RNS No 9189n
DENS DANSKE BANK
20th August 1998
PART II
Den Danske Bank
Note: Group Den Danske Bank
Profit and Loss Account 1998 1997 1998 1997
for the six months ended DKr m DKr m DKr m DKr m
June 30
Interest income, etc.
Interest from credit institutions,etc. 2,076 1,725 2,522 2,143
Interest on loans and advances,etc. 10,095 8,473 7,112 5,940
Interest on bonds,etc. 3,975 3,363 3,703 3,163
Other interest income,etc. 215 30 178 85
Total 16,361 13,591 13,515 11,331
Interest expenses,etc.
Interest to credit institutions 3,718 3,136 3,709 3,067
Interest on deposits,etc. 4,814 3,964 4,645 3,849
Interest on issued bonds,etc. 2,932 2,227 942 718
Interest on subordinated debt, etc. 669 548 657 542
Other interest expenses, etc. 3 11 3 2
Total 12,136 9,886 9,956 8,178
Net interest income 4,225 3,705 3,559 3,153
Dividend from shares,etc, and other
holdings
Dividend from shares,etc. 137 109 132 104
Dividend from holdings in associated
undertakings and other significant
holdings - - - -
Total 137 109 132 104
Fee and Commission income,etc.
Guarantee commission 161 144 227 202
Fee and other commission income,etc. 1,586 1,219 1,368 1,075
Total 1,747 1,363 1,595 1,277
Fee and commissions paid
Guarantee commission paid 0 - 5 4
Fees and other commissions paid 228 215 220 188
Total 228 215 225 192
Net interest and fee income 5,881 4,962 5,061 4,342
Market value adjustments of securities
and foreign exchange income,etc.
Market value adjustment of bonds,etc. 27 286 38 349
Market value adjustment of shares,etc. 1,761 1,814 1,718 1,781
Market value adjustment of mortgages
,etc. 48 31 41 25
Foreign exchange income 214 316 192 290
Market value adjustment of derivative
financial instruments -218 -387 -300 -470
Adjustment for pooled pension fund
deposits -753 -1 011 -728 -979
3 Total 1,079 1,049 961 996
Other operating income 133 149 88 114
Profit on financial operations 7,093 6,160 6,110 5,452
Den Danske Bank
Group Den Danske Bank
1998 1997 1998 1997
DKr m DKr m DKr m DKr m
Note
Staff costs,etc., and administrative
expenses
Salaries and remuneration of Board
of Directors,
Executive Board and Advisory Board 20 19 9 9
Staff costs
Wages and salaries 1,876 1,745 1,533 1,494
Pensions 173 189 145 153
Financial services employer tax, etc. 203 168 162 144
Other administrative expenses 643 535 666 589
Total 2,915 2,656 2,515 2,389
Depreciation of tangible assets
Depreciation of land and buildings 16 15 12 13
Depreciation of machinery and equipment 189 159 150 122
Total 205 174 162 135
Other operating expenses 509 459 572 487
Provisions for bad and doubtful
debts (net) 183 213 131 151
Value adjustments of holdings in
associated and subsidiary undertakings,
etc.
Value adjustments of holdings in
associated undertakings and other
significant holdings 84 46 80 43
6 Value adjustment of holdings in
subsidiary undertakings 535 401 996 698
Total 619 447 1,076 741
Profit on ordinary operations 3,900 3,105 3,806 3,031
Extraordinary income 28 10 27 10
Extraordinary expenses 44 57 32 10
Profit before taxation 3,884 3,058 3,801 2,991
Attributable to minority interests 4 2
Attributable to shareholders of Den 3,880 3,056
Danske Bank
Group Den Danske Bank
1998 1997 1998 1997
DKr m DKr m DKr m DKr m
Note - Balance Sheet at June 30
Assets
Cash in hand and demand deposits with
central banks etc 2,442 1,745 2,439 1,651
Treasury bills and other bills eligible
for refinancing with central banks - - - -
Due from credit institutions, etc. 76,362 70,314 102,359 94,115
1 Loans and advances 320,052 268,637 237,884 188,873
Bonds, etc 129,333 115,674 121,833 105,814
Shares, etc. 12,048 10,023 11,655 9,783
Holdings in associated undertakings and
other significant holdings 757 774 606 611
Holdings in subsidiary undertakings 9,050 8,378 15,470 14,065
Intangible assets - - - -
Tangible assets 4,214 4,486 3,611 3,725
Own shares 441 320 433 316
Other assets 1,985 3,199 1,216 1,200
Prepayments and accrued income 29,328 20,825 28,910 20,477
4 Total assets 586,012 504,375 526,416 440,630
Liabilities
Due to credit institutions 163,897 121,047 171,842 120,781
Deposits 221,328 217,164 218,341 203,701
Issued bonds, etc 98,857 76,932 36,142 32,577
Other liabilities 17,237 18,484 16,887 14,904
Accruals and deferred income 31,673 23,449 30,405 21,946
Provisions for costs 1,409 1,930 1,331 1,816
Subordinated debt 20,196 18,023 20,193 17,636
Profit for the year to date 3,884 3,058 3,801 2,991
2 Shareholders' equity 27,531 24,288 27,474 24,278
Attributable to minority interests 57 10
Attributable to shareholders of
Den Danske Bank 27,474 24,278
4 Total liabilities 586,012 504,375 526,416 440,630
Off-balance-sheet items
Guarantees, etc 51,913 45,750 97,570 82,538
Other commitments 2,006,259 2,031,461 1,989,253 2,019,043
Total off-balance sheet items 2,058,172 2,077,211 2,086,823 2,101,581
Notes
Accounting Policies
The Accounts for the first half of 1998 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.
Den Danske Bank
Group Den Danke Bank
1998 1997 1998 1997
DKr m DKr m DKr m DKr m
1 Accumulated provisions at June 30
Accumulated provisions against loans,
advances and guarantees 9,040 9,688
Accumulated provisions against
amounts due from credit institutions
etc. 1,743 1,165
Total accumulated provisions 10,783 10,853
Accumulated provisions against loans,
advances and guarantees, as a
percentage of loans, advances and
guarantees at June 30 2.90 3.45
Non-accrual loans and advances to
customers and non-accrual amounts due
from credit institutions at June 30 2,739 2,749
2 Capital base and solvency ratio
Capital base
Core capital less statutory deduction
for own shares 26,890 23,765 26,841 23,759
Eligible subordinated debt and
revaluation reserve 18,372 15,868 18,372 15,868
Statutory deduction for Subsidiary
insurance companies -5,100 -4,635 -5,100 -4,635
Other statutory deductions -100 -95 -100 -95
Supplementary capital, less
statutory deductions 13,172 11,138 13,172 11,138
Total capital base, less statutory
deductions 40,062 34,903 40,013 34,897
Weighted items not included in
trading portfolio 275,272 242,626 233,465 195,964
Weighted items below the line 74,331 60,300 99,471 81,286
Weighted items with counterparty
risk not included in trading portfolio 422 417 428 430
Weighted items with market risk, etc. 58,953 70,530 57,700 68,522
Total weighted items 408,978 373,873 391,064 346,202
Solvency ratio, % 9.80 9.34 10.23 10.08
- based on Core capital alone, % 6.58 6.36 6.86 6.86
The solvency ratio is subject to a
statutory minimum requirement of, % 8.00 8.00 8.00 8.00
3 Market value adjustments of securities and
foreign exchange income, etc.
Market value adjustments after adjustment for
pooled pension fund deposits:
Den Danske Bank
Group
1998 1997
DKr m DKr m
Market value adjustment of bonds, etc. -40 191
Market value adjustment of shares, etc 1,064 1,040
Market value adjustment of mortgages, etc 48 31
Foreign exchange income 226 174
Market value adjustment of derivative
financial instruments -219 -387
Total 1,079 1,049
of which maturity-related value
adjustments -560 -300
4 Market value adjustment
Den Danske Bank Group continuously evaluates 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, part of the Group's fixed rate assets
(loans and advances as well as unlisted securities),may not be revalued in the
Accounts to a market value in excess of cost. For some of those assets, the
interest rate risk has been hedged by derivative financial instruments. Under
Danish accounting regulations, value adjustment of the derivative financial
instruments employed for hedging these assets is not allowed. Therefore, the
Group did not at the end of June 1998 expense DKr959m market value adjustment of
these derivative financial instruments, corresponding to the income which market
value adjustment of the assets hedged would have generated. At the end of June
1997, the corresponding amount was DKr 1,098m.
The interest rate risk on the Group's fixed rate liabilities, which, under
Danish accounting regulations, are not value adjusted, is hedged by derivative
financial instruments in respect of long-term liabilities.
The Group is not allowed to make adjustment of these derivative financial
instruments employed for hedging purposes. Therefore, the Group did not at the
end of June 1998 carry to income DKr 1,179m market value adjustment of these
derivative financial instruments, corresponding to the expense which market
value adjustment of the liabilities hedged would have generated. At the end of
June 1997, the corresponding amount was DKr942m.
Notes (continued)
4 Market value adjustment continued
1998 1997
DKr m DKr m
Nominal/ Nominal/
Purchase Market Notional Market Notional
Den Danske Bank Group Price Book value value value Book value value value
Assets
Loans and advances 22,906 22,906 23,624 22,906 17,002 17,863 17,002
Bonds 10,054 10,054 10,296 10,558 9,315 9,552 9,193
Total assets 32,960 32,960 33,920 33,464 26,317 27,415 26,195
Derivative financial
instruments hedging interest
rate risks
Swaps - - 959 32,961 - 1,098 26,317
Liabilities
Deposits - 2,510 2,696 2,510 3,296 3,502 3,296
Issued bonds etc, - 4,676 5,024 4,676 2,974 3,164 2,974
Subordinated debt 8,666 9,310 8,666 8,526 9,072 8,526
Total liabilities - 15,852 17,030 15,852 14,796 15,738 14,796
Derivative Financial
instruments hedging interest
rate risks
Swaps - - 1,179 15,852 - 942 14,822
Danske Kredit's fixed rate loans are covered 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, the fixed rate assets and liabilities
listed above do not include fixed rate mortgage credit loans and mortgage credit
bonds issued.
Den Danske Bank
Assets
Loans and advances 15,360 15,360 15,839 15,360 11,019 11,565 11,019
Bonds 10,054 10,054 10,296 10,558 9,315 9,552 9,193
Total assets 25,414 25,414 26,135 25,918 20,334 21,117 20,212
Derivative financial
instruments hedging interest
rate risks
Swaps - - 722 25,413 - 783 20,334
Liabilities
Deposits - 2,510 2,696 2,510 3,296 3,502 3,296
issued bonds etc - 4,676 5,024 4,676 2,974 3,164 2,974
Subordinated debt - 8,666 9,310 8,666 8,526 9,072 8,526
Total liabilities - 15,852 17,030 15,852 14,796 15,738 14,796
Derivative financial
instruments hedging interest
rate risks
Swaps - - 1,179 15,852 - 942 14,822
5 Contingent utilities
Legal proceedings have 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 DKrl.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 but 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.
6 Value adjustments of holdings in subsidiary undertakings
Den Danske Bank
Group
1998 1997
DKr m DKr m
Danica Forsikring group 535 362
Danske Forsikring, Skade 1) - 39
535 401
1) The company was taken over by Danica Forssikring at the end of 1997
and was incorporated into the Danica Forsikring group as from 1998.
Danica Forsikring group highlights: Danica Forsikring
group
Profit and lost account
Technical result of ongoing business, non-life
insurers 15 -15
Technical result of run-off business, non-life
insurers 13 -1
Investment income, non-life insurers 82 83
Profit on non-life business, excluding gains
and losses on investments, etc. 110 67
Profit on life business 353 248
Operating profit before gains and losses on
investments,
extraordinry items and tax 463 315
Gains and losses on investments in non-life
insurers 54 47
Extraorditary items and tax in non-life
insurers 18 0
Profit attributable to Den Danske Bank 535 362
minority interests 6 16
Profit 541 378
Balance sheet
Total asset 152,951 135,145
Shareholders' equity attributable to
Den Danske Bank 9,050 8,160
Minority interests 174 287
Life insurance provisions, net of
reinsurance 122,830 111,466
Outstanding claim provision, net of
reinsurance 2,730 2,228
Bonus equalisation provision, life
insurance 12,334 7,425
Den Danske Bank
Group
1st half
7 The Danish Financial Supervisory Authority Ratio System 1998 1997
The ratios required by the Danish Financial Supervisory Authority from
Den Danske Bank Group for the six months to June 30 are shown below.
% %
1. Solvency and capital
1.1 Solvency ratio 9.80 9.34
1.2 Solvency ratio based on core capital (tier 1 capital) 6.58 6.36
1.3 Supplementary capital utilisation ratio 68.32 66.77
1.4 Weighted items subject to market risk,
etc/total weighted items 14.42 18.87
2. Earnings
2.1 Core earnings before provisions/shareholders'equity,
beginning of year 1) 18.87 16.53
2.2 Core earnings/sharcholders' equity,
beginning of year 1) 17.55 14.88
2.2.a Core earnings (adjusted)/shareholders'
equity, beginning of year 1) 16.93 14.20
2.3 Profit on ordinary operations/shareholders'equity,
beginning of year 1) 28.33 24.00
2.4 Operating expenses/operating income 58.27 60.59
2.4.a Operating expenses/operating income (adjusted) 59.08 61.59
3. Market risk
3.1 Interest rate risk/core capital
less statutory deduction 3.42 3.08
3.2 Foreign exchange risk/core capital less statutory deduction
Exchange rate indicator l/core capital less statutory deduction
11.86 8.95
Exchange rate indicator 2/core capital less statutory deduction
0.12 0.06
4. Liquidity
4.1 Loans and advances + provisions/deposits 148.42 127.94
4.2 Excess cover relative to the provisions of s. 28 of the Danish Banking
Act
a. 15% 158.06 177.07
b. 10% 135.18 144.14
5. Credit risk
5.1 Non-accrual loans and advances (before deduction of provisions)/
loans and advances, guarantees and provisions 2) 0.76 0.89
5.2 A-provisions/loans and advances, guarantees and provisions
1.85 2.21
5.3 B-provision/loans and advances, guarantees and provisions
0.52 0.78
5.4 Total provisions/loans and advances, guarantees and provisions
2.37 2.99
5.5 Provisions (net)/loans and advances, guarantees and provisions
-0.03 0.01
5.6 Loans and advances/shareholders' equity 1,162.50 1,106.04
5.7 Provisions taken earlier now written off/write-offs for the period
96.19 96.29
5.8 Write-offs for the period as % of provisions, beginning of year
3.99 4.39
1) Ratios have been converted to a full-year basis
2) The ratio is calculated for Den Danske Bank - not for Den Danske Bank Group
Notes (continued)
8 GROUP STRUCTURE June 30,1998 Share capital Share capital
June 30, 1998 held by the
(thousands) Group (%)
Consolidated subsidiaries:
Den Danske Bank International S.A.,
Luxembourg LUF 3,625,000 100
Subsidiaries of Den Danske Bank
International S.A.:
Danske Fund Management Company S.A.
Luxembourg
Danske Finance Company S.A.,
Luxembourg
Danske Global, Sicav, Luxembourg MB
DDB Invest AB, Sweden: SEK 600,100 100
The company has 10 subsidiaries
Danske Kredit Realkreditaktieselskab,
Copenhagen DKK 937,500 100
Danica Bank A/S, Copenhagen DKK 125,000 100
Danske Capital Management,Copenhagen DKK 100,000 100
Nordania A/S, Birkeroed 1) DKK 5,600 100
Subsidiary of Nordania A/S:
Nordania Finans A/S, Birkeroed
Forenede Factors A/S, Glostrup DKK 9,000 100
HandelsFinanans A/S, Glostrup DKK 40,000 100
KortFinans A/S, Copenhagen DKK 25,000 100
Den Danske Corporation, Delaware,
U.S.A USD 4 100
KHB VI A/S, Copenhagen DKK 111,700 100
Danske Data A/S af 1996, Copenhagen DKK 13,000 100
Danske Ejendomme A/S, Copenhagen DKK 6,500 100
DDB-Ejendomsselkab af 1.januar 1990
A/S, Copenhagen DKK 35,700 100
Pro Finance (Asia) Ltd, Hong Kong HKD 1,000 51
Danske Institutional, Sicav,
Luxembourg ECU 16,881 81
Saga Securities ASA, Norway NOK 30,000 51
9 subsidiaries without activity, all
with a share capital of DKK 500 100
Non-consolidated subsidiaries:
Insurance companies:
Danica Forsikring Skadeforsiktings-
aktieselskab, Copenhagen DKK 1,000,000 100
Subsidiaries of Danica Forsikring
Skadeforsikringsaktieselskab:
Danske Forsikring, Skade,
Forsikringsaktieselskab
Danica Liv 1 Holding A/S
The company has 24 subsidiaries
Danica B 1, Livsforsikringsaktie-
selskab
The company has 6 subsidiaries
1) In 1998 the company changed its name from Nordania EjendomsLeasing A/S to
Nordania A/S.
END
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