders. Some operations,
such as Danica, Fokus Bank, Ostgota Enskilda and Provinsbanken, will
retain their present names but their affiliation to the Group will be
signalled by overall branding and the new design.
The year 2000
Ahead of the turn from 1999 to 2000, financial market participants were
uncertain about whether IT systems could cope with the millennium change.
Den Danske Bank's IT and other systems completed the turn of the year
without problems.
Core earnings and earnings from investment portfolios
Core earnings and net profit for the year
(DKr m)
1999 1998
Net interest income, excluding
income from investment portfolios 8,593 7,911
Share dividends 90 87
Fee and commission income (net) 3,749 2,984
Trading income 967 366
Other operating income 447 392
Core insurance income 975 920
Total core income 14,821 12,660
Operating expenses and depreciation 9,173 7,645
Core earnings before provisions 5,648 5,015
Provisions for bad and doubtful debts 489 511
Core earnings 5,159 4,504
Profit on sale of subsidiaries 703 -
Earnings from investment portfolios 459 738
Profit before tax 6,321 5,242
Tax 1,293 1,292
Net profit for the year 5,028 3,950
Core earnings are presented in the same way as in the Interim Report;
core earnings hence include trading income, but exclude gains on
investment portfolios. The table later in this report provides an overview of
core earnings, earnings from investment portfolios and the statutory
presentation of accounting figures in accordance with the guidelines of the
Danish Financial Supervisory Authority. Group accounting policies are unchanged
from previous years.
Core earnings were influenced by the following trends:
- Net interest income rose by DKr682m to DKr8,593m.
- Fees and commissions grew by DKr765m to DKr3,749m.
- Trading income was up by DKr601m.
- Other operating income increased from DKr392m to DKr447m in 1999. In
1998, this item included DKr121m in one-off income relating to an
exceptional refund of value-added tax.
- Core insurance income included DKr273m of income relating to changes
in the method whereby taxes are allocated among jointly-taxed
subsidiaries.
- Expenses rose by DKr1,528m to DKr9,173m. The cost/core income ratio
increased from 60.4% to 61.9%.
- The charge for bad and doubtful debts, at DKr489m, was at a similar
level to 1998.
- Fokus Bank's core earnings were DKr227m from June 1 to December 31
before accounting for the cost of funding the acquisition.
Higher fee and commission income stemmed mainly from the expansion in the
Nordic financial markets, which raised securities trading activity at
Retail Banking. Moreover, the expansion of investment banking activities
at Danske Securities brought a higher volume of equity trading with
institutional clients. There was significant mortgage refinancing
activity, particularly in the first half of the year.
The increase in expenses and depreciation had been anticipated. The
acquisition of Fokus Bank added DKr587m to costs. Moreover, higher costs
were incurred from IT, expansion at Danske Securities and the enlargement
of the Swedish operation. In addition, the cost of acquiring the
franchising rights for the American Express card in Denmark was written
off on acquisition. Expenses rose by 10% not counting the cost increases
associated with new acquisitions. The Group's total IT costs were in the
region of DKrl.8bn.
The cost/core income ratio rose from 60.4% to 61.9%. The cost/core income
ratio stayed in the 60% region not counting the acquisition of the franchising
rights for the American Express card and costs associated with the creation
of a unified corporate identity for the Group, a significant share of which
was expensed in 1999.
In 1999, Den Danske Bank continued to organise its activities into
business areas around the needs of customers.
The Group allocates its capital to the various business areas to be able
to measure profitability. This is done on the basis of each area's
average share in risk-weighted items, calculated according to the Capital
Adequacy Executive Order issued by the Danish Financial Supervisory
Authority.
The table below specifies core earnings before provisions by business area:
Core earnings before provisions
(DKr m) 1999 1998
Retail Banking 2,077 1,661
Wholesale Banking 2,178 2,217
Danske Securities 122 51
Asset Management 506 277
Life and Pensions 832 755
Other areas -67 54
Total Group 5,648 5,015
The charge for bad and doubtful debts remained low owing to the general economic
conditions.
Earning from investment portfolios, which comprise the gains on the
investment portfolios of the banking group and securities valuation
adjustments at non-life companies, showed a decline from DKr738m in 1998
to DKr459m in 1999.
The total interest rate risk of the Group increased in 1999. This meant that a
one percentage point rise in interest rates across the yield curve would have
caused a valuation loss of DKrl,135m at the end of 1999, against DKr941m a year
earlier.
The sale of the non-life insurance business produced a net gain of
DKr703m after provision for restructuring.
Pre-tax profit rose from DKr5,242m to DKr6,321m.
The tax charge of the Group, including the insurance business, totalled
DKr1,293m, against DKr1,292m for 1998. The main reason why the realised tax
rate, at 20%, was lower than the expected one of 32% was that net gains
on the sale of a number of equity holdings, including Danica Forsikring,
were not taxable.
Net profit was DKr5,028m for 1999, against DKr3,950m for 1998.
The table below shows the statutory presentation of accounts in
accordance with the guidelines of the Danish Financial Supervisory
Authority:
Summary Profit and Loss Account
(DKr m) 1999 1998
Net interest income 9,738 8,512
Dividends from shares, etc. 195 175
Fee and commission income (net) 3,731 2,972
Net interest and fee income 13,664 11,659
Securities and foreign exchange
income 255 294
Other operating income 1,206 392
Operating expenses and depreciation 9,255 7,702
Other operating expenses 2 2
Provisions for bad and
doubtful debts 489 511
Income from associated and
subsidiary undertakings 942 1,112
Profit before tax 6,321 5,242
Tax 1,293 1,292
Net profit for the year 5,028 3,950
Group balance sheet solvency and equity
The total assets of the consolidated Group were DKr701bn at the end of
1999, against DKr593bn a year earlier. Fokus Bank accounted for DKr39bn
of Group assets at the 1999 year-end. The assets of the insurance
companies, which are not consolidated in the Group accounts, amounted to
DKr163bn. Hence, the Group held total assets worth DKr864bn.
Loans and advances grew by DKr78bn to DKr381bn. while deposits rose by
DKr52bn to DKr266bn. DKr34bn of the increase in loans and advances and DKr21bn
of that in deposits could be attributed to the consolidation of Fokus Bank.
Mortgage lending grew by DKrl1bn.
The shareholders' equity of Den Danske Bank Group amounted to DKr30.5bn
at the end of 1999, against DKr30.4bn a year earlier. The write-off of
goodwill on acquisitions during the year reduced equity capital by
DKr3.6bn.
The Group's solvency ratio stood at 11.0% at the end of 1999, of which
7.4 percentage points came from core capital. At the end of 1998, the
solvency ratio was 10.4% and the core capital ratio 7.7%.
The acquisition of Fokus Bank cut the core capital ratio to the 5.9%
region. Since then, the Group has increased its core capital ratio to the
level mentioned above. The Group has mainly done so by way of current
earnings and by reducing business volume at Corporate Banking. Moreover,
Den Danske Bank Group has taken advantage of credit derivatives to transfer
the credit risk inherent in a credit portfolio of DKr27bn to another
bank, which reduced the related capital requirement to 20%.
Subordinated debt rose from DKrl6.7bn to DKr21.4bn. On May 10, 1999, Den
Danske Bank raised #100m nominal value of supplementary capital by an
issue of six-year notes.
Transactions with related parties
No related parties exercise significant influence over Den Danske Bank.
Apart from intragroup restructuring at market prices, no unusual transactions
took place with associated or subsidiary undertakings in 1999.
Outlook for 2000
The Group expects the international economic climate to be generally favourable
in 2000 although it is uncertain whether the buoyant American economy will begin
to run out of steam. The economic recovery in Europe is forecast to gather
further momentum. On its Nordic home markets, the Group expects strong economic
growth in Sweden and - if oil prices remain high - also in Norway. In Denmark,
the slowdown that hit the domestic economy in the second half of 1999 may make
itself felt also in 2000.
Core income is expected to show continued improvement.
Fokus Bank will be included for a full year in the 2000 Accounts, against
seven months in 1999. Nonetheless, expenses and depreciation are forecast
to rise only slightly from 1999.
Hence, the cost/core income ratio should decline from its 1999 level of
61.9%.
The Group expects the charge for bad and doubtful debts to be at a
similar level to 1999.
Against this background, core earnings are forecast to exceed their 1999
level of DKr5,159m.
The ratio of core earnings to equity capital is expected to go up. The
Group will continue its efforts to optimise capital allocation.
Earnings from investment portfolios in 2000 will, as usual, depend
significantly on the level of securities prices at the year-end.
The Group expects its tax charge for 2000 to increase to a level equal
to the Danish corporation tax rate.
The Group will publish quarterly financial reports as from the first
quarter of 2000. Financial data are expected to be released on the
following dates:
- Quarterly Report, First Quarter, May 11, 2000
- Half-Year Report, August 17, 2000
- Quarterly Report, Third Quarter, November 16, 2000
Annual General Meeting
The Bank's Annual General Meeting will be held at 2pm on March 28, 2000, at the
Bella Center, 5 Center Boulevard, Copenhagen.
The Board of Directors is proposing that Den Danske Bank should change
its name into Danske Bank A/S.
Copenhagen, February 24, 2000
This Announcement and Den Danske Bank's 1999 Annual Report are available
on the Internet at www.danskebank.dk
The English version of the printed Annual Report is expected to be
available on March 10, 2000
Profit and Loss Account for Den Danske Bank Group
DEN DANSKE BANK GROUP
1999 1998
DKr m DKr m
Interest income 34,594 32,883
Interest expense 24,856 24,371
Net interest income 9,738 8,512
Dividends from shares, etc. 195 175
Fee and commission income 4,369 3,454
Fees and commissions paid 638 482
Net Interest and fee income 13,664 11,659
Securities and foreign exchange income 255 294
Other operating income 1,206 392
Staff costs and administrative expenses 8,566 7,167
Depreciation 689 535
Other operating expenses 2 2
Provisions for bad and doubtful debts 489 511
Income from associated and
subsidiary undertakings 942 1,112
Profit on ordinary operations before tax 6,321 5,242
Tax 1,293 1,292
Net profit for the year 5,028 3,950
Attributable to minority interests 43 -1
Attributable to shareholders of
Den Danske Bank 4,985 3,951
Balance Sheet for Den Danske Bank Group
DEN DANSKE BANK GROUP
1999 1998
DKr m DKr m
ASSETS
Cash in hand and demand deposits with
central banks 5,498 2,788
Due from credit institutions and
deposits with central banks 88,499 64,738
Loans and advances 380,956 303,132
Bonds 134,105 129,149
Shares, etc. 12,773 10,673
Holdings in associated undertakings, etc. 723 675
Holdings in subsidiary undertakings 7,934 9,509
Tangible assets 4,293 4,179
Own shares 239 237
Other assets 65,867 67,283
Prepayments and accrued income 529 472
Total assets 701,416 592,835
LIABILITIES
Due to credit institutions and
central banks 157,617 140,383
Deposits 266,095 213,560
Issued bonds 149,651 107,473
Other liabilities 75,213 82,964
Accruals and deferred income 391 309
Provisions for obligations 494 1,126
Subordinated debt 21,413 16,654
Shareholders' equity
Share capital 5,293 5,293
Revaluation reserve 52 52
Reserves - -
Brought forward from prior years 21,492 22,023
Appropriated from net profit for the year 3,705 2,998
Total shareholders' equity 30,542 30,366
Attributable to minority interests 130 54
Attributable to shareholders of
Den Danske Bank 30,412 30,312
Total liabilities 701,416 592,835
OFF-BALANCE-SHEET ITEMS
Guaranteee, etc 69,069 58,218
Other commitments 93,330 93,970
Total off-balance-sheet items 162,399 152,188
Movements in capital
Movements in the capital of Den Danske Bank in 1999
Beginning Other Other End of
(DKr m) of year additions disposals year
Share capital 5,293 - - 5,293
Revaluation reserve 52 - - 52
Non-distributable reserve relating
to subsidiaries 1,090 - 1,090 -
Profit brought forward 23,877 4,752 3,562 25,067
Total shareholders' equity 30,312 4,752 4,652 30,412
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.
1999 1998
Movementes in Den Danske Bank Group's shareholders'
equity DKr m DKr m
Shareholders' equity at January 1 30,312 27,524
Net profit for the year 4,985 3,951
Dividends 1,323 953
Goodwill fully written off at the time of acquisition 3,562 210
Shareholders' equity, Den Danske Bank, at December 31 30,412 30,312
Minority interests at January 1 54 14
Foreign exchange revaluation 3 -
Net profit for the year 43 -1
Addition of minority interests 74 41
Redemption of minority interests 44 -
Minority interests at December 31 130 54
Shareholders' equity, Den Danske Bank Group,
at December 31 30,542 30,366
Solvency
DEN DANSKE BANK
GROUP
1999 1998
DKr m Dkr m
Capital base and solvency ratio
Capital base
Core capital, less statutory deduction
for own shares 30,252 30,078
Eligible subordinated debt and
revaluation reserve 20,341 16,040
Statutory deduction for insurance
subsidiaries -5,374 -5,313
Other statutory deductions -100 -100
Supplementary capital, less statutory
deductions 14,867 10,627
Total capital base, less statutory
deductions 45,119 40,705
Weighted items outside trading portfolio 364,527 335,796
Weighted items with market risk included
in trading portfolio 46,819 54,736
Total weighted items 411,346 390,532
Solvency ratio (%) 10.97 10.42
- based on core (tier 1) capital alone (%) 7.35 7.70
The solvency ratio is subject to a statutory
minimum requirement of (%) 8.00 8.00
The solvency ratio is calculated in accordance with the rules on
capital adequacy for banks and certain 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. The consequent
reduction in the solvency ratio is 1.3 percentage points for 1999, and it was
1.4 percentage points at the end of 1998.
Cash flow statement
DEN DANSKE BANK
GROUP
1999 1998
DKr m DKr m
Net profit for the year 5,028 3,950
Adjustment for non-cash items in the
Profit and Loss Account -13 1,242
Net profit for the year adjusted for
non-cash items in the Profit and Loss Account 5,015 5,192
Increase/decrease in working capital
Loans and advances and amounts due from
credit institutions -51,135 -26,368
Deposits and amounts due to credit institutions 51,273 -9,768
Mortgage bonds and other bonds issued 42,177 28,870
Other working capital -8,124 -6,337
Total 34,191 -13,603
Cash flow from operations 39,206 -8,411
Cash flow from investing activities
Financial fixed assets 1,181 -122
Acquisition of business -5,613 -252
Sale of business 1,325 -
Tangible assets -491 -474
Total -3,598 -848
Cash flow from financing
Subordinated debt 3,153 -1,736
Dividends -953 -953
Total 2,200 -2,689
Cash and cash equivalents, beginning of year 123,131 134,942
Cash and cash equivalents of business acquired 1,358 137
Increase/decrease in cash and cash equivalents 37,808 -11,948
Cash and cash equivalents, end of year 162,297 123,131
Core earnings and earnings from investment portfolios
of Den Danske Bank Group and the statutory presentation of accounts
1999
Earnings from
Core Profit investment
(DKr m) earnings on sale(1) portfolios Total*
Net interest income 8,593 1,145 9,738
Dividends from shares, etc. 90 105 195
Fee and commission income 3,749 -18 3,731
Net interest and fee income 12,432 1,232 13,664
Securities and foreign exchange
income 967 -712 255
Other operating income 447 703 56 1,206 Staff
costs and administrative
expenses 8,482 84 8,566
Depreciation 689 - 689
Other operating expenses 2 - 2
Provisions for bad and
doubtful debts 489 - 489
Income from associated and
subsidiary undertakings 975 -33 942
Profit before tax 5,159 703 459 6,321
1998
Earnings from
Core investment
(DKr m) earnings portfolios Total*
Net interest income 7,911 601 8,512
Dividends from shares, etc. 87 88 175
Fee and commission income 2,984 -12 2,972
Net interest and fee income 10,982 677 11,659
Securities and foreign exchange
income 366 -72 294
Other operating income 392 - 392
Staff costs and administrative
expenses 7,108 59 7,167
Depreciation 535 - 535
Other operating expenses 2 - 2
Provisions for bad and
doubtful debts 511 - 511
Income from associated and
subsidiary undertakings 920 192 1,112
Profit before tax 4,504 738 5,242
*The statutory presentation of accounts of the Danish Financial Supervisory
Authority
(1) Profit on sale of subsidiary undertakings
Core earnings comprise the result of customer-related activities,
including the trading portfolio and life and non-life insurance
business. Earnings from investment portfolios comprise the profits on
the 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.
The Group's business areas
In 1999, Den Danske Bank continued to organise its activities into
business areas around the needs of customers.
Retail Banking provides services to personal customers and small and
medium-sized business customers served by the Nordic branch network.
Retail Banking offers a range of standardised and competitive
financial products of high quality. This business area encompasses
the Group's leasing and factoring operations.
Wholesale Banking serves the Group's large corporate and
institutional clients. This division is responsible for the Group's
global trading activities on interest rate and foreign exchange
markets.
Danske Securities, the Group's investment banking division, is
responsible for corporate finance activities and the sales and
trading of equities and equity-related products. Danske Securities
is active on four Nordic stock exchanges.
Asset Management provides investment portfolio services to
institutional clients and other large investors, primarily in the
Nordic region. Moreover, Asset Management provides private banking
services and unit trust products in the Nordic and other European
markets.
Life and Pensions services are provided by Danica, which targets
personal and business customers and also markets its products
through Retail Banking's outlets.
The Group allocates its capital to the various business areas to be
able to measure profitability. This is done on the basis of each
area's average share in risk-weighted items, calculated according to
the Capital Adequacy Executive Order issued by the Danish Financial
Supervisory Authority.
The table shows financial highlights for the five business areas.
Transactions among the business areas are settled at market prices.
The costs of support functions are allocated to the individual
business areas according to an assessment based on their
proportionate share in the Group's activities.
Core earnings
before provisions
(DKr m) 1999 1998
Retail Banking 2,077 1,661
Wholesale Banking 2,178 2,217
Danske Securities 122 51
Asset Management 506 277
Life and Pensions 832 755
Other areas -67 54
Total core earnings 5,648 5,015
The breakdown of comparative figures for 1998 is based in part on estimates.
END
FR KKQKKBBKDDBB
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