Danske Bank Plc - Interim Management statement

Danske Bank Plc Group: Interim Management Statement January-March 2016

DANSKE BANK Plc GROUP - INTERIM MANAGEMENT STATEMENT JANUARY - MARCH 2016

Danske Bank Plc Group's January-March 2016:

Solid performance in core banking business despite challenging conditions

The first months of 2016 did not bring signs of a clear turnaround in the
Finnish economy. Economic activity remained consumer-driven, and investments
were sluggish. The operating environment in the banking sector remained
challenging, and record-low interest rates continued to depress Danske Bank
Finland's* net interest income. Fee income remained stable, while net trading
income was negatively affected by market volatility. Total income for Danske
Bank's operations in Finland was EUR 154.1 million, 7.5% below the previous
year's level. Due to continued strong focus on cost efficiency and operational
processes, total costs decreased by 5.1%.

Danske Bank's core banking business in Finland remained solid, and profit before
taxes improved in three out of four business units. Profit before taxes for the
period amounted to EUR 62.4 million (77.2). The decrease was due to valuation
adjustments stemming from the volatile market and credit loss impairments
(recoveries in the comparison period).

While the low interest environment helps to boost households' spending power, it
also has a negative impact on the development of Finnish households' overall
prosperity.

"Finns' financial assets are deposit-heavy, and for the moment they are
gathering little or no return. To meet the demographic and public deficit
challenges that Finland is facing, it is high time to encourage Finns to
contribute to their personal financial security through systematic and
diversified saving. We in the financial sector have a big responsibility to
educate and advise households and businesses on how to plan their finances and
build a balanced asset portfolio. For us at Danske Bank it was important to
integrate the possibility for continuous saving without subscription fee in our
new flexible mortgage solutions, and we believe that our new Wealth Management
business unit is well positioned to help Finns to prepare for a good life and
realise their dreams. It should, however, also be in the Finnish State's
interest to devise incentives and promote a savings-friendly environment for
every household," says Risto Tornivaara, CEO of Danske Bank Plc.

In mortgage lending, Danske Bank started 2016 by challenging the Finnish
mortgage conventions. Based on thorough customer research, the bank launched a
new selection of transparent mortgages that suit different life situations and
are flexible enough to enable customers to save and realize other goals while
paying their mortgage. The new thinking has been well received, with almost half
of customers choosing one of the new flexible mortgage solutions and a total of
19% of new mortgage customers taking the benefit of managing their interest risk
with an interest rate collar that we now offer transparently for no extra charge
during the first quarter.

In Business Banking, customer satisfaction improved even further, and our loan
portfolio among small and medium-sized companies grew by 10%, outpacing the
market. Danske Bank's Corporate Finance and Capital Markets units retained their
strong positions and were awarded several key mandates by large corporate
customers and institutional clients.

*Includes Danske Bank Plc and the Helsinki Branch of Danske Bank A/S

Financial Highlights of Danske Bank's operations in Finland

In addition to Danske Bank Plc, Danske Bank's operations in Finland include the
Helsinki branch of Danske Bank A/S.

+------------------------------------+--------+--------+-------+--------+------+
|EUR millions                        | Q1 2016| Q1 2015| change| Q4 2015|change|
+------------------------------------+--------+--------+-------+--------+------+
|Net interest income                 |    79.0|    81.6|  -3.2%|    83.1| -4.9%|
+------------------------------------+--------+--------+-------+--------+------+
|Net fee income                      |    67.4|    67.7|  -0.4%|    64.2|  5.0%|
+------------------------------------+--------+--------+-------+--------+------+
|Net trading income                  |     5.3|    14.5| -63.4%|     6.8|-22.1%|
+------------------------------------+--------+--------+-------+--------+------+
|Other income                        |     2.4|     2.8| -14.3%|     2.7|-11.1%|
+------------------------------------+--------+--------+-------+--------+------+
|Total income                        |   154.1|   166.6|  -7.5%|   156.8| -1.7%|
+------------------------------------+--------+--------+-------+--------+------+
|Operating expenses                  |    89.5|    94.3|  -5.1%|   100.7|-11.1%|
+------------------------------------+--------+--------+-------+--------+------+
|Profit before loan impairment       |        |        |       |        |      |
|charges                             |    64.6|    72.3| -10.7%|    56.1| 15.2%|
+------------------------------------+--------+--------+-------+--------+------+
|Loan impairment charges             |     2.2|    -4.9|-144.9%|     1.1|100.0%|
+------------------------------------+--------+--------+-------+--------+------+
|Profit before tax                   |    62.4|    77.2| -19.2%|    55.0| 13.5%|
+------------------------------------+--------+--------+-------+--------+------+
|                                    |        |        |       |        |      |
+------------------------------------+--------+--------+-------+--------+------+
|C/I-ratio, %                        |   58.1%|   56.6%|   1.5%|   64.2%| -6.1%|
+------------------------------------+--------+--------+-------+--------+------+
|                                    |        |        |       |        |      |
+------------------------------------+--------+--------+-------+--------+------+
|Loans                               |21,363.7|20,780.6|   2.8%|20,882.8|  2.3%|
+------------------------------------+--------+--------+-------+--------+------+
|Deposits                            |19,167.5|18,674.7|   2.6%|19,830.6| -3.3%|
+------------------------------------+--------+--------+-------+--------+------+
|                                    |        |        |       |        |      |
+------------------------------------+--------+--------+-------+--------+------+


Danske Bank Plc Group's Financial Highlights

+-----------------------------------+--------+--------+-------+--------+-------+
|EUR millions                       | Q1 2016| Q1 2015| change| Q4 2015| change|
+-----------------------------------+--------+--------+-------+--------+-------+
|Net interest income                |    71.4|    73.7|  -3.1%|    76.5|  -6.7%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Net fee income                     |    56.8|    57.4|  -1.1%|    57.3|  -0.9%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Net trading income                 |     4.4|    13.7| -67.9%|     4.0|  10.0%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Other income                       |     4.8|     5.2|  -8.2%|     5.3|  -9.4%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Total income                       |   137.4|   150.1|  -8.5%|   143.1|  -4.0%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Operating expenses                 |    83.4|    89.2|  -6.5%|    93.5| -10.8%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Profit before loan impairment      |        |        |       |        |       |
|charges                            |    54.0|    60.9| -11.3%|    49.6|   8.9%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Loan impairment charges            |     2.0|    -2.8|-171.4%|    -0.5|-500.0%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Profit before tax                  |    52.0|    63.7| -18.4%|    50.1|   3.8%|
+-----------------------------------+--------+--------+-------+--------+-------+
|                                   |        |        |       |        |       |
+-----------------------------------+--------+--------+-------+--------+-------+
|C/I-ratio, %                       |  60.7 %|  59.5 %|   1.2%|  65.3 %|  -4.6%|
+-----------------------------------+--------+--------+-------+--------+-------+
|ROE, %                             |        |        |       |   6.6 %|       |
+-----------------------------------+--------+--------+-------+--------+-------+
|Total capital ratio, %             |        |        |       |  18.4 %|       |
+-----------------------------------+--------+--------+-------+--------+-------+
|Common equity tier 1 capital ratio,|        |        |       |        |       |
|%                                  |        |        |       |  17.5 %|       |
+-----------------------------------+--------+--------+-------+--------+-------+
|FTE                                |  1683.3|  1839.5|  -8.5%|  1730.4|  -2.7%|
+-----------------------------------+--------+--------+-------+--------+-------+
|                                   |        |        |       |        |       |
+-----------------------------------+--------+--------+-------+--------+-------+
|Loans                              |20,215.6|19,426.3|   4.1%|19,818.8|   2.0%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Deposits                           |17,452.3|18,619.3|  -6.3%|18,115.3|  -3.7%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Total equity*                      | 2,455.2| 2,349.8|   4.5%| 2,515.4|  -2.4%|
+-----------------------------------+--------+--------+-------+--------+-------+
|Total balance sheet                |30,380.6|31,862.6|  -4.7%|30,312.9|   0.2%|
+-----------------------------------+--------+--------+-------+--------+-------+
|                                   |        |        |       |        |       |
+-----------------------------------+--------+--------+-------+--------+-------+
Figures in this press release have not been audited.
*Profit for Q1 2016 and Q1 2015 not included in total equity for respective
period

Danske Bank Plc does not publish a full interim report for the first and third
quarters.
Outlook for 2016

Growth in the Finnish economy is expected to be quite modest during 2016 and
mainly driven by growth in exports. The interest environment, especially short-
term interest rates, is expected to remain at a low level. We expect our lending
to personal and corporate customers to grow in 2016.

Expenses are expected to be at the same level as the previous year, even though
the bank continues to have a strong focus on improving its cost efficiency and
operational processes. This is due to growth in the bank's costs associated with
e.g. regulation. Overall, we expect that our net profit for 2016 will be
slightly higher than in 2015 as loan impairment charges are expected to remain
at a low level.

For further information:

Anu Ilvonen, Head of Communications, tel. +358 10 546 8002



  

[HUG#2008256]

Attachments:

Danske Bank Plc - Interim Management Statement January-March 2016.pdf