Danske Bank

Danske Bank delivered a financial result with a net profit of DKK 15bn (DKK 21bn) and a return on shareholders’ equity of 9.8%. The financial result was overshadowed by the AML case.

Danske Bank is a Nordic focused universal bank with four core Nordic markets - Denmark, Norway, Sweden and Finland - and four business segments - personal, business, corporate and institutions and wealth. The universal banking model provides a strong diversified platform delivering synergies across core markets.

A.P. Moller has been involved in Danske Bank since 1928. In 2015, A.P. Moller Holding acquired a 20% direct ownership stake in Danske Bank, and at the end of 2018 A.P. Moller Holding held 20.5% of the shares in Danske Bank. A.P. Moller Holding continues to see the importance and value of a leading Nordic bank, with a strong presence in Denmark.

THE YEAR IN BRIEF 2018 proved to be a challenging year for Danske Bank, with the continued development of the serious issues related to the non-resident portfolio in Estonia (the AML case), which continues to negatively impact the bank in a number of ways.

Following the release of the report on the AML case, there has been changes in the management team and in the Board of Directors elected on the extraordinary general meeting held in December 2018. The extraordinary general meeting was called by Danske Bank at A.P. Moller Holding’s request and was fully supported by other main shareholders. The purpose was to ensure that the Board of Directors has strong integrity and comprehensive experience in engaging with regulators, as well as financial competencies, to support the bank’s talented employees in re-establishing a new, sound foundation and to strengthen Danske Bank’s position as a leading Nordic bank.

The decrease in net profit from 2017 was driven mainly by difficult conditions on the financial markets, which had a negative impact on trading as well as on fee income. The results also reflect the donation of the estimated gross income from the non-resident portfolio in Estonia from 2007 to 2015 of DKK 1.5bn.

In June 2018, Danske Bank acquired SEB Pension Denmark adding 300,000 new customers and increasing the assets under management approximately DKK 100bn.

Danske Bank decided to discontinue their share buy-back program on 4 October 2018 as a consequence of the ongoing AML case.

In December 2018, Danske Bank announced its intention to sell the Swedish pension activities to a consortium of investors. However, Danske Bank and the new owners of Danica Pension Sweden will continue to collaborate.

STRATEGY REVIEW Danske Bank launched their “Nordic Integrator Bank” strategy in May 2018 with the vision of becoming a trusted financial partner and setting new ambitions for the value creating for all its customers.

Danske Bank is executing on its strategy based on eight strategic priorities: Win on customer experience, Make compliance a business enabler, Increase the focus on people and culture, Build a harmonised Nordic core, Drive efficiency and agility, Make partnerships a growth lever, Lead data and analytics and Integrate societal impact into their business model.

Danske Bank will work within the framework to create the best possible customer experience.

FINANCIALS Net profit amounted to DKK15bn, a decrease of 28% from the level in 2017. The underlying business remained solid and saw good developments. The profit was primarily affected by a decrease in net trading income of DKK 2.4bn and the one-off expense of DKK 1.5bn relating to the donation. In addition, the result was negatively affected by increased compliance costs, including costs relating to the AML case and the integration of SEB Pension Danmark.

The CET1 capital ratio was 17.0% end of 2018 (17.6% end of 2017). Danske Bank has set the ratio target at around 16%. Danske Bank thus meets the regulatory requirement of 14%.

Danske Bank’s overall liquidity position remained robust. Stress tests show that the bank has a sufficient liquidity buffer well beyond 12 months. At the end of 2018, the liquidity coverage ratio stood at 121%, with a liquidity reserve of DKK 512bn. Danske Bank maintains its dividend policy of paying out between 40% and 60% of net profit and proposes a dividend of DKK 8.50 per share, corresponding to 51% of reported net profit.

EXECUTIVE LEADERSHIP • Jesper Nielsen (Interim CEO) • Christian Baltzer (CFO) • Jacob Aarup-Andersen • Jim Ditmore • Carsten Egeriis • Jakob Groot • Glenn Söderholm • Frederik Vinten • Phillippe Vollot

BOARD OF DIRECTORS • Karsten Dybvad (Chairman) • Carol Sergeant (Vice Chairman) • Jan T. Nielsen (Vice Chairman) • Bente Avnung Landsnes (elected March 2019) • Christian Sagild (elected March 2019) • Gerrit Zalm (elected March 2019) • Jens Due Olsen • Lars-Erik Brenøe • Bente Bang • Charlotte Hoffmann • Kirsten Ebbe Brich • Thorbjørn Lundholm Dahl TOTAL INCOME (DKKm)

44,365 48,149 47,959 45,611 45,330

2018 2017 2016 2015 2014

NET PROFIT (DKKm)

15,001 20,900 19,858

13,123

3,948

2018 2017 2016 2015 2014

CET1 CAPITAL RATIO (%)

17.0% 17.6% 16.3% 16.1% 15.1%

2018 2017 2016 2015 2014

DIVIDEND YIELD (%)

6.6%

4.1% 4.2% 4.3%

3.3%

2018 2017 2016 2015 2014