Danske Bank Plc Group’s Annual Report January - December 2015

2 ​February 2016

Risto Tornivaara, CEO: Credit portfolios performed favorably in the difficult market conditions.

“In 2015 we saw that the reform of the bank´s operational model and organizational structure  that we initiated in 2012 to ensure our competitiveness in the changing environment continues to bear fruit. Customer satisfaction continued to improve in all segments, especially among medium-sized and large corporate customers where we are already either in the first or second position, which is what we aim for. Danske Bank’s objective is to be the most trusted financial partner for Finns, and we are pleased that satisfaction among our personal customers also showed progress.

Our consistent work to improve customer satisfaction was also reflected positively in our  business performance. Our loan portfolio among small and medium-sized companies grew by 8 per cent, which is faster than the market. Personal banking customers responded well to our efforts to make daily banking effortless, and the volume of new housing loans granted grew by 20 per cent in total compared with 2014.

Moreover, more than 22,000 of our personal banking customers took the opportunity to have an interest-only period on their home loans, which released some EUR 110 million in assets for households to use.

The quality of the loan portfolio is generally at a good level, and we do not see any substantial change in credit risks.

It is our ambition to make both daily banking and bigger financial decisions easy by providing leading innovative services and solutions. The popularity of our mobile and tablet bank apps continued its strong growth, and the combined number of log ins in December was over 3 million. During the last month of the year, our customers checked their account transactions over 5 million times and their investment holdings around 200,000 times through the mobile bank alone.

Nearly 240,000 Finns had downloaded the MobilePay payment app by the end of the year, and money was transferred through the app nearly 500,000 times during the year. We believe that mobile payments will gain further traction 2016 and anticipate a strong year for MobilePay.

The operating environment in the banking sector continued to be very challenging throughout the year. The Finnish national economy had its fourth difficult year in a row, and record-low interest rates depressed our net interest income. Since the net trading income also declined, Danske Bank Plc Group’s operating income fell short of the 2014 figure by 5 per cent. Determined efforts to develop the bank’s cost structure continued, and credit losses also declined. Our cost-to-income ratio improved by 0.4 percentage points on the previous year and was 61.4 per cent.

The profit before taxes for the year was EUR 209.5 million, which is 2 per cent less than in 2014. Danske Bank’s operations in Finland is a significant Finnish taxpayer. We paid EUR 58.8 million in corporate tax in total on the result for 2014, and were Finland’s tenth-largest payer of corporate tax according to the statistics of the Federation of Finnish Financial Services.

Danske Bank Plc Group’s capital adequacy is still very strong, and the total capital ratio was 18.4 per cent at the end of the year (14.5% at the end of 2014). Our aim is to grow in Finland, and our strong capital adequacy provides a good foundation for this.”

​Danske Bank Plc Group’s Financial Highlights ​ ​ ​ ​ ​
EURm ​2015 ​2014 ​2013 ​2012 ​2011
​Revenue ​790 ​850 ​887 ​1001 ​1087
Net interest income  ​304 ​315 ​318 ​358 ​346
% of revenue  ​38.5 ​37.1 ​35.9 ​35.8 ​31.8
​Profit before taxes  ​210 ​214 ​200 ​157 ​147
% of revenue  ​26.5 ​25.1 ​22.5 ​15.7 ​13.6
​Total income 1) ​575 ​603 ​622 ​637 ​650
​Total operating expenses 2) ​353 ​373 ​425 ​417 ​449
​Cost to income ratio ​61.4 ​61.8 ​68.3 ​65.4 ​69.1
​Total assets  ​30,313 ​29,692 ​26,680 ​31,813 ​27,406
​Equity   ​2,515 ​2,502 ​2,383 ​2,379 ​2,272
​Return on assets, % ​0.6 ​0.6 ​0.4 ​0.4 ​0.4
​Return on equity, % 3)   ​6.6 ​6.9 ​6.1 ​5.0 ​5.0
​Equity/assets ratio, % 3) ​8.3 ​8.4 ​8.9 ​7.5 ​8.3
​Solvency ratio, % 4)   ​18.4 ​14.5 ​16.7 ​15.8 ​14.4
​Impairment on loans and receivables  5) ​13 ​17 ​-3 ​64 ​53
​Off-balance sheet items  ​4,589 ​4,322 ​5,435 ​6,026 ​6,236
​Average number of staff ​2,006 ​2,097 ​2,286 ​2,765 ​3,035
​FTE at the end of period 6)  ​1,730 ​1,709 1,776​ ​2,235 ​2,483

1) Total income comprises the income in the formula for the cost to income ratio. 
2) Total operating expenses comprise the cost in the formula for the cost to income ratio.
3) Capital securities have not been included in the equity.
4) Group capital adequacy ratio has been calculated both in accordance with Credit Institutions Act Sect 9-10 and EU Capital Requirement Regulation (CRR). For calculation of credit risk exposure amount in corporates, Danske Bank Plc Group applies internal model (FIRB) and otherwise standard method. For calculation of risk exposure amount in market and operational risk, Danske Bank Plc Group applies standard method. Comparison figure for year 2013 is changed to reflect new regulation. 
5) Impairment on loans and receivables includes impairment losses, reversals of them, write-offs and recoveries. (-) net loss positive.
6) Presentation has been changed for 2015, so that hourly paid staff has been included in FTE. Comparative figures have not been changed. 

Danske Bank Plc is part of the Danske Bank Group. In addition to Danske Bank Plc, Danske Bank’s operations in Finland include the Helsinki Branch of Danske Bank A/S.

​Financial Highlights of Danske Bank's operations in Finland ​ ​ ​
2015​ 2014​
​Total operating income  ​EURm 632​ 663​
​Profit before taxes ​EURm ​243 249​
​Total assets at the end of period  ​EURm ​33,255 31,128​
​Number of staff at the end of the period  1) ​2,038 ​2,111

1) Presentation has been changed in 2015, so that hourly paid staff has been    
Included in FTE. Comparative figure has been changed accordingly.   

Outlook for 2016
Growth in Finnish economy is expected to be quite modest still during 2016 and mainly driven by growth in exports. The weakening of the euro should support Finland’s exports especially to the USA. Russia’s weak economic outlook and sanctions will continue and will have an negative impact on Finnish export and demand for domestic service.

The interest environment, especially short-term interest rates, are expected to remain at low level also during 2016. Although the slowly increasing unemployment level and low income growth are weakening households’ purchasing power, we expect private consumption to continue rising moderately. Low interest rates and declining consumer prices will contribute positively in this case. We expect our lending to personal and corporate customers to grow in 2016 and thus we anticipate that our net interest income and total income will be higher compared to 2015.

Expenses are expected to be at the same level as previous year even though the Bank continues to have a strong focus on improving our cost efficiency and operational processes. This is due to growth in banks’ costs associated with regulation, as the authorities are preparing for example bank resolution in the form of various funds in Finland and in the entire banking Union. Overall, we expect that our net profit for 2016 will be slightly higher than 2015 as loan impairment charges are expected to remain at low level.

This guidance is generally subject to uncertainty related to macroeconomic forecasts. Our trading income and loan loss charges are particularly uncertain.

Full Annual Report

The Danske Bank Plc Group’s full Annual Report for January – December 2015 is attached to this release as a pdf-file and is available at the bank’s website www.danskebank.fi.

For further information:

Risto Tornivaara, CEO of Danske Bank Plc

For an interview with Risto Tornivaara, please contact Tomi Koljonen/communications, tel. +358 50 422 0911.

Danske Bank is a modern bank that serves around million Finnish personal, business and institutional customers with deep financial competence and leading, innovative solutions. Danske Bank Plc is a part of the Nordic Danske Bank Group.

Danske Bank Group

Danske Bank is a Nordic universal bank with strong regional roots and close ties to the rest of the world. We serve more than 3.5 million personal, business and institutional customers, and in addition to banking services, we offer life insurance and pension, mortgage credit, wealth management, real estate and leasing services and products.

Our vision is to be recognised as the most trusted financial partner, and we are driven by a desire to create long-term value for our customers, investors and the societies we are a part of.

Danske Bank is headquartered in Copenhagen and is listed on Nasdaq Copenhagen. www.danskebank.com

Danske Bank Plc. Annual Report 2015