RNS Number:4219K
Den Danske Bank A/S
11 May 2000
Interim Report
First Quarter of 2000
DEN DANSKE BANK Group
Core earnings and net profit for the QI QI Index Full year
Period (DKr million) 2000 1999 00/99 1999
Total core income 4,036 3,381 127 14,821
Operating expenses and depreciation 2,338 1,907 123 9,173
Core earnings before provisions 1,968 1,474 134 5,648
Provisions for bad and doubtful debts 124 175 71 489
Core earnings 1,844 1,299 142 5,159
Profit on sale of subsidiaries 0 0 0 703
Earnings from investment portfolios 434 10 4,340 459
Profit on ordinary operations before
tax 2,278 1,309 174 6,321
Tax 675 376 180 1,293
Net profit for the period 1,603 933 172 5,028
Balance sheet highlights (DKr billion)
Loans and advances 399 338 118 381
Bonds and shares, etc. 151 151 100 147
Due to credit institutions and central
banks 185 184 101 158
Deposits 278 239 116 266
Issued bonds 155 127 122 150
Subordinated debt 22 18 122 21
Shareholders' equity 32 31 103 31
Total assets 770 696 111 701
Ratios and key figures
Net profit per share, DKr 30.3 17.6 95.0
Net profit as % of average shareholders'
equity 20.5 12.1 16.5
Core earnings as % of average
shareholders' equity 23.5 16.9 16.9
Cost/core income ratio, % 54.3 56.4 61.9
Solvency ratio, % (excl. first-quarter
profits) 10.3 10.0 11.0
Core (tier 1) capital ratio, % (excl.
first-quarter profits) 6.8 7.2 7.4
Share price end of period, DKr 799 718 809
Book value per share, DKr 607 590 577
Number of full-time employees end of
period in:
Danske Bank and consolidated
subsidiaries 12,365 11,641 12,397
Non-consolidated subsidiaries
(insurance companies) 1,048 1,444 1,128
Rating -Moody's (short-term) P-1 P-1 P-1
-Moody's (long-term) Aa3 Aa3 Aa3
-S&P (short-term) A-1 A-1 A-1
-S&P (long-term) A+ A+ A+
Review
- Den Danske Bank Group recorded an after-tax profit of DKr1,603m for the first
quarter of 2000, against DKr933m for the first quarter of 1999. The tax charge
was DKr675m, against DKr376m the year before.
- Core earnings rose by DKr545m to DKr1,844m, mainly as a result of increased
securities trading and asset management activity.
- Earnings from investment portfolios rose by DKr424m to DKr434m.
- The Group's solvency ratio (the first-quarter results not incorporated) was
10.3%. The core (tier 1) capital ratio stood at 6.8%.
- There was a significant increase in customers' use of the Group's e-banking
facilities in the first quarter. Retail Banking gained a satisfactory number of
new customer contracts. Thirteen per cent of securities trading at Retail
Banking took place through the e-banking facilities. In March, Den Danske Bank
launched a WAP banking service.
Core earnings were better than expected at the release of the 1999 Annual
Report, as high activity in securities markets raised earnings from trading and
asset management activities.
When comparing Profit-and-Loss and Balance-Sheet items for the first quarter of
2000 with those for the year before, it should be taken into account that Fokus
Bank was not incorporated into the Group Accounts until June 1, 1999, and that
the non-life insurance companies were sold off as at the end of 1999. Fokus
Bank's core earnings for the first quarter of 2000 were DKr107m before
accounting for the cost of funding the acquisition. The non-life technical
result contributed DKr6m to first-quarter earnings.
Operating expenses and depreciation rose by DKr431m from the year before, in
line with expectations. Expenses rose by 5% not counting Fokus Bank and the
increase in provisions for performance-related bonus payments that was prompted
by higher profits from trading activities. IT and e-finance development costs
remained high. The cost/core income ratio declined, as had been expected, and
now amounts to 54.3%, slightly better than the Group's target.
The charge for bad and doubtful debts was DKr124m, against DKr175m the year
before. Den Danske Bank reached a settlement with the Danish government in the
Faroese banking affair on March 23, 2000 and, in April, the Bank made an ex
gratia payment of DKr300m to the Danish government. The amount had been
provided as at the end of 1999 and hence did not affect the first-quarter
results.
The tax charge was 30% of pre-tax profit.
The total assets of the Group rose to stand at DKr770bn at March 31, 2000. The
solvency ratio was 10.3% (first-quarter results not incorporated).
The return on equity grew to 20.5%.
This Quarterly Report has been prepared in accordance with the Copenhagen Stock
Exchange guidelines for issuers of listed securities. The accounting policies
are unchanged from 1999.
The Group's business areas
The business areas of the Group performed satisfactorily and slightly ahead of
expectations, Danske Securities and Asset Management made a particular
contribution owing to high activitiy on equity markets in the first quarter.
A breakdown of core earnings before provisions by business area shows that
Retail Banking, Danske Securities and Asset Management are contributing an
increasing share of total earnings.
Core earnings before Core earnings before
Provisions Q1 2000 Provisions Q1 1999
Retail Banking 41% 36%
Wholesale Banking 29% 42%
Danske Securities 5% 1%
Asset Management 15% 9%
Life and Pensions 10% 9%
Other areas 0% 3%
Core earnings before provisions by business area were as follows:
Year to date
(DKr million) Retail Banking Wholesale Banking Danske Securities
2000 1999 2000 1999 2000 1999
Core income 2,430 1,903 989 984 254 107
Operating
Expenses and
Depreciation 1,645 1,378 409 367 151 87
Core earnings
Before provisions 785 525 580 617 103 20
Total assets
(average) 227,076 168,597 399,082 377,496 671 448
Risk-weighted
Items (average)171,120 113,629 199,728 229,775 548 435
Allocated
Capital
(average) 11,974 7,954 13,981 16,084 38 30
Year to date
(DKr million) Asset Management Life and Pensions Other Areas
2000 1999 2000 1999 2000 1999
Core income 423 235 - - 13 14
Operating
Expenses and
Depreciation 123 104 - - 10 -29
Core earnings
Before provisions 300 131 197 138 3 43
Total assets
(average) 8,121 7,150 - - - -
Risk-weighted
Items (average) 5,257 3,957 - - - -
Allocated
Capital
(average) 368 277 5,373 5,402 - -
Retail Banking continued to make progress and saw strong activity in the first
quarter of 2000. A growing business volume, particularly a sharp advance in
sales of investment products, contributed to the results of this division.
Return on allocated capital remained at 26% before provisions. Retail Banking
continued to focus on measures to enhance efficiency. In Denmark, the ongoing
restructuring of the Copenhagen branch network will cut the number of branches
by 21. Expenses rose by 19%. Expenses were more or less flat not counting the
integration of Fokus Bank. In Sweden, Retail Banking recorded very satisfactory
improvement in earnings and an advance in lending and sales of investment
products.
Wholesale Banking reduced its capital requirement from the first quarter of 1999
and raised the return on allocated capital. Profit has not yet reached a
satisfactory level, however, Trading on interest rate and currency markets made
a particularly strong contribution to first-quarter profit.
Danske Securities, Den Danske Bank's investment banking division, had strong
growth in equity trading volume. The sharp increase in earnings from equity
activities is not likely to be maintained during the rest of 2000. Expenses
increased owing to the enlargement of the investment banking division in 1999
and higher provisions for performance-related bonuses in 2000.
Asset Management saw good growth in core earnings, also in Norway and Sweden.
Earnings growth arose from an increase in client funds under management,
stronger activity and a change in the composition of client funds. Private
Banking also made good progress in the first quarter.
Life and Pensions saw profits develop in line with expectations. The volume of
life premiums with company pension clients increased at a good rate. Sales of
unit-linked products in Sweden, which were launched in 1999, showed strong
growth. The agreement to co-operate with Top-danmark on non-life business
developed as planned.
Outlook
For the whole of 2000, Den Danske Bank expects core income to show improvement,
expenses and depreciation to rise slightly from 1999, and provisions for bad and
doubtful debts to be at a similar level to 1999. The Group does not expect to
maintain the high level of activity recorded in the first quarter of 2000
throughout the year. Earnings from securities trading are forecast to lose some
momentum. The Group expects core earnings for the remaining nine months of this
year to exceed those generated in the same period of 1999.
Earnings from investment portfolios during the rest of this year will depend
significantly on the level of securities prices at the year-end.
The tax charge for 2000 is expected to equal the Danish corporation tax rate.
The Group expects to publish its Half-Year Report on August 17, 2000.
Copenhagen, May 11, 2000
Den Danske Bank Aktieselskab
2-12 Holmens Kanal
Reg.No.28472 Copenhagen
DK-1092 Copenhagen K
www.danskebank.com
DEN DANSKE BANK Group
Core earnings and net profit Q1 Q4 Q3 Q2 Q1 Full
Year
(DKr million) 2000 1999 1999 1999 1999 1999
Net interet income, excluding
Earnings from investment
Portfolios 2,341 2,286 2,233 2,062 2,012 8,593
Fee and commission income
(net) 1,211 1,041 950 914 844 3,749
Trading income 368 467 100 170 230 967
Other core income 157 129 165 125 118 537
Core insurance income 229 224 288 286 177 975
Total core income 4,306 4,147 3,736 3,557 3,381 14,821
Operating expenses and
Depreciation 2,338 2,923 2,177 2,166 1,907 9,173
Core earnings before
Provisions 1,968 1,224 1,559 1,391 1,474 5,648
Provisions for bad and
Doubtful debts 124 325 26 -37 175 489
Core earnings 1,844 899 1,533 1,428 1,299 5,159
Profit on sale of subsidiaries 0 703 0 0 0 703
Earnings from investment
Portfolios 434 411 -138 176 10 459
Profit on ordinary operations
Before tax 2,278 2,013 1,395 1,604 1,309 6,321
Tax 675 194 280 443 376 1,293
Net profit for the period 1,603 1,819 1,115 1,161 933 5,028
Balance sheet highlights
(DKr billion)
Core earnings and net profit Q1 Q4 Q3 Q2 Q1 Full
Year
(DKr million) 2000 1999 1999 1999 1999 1999
Loans and advances 399 381 386 370 338 381
Bonds and shares, etc. 151 147 140 147 151 147
Due to credit institutions
And central banks 185 158 165 155 184 158
Deposits 278 266 267 246 239 266
Issued bonds 155 150 141 134 127 150
Subordinated debt 22 21 20 21 18 21
Shareholders' equity 32 31 30 29 31 31
Total assets 770 701 706 678 696 701
Total off-balance-sheet items 163 162 150 158 154 162
Movements in Den Danske Bank
Group's shareholders' equity Q1 Q1 Full year
(DKr million) 2000 1999 1999
Shareholders' equity at January 1 30,542 30,366 30,366
Net profit for the period 1,603 933 5,028
Dividends 0 0 -1,323
Goodwill fully written off at the
Time of acquisition -48 -33 -3,562
Change in minority interests 13 -18 33
Shareholders' equity 32,110 31,248 30,542
The share capital is made up of 52,925,000 shares, totalling DKr5,293m.
Solvency (excluding net profit for the period)
(DKr million)
Core capital, less statutory
Deduction for own shares 30,210 30,044 30,252
Supplementary capital, less
Statutory deductions 15,702 11,732 14,867
Total capital base, less statutory
Deductions 45,912 41,776 45,119
Weighted items
Outside trading portfolio 392,450 362,768 364,527
With market risk included in
Trading portfolio 51,697 54,609 46,819
Total weighted items 444,147 417,377 411,346
Solvency ratio (%) 10.3 10.0 11.6
Core (tier 1) capital alone (%) 6.8 7.2 7.4
The solvency ratio is subject to
A statutory minimum requirement of(%) 8.0 8.0 8.0
DEN DANSKE BANK Group
Core earnings before provisions, breakdown
Q1 Q4 Q3 Q2 Q1 Full year
(DKr million) 2000 1999 1999 1999 1999 1999
Retail Banking
Core income 2,430 2,336 2,330 2,044 1,903 8,613
Operating
Expenses and
Depreciation 1,645 2,026 1,595 1,537 1,378 4,536
Core earnings
Before provisions 785 310 735 507 525 2,077
Allocated
Capital 11,974 11,071 10,617 9,125 7,954 9,703
Wholesale Banking
Core income 989 1,048 819 935 984 3,786
Operating
Expenses and
Depreciation 409 448 398 395 367 1,608
Core earnings
Before provisions 580 600 421 540 617 2,178
Allocated
Capital 13,981 14,601 14,868 16,729 16,084 15,637
Dankske Securities
Core income 254 204 130 165 107 606
Operating expenses
And depreciation 151 196 93 108 87 484
Core earnings
Before provisions 103 8 37 57 20 122
Allocated
Capital 38 12 42 18 30 27
Core earnings before provisions, breakdown
Q1 Q4 Q3 Q2 Q1 Full year
(DKr million) 2000 1999 1999 1999 1999 1999
Asset Management
Core income 423 307 189 227 235 958
Operating expenses
And depreciation 123 128 109 111 104 452
Core earnings
Before provisions 300 179 80 116 131 506
Allocated
Capital 368 410 283 314 277 321
Life and Pensions
Profit from life
Insuarance 210 223 220 223 131 797
Non-life technical
Result - -28 41 26 6 45
Net interest from
Investments, etc. 19 29 27 37 40 133
Core insurance
Income 229 224 288 286 177 975
Funding costs, net-32 -37 -33 -34 -39 -143
Core earnings
Before provisions 197 187 255 252 138 832
Allocated
Capital 5,373 5,402 5,409 5,421 5,402 5,411
Other areas
Core income 13 65 13 -66 14 26
Operating expenses
And depreciation 10 125 -18 15 -29 93
Core earnings
Before provision 3 -60 31 -81 43 -67
Core earnings before provisions, breakdown
Q1 Q4 Q3 Q2 Q1 Full year
(DKr million) 2000 1999 1999 1999 1999 1999
Group
Core income 4,306 4,147 3,736 3,557 3,381 14,821
Operating
Expenses and
Depreciation 2,338 2,923 2,177 2,166 1,907 9,173
Core earnings
Before
Provisions 1,968 1,224 1,559 1,391 1,474 5,648
The Group's business areas:
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 directly and also markets its products through Retail
Banking's outlets.
END
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