vestjyskBANK's Quarterly Report for Q1-Q3 2010
(at www.vestjyskBANK.dk )
Highlights
Profit for Q3 amounts to DKK 101m before tax and expenses for the Private
Contingency Association.
Core earnings before impairment and expenses for the Private Contingency
Association amount to DKK 130m for Q3. The satisfactory level from Q2 has thus
been maintained.
Impairment of loans and advances and guarantees for Q3 amounts to DKK 48m.
Expenses for the Private Contingency Association amount to DKK 66m for Q3, of
which DKK38m constitute provisions, which cover vestjyskBANK's maximum share of
the DKK 10bn loss limit related to the Private Contingency Association (Banking
Package I).
A deficit of DKK40m after tax has been realised for the period 1 January to 30
September 2010.
The solvency ratio equals 13.5.
The solvency need equals 9.8%.
Excess coverage in compliance with statutory liquidity requirements is
calculated at 128%.
Expectations for 2010 for core earnings before impairment and expenses for the
Private Contingency Association are maintained at DKK 500m.
Due to larger than expected impairments relating to the Private Contingency
Association, expectations for the impairment percentage for 2010 are adjusted
from 1-1.25 to the level 1.35.
vestjyskBANK
Frank Kristensen
Chief Executive Officer
Management's Report
Development of Activities and the Economic Situation
In the third quarter of 2010, vestjyskBANK realised core earnings of DKK 130m,
which is 41% more than the same period last year and on a par with core earnings
for the second quarter of 2010 despite lower net fee income as a result of
seasonal fluctuations. This favourable growth in core earnings, which is a
consequence of the efforts the Bank has made to optimise revenue, means that the
revenue backlog following the first quarter has now been recouped and that
overall, for the first nine months of the year the Bank has realised core
earnings of DKK 357m.
Costs in the third quarter of 2010 remained on a par with the second quarter and
therefore, the cost percentage for the quarter is still a satisfactory 53.7. The
overall cost percentage for the period 1 January to 30 September 2010 is 56.6
and has been impacted by the lower income in the first quarter of 2010.
As of 30 September 2010, vestjyskBANK's total business volume amounts to DKK
44.3bn, which is DKK 2.9bn less than at the end of June 2010. This fall in
business volume can be attributed to a decrease of DKK 1.8bn in deposits, DKK
0.2bn less in loans and advances and DKK 0.8bn less in guarantees over the
quarter. The lower level of deposits is primarily due to a decrease in deposits
with agreed maturity resulting from the expiry of Banking Package I.
Impairment on loans and advances in the third quarter of 2010 amounts to DKK 48m
and has thus, as expected, been reduced considerably in comparison with the
previous quarter. On top of this, there are impairments totalling DKK 37.7m
relating to the Private Contingency Association (Det Private Beredskab), also
called Banking Package I. Total impairments for the period 1 January to 30
September 2010 amount to DKK 325m net, which includes impairments relating to
the Private Contingency Association, and corresponds to 1.5% of loans and
advances and guarantees when converted to an annual basis.
vestjyskBANK's profit for the third quarter of 2010 shows a surplus of DKK 25m
after tax, compared with a loss of DKK 89m for the previous quarter. Overall,
for the period 1 January to 30 September 2010 the Bank has realised a deficit of
DKK 40m after tax.
As at 30 September 2010, the solvency ratio is calculated at 13.5% compared with
14.7% at the end of 2009.
On the basis of the improvement in core earnings and core earnings over the
quarter and the continued expectation that the underlying market situation and
conditions are heading towards normalisation, vestjyskBANK maintains its
previously reported expectation of core earnings of DKK 500m and a cost
percentage of 54.5 for the 2010 financial year.
Despite a considerable decline in impairment on loans and advances and
guarantees in the third quarter of 2010, greater impairment than originally
estimated on, e.g. the Private Contingency Association, means that expectations
for this item have had to be revised. Consequently, total impairments for the
2010 financial year are expected to amount to approximately 1.35% of loans and
advances and guarantees compared with the previous figure of 1.0-1.25%.
Frank Kristensen Preben Knudsgaard
CEO Managing Director
Management's Report
Financial Highlights
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| Financial highlights | Q1-Q3 | Q1-Q3 | Full year |
| | 2010 | 2009 | 2009 |
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| Income statement (DKK m) | | | |
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| Net interest income | 604 | 602 | 789 |
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| Net fee income | 171 | 165 | 225 |
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| Dividends from shares, etc. | 3 | 7 | 7 |
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| Market value adjustment of foreign | | | |
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| exchange and sector shares | 36 | 40 | 57 |
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| Other operating income | 8 | 65 | 66 |
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| Core income | 822 | 878 | 1.144 |
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| Operating expenses and operating | -465 | -487 | -641 |
| depreciation | | | |
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| Core earnings before impairment | 357 | 391 | 503 |
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| Impairment of loans and advances and | | | |
| accounts | | | |
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| receivable etc. excl. the Private | | | |
| Contingency | | | |
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| Association | -262 | -288 | -464 |
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| Core earnings after impairment | 95 | 103 | 39 |
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| Other market value adjustments | 2 | 64 | 84 |
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| Profit after market value adjustments | 97 | 166 | 123 |
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| The Private Contingency Association | -148 | -136 | -182 |
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| Profit before tax | -51 | 31 | -59 |
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| Tax | 11 | -7 | 18 |
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| Profit for the period | -40 | 24 | -41 |
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| Balance sheet (DKK m) | | | |
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| Total assets | 34,088 | 33,837 | 32,838 |
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| Loans and advances | 23,711 | 23,579 | 23,874 |
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| Deposits including pooled funds | 15,506 | 18,299 | 18,635 |
| schemes | | | |
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| Contingent liabilities | 5,107 | 5,188 | 5,715 |
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| Business volume | 44,324 | 47,066 | 48,224 |
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| Shareholders' equity | 2,125 | 2,224 | 2,149 |
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| Key figures | Q1-Q3 | Q1-Q3 | Full year |
| | 2010 | 2009 | 2009 |
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| Solvency | | | |
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| Solvency ratio | 13.5% | 15.5% | 14.7% |
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| Core capital ratio | 11.0% | 12.2% | 11.4% |
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| Earnings | | | |
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| Return on equity before tax p.a. 1 | -3.2% | 1.9% | -2.7% |
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| Return on equity after tax p.a. 1 | -2.5% | 1.5% | -1.9% |
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| Earnings/costs 2 | 0.94 | 1.03 | 0.95 |
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| Cost percentage 3 | 56.6% | 55.5% | 56.0% |
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| Employees calculated as full-time | 645.3 | 662.8 | 658.9 |
| staff | | | |
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| (average) | | | |
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| Market risk | | | |
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| Interest rate risk 4 | -2.7% | -1.8% | -1.6% |
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| Foreign exchange position 5 | 4.7% | 6.3% | 3.9% |
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| Foreign exchange risk | 0.1% | 0.1% | 0.1% |
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| Excess coverage in compliance with | | | |
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| statutory liquidity requirements 6 | 128.1% | 150.2% | 125.8% |
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| Credit risk | | | |
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| Loans and advances plus impairment of | | | |
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| these relative to deposits | 163.6% | 135.3% | 135.0% |
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| Loans and advances relative to | | | |
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| shareholders' equity | 11.2 | 10.6 | 11.1 |
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| Growth in loans and advances for the | -0.7% | -2.0% | -0.8% |
| period 8 | | | |
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| Sum of large commitments 7 | 40.2% | 36.9% | 38.1% |
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| Accumulated impairment percentage | 5.9% | 4.9% | 5.1% |
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| Impairment percentage for the period | 1.1% | 1.1% | 1.7% |
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| The vestjyskBANK share | | | |
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| Profit for the period, per share | -3.2 | 2.0 | -3.4 |
| (unit size DKK 10) | | | |
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| Equity value, per share (unit size | 171.4 | 180.3 | 175.8 |
| DKK 10) | | | |
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| Price of vestjyskBANK shares at the | | | |
| end | | | |
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| of the period | 68.0 | 108.0 | 87.0 |
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| Market price/profit for the period, | -21.2 | 55.0 | -25.7 |
| per share | | | |
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| Market price/equity value, per share | 0.4 | 0.6 | 0.5 |
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1 On the basis of average shareholders' equity
2 Ordinary income relative to ordinary costs
Ordinary income = net interest and fee income + market value adjustments + other
operating income
Ordinary costs = staff costs and administrative expenses + depreciation and
impairment of intangible and tangible assets + other operating expenses +
impairment of loans and advances and accounts receivable, etc.
3 Operating expenses incl. depreciation and impairment of assets / core income
4 Interest rate risk relative to core capital after deductions
5 Foreign Exchange Indicator 1 relative to core capital after deductions
6 Excess coverage in compliance with the 10% requirement of Section 152 of the
Danish Financial Business Act
7 Commitments larger than 10% of the capital base relative to the capital base
8 Growth in loans and advances relative to vestjyskBANKs loans and advances at
the beginning of the period.
Management's Report
Financial Highlights Distributed by Quarter
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| Financial highlights | Q3 | Q2 2010 | Q1 2010 | Q4 2009 | Q3 2009 |
| | 2010 | | | | |
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| Income statement (DKK m) | | | | | |
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| Net interest income | 210 | 203 | 191 | 187 | 196 |
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| Net fee income | 51 | 64 | 56 | 61 | 50 |
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| Dividends from shares, etc. | 0 | 3 | 0 | 0 | 0 |
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| Market value adjustment of | | | | | |
| foreign | | | | | |
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| exchange and sector shares | 17 | 12 | 7 | 17 | 15 |
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| Other operating income | 3 | 3 | 2 | 0 | -15 |
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| Core income | 281 | 285 | 256 | 265 | 246 |
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| Operating expenses and | -151 | -152 | -162 | -154 | -154 |
| operating depreciation | | | | | |
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| Core earnings before | 130 | 133 | 94 | 111 | 92 |
| impairment | | | | | |
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| Impairment of loans and | | | | | |
| advances and accounts | | | | | |
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| receivable etc. excl. the | | | | | |
| Private Contingency | | | | | |
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| Association | -48 | -163 | -51 | -176 | -84 |
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| Core earnings after | 82 | -30 | 43 | -65 | 8 |
| impairment | | | | | |
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| Other market value | 19 | -35 | 18 | 21 | 32 |
| adjustments | | | | | |
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| Profit after market value | 101 | -65 | 61 | -44 | 40 |
| adjustments | | | | | |
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| The Private Contingency | -66 | -54 | -28 | -46 | -45 |
| Association | | | | | |
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| Profit before tax | 35 | -119 | 33 | -90 | -5 |
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| Tax | -10 | 30 | -9 | 25 | 2 |
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| Profit for the period | 25 | -89 | 24 | -65 | -3 |
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| Balance sheet (DKK m) | | | | | |
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| Total assets | 34,088 | 39,658 | 34,077 | 32,838 | 33,837 |
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| Loans and advances | 23,711 | 23,954 | 23,798 | 23,874 | 23,579 |
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| Deposits including pooled | 15,506 | 17,353 | 18,43 | 18,635 | 18,299 |
| funds schemes | | | | | |
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| Contingent liabilities | 5,107 | 5,933 | 5,958 | 5,715 | 5,188 |
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| Business volume | 44,324 | 47,24 | 48,186 | 48,224 | 47,066 |
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| Shareholders' equity | 2,125 | 2,099 | 2,19 | 2,149 | 2,224 |
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| Key figures | Q3 | Q2 | Q1 2010 | Q4 2009 | Q3 2009 |
| | 2010 | 2010 | | | |
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| Solvency | | | | | |
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| Solvency ratio | 13.5% | 13.9% | 14.6% | 14.7% | 15.5% |
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| Core capital ratio | 11.0% | 10.4% | 11.3% | 11.4% | 12.2% |
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| Earnings | | | | | |
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| Return on equity before tax | 6.6% | -22.3% | 6.2% | -16.3% | -1.1% |
| p.a. 1 | | | | | |
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| Return on equity after tax | 4.9% | -16.8% | 4.5% | -11.9% | -0.5% |
| p.a. 1 | | | | | |
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| Earnings/costs 2 | 1.13 | 0.68 | 1.14 | 0.76 | 0.98 |
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| Cost percentage 3 | 53.7% | 53.5% | 63.3% | 57.9% | 62.9% |
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| Employees calculated as | | | | | |
| full-time staff | | | | | |
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| (average) | 643.2 | 643.2 | 647.8 | 647.4 | 646.3 |
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| Market risk | | | | | |
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| Interest rate risk 4 | -2.7% | -2.6% | -2.9% | -1.6% | -1.8% |
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| Foreign exchange position 5 | 4.7% | 10.9% | 9.5% | 3.9% | 6.3% |
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| Foreign exchange risk | 0.1% | 0.1% | 0.1% | 0.1% | 0.1% |
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| Excess coverage in | | | | | |
| compliance with | | | | | |
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| statutory liquidity | 128.1% | 219.9% | 139.3% | 125.8% | 150.2% |
| requirements 6 | | | | | |
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| Credit risk | | | | | |
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| Loans and advances plus | | | | | |
| impairment of | | | | | |
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| these relative to deposits | 163.6% | 147.5% | 136.4% | 135.0% | 135.3% |
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| Loans and advances relative | | | | | |
| to | | | | | |
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| shareholders' equity | 11.2 | 11.4 | 10.9 | 11.1 | 10.6 |
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| Growth in loans and | -1.0% | 0.7% | -0.3% | 1.3% | -0.9% |
| advances for the period 8 | | | | | |
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| Sum of large commitments 7 | 40.2% | 53.3% | 37.5% | 38.1% | 36.9% |
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| Accumulated impairment | 5.9% | 5.6% | 5.3% | 5.1% | 4.8% |
| percentage | | | | | |
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| Impairment percentage for | 0.3% | 0.6% | 0.2% | 0.6% | 0.3% |
| the period | | | | | |
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| The vestjyskBANK share | | | | | |
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| Profit for the period, per | 2.1 | -7.2 | 2.0 | -5.3 | -0.2 |
| share (unit size DKK 10) | | | | | |
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| Equity value, per share | 171.4 | 169.3 | 176.4 | 175.8 | 180.3 |
| (unit size DKK 10) | | | | | |
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| Price of vestjyskBANK | | | | | |
| shares at the end | | | | | |
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| of the period | 68.0 | 79.5 | 83.0 | 87.0 | 108.0 |
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| Market price/profit for the | 32.5 | -11.0 | 42,2 | -16.3 | -440.7 |
| period, per share | | | | | |
--------------------------------------------------------------------------------
| Market price/equity value, | 0.4 | 0.5 | 0.5 | 0.5 | 0.6 |
| per share | | | | | |
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1 On the basis of average shareholders' equity
2 Ordinary income relative to ordinary costs
Ordinary income = net interest and fee income + market value adjustments + other
operating income
Ordinary costs = staff costs and administrative expenses + depreciation and
impairment of intangible and tangible assets + other operating expenses +
impairment of loans and advances and accounts receivable, etc.
3 Operating expenses incl. depreciation and impairment of assets / core income
4 Interest rate risk relative to core capital after deductions
5 Foreign Exchange Indicator 1 relative to core capital after deductions
6 Excess coverage in compliance with the 10% requirement of Section 152 of the
Danish Financial Business Act
7 Commitments larger than 10% of the capital base relative to the capital base
8 Growth in loans and advances relative to vestjyskBANKs loans and advances at
the beginning of the period.
Management's Report
Income Statement
Core income amounts to DKK 281m for the third quarter of 2010 and is thus on a
par with the previous quarter. For the period 1 January to 30 September 2010,
core income totals DKK 822m. This level reflects original expectations now that
the income backlog from the first quarter of the year has been recouped.
In the third quarter of 2010, net interest income increased by 3% compared with
the second quarter of 2010 and by 7% compared with the same period last year.
Consequently, the increasing tendency from the second quarter of 2010 is
continued as a result of, for instance, the Bank's focus on marginal increases.
Since the beginning of the financial year, the Bank has realised net interest
income of DKK 604m, which corresponds to the level for the same period last
year.
For the third quarter, net fee and commission income amounts to DKK 51m, which
is on a par with the same period last year and DKK 13m less than in the second
quarter of 2010. The growth over the quarter reflects the fact that fee income
in the first and third quarters is normally below the level it is in the second
and fourth quarter of the year. For the entire period 1 January to 30 September,
net fee income amounts to DKK 171m, which is 4% higher than the same period in
2009. This growth reflects the highly satisfactory result stemming from
increased focus on vestjyskVÆRDIPLEJE, vestjyskPENSIONSPULJE and other balance
II products which has led to an increase of 20% in fee incomes from securities
trading compared to the same period last year.
For the period 1 January to 30 September, market value adjustment of foreign
exchange and sector shares shows a positive result of DKK 36m, distributed over
DKK 22m on foreign exchange and DKK 14m on sector shares.
Operating expenses and operating depreciation in the third quarter of 2010 were
realised at DKK 151m, which is on a par with the second quarter of 2010, and
cost reductions of DKK 10m from the first to the second quarter have thus been
maintained in the third quarter. In the period since the beginning of the
financial year, operating expenses and operating depreciation total DKK 465m,
or approximately 5% less than the same period last year, which is marginally
better than expected.
In the third quarter, the cost percentage amounted to 53.7, and for the period 1
January to 30 September 2010 has been calculated at 56.6%. Thus, the cost
percentage for the year to date is above the Bank's target of 54.5%, which can
essentially be attributed to lower core income than expected in the first
quarter of the year.
Core earnings before impairment in the third quarter were realised at DKK 130m,
which is 41% more than the same period last year and on a par with the second
quarter of 2010, despite lower net fee income. This being the case, the positive
growth shown by core earnings continues. For the period 1 January to 30
September, the Bank's core earnings before impairment total DKK 357m, which is
in keeping with expectations.
Impairment of loans and advances and accounts receivable etc. in the third
quarter amounts to DKK 48m and as such has been reduced considerably in
comparison with impairments made in the second quarter of 2010. Overall, since
the beginning of the year, the Bank has made impairments on loans and advances
and accounts receivable totalling DKK 262m, compared with DKK 288m in the same
period last year.
Impairments relating to the Private Contingency Association amount to DKK 63m
for the period 1 January to 30 September 2010. Of this amount, in the third
quarter, DKK 37.7m was charged to expenditure.
Converted to annual basis, total impairments for the period 1 January 2010 to 30
September 2010 correspond to 1.5% of loans, advances and guarantees which
continues to exceed expectations. The impairments account reflects the fact
that despite nascent social growth, there continues to be corporate customers
with economic difficulties, primarily within agriculture and property.
The need for impairment cannot be attributed to any individual major commitments
and the level of impairment relating to retail customers is relatively low.
Accumulated impairments and provisions amount to DKK 1.8bn, which corresponds to
5.9% of loans, advances and guarantees. Loans and advances for which the
interest rate has been set at zero amount to DKK 1.2bn.
The industry distribution of accumulated impairments and provisions is shown in
the diagram on page 8.
Other market value adjustments in the third quarter show a positive market value
adjustment of DKK 19m, whereas the item amounts to DKK 2m after the first three
quarters of the financial year. From 1 January 2010 to 30 September 2010,
positive market value adjustments amounting to DKK 64.7m for bonds, positive
market value adjustments to shares amounting to DKK 2.4m, negative market value
adjustments amounting to DKK 67.2m for financial instruments and positive market
value adjustments amounting to DKK 2.5m for other assets and liabilities have
been made.
vestjyskBANK has maintained a negative interest risk since the Bank continues to
expect interest rates to increase. Financial contracts have been concluded on
the strength of this expectation. These contracts have led to unrealised
exchange rate losses as interest rates have fallen.
As mentioned previously, the Private Contingency Association has, in the third
quarter, been charged to expenditure amounting to DKK 37.7m in inpairments,
which is the remaining amount that is permissable for vestjyskBANK within the
initial loss limit of DKK 10bn which the sector may incur on losses relating to
ailing financial institutions. This has been done in consideration of the
particular uncertainty surrounding EIK Bank. For the period 1 January 2010 to
30 September 2010, the Private Contingency Association has been charged as
expenditure amounting to DKK 148m which comprises DKK 85m in guarantee
commission and DKK 63m in impairments relating to sector assignments involving
banks under administration in Financial Stability.
Pre-tax profit in the third quarter shows a surplus of DKK 35m, compared with an
unsatisfactory deficit of DKK 119m for the second quarter. For the period 1
January to 30 September overall, the Bank realised a deficit of DKK 51m before
tax and DKK 40m after tax compared with a surplus of DKK 31m and DKK 24m
respectively for the same period last year.
Balance Sheet
At the end of September 2010, the Bank's balance sheet amounts to DKK 34.1bn
compared with DKK 32.8bn at the end of 2009.
Since the beginning of the financial year, total loans and advances have been
reduced by DKK 163m to DKK 23.7bn, which is in line with expectations. From the
end of 2009 to the end of September 2010, deposits have been reduced by DKK
3.1bn to DKK 15.5bn. Taken in isolation, in the third quarter of 2010 deposits
have decreased by DKK 1.8bn, primarily due to withdrawn fixed-term deposits.
This amount exceeds the Bank's previous estimate for transient deposits of DKK
1.5bn relating to the expiry of Banking Package I.
Since the end of 2009, guarantees have decreased from DKK 5.7bn to DKK 5.1bn as
a result of decreasing financial guarantees.
Thus, as at 30 September 2010, the total business volume, i.e. total deposits,
loans and advances and guarantees, amounts to DKK 44.3bn.
On the whole, the industry distribution of loans and advances and guarantees is
unchanged compared with the end of 2009 and the Bank does not believe that the
risk picture for the individual industries has changed to any significant extent
since the beginning of the current financial year.
The sum of “large commitments”, i.e. commitments representing 10% or more of
the capital base, amounts to 40.2% at the end of September 2010 and comprises
three commitments. Thus, the sum of large commitments has been reduced over the
quarter, as the commitment with one mortgage lender, which, as a result of the
Bank's temporary high holding of mortgage bonds exceeded the 10% limit on 30
June 2010, has returned to a normal level after the bonds were sold and the
proceeds used for the repayment of loans.
Securities held in custody have increased from DKK 9.1bn at the end of 2009 to
DKK 9.5bn as at 30 September 2010. This amount includes DKK 2bn in
vestjyskVÆRDIPLEJE.
Liquidity
vestjyskBANK's excess coverage in compliance with statutory liquidity
requirements is 128.1% as at 30 September 2010 compared with 125.8% at the end
of 2009. vestjyskBANK's long-term liquidity target is a minimum excess coverage
of 50%. Consequently, the Bank's liquidity requirement has been entirely
fulfilled and liquidity is good.
In the third quarter of 2010 vestjyskBANK has repaid a total of DKK 3.7bn in
issued bonds and debts to credit institutions. Subsequently, liquidity is at a
normal level.
Of vestjyskBANK's total deposits amounting to DKK 15.5bn, DKK 10.9bn is covered
by the depositor guarantee scheme.
vestjyskBANK's liquidity policy states that loans shall be financed by deposits,
bonds issued and loans with a maturity date of > 1 year, subordinated loans and
shareholder's equity minus property. As the schedule on the following page
shows, this policy has been fully complied with.
Solvency and Shareholders' Equity
Management has set a solvency target of 12%. At the end of the third quarter of
2010, vestjyskBANK had a solvency ratio of 13.5%.
After deduction of the profit for the period, after tax, shareholders' equity at
the end of September 2010, has been calculated at DKK 2.1bn.
The capital base after deductions amounts to DKK 3.8bn as at 30 September 2010,
and weighted assets amount to DKK 28.3bn as of the same date. The weighted
assets are thus comprised of:
Credit risks DKK 25.0bn
Market risks DKK 1.8bn
Operational risks DKK 1.5bn
The individual solvency need for vestjyskBANK which, among other things, is
based on Management's expectations for the future, is calculated at 8.8% to
which can be added a precautionary supplement of DKK 1%, bringing the total to
9.8%. Refer to the Bank's website for a more in-depth explanation of the
solvency need at the end of September 2010.
In the third quarter of 2010, vestjyskBANK has terminated subordinated loans
totalling DKK 362m due for repayment at the end of October/ beginning of
November 2010. This has had a negative impact on solvency by 1.0 percentage
points. To resolve this, the Bank is working on raising new subordinated loan
capital totalling DKK 300-500m which will have a positive impact on solvency by
1-1.7 percentage points.
Ownership
As of 30 September 2010 there are 41,542 shareholders listed by name. Together,
they own 96.1% of the share capital. The shareholding structure is
characterised by the fact that, together, the 10 largest shareholders own 19.1%
of the share capital.
70% of the share capital is held by 3,877 shareholders. Thus, vestjyskBANK has a
large number of shareholders with small shareholdings.
In accordance with Article 55 of the Danish Companies Act, no shareholder has
informed the Bank that they own more than 5% of the share capital or the
associated voting rights.
The closing rate of vestjyskBANK shares decreased from a closing rate of 87.0 at
the end of 2009 to a closing rate of 68.0 on 30 September 2010. The number of
shareholders listed by name during the same period was reduced by 1,585.
The Supervision Diamond (Tilsynsdiamanten)
In a letter to financial institutions in June 2010, the Danish Financial
Supervisory Authority informed them of five indicators of risk which the
financial institutions should adhere to by the end of 2012.
The table below shows the limits, which the Danish Financial Supervisory
Authority has determined, and vestjyskBANK's placing within the individual
areas as of 30 September 2010.
As the table shows, vestjyskBANK exceeds the Danish Financial Supervisory
Authority's limit for funding ratio since the Bank's ratio amounts to 1.53
compared with the limit of 1.25. In its comments to this key figure, the Danish
Financial Supervisory Authority has stated that the intention should be to
achieve a secure and long-term funding structure rather than eliminating any
potential deposit deficit. Therefore, the Danish Financial Supervisory Authority
will initiate a dialogue with the Danish Bankers Association in order to set a
more appropriate liquidity target.
Indeed, vestjyskBANK's funding is based on a long-term structure which appears
in the schedule above.
Expectations for 2010
On the basis of the improvement in core income and core earnings over the
quarter and continued expectations that the underlying market situation and
conditions are heading towards normalisation, vestjyskBANK maintains its
previously reported expectations for the 2010 financial year of core earnings of
DKK 500m before impairments and expenses relating to the Private Contingency
Association. Similarly, the Bank maintains its expectation that its cost
percentage for the 2010 financial year can be realised at the previously
reported level of 54.5.
The Bank focuses intensely on the credit-worthiness of its credit commitments
and therefore expects that the decrease in impairments on loans and advances
and accounts receivable from the second to the third quarter of 2010 will
continue, provided that conditions in market remain unchanged. Nevertheless,
impairments on the Private Contingency Association, among other things, have
been greater than originally estimated so therefore expectations for this item
must be revised. Consequently, total impairments for the 2010 financial year are
expected to amount to approximately 1.35% of loans and advances and guarantees
compared with the previous figure of 1.0-1.25%.
Apart from the decline in deposits which oc- curred in connection with the
expiry of Banking Package I, the business volume is expected to remain unchanged
compared to 2009.
For the remainder of 2010, vestjyskBANK will continue to focus on improving
revenue, mana- ging costs, maintaining credit management and increasing
deposits.
Related Parties vestjyskBANK's related parties with significant influence
include the Bank's Board of Directors, Executive Management and executive staff,
as well as their family members. During the period there have been normal
business transactions, under market conditions, with master butcher Peter
Mortensen and with the company which is 100% owned by Director Anders Bech, Kaj
Bech A/S. Otherwise, no transactions besides regular executive emoluments have
taken place with the Bank's related parties during the ac- counting period.
Uncertainty Regarding Recognition and Measuring The most significant source of
uncertainty re- garding recognition and measurement relates to the impairment of
loans and advances where the future outlook for the agriculture sector in
particular is uncertain. The Bank continually strives to improve methods of
recognition and measuring.
Financial Calendar 2011
22 February 2011 Annual Report for 2010
16 March 2011 General Meeting
3 May 2011 Quarterly Report for Q1 2011
11 August 2011 Half-year report for 2011
27 October 2011 Quarterly Report for Q1-Q3 2011
The Board of Directors and the Executive Management have today reviewed and
approved the Report for the period 1 January - 30 September 2010 for
vestjyskBANK.
The Report has been presented in accordance with IAS 34 ”Interim Financial
Reporting”, as approved by the EU, and further Danish disclosure requirements
for listed financial companies.
The accounting policy used is considered appropriate, inasmuch as the Report
provides a fair view of the Bank's assets, liabilities and financial position as
at 30 September 2010 and of the result of the Bank's activities and cashflow for
the accounting period 1 January to 30 September 2010.
The Management's Report is considered to contain a fair account of the
development in the Bank's activities and financial issues as well as a fair
description of the significant risks and elements of uncertainty by which the
Bank can be affected.
The Quarterly Report has not been audited or reviewed.
Lemvig, 28 October 2010
Executive Management
Frank Kristensen Preben Knudsgaard
Board of Directors
Anders Kristian Bech
Peter Mortensen
Carl Olav Birk Jensen
Peter Bækkelund Rasmussen
Poul Hjulmand
Kirsten Lundgaard-Karlshøj
Bjørn Albinus
Peder Hesselaa Nielsen
Income Statement
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note no. |
--------------------------------------------------------------------------------
| | Q1-Q3 | Q1-Q3 | Q3 | Q3 | Full year |
| | 2010 | 2009 | 2010 | 2009 | 2009 DKK |
| | DKK t | DKK t | DKK t | DKK t | t |
--------------------------------------------------------------------------------
| 2 Interest income | 1,153,7 | 1,350,8 | 394,33 | 404,72 | 1,733,853 |
| | 69 | 35 | 4 | 3 | |
--------------------------------------------------------------------------------
| 3 Interest expenses | 549,547 | 749,318 | 184,17 | 209,36 | 944,733 |
| | | | 4 | 7 | |
--------------------------------------------------------------------------------
| Net interest income | 604,222 | 601,517 | 210,16 | 195,35 | 789,12 |
| | | | | 6 | |
--------------------------------------------------------------------------------
| Dividends of shares, etc. | 3,358 | 6,969 | 126 | 139 | 7,058 |
--------------------------------------------------------------------------------
| 4 Fees and commission | 188,822 | 180,728 | 56,465 | 55,876 | 247,973 |
| income | | | | | |
--------------------------------------------------------------------------------
| Paid fees and commission | 18,772 | 16,227 | 6,259 | 5,809 | 22,854 |
| expenses | | | | | |
--------------------------------------------------------------------------------
| Net interest and fee | 777,63 | 772,987 | 260,49 | 245,56 | 1,021,297 |
| income | | | 2 | 2 | |
--------------------------------------------------------------------------------
| 5 Market value adjustments | 38,025 | 103,475 | 36,477 | 47,137 | 140,803 |
--------------------------------------------------------------------------------
| Total other operating | 7,696 | 64,83 | 2,965 | -15,36 | 65,684 |
| income | | | | | |
--------------------------------------------------------------------------------
| 6 Staff costs and | 451,172 | 474,077 | 146,49 | 149,49 | 622,901 |
| administrative expenses | | | 5 | 6 | |
--------------------------------------------------------------------------------
| Depreciation and | | | | | |
| impairment of | | | | | |
--------------------------------------------------------------------------------
| intangible and tangible | 12,221 | 12,398 | 4,053 | 4,076 | 17,657 |
| assets | | | | | |
--------------------------------------------------------------------------------
| Other operating income | 86,159 | 81,244 | 28,469 | 28,497 | 109,562 |
--------------------------------------------------------------------------------
| 7 Impairment of loans and | | | | | |
| advances and | | | | | |
--------------------------------------------------------------------------------
| accounts receivable, etc. | 324,973 | 342,883 | 85,95 | 101,18 | 536,69 |
| | | | | 3 | |
--------------------------------------------------------------------------------
| Pre-tax profit | -51,174 | 30,69 | 34,967 | -5,913 | -59,026 |
--------------------------------------------------------------------------------
| Tax | -11,612 | 6,596 | 9,046 | -2,892 | -17,734 |
--------------------------------------------------------------------------------
| Profit | -39,562 | 24,094 | 25,921 | -3,021 | -41,292 |
--------------------------------------------------------------------------------
| Earnings per share | | | | | |
--------------------------------------------------------------------------------
| Earnings per share | -3.2 | 2.0 | 2.1 | -0.2 | -3.4 |
--------------------------------------------------------------------------------
| Watered-down earnings per | -3.2 | 2.0 | 2.1 | -0.2 | -3.4 |
| share | | | | | |
--------------------------------------------------------------------------------
| Total income statement | | | | | |
--------------------------------------------------------------------------------
| Profit for the period | -39,562 | 24,094 | 25,921 | -3,021 | -41,292 |
--------------------------------------------------------------------------------
| Other total income after | 0 | 0 | 0 | 0 | 0 |
| tax | | | | | |
--------------------------------------------------------------------------------
| Total income overall | -39,562 | 24,094 | 25,921 | -3,021 | -41,292 |
--------------------------------------------------------------------------------
Balance Sheet
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note no. |
--------------------------------------------------------------------------------
| | 30/9 2010 | 30/9 2009 | Full year |
| | DKK t | DKK t | 2009 DKK t |
--------------------------------------------------------------------------------
| Assets | | | |
--------------------------------------------------------------------------------
| Cash in hand and demand deposits at | | | |
--------------------------------------------------------------------------------
| central banks | 297,421 | 619,354 | 485,386 |
--------------------------------------------------------------------------------
| Accounts receivable at credit | | | |
| institutions | | | |
--------------------------------------------------------------------------------
| and central banks | 968,441 | 2,472,951 | 1,445,186 |
--------------------------------------------------------------------------------
| 8 Loans and advances and other | | | |
| accounts | | | |
--------------------------------------------------------------------------------
| receivable at amortised cost price | 23,710,918 | 23,578,758 | 23,874,057 |
--------------------------------------------------------------------------------
| Bonds carried at current value | 5,718,890 | 4,568,554 | 4,297,370 |
--------------------------------------------------------------------------------
| Shares, etc. | 731,988 | 676,815 | 706,871 |
--------------------------------------------------------------------------------
| Assets relating to pooled funds | 1,034,315 | 779,217 | 835,012 |
| schemes | | | |
--------------------------------------------------------------------------------
| Intangible assets | 108,936 | 110,432 | 110,058 |
--------------------------------------------------------------------------------
| Total land and buildings | 374,501 | 352,574 | 384,798 |
--------------------------------------------------------------------------------
| Investment properties | 10,806 | 9,251 | 18,401 |
--------------------------------------------------------------------------------
| Domicile properties | 363,695 | 343,323 | 366,397 |
--------------------------------------------------------------------------------
| Other tangible assets | 12,369 | 15,7 | 17,375 |
--------------------------------------------------------------------------------
| Current tax assets | 1,650 | 54,583 | 1,036 |
--------------------------------------------------------------------------------
| Deferred tax assets | 177,978 | 140,432 | 166,366 |
--------------------------------------------------------------------------------
| 9 Other assets | 950,685 | 467,323 | 514,863 |
--------------------------------------------------------------------------------
| Total assets | 34,088,092 | 33,836,693 | 32,838,378 |
--------------------------------------------------------------------------------
| Liabilities | | | |
--------------------------------------------------------------------------------
| Debt to credit institutions and | | | |
| central | | | |
--------------------------------------------------------------------------------
| banks | 4,104,255 | 4,785,956 | 3,608,321 |
--------------------------------------------------------------------------------
| 10 Deposits and other amounts due | 14,471,807 | 17,520,116 | 17,799,809 |
--------------------------------------------------------------------------------
| Deposits in pooled funds schemes | 1,034,315 | 779,217 | 835,012 |
--------------------------------------------------------------------------------
| Issued bonds carried at amortised | | | |
--------------------------------------------------------------------------------
| cost price | 8,575,544 | 5,043,420 | 5,079,836 |
--------------------------------------------------------------------------------
| 11 Other liabilities | 1,152,424 | 834,939 | 769,431 |
--------------------------------------------------------------------------------
| 12 Subordinated debt | 2,624,718 | 2,648,737 | 2,596,553 |
--------------------------------------------------------------------------------
| Total liabilities | 31,963,063 | 31,612,385 | 30,688,962 |
--------------------------------------------------------------------------------
| Shareholders' equity | | | |
--------------------------------------------------------------------------------
| 13 Share capital | 125,000 | 125,000 | 125,000 |
--------------------------------------------------------------------------------
| Revaluation reserves | 30,848 | 30,848 | 30,848 |
--------------------------------------------------------------------------------
| Earnings retained / loss brought | 1,969,181 | 2,068,460 | 1,993,568 |
| forward | | | |
--------------------------------------------------------------------------------
| 14 Total shareholders' equity | 2,125,029 | 2,224,308 | 2,149,416 |
--------------------------------------------------------------------------------
| Total liabilities and shareholders' | 34,088,092 | 33,836,693 | 32,838,378 |
| equity | | | |
--------------------------------------------------------------------------------
| 15 Contingent liabilities | | | |
--------------------------------------------------------------------------------
| Contingent liabilities | 5,107,232 | 5,187,777 | 5,715,388 |
--------------------------------------------------------------------------------
| Other binding agreements | 205,596 | 5,181 | 7,781 |
--------------------------------------------------------------------------------
| Total contingent liabilities | 5,312,828 | 5,192,958 | 5,723,169 |
--------------------------------------------------------------------------------
Statement of Changes in Shareholders' Equity
--------------------------------------------------------------------------------
| | Share | Revaluation | Earnings | Total |
| | capital | reserves | retained | shareholders |
| | | | | ' |
--------------------------------------------------------------------------------
| | DKK t | DKK t | DKK t | equity DKK t |
--------------------------------------------------------------------------------
| Shareholders' equity, | 125,000 | 30,848 | 1,993,568 | |
| 1 January 2010 | | | | |
--------------------------------------------------------------------------------
| Total income for the | | | -39,562 | -39,562 |
| period | | | | |
--------------------------------------------------------------------------------
| Additions, sale of | | | 78,669 | 78,669 |
| own shares | | | | |
--------------------------------------------------------------------------------
| Outflow, acquisition | | | -63,494 | -63,494 |
| of own shares | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity | 125,000 | 30,848 | 1,969,181 | 2,125,029 |
| end of Q3 2010 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Revaluation | Earnings | Total |
| | capital | reserves | retained | shareholders |
| | | | | ' |
--------------------------------------------------------------------------------
| | DKK t | DKK t | DKK t | equity DKK t |
--------------------------------------------------------------------------------
| Shareholders' equity, | 125,000 | 30,848 | 2,040,073 | 2,195,921 |
| 1 January 2009 | | | | |
--------------------------------------------------------------------------------
| Total income for the | | | 24,094 | 24,094 |
| period | | | | |
--------------------------------------------------------------------------------
| Additions, sale of | | | 132,073 | 132,073 |
| own shares | | | | |
--------------------------------------------------------------------------------
| Outflow, acquisition | | | -124,771 | -124,771 |
| of own shares | | | | |
--------------------------------------------------------------------------------
| Tax relating to own | | | -3,009 | -3,009 |
| shares | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity | 125,000 | 30,848 | 2,068,460 | 2,224,308 |
| end of Q3 2009 | | | | |
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Share | Revaluation | Earnings | Total |
| | capital | reserves | retained | shareholders |
| | | | | ' |
--------------------------------------------------------------------------------
| | DKK t | DKK t | DKK t | equity DKK t |
--------------------------------------------------------------------------------
| Shareholders' equity, | 125,000 | 30,848 | 2,040,073 | 2,195,921 |
| 1 January 2009 | | | | |
--------------------------------------------------------------------------------
| Total income for the | | | .41,292 | -41,292 |
| period | | | | |
--------------------------------------------------------------------------------
| Additions, sale of | | | 151,643 | 151,643 |
| own shares | | | | |
--------------------------------------------------------------------------------
| Outflow, acquisition | | | -155,851 | -155,851 |
| of own shares | | | | |
--------------------------------------------------------------------------------
| Tax relating to own | | | -1,005 | -1,005 |
| shares | | | | |
--------------------------------------------------------------------------------
| Shareholders' equity | 125,000 | 30,848 | 1,993,568 | 2,149,416 |
| end of 2009 | | | | |
--------------------------------------------------------------------------------
Cash Flow Statement
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| | Q1-Q3 | Q1-Q3 | Full year |
| | 2010 DKK | 2009 DKK | 2009 DKK t |
| | t | t | |
--------------------------------------------------------------------------------
| Operations | | | |
--------------------------------------------------------------------------------
| Profit for the period after tax | -39,562 | 24,094 | -41,292 |
--------------------------------------------------------------------------------
| Adjustment for non-cash operational | | | |
| items etc. | | | |
--------------------------------------------------------------------------------
| Adjustment of impairments on loans and | 327,032 | 342,883 | 536,69 |
| advances etc. | | | |
--------------------------------------------------------------------------------
| Depreciation and impairment of tangible | 15,577 | 14,233 | 17,657 |
| and intangible assets | | | |
--------------------------------------------------------------------------------
| Other unpaid operational items | -51,866 | -102,434 | -300,293 |
--------------------------------------------------------------------------------
| Charged tax | -11,612 | 6,596 | -17,734 |
--------------------------------------------------------------------------------
| Corporation tax paid | -614 | -726 | 53,383 |
--------------------------------------------------------------------------------
| Total operational items | 238,955 | 284,646 | 248,411 |
--------------------------------------------------------------------------------
| Working capital | | | |
--------------------------------------------------------------------------------
| Change in credit institutions and | 491,879 | -2,560,58 | -3,725,458 |
| central banks, net | | 2 | |
--------------------------------------------------------------------------------
| Change in loans, advances and other | | | |
--------------------------------------------------------------------------------
| accounts receivable at amortised cost | -163,893 | 147,596 | -341,51 |
| price | | | |
--------------------------------------------------------------------------------
| Change in bonds at current value | -1,421,52 | -33,097 | 238,087 |
| | 0 | | |
--------------------------------------------------------------------------------
| Change in shareholding | -25,117 | -56,841 | -86,897 |
--------------------------------------------------------------------------------
| Change in issued bonds at amortised | 3,495,708 | 1,245,097 | 1,281,513 |
| cost price | | | |
--------------------------------------------------------------------------------
| Change in other assets and other | -964 | -68,517 | 12,262 |
| liabilities, net | | | |
--------------------------------------------------------------------------------
| Change in deposits and other debt | -3,328,00 | 1,528,453 | 1,808,146 |
| | 2 | | |
--------------------------------------------------------------------------------
| Total working capital | -951,909 | 202,109 | -813,857 |
--------------------------------------------------------------------------------
| Total working cash flow | -712,954 | 486,755 | -565,446 |
--------------------------------------------------------------------------------
| Investments | | | |
--------------------------------------------------------------------------------
| Net investment in tangible fixed assets | 848 | -39,384 | -76,333 |
--------------------------------------------------------------------------------
| Net investment in own equity | 15,102 | 4,272 | -4,208 |
| investments | | | |
--------------------------------------------------------------------------------
| Total investments | 15,95 | -35,112 | -80,541 |
--------------------------------------------------------------------------------
| Financing: | | | |
--------------------------------------------------------------------------------
| Subordinated debt | 28,164 | 1,476,275 | 1,424,091 |
--------------------------------------------------------------------------------
| Total financing | 28,164 | 1,476,275 | 1,424,091 |
--------------------------------------------------------------------------------
| Change in liquidity for the period | -668,84 | 1,927,918 | 778,104 |
--------------------------------------------------------------------------------
| Liquid assets beginning of year | 1,821,474 | 1,043,370 | 1,043,370 |
--------------------------------------------------------------------------------
| Change in liquidity for the period | -668,84 | 1,927,918 | 778,104 |
--------------------------------------------------------------------------------
| Liquid assets end of period | 1,152,634 | 2,971,288 | 1,821,474 |
--------------------------------------------------------------------------------
| Liquid assets end of period | | | |
--------------------------------------------------------------------------------
| Cash in hand and demand deposits at | | | |
--------------------------------------------------------------------------------
| central banks | 297,421 | 619,354 | 485,386 |
--------------------------------------------------------------------------------
|-------------------------------------------------------------------------------
-
| Accounts receivable at credit | |
| institutions and central banks due for | |
| payment within 3 months | 855.288 | 2,351,094 | 1.336,088
-------------------------------------------------------------------------------
| Total | 1,152,709 | 2,970,448 | 1,821,47|
--------------------------------------------------------------------------------
Notes to the Quarterly Report
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
| Note no. |
--------------------------------------------------------------------------------
| | Q1-Q3 | Q1-Q3 | Full year |
| | 2010 DKK | 2009 DKK | 2009 DKK t |
| | t | t | |
--------------------------------------------------------------------------------
| 1 Accounting Policy | | | |
| At the end of the first half of 2010, | | | |
| vestjyskBANK | | | |
| decided to start preparing its | | | |
| annual, half-yearly and quarterly | | | |
| reports | | | |
| in accordance with the International | | | |
| Financial Reporting Standards (IFRS) | | | |
| which have been approved by the EU. | | | |
| Furthermore, the annual, half-yearly | | | |
| and quarterly reports are presented in | | | |
| accordance with the IFRS as issued by | | | |
| the International Accounting Standards | | | |
| Board (IASB). For the purposes of | | | |
| presenting | | | |
| its accounts, the Bank uses the | | | |
| standards and interpretations | | | |
| applicable | | | |
| to the financial year beginning on 1 | | | |
| January 2010. | | | |
| The accounting policy has not changed | | | |
| in | | | |
| relation to the Half Year Report | | | |
| covering | | | |
| the period up to 30 June 2010. Refer to | | | |
| this for a comprehensive description of | | | |
| the accounting policy applied. | | | |
--------------------------------------------------------------------------------
| 2 Interest income | | | |
--------------------------------------------------------------------------------
| Accounts receivable at credit | | | |
| institutions | | | |
--------------------------------------------------------------------------------
| and central banks | 14,656 | 47,171 | 53,602 |
--------------------------------------------------------------------------------
| Loans and advances and other | | | |
--------------------------------------------------------------------------------
| accounts receivable | 1,020,159 | 1,134,021 | 1,477,024 |
--------------------------------------------------------------------------------
| Bonds | 100,487 | 132,372 | 163,325 |
--------------------------------------------------------------------------------
| Derivative financial instruments | | | |
--------------------------------------------------------------------------------
| Foreign exchange contracts | 15,162 | 38,551 | 44,93 |
--------------------------------------------------------------------------------
| Interest rate contracts | 3,172 | -1,281 | -5,048 |
--------------------------------------------------------------------------------
| Total derivate financial instruments | 18,334 | 37,27 | 39,882 |
--------------------------------------------------------------------------------
| Other interest income | 133 | 1 | 20 |
--------------------------------------------------------------------------------
| Total interest income | 1,153,769 | 1,350,835 | 1,733,853 |
--------------------------------------------------------------------------------
| 3 Interest expenses | | | |
--------------------------------------------------------------------------------
| Credit institutions and central banks | 37,694 | 141,877 | 160,117 |
--------------------------------------------------------------------------------
| Deposits and other amounts due | 205,273 | 390,163 | 477,112 |
--------------------------------------------------------------------------------
| Issued bonds | 165,016 | 159,144 | 201,035 |
--------------------------------------------------------------------------------
| Subordinated debt | 141,546 | 57,693 | 106,025 |
--------------------------------------------------------------------------------
| Other interest expenses | 18 | 441 | 444 |
--------------------------------------------------------------------------------
| Total interest expenses | 549,547 | 749,318 | 944,733 |
--------------------------------------------------------------------------------
| 4 Fees and commission income | | | |
--------------------------------------------------------------------------------
| Securities trading and custody | 45,951 | 38,438 | 58,457 |
--------------------------------------------------------------------------------
| Money transmission services | 28,924 | 27,474 | 40,718 |
--------------------------------------------------------------------------------
| Loan processing fees | 54,535 | 40,231 | 59,801 |
--------------------------------------------------------------------------------
| Guarantee commission | 45,834 | 59,766 | 69,708 |
--------------------------------------------------------------------------------
| Other fees and commissions | 13,578 | 14,819 | 19,289 |
--------------------------------------------------------------------------------
| Total fees and commission income | 188,822 | 180,728 | 247,973 |
--------------------------------------------------------------------------------
| 5 Market value adjustments | | | |
--------------------------------------------------------------------------------
| Bonds | 64,675 | 77,55 | 84,07 |
--------------------------------------------------------------------------------
| Shares, etc. | 16,517 | 43,700 | 56,767 |
--------------------------------------------------------------------------------
| Foreign exchange | 21,530 | 32,772 | 39,221 |
--------------------------------------------------------------------------------
| Currency, interest, shares, raw | | | |
--------------------------------------------------------------------------------
| materials and other contracts and other | | | |
--------------------------------------------------------------------------------
| derivative financial instruments | -67,166 | -51,084 | -38,285 |
--------------------------------------------------------------------------------
| Assets relating to pooled funds schemes | 120,885 | 141,665 | 148,826 |
--------------------------------------------------------------------------------
| Deposits in pooled funds schemes | -120,885 | -141,665 | -148,826 |
--------------------------------------------------------------------------------
| Other assets | 6,086 | 6,285 | 5,289 |
--------------------------------------------------------------------------------
| Other liabilities | -3,617 | -5,748 | -6,259 |
--------------------------------------------------------------------------------
| Total market value adjustments | 38,025 | 103,475 | 140,803 |
--------------------------------------------------------------------------------
| 6 Staff costs and administrative | | | |
| expenses | | | |
--------------------------------------------------------------------------------
| Salaries and remuneration to the | | | |
--------------------------------------------------------------------------------
| Board of Directors and Executive | | | |
--------------------------------------------------------------------------------
| Management | | | |
--------------------------------------------------------------------------------
| Board of Directors | 1,125 | 937 | 1,321 |
--------------------------------------------------------------------------------
| Executive Management: | | | |
--------------------------------------------------------------------------------
| Salaries | 4,438 | 4,336 | 5,797 |
--------------------------------------------------------------------------------
| Pensions | 2,759 | 1,998 | 3,145 |
--------------------------------------------------------------------------------
| Total Executive Management | 7,197 | 6,334 | 8,942 |
--------------------------------------------------------------------------------
| Total | 8,322 | 7,271 | 10,263 |
--------------------------------------------------------------------------------
| Staff costs | | | |
--------------------------------------------------------------------------------
| Salaries | 214,082 | 208,42 | 286,497 |
--------------------------------------------------------------------------------
| Pensions | 28,163 | 27,658 | 37,439 |
--------------------------------------------------------------------------------
| Expenses for social security, | | | |
--------------------------------------------------------------------------------
| Payroll Tax etc. | 23,45 | 24,097 | 30,355 |
--------------------------------------------------------------------------------
| Total | 265,695 | 260,175 | 354,291 |
--------------------------------------------------------------------------------
| Other administrative expenses | 177,155 | 206,631 | 258,347 |
--------------------------------------------------------------------------------
| Total staff costs and administrative | | | |
--------------------------------------------------------------------------------
| expenses | 451,172 | 474,077 | 622,901 |
--------------------------------------------------------------------------------
| Other Executive Management items | | | |
--------------------------------------------------------------------------------
| Value of employee benefits | 210 | 191 | 262 |
--------------------------------------------------------------------------------
| No agreements have been concluded | 3,703 | 6,525 | 4,602 |
| regarding bonus schemes, incentive | | | |
| programmes | | | |
| or similar remuneration schemes. | | | |
| The Bank has been exempted from | | | |
| any pension liability with regard to | | | |
| Executive Management's resignation, | | | |
| whether this be on the grounds of age, | | | |
| illness, invalidity or any other | | | |
| reason. | | | |
| With regard to the conditions for | | | |
| Banking | | | |
| Package II, it should be pointed | | | |
| out that when calculating taxable | | | |
| income, tax deducted remuneration to | | | |
| Executive Management is included | | | |
--------------------------------------------------------------------------------
| Number of employees | 645.3 | 662.8 | 658.9 |
| The average number of employees | | | |
| during the financial period has been | | | |
| converted to full-time employees | | | |
--------------------------------------------------------------------------------
| 7 Impairment of loans, advances and | | | |
| accounts receivable etc. | | | |
--------------------------------------------------------------------------------
| Loans and advances | 261,068 | 289,989 | 465,142 |
--------------------------------------------------------------------------------
| The Private Contingency Association | 63,009 | 54,656 | 73,046 |
--------------------------------------------------------------------------------
| Guarantees and credit agreements | 896 | -1,762 | -1,498 |
--------------------------------------------------------------------------------
| Total impairment of loans, advances | | | |
--------------------------------------------------------------------------------
| and accounts receivable | 324,973 | 342,883 | 536,69 |
--------------------------------------------------------------------------------
| 8 Impairment of loans and advances | 1,382,857 | 1,193,773 | 1,193,773 |
| and provisions for guarantees etc. | | | |
| Individual impairments of loans | | | |
| and advances and other accounts | | | |
| receivable at beginning of year | | | |
| Individual impairments of loans and | | | |
| advances and other accounts receivable | | | |
| at beginning of year | | | |
--------------------------------------------------------------------------------
| Impairment during period | 391,599 | 351,109 | 452,642 |
--------------------------------------------------------------------------------
| Reversal of impairment made during | | | |
--------------------------------------------------------------------------------
| previous financial years | -110,702 | -144,838 | -85,339 |
--------------------------------------------------------------------------------
| Other movements | 13,828 | -51,521 | -51,521 |
--------------------------------------------------------------------------------
| Previous individual impairment finally | -101,397 | -52,427 | -126,698 |
| lost | | | |
--------------------------------------------------------------------------------
| Induvidual impairment of loans and | | | |
--------------------------------------------------------------------------------
| advances and other accounts receivable | | | |
--------------------------------------------------------------------------------
| at the end of period | 1,576,185 | 1,296,096 | 1,382,857 |
--------------------------------------------------------------------------------
| Collective impairment of loans and | 103,822 | 18,02 | 18,02 |
| advances | | | |
| Collective impairment of loans and | | | |
| advances and other accounts receivable | | | |
| at beginning of year | | | |
--------------------------------------------------------------------------------
| Impairments during the period | 37,796 | 79,387 | 87,886 |
--------------------------------------------------------------------------------
| Reversal of impairments made in | | | |
--------------------------------------------------------------------------------
| previous financial years | -61,341 | -3,877 | -2,147 |
--------------------------------------------------------------------------------
| Other movements | 1,014 | 63 | 63 |
--------------------------------------------------------------------------------
| Collective impairment of loans and | | | |
| advances | | | |
--------------------------------------------------------------------------------
| and other accounts receivable at end of | 81,291 | 93,593 | 103,822 |
| period | | | |
--------------------------------------------------------------------------------
| Total impairment of loans and advances | | | |
--------------------------------------------------------------------------------
| Impairment of loans and advances and | | | |
| other | | | |
--------------------------------------------------------------------------------
| accounts receivable at beginning of | 1,486,679 | 1,211,793 | 1,211,793 |
| year | | | |
--------------------------------------------------------------------------------
| Impairments during the period | 429,395 | 430,496 | 540,528 |
--------------------------------------------------------------------------------
| Reversal of impairments made in | | | |
--------------------------------------------------------------------------------
| previous financial years | -172,043 | -148,715 | -87,486 |
--------------------------------------------------------------------------------
| Other movements | 14,842 | -51,458 | -51,458 |
--------------------------------------------------------------------------------
| Previous individual impairments now | | | |
--------------------------------------------------------------------------------
| finally classed as lost | -101,397 | -52,427 | -126,698 |
--------------------------------------------------------------------------------
| Impairment of loans and advances and | | | |
--------------------------------------------------------------------------------
| other accounts receivable at end of | 1,657,476 | 1,389,689 | 1,486,679 |
| period | | | |
--------------------------------------------------------------------------------
| Provisions for losses on guarantees | 101,081 | 29,533 | 29,533 |
| and unutilised credit agreements | | | |
| Provisions for losses on guarantees | | | |
| and unutilised credit agreements at | | | |
| beginning of year | | | |
--------------------------------------------------------------------------------
| 8 Provisions during the period | 72,411 | 64,121 | 84,273 |
--------------------------------------------------------------------------------
| Reversal of provisions made in previous | | | |
--------------------------------------------------------------------------------
| financial years | -8,505 | -9,007 | -12,725 |
--------------------------------------------------------------------------------
| Provisions for losses on guarantees and | | | |
--------------------------------------------------------------------------------
| unutilised credit agreements at end of | 164,987 | 84,647 | 101,081 |
| period | | | |
--------------------------------------------------------------------------------
| Accumulated impairment percentage | 5.9% | 4.9% | 5.1% |
--------------------------------------------------------------------------------
| 9 Other assets | | | |
--------------------------------------------------------------------------------
| Positive market value of derivative | | | |
--------------------------------------------------------------------------------
| financial instruments | 797,854 | 306,643 | 354,04 |
--------------------------------------------------------------------------------
| Various debtors | 45,907 | 36,842 | 26,927 |
--------------------------------------------------------------------------------
| Interest receivable and commissions | 75,103 | 85,065 | 94,355 |
--------------------------------------------------------------------------------
| Acquired properties | 6,041 | 7,339 | 9,255 |
--------------------------------------------------------------------------------
| Other assets | 25,780 | 31,434 | 30,286 |
--------------------------------------------------------------------------------
| Total other assets | 950,685 | 467,323 | 514,863 |
--------------------------------------------------------------------------------
| 10 Deposits and other amounts due | | | |
--------------------------------------------------------------------------------
| On demand | 9,027,492 | 9,477,211 | 9,779,596 |
--------------------------------------------------------------------------------
| At notice | 26,399 | 107,635 | 79,202 |
--------------------------------------------------------------------------------
| Time deposits | 3,200,181 | 5,778,632 | 5,623,003 |
--------------------------------------------------------------------------------
| Special deposits | 2,217,735 | 2,156,638 | 2,318,008 |
--------------------------------------------------------------------------------
| Total deposits | 14,471,80 | 17,520,11 | 17,799,809 |
| | 7 | 6 | |
--------------------------------------------------------------------------------
| 11 Other liabilities | | | |
--------------------------------------------------------------------------------
| Negative market value of derivative | | | |
--------------------------------------------------------------------------------
| financial instruments | 618,592 | 312,654 | 344,567 |
--------------------------------------------------------------------------------
| Various creditors | 102,86 | 94,456 | 152,318 |
--------------------------------------------------------------------------------
| Interest and commissions payable | 240,133 | 321,329 | 148,311 |
--------------------------------------------------------------------------------
| Provisions for pensions and similar | 22,785 | 20,677 | 22,73 |
| liabilities | | | |
--------------------------------------------------------------------------------
| Provisions for losses on guarantees | 162,953 | 77,936 | 95,593 |
--------------------------------------------------------------------------------
| Provisions for other liabilities | 2,034 | 6,711 | 5,489 |
--------------------------------------------------------------------------------
| Other liabilities | 3,067 | 1,176 | 423 |
--------------------------------------------------------------------------------
| Total Other liabilities | 1,152,424 | 834,939 | 769,431 |
--------------------------------------------------------------------------------
| 12 Subordinated debt | | | |
--------------------------------------------------------------------------------
| Supplementary capital of EUR 15m | 111,779 | 111,665 | 111,623 |
--------------------------------------------------------------------------------
| Current interest rate | 2.014% | 2.629% | 2.058% |
--------------------------------------------------------------------------------
| Date of maturity 31/10/2015 | | | |
| The Danish Financial Supervisory | | | |
| Authority has approved prepayment | | | |
| as of 31/10/2010 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 100m | 100 | 100 | 100 |
--------------------------------------------------------------------------------
| Current interest rate | 2.145% | 3.005% | 2.564% |
--------------------------------------------------------------------------------
| Date of maturity 01/11/2013 | | | |
| The Danish Financial Supervisory | | | |
| Authority has approved prepayment | | | |
| as of 01/11/2010 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of NOK 135m | 126,252 | 118,787 | 120,717 |
--------------------------------------------------------------------------------
| Current interest rate | 3.370% | 2.630% | 2.820% |
--------------------------------------------------------------------------------
| Date of maturity 16/05/2014 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 16/05/2011 | | | |
--------------------------------------------------------------------------------
| 12 Supplementary capital of DKK 100m | 100,000 | 100,000 | 100,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.095% | 2.955% | 2.514% |
--------------------------------------------------------------------------------
| Date of maturity 01/05/2015 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 01/05/2012 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 100m | 100,000 | 100,000 | 100,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.898% | 3.448% | 3.300% |
--------------------------------------------------------------------------------
| Date of maturity 18/02/2016 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 18/02/2013 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 100m | 100,000 | 100,000 | 100,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.898% | 3.448% | 3.300% |
--------------------------------------------------------------------------------
| Date of maturity 22/02/2016 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 22/02/2013 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 25m | 25,000 | 25,000 | 25,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.873% | 3.943% | 3.377% |
--------------------------------------------------------------------------------
| Date of maturity 03/03/2014 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 03/03/2011 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 25m | 25,000 | 25,000 | 25,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.123% | 3.193% | 2.627% |
--------------------------------------------------------------------------------
| Date of maturity 03/03/2016 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 03/03/2013 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 50m | 50,000 | 50,000 | 50,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.295% | 3.155% | 2.714% |
--------------------------------------------------------------------------------
| Date of maturity 01/11/2013 | | | |
| The Danish Financial Supervisory | | | |
| Authority has approved prepayment | | | |
| as of 01/11/2010 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 60m | 0 | 60,000 | 0 |
--------------------------------------------------------------------------------
| Current interest rate | | 4,72% | |
--------------------------------------------------------------------------------
| The loan was prepaid with the approval | | | |
| of the Danish Financial Supervisory | | | |
| Authority on 26/11/2009 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 100m | 100,000 | 100,000 | 100,000 |
--------------------------------------------------------------------------------
| Current interest rate | 2.145% | 3.005% | 2.564% |
--------------------------------------------------------------------------------
| Date of maturity 01/11/2013 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 01/11/2010 | | | |
--------------------------------------------------------------------------------
| 12 Supplementary capital of NOK 200m | 187,040 | 175,980 | 178,840 |
--------------------------------------------------------------------------------
| Current interest rate | 3.470% | 2.790% | 2.810% |
--------------------------------------------------------------------------------
| Date of maturity 01/09/2014 | | | |
| The Danish Financial Supervisory | | | |
| Authority has approved prepayment | | | |
| as of 01/09/2011 | | | |
--------------------------------------------------------------------------------
| Supplementary capital of DKK 50m | 50,000 | 50,000 | 50,000 |
--------------------------------------------------------------------------------
| Current interest rate | 1.973% | 3.043% | 2.477% |
--------------------------------------------------------------------------------
| Date of maturity 31/10/2015 | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 31/10/2012 | | | |
--------------------------------------------------------------------------------
| Hybrid core capital of DKK 100m | 104,753 | 99,302 | 99,397 |
--------------------------------------------------------------------------------
| Current interest rate | 4.765% | 4.765% | 4.765% |
--------------------------------------------------------------------------------
| No date of maturity | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid on 15/11/2015 | | | |
--------------------------------------------------------------------------------
| Hybrid core capital of DKK 1,438m | 1,444,894 | 1,433,003 | 1,435,976 |
--------------------------------------------------------------------------------
| As far as DKK 322m are concerned, | | | |
| the Bank is subject to an obligation of | | | |
| conversion, if the Bank does not meet | | | |
| the solvency requirement, or the Danish | | | |
| Financial Supervisory | | | |
| Authority deems | | | |
| that there is reasonable risk that the | | | |
| Bank | | | |
| cannot meet the solvency requirement. | | | |
--------------------------------------------------------------------------------
| Current interest rate | 9.943% | 9.943% | 9.943% |
--------------------------------------------------------------------------------
| No date of maturity | | | |
| The loan may, with the approval of the | | | |
| Danish Financial Supervisory Authority, | | | |
| be prepaid at the following price: | | | |
| During the period 25/08/2012 - | | | |
| 24/08/2014 at the price of 100 | | | |
| During the period 25/08/2014 - | | | |
| 24/08/2015 at the price of 105 | | | |
| During the period 25/08/2015 and | | | |
| onward at the price of 110 | | | |
| The premium has been recognised | | | |
| and amortised according to expected | | | |
| maturity date | | | |
--------------------------------------------------------------------------------
| Total subordinated debt | 2,624,718 | 2,648,737 | 2,596,553 |
--------------------------------------------------------------------------------
| Subordinated debt to be stated as part | | | |
--------------------------------------------------------------------------------
| of the capital base | 2,253,384 | 2,488,737 | 2,496,553 |
--------------------------------------------------------------------------------
| Costs in connection with raising loans | 0 | 5,988 | 5,988 |
--------------------------------------------------------------------------------
| Interest relating to subordinated debt | | | |
--------------------------------------------------------------------------------
| included in the income statement | 141,546 | 57,693 | 106,025 |
--------------------------------------------------------------------------------
| 13 Holding of own shares | | | |
--------------------------------------------------------------------------------
| Number of shares at DKK 10 (each) | 102 | 166 | 271 |
--------------------------------------------------------------------------------
| Percentage of share capital | 0.8% | 1.3% | 2.2% |
--------------------------------------------------------------------------------
| 14 Difference between presentation of | | | |
| accounts in accordance with IFRS | | | |
| and the Danish Financial Supervisory | | | |
| Authority's (FSA) rules | | | |
--------------------------------------------------------------------------------
| Result for the period | | | |
--------------------------------------------------------------------------------
| (according to IFRS rules) | -39,562 | 24,094 | -41,292 |
--------------------------------------------------------------------------------
| Owner-occupied properties | 3,356 | 1,835 | 24,283 |
--------------------------------------------------------------------------------
| Result for the period | | | |
--------------------------------------------------------------------------------
| (according to the Danish FSA's rules) | -42,918 | 22,259 | -65,575 |
--------------------------------------------------------------------------------
| Shareholders equity in accordance with | 2,125,029 | 2,224,308 | 2,149,416 |
| IFRS | | | |
--------------------------------------------------------------------------------
| Investment properties | 27,639 | 1,835 | 24,283 |
--------------------------------------------------------------------------------
| Shareholders equity in accordance with | 2,097,390 | 2,222,473 | 2,125,133 |
| Danish Financial Supervisory | | | |
| Authority's | | | |
| (FSA) rules | | | |
--------------------------------------------------------------------------------
| 15 Contingent liabilities | | | |
--------------------------------------------------------------------------------
| Financial guarantees | 1,584,265 | 2,076,312 | 2,502,476 |
--------------------------------------------------------------------------------
| Loss guarantees for mortgage credit | 1,025,049 | 908,69 | 958,528 |
| loans | | | |
--------------------------------------------------------------------------------
| Land registration and conversion | | | |
--------------------------------------------------------------------------------
| guarantees | 1,039,127 | 380,652 | 605,155 |
--------------------------------------------------------------------------------
| Other contingent liabilities | 1,458,791 | 1,822,123 | 1,649,229 |
--------------------------------------------------------------------------------
| Total | 5,107,232 | 5,187,777 | 5,715,388 |
--------------------------------------------------------------------------------
| Other contingent liabilities | | | |
--------------------------------------------------------------------------------
| Committed credit agreements of less | 200,000 | 0 | 0 |
| than 1 year | | | |
--------------------------------------------------------------------------------
| Other liabilities | 5,596 | 5,181 | 7,781 |
--------------------------------------------------------------------------------
| Total | 205,596 | 5,181 | 7,781 |
--------------------------------------------------------------------------------
| 16 Capital requirement | | | |
--------------------------------------------------------------------------------
| Shareholders' equity excl. result for | 2,140,308 | 2,200,214 | 2,190,708 |
| the | | | |
| period cf. the Danish FSA's rules | | | |
--------------------------------------------------------------------------------
| Recognised result cf. the Danish FSA's | -42,918 | 0 | -65,575 |
| rules | | | |
--------------------------------------------------------------------------------
| Revaluation reserves | -30,848 | -30,848 | -30,848 |
--------------------------------------------------------------------------------
| Intangible assets | -108,936 | -110,432 | -110,058 |
--------------------------------------------------------------------------------
| Deferred capitalised tax assets | -177,978 | -138,999 | -164,793 |
--------------------------------------------------------------------------------
| Other deductions in core capital | -128,556 | -78,578 | -105,947 |
--------------------------------------------------------------------------------
| Hybrid core capital | 1,452,425 | 1,532,305 | 1,476,090 |
--------------------------------------------------------------------------------
| Core capital after deductions | 3,103,497 | 3,373,662 | 3,189,577 |
--------------------------------------------------------------------------------
| Subordinated loan capital | 703,737 | 956,432 | 961,18 |
--------------------------------------------------------------------------------
| Revaluation reserves | 30,848 | 30,848 | 30,848 |
--------------------------------------------------------------------------------
| Hybrid core capital | 97,222 | 0 | 59,283 |
--------------------------------------------------------------------------------
| Capital base before deductions | 3,935,304 | 4,360,942 | 4,240,888 |
--------------------------------------------------------------------------------
| Deductions in capital base | -128,556 | -78,578 | -105,947 |
--------------------------------------------------------------------------------
| Capital base after reductions | 3,806,748 | 4,282,364 | 4,134,941 |
--------------------------------------------------------------------------------
| Total weighted items | 28,299,23 | 27,635,62 | 28,079,546 |
| | 4 | 4 | |
--------------------------------------------------------------------------------
| Core capital after deductions in | | | |
| percent | | | |
--------------------------------------------------------------------------------
| of total weighted items | 11.0% | 12.2% | 11.4% |
--------------------------------------------------------------------------------
| Solvency ratio according to section | | | |
| 124(2) | | | |
--------------------------------------------------------------------------------
| of the Danish Financial Business Act | 13.5% | 15.5% | 14.7% |
--------------------------------------------------------------------------------
| 17 Pledging of security | | | |
--------------------------------------------------------------------------------
| Bonds: | | | |
| Pledged as security for drawing right | | | |
| at | | | |
| Danmarks Nationalbank | | | |
--------------------------------------------------------------------------------
| Total nominal value | 1,037,301 | 764,327 | 876,518 |
--------------------------------------------------------------------------------
| Total market value | 1,036,449 | 761,092 | 874,666 |
--------------------------------------------------------------------------------
| Of which charged | 0 | 421,674 | 0 |
--------------------------------------------------------------------------------
| Credit institutes: | 309,126 | 3,825 | 92,402 |
| Margin accounts pledged as security in | | | |
| relation to financial instruments | | | |
--------------------------------------------------------------------------------
