Den Danske Bank A/S - 1st Quarter Results

RNS Number:4219K
Den Danske Bank A/S
11 May 2000

  Interim Report
First Quarter of 2000

DEN DANSKE BANK Group

Core earnings and net profit for the     QI       QI      Index     Full year
Period (DKr million)                    2000     1999     00/99       1999

Total core income                      4,036     3,381     127      14,821
Operating expenses and depreciation    2,338     1,907     123       9,173
Core earnings before provisions        1,968     1,474     134       5,648
Provisions for bad and doubtful debts    124       175      71         489
Core earnings                          1,844     1,299     142       5,159
Profit on sale of subsidiaries             0         0       0         703
Earnings from investment portfolios      434        10   4,340         459
Profit on ordinary operations before 
tax                                    2,278     1,309     174       6,321
Tax                                      675       376     180       1,293
Net profit for the period              1,603       933     172       5,028


Balance sheet highlights (DKr billion)

Loans and advances                       399       338     118         381
Bonds and shares, etc.                   151       151     100         147
Due to credit institutions and central 
banks                                    185       184     101         158
Deposits                                 278       239     116         266
Issued bonds                             155       127     122         150
Subordinated debt                         22        18     122          21
Shareholders' equity                      32        31     103          31

Total assets                             770       696     111         701

Ratios and key figures

Net profit per share, DKr               30.3      17.6                95.0
Net profit as % of average shareholders'
 equity                                 20.5      12.1                16.5
Core earnings as % of average 
 shareholders' equity                   23.5     16.9                 16.9
Cost/core income ratio, %               54.3     56.4                 61.9
Solvency ratio, % (excl. first-quarter
 profits)                               10.3     10.0                 11.0
Core (tier 1) capital ratio, % (excl.
first-quarter profits)                   6.8      7.2                  7.4
Share price end of period, DKr           799      718                  809
Book value per share, DKr                607      590                  577
Number of full-time employees end of
period in: 
 Danske Bank and consolidated 
 subsidiaries                         12,365   11,641               12,397
 Non-consolidated subsidiaries 
 (insurance companies)                 1,048    1,444                1,128
Rating -Moody's (short-term)             P-1     P-1                  P-1
       -Moody's (long-term)              Aa3     Aa3                  Aa3
       -S&P (short-term)                 A-1     A-1                  A-1
       -S&P (long-term)                  A+      A+                   A+

Review

- Den Danske Bank Group recorded an after-tax profit of DKr1,603m for the first
quarter of 2000, against DKr933m for the first quarter of 1999.  The tax charge
was DKr675m, against DKr376m the year before.     

- Core earnings rose by DKr545m to DKr1,844m, mainly as a result of increased
securities trading and asset management activity.

- Earnings from investment portfolios rose by DKr424m to DKr434m.

- The Group's solvency ratio (the first-quarter results not incorporated) was
10.3%.  The core (tier 1) capital ratio stood at 6.8%.

- There was a significant increase in customers' use of the Group's e-banking
facilities in the first quarter.  Retail Banking gained a satisfactory number of
new customer contracts.  Thirteen per cent of securities trading at Retail
Banking took place through the e-banking facilities.  In March, Den Danske Bank
launched a WAP banking service.  

Core earnings were better than expected at the release of the 1999 Annual
Report, as high activity in securities markets raised earnings from trading and
asset management activities.

When comparing Profit-and-Loss and Balance-Sheet items for the first quarter of
2000 with those for the year before, it should be taken into account that Fokus
Bank was not incorporated into the Group Accounts until June 1, 1999, and that
the non-life insurance companies were sold off as at the end of 1999. Fokus
Bank's core earnings for the first quarter of 2000 were DKr107m before
accounting for the cost of funding the acquisition.  The non-life technical
result contributed DKr6m to first-quarter earnings.

Operating expenses and depreciation rose by DKr431m from the year before, in
line with expectations.  Expenses rose by 5% not counting Fokus Bank and the
increase in provisions for performance-related bonus payments that was prompted
by higher profits from trading activities.  IT and e-finance development costs
remained high.  The cost/core income ratio declined, as had been expected, and
now amounts to 54.3%, slightly better than the Group's target.

The charge for bad and doubtful debts was DKr124m, against DKr175m the year
before.  Den Danske Bank reached a settlement with the Danish government in the
Faroese banking affair on March 23, 2000 and, in April, the Bank made an ex
gratia payment of DKr300m to the Danish government.  The amount had been
provided as at the end of 1999 and hence did not affect the first-quarter
results.

The tax charge was 30% of pre-tax profit.

The total assets of the Group rose to stand at DKr770bn at March 31, 2000.  The
solvency ratio was 10.3% (first-quarter results not incorporated).

The return on equity grew to 20.5%.

This Quarterly Report has been prepared in accordance with the Copenhagen Stock
Exchange guidelines for issuers of listed securities.  The accounting policies
are unchanged from 1999.

The Group's business areas

The business areas of the Group performed satisfactorily and slightly ahead of
expectations, Danske Securities and Asset Management made a particular
contribution owing to high activitiy on equity markets in the first quarter.

A breakdown of core earnings before provisions by business area shows that
Retail Banking, Danske Securities and Asset Management are contributing an
increasing share of total earnings.


                                Core earnings before   Core earnings before
                                Provisions Q1 2000     Provisions Q1 1999
Retail Banking                           41%                  36%
Wholesale Banking                        29%                  42%
Danske Securities                         5%                   1%
Asset Management                         15%                   9%
Life and Pensions                        10%                   9%
Other areas                               0%                   3%


Core earnings before provisions by business area were as follows:

Year to date 
(DKr million)      Retail Banking     Wholesale Banking     Danske Securities
                 2000         1999   2000          1999    2000          1999

Core income      2,430        1,903  989           984      254           107
Operating 
Expenses and
Depreciation     1,645        1,378  409           367      151            87
Core earnings
Before provisions  785          525  580           617      103            20
Total assets 
(average)      227,076      168,597  399,082   377,496      671           448
Risk-weighted
Items (average)171,120      113,629  199,728   229,775      548           435
Allocated 
Capital
(average)       11,974        7,954   13,981    16,084       38            30

Year to date 
(DKr million)     Asset Management    Life and Pensions       Other Areas
                 2000         1999   2000          1999    2000          1999

Core income       423          235      -             -      13            14
Operating 
Expenses and
Depreciation       123          104    -             -       10           -29
Core earnings
Before provisions  300          131  197           138        3            43

Total assets
(average)        8,121        7,150    -             -        -             -
Risk-weighted
Items (average)  5,257        3,957    -             -        -             -
Allocated 
Capital 
(average)          368          277  5,373       5,402        -             -


Retail Banking continued to make progress and saw strong activity in the first
quarter of 2000.  A growing business volume, particularly a sharp advance in
sales of investment products, contributed to the results of this division. 
Return on allocated capital remained at 26% before provisions.  Retail Banking
continued to focus on measures to enhance efficiency.  In Denmark, the ongoing
restructuring of the Copenhagen branch network will cut the number of branches
by 21.  Expenses rose by 19%.  Expenses were more or less flat not counting the
integration of Fokus Bank.  In Sweden, Retail Banking recorded very satisfactory
improvement in earnings and an advance in lending and sales of investment
products.

Wholesale Banking reduced its capital requirement from the first quarter of 1999
and raised the return on allocated capital.  Profit has not yet reached a
satisfactory level, however, Trading on interest rate and currency markets made
a particularly strong contribution to first-quarter profit.

Danske Securities, Den Danske Bank's investment banking division, had strong
growth in equity trading volume.  The sharp increase in earnings from equity
activities is not likely to be maintained during the rest of 2000.  Expenses
increased owing to the enlargement of the investment banking division in 1999
and higher provisions for performance-related bonuses in 2000.

Asset Management saw good growth in core earnings, also in Norway and Sweden. 
Earnings growth arose from an increase in client funds under management,
stronger activity and a change in the composition of client funds.  Private
Banking also made good progress in the first quarter.

Life and Pensions saw profits develop in line with expectations.  The volume of
life premiums with company pension clients increased at a good rate.  Sales of
unit-linked products in Sweden, which were launched in 1999, showed strong
growth.  The agreement to co-operate with Top-danmark on non-life business
developed as planned.

Outlook

For the whole of 2000, Den Danske Bank expects core income to show improvement,
expenses and depreciation to rise slightly from 1999, and provisions for bad and
doubtful debts to be at a similar level to 1999.  The Group does not expect to
maintain the high level of activity recorded in the first quarter of 2000
throughout the year.  Earnings from securities trading are forecast to lose some
momentum.  The Group expects core earnings for the remaining nine months of this
year to exceed those generated in the same period of 1999.

Earnings from investment portfolios during the rest of this year will depend
significantly on the level of securities prices at the year-end.

The tax charge for 2000 is expected to equal the Danish corporation tax rate.  

The Group expects to publish its Half-Year Report on August 17, 2000.

Copenhagen, May 11, 2000
Den Danske Bank Aktieselskab
2-12 Holmens Kanal
Reg.No.28472 Copenhagen
DK-1092 Copenhagen K
www.danskebank.com 


DEN DANSKE BANK Group

Core earnings and net profit   Q1       Q4       Q3       Q2       Q1    Full  
                                                                         Year
(DKr million)                 2000     1999     1999     1999     1999   1999

Net interet income, excluding
Earnings from investment 
Portfolios                    2,341    2,286   2,233     2,062   2,012   8,593
Fee and commission income 
(net)                         1,211    1,041     950       914     844   3,749
Trading income                  368      467     100       170     230     967
Other core income               157      129     165       125     118     537
Core insurance income           229      224     288       286     177     975
Total core income             4,306    4,147   3,736     3,557   3,381  14,821
Operating expenses and 
Depreciation                  2,338    2,923   2,177     2,166   1,907   9,173
Core earnings before 
Provisions                    1,968    1,224   1,559     1,391   1,474   5,648
Provisions for bad and 
Doubtful debts                  124      325      26       -37     175     489
Core earnings                 1,844      899   1,533     1,428   1,299   5,159
Profit on sale of subsidiaries    0      703       0         0       0     703
Earnings from investment 
Portfolios                      434      411    -138       176      10     459
Profit on ordinary operations 
Before tax                    2,278    2,013   1,395     1,604   1,309   6,321
Tax                             675      194     280       443     376   1,293
Net profit for the period     1,603    1,819   1,115     1,161     933   5,028
Balance sheet highlights
(DKr billion)

Core earnings and net profit   Q1       Q4       Q3       Q2       Q1    Full  
                                                                         Year
(DKr million)                 2000     1999     1999     1999     1999   1999

Loans and advances            399       381      386      370      338    381
Bonds and shares, etc.        151       147      140      147      151    147
Due to credit institutions
And central banks             185       158      165      155      184    158
Deposits                      278       266      267      246      239    266
Issued bonds                  155       150      141      134      127    150
Subordinated debt              22        21       20       21       18     21
Shareholders' equity           32        31       30       29       31     31

Total assets                  770       701      706      678      696    701

Total off-balance-sheet items 163       162      150      158      154    162



Movements in Den Danske Bank
Group's shareholders' equity         Q1             Q1             Full year
(DKr million)                       2000           1999               1999

Shareholders' equity at January 1   30,542         30,366             30,366
Net profit for the period            1,603            933              5,028
Dividends                                0              0             -1,323
Goodwill fully written off at the 
Time of acquisition                    -48            -33             -3,562
Change in minority interests            13            -18                 33
Shareholders' equity                32,110         31,248             30,542

The share capital is made up of 52,925,000 shares, totalling DKr5,293m.

Solvency (excluding net profit for the period)
(DKr million)
Core capital, less statutory 
Deduction for own shares           30,210         30,044            30,252
Supplementary capital, less
Statutory deductions               15,702         11,732            14,867
Total capital base, less statutory
Deductions                         45,912         41,776            45,119

Weighted items
  Outside trading portfolio       392,450        362,768           364,527
  With market risk included in
  Trading portfolio                51,697         54,609            46,819
Total weighted items              444,147        417,377           411,346

Solvency ratio (%)                   10.3           10.0              11.6
Core (tier 1) capital alone (%)       6.8            7.2               7.4
The solvency ratio is subject to 
A statutory minimum requirement of(%) 8.0            8.0               8.0
DEN DANSKE BANK Group

Core earnings before provisions, breakdown

                 Q1         Q4         Q3         Q2         Q1      Full year
(DKr million)   2000       1999       1999       1999       1999     1999

Retail Banking
Core income     2,430      2,336      2,330      2,044      1,903    8,613
Operating 
Expenses and
Depreciation    1,645      2,026      1,595      1,537      1,378    4,536
Core earnings
Before provisions 785        310        735        507        525    2,077
Allocated 
Capital        11,974     11,071     10,617      9,125      7,954    9,703

Wholesale Banking
Core income       989      1,048       819         935        984    3,786
Operating 
Expenses and
Depreciation      409        448        398        395        367    1,608
Core earnings 
Before provisions 580        600        421        540        617    2,178
Allocated 
Capital        13,981     14,601     14,868     16,729     16,084   15,637

Dankske Securities
Core income       254        204        130        165        107      606
Operating expenses
And depreciation  151        196         93        108         87      484
Core earnings 
Before provisions 103          8         37         57         20      122
Allocated 
Capital            38         12         42         18         30       27 

Core earnings before provisions, breakdown

                 Q1         Q4         Q3         Q2         Q1      Full year
(DKr million)   2000       1999       1999       1999       1999     1999

Asset Management
Core income       423        307        189        227        235      958
Operating expenses
And depreciation  123        128        109        111        104      452
Core earnings 
Before provisions 300        179         80        116        131      506
Allocated 
Capital           368        410        283        314        277      321

Life and Pensions
Profit from life
Insuarance        210        223        220        223        131      797
Non-life technical
Result              -        -28         41         26          6       45
Net interest from
Investments, etc.  19         29         27         37         40      133
Core insurance
Income            229        224        288        286        177      975
Funding costs, net-32        -37        -33        -34        -39     -143
Core earnings 
Before provisions 197        187        255        252        138      832
Allocated 
Capital         5,373      5,402      5,409      5,421      5,402    5,411

Other areas
Core income       13          65         13        -66         14       26
Operating expenses
And depreciation  10         125        -18         15        -29       93
Core earnings 
Before provision   3         -60         31        -81         43      -67

Core earnings before provisions, breakdown

                 Q1         Q4         Q3         Q2         Q1      Full year
(DKr million)   2000       1999       1999       1999       1999     1999

Group
Core income    4,306       4,147      3,736      3,557      3,381   14,821      
Operating 
Expenses and 
Depreciation   2,338       2,923      2,177      2,166      1,907    9,173
Core earnings 
Before 
Provisions     1,968       1,224      1,559      1,391      1,474    5,648



The Group's business areas:

Retail Banking provides services to personal customers and small and
medium-sized business customers served by the Nordic branch network.  Retail
Banking offers a range of standardised and competitive financial products of
high quality.  This business area encompasses the Group's leasing and factoring
operations

Wholesale Banking serves the Group's large corporate and institutional clients.
This division is responsible for the Group's global trading activities on
interest rate and foreign exchange markets.

Danske Securities, the Group's investment banking division, is responsible for
corporate finance activities and the sales and trading of equities and
equity-related products.  Danske Securities is active on four Nordic stock
exchanges

Asset Management provides investment portfolio services to institutional clients
and other large investors, primarily in the Nordic region.  Moreover, Asset
Management provides private banking services and unit trust products in the
Nordic and other European markets.

Life and Pensions services are provided by Danica, which targets personal and
business customers directly and also markets its products through Retail
Banking's outlets.


END

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