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20

11 DANSKE BANK PLC

ANNUAL REPORT 2012

Danske Bank Plc

BoarD of Directors´ rePort ............................................. 3

ifrs financial statements ........................................................... 10

consolidated statement of comprehensive income ... 10

consolidated Balance sheet ........................................................ 11

statement of changes in equity ................................................ 11

cash flow statement ......................................................................... 12

notes to the financial statements .................. 13

summary of significant accounting Policies ................. 13

income statement ................................................................................23

corporate Governance .....................................................................25

risk management ................................................................................29

segment information .........................................................................38

other notes: .....................................................................................40

1 net interest income ................................................................40

2 fee and commission income and expenses .........40

3 net trading income .................................................................40

4 other operating income ...................................................... 41

5 net income from investments ........................................ 41

6 staff costs .....................................................................................41

7 share-based payment ..........................................................41

8 other operating expenses,

depreciations and impairments....................................43

9 audit fees ......................................................................................43

10 loan impairment charges .................................................44

11 taxes ................................................................................................44

12 Balance sheet classification

and maturity analysis ..........................................................45

13 fair value .......................................................................................47

14 cash and balances at central banks .........................48

15 loans and receivables .........................................................49

16 financial instruments .........................................................50

17 investments in associates ................................................53

18 intangible assets and goodwill .....................................53

19 investment property .............................................................54

20 Property, plant and equipment ......................................54

21 other assets ................................................................................55

22 tax assets and liabilities ...................................................55

23 amounts owed to credit institutions

and customers ...........................................................................55

24 Debt securities in issue.......................................................56

25 other liabilities .........................................................................57

26 Provisions ....................................................................................57

27 contingent liabilities and commitments ................57

28 related party disclosures .................................................59

29 equity and reserves ...............................................................60

Danske Bank Plc financial statements

(fas)...............................................................................................................61

income statement ................................................................................61

Balance sheet .........................................................................................62

notes to the financial statements ..................64

accounting policies ............................................................................64

other notes to the financial

statements ........................................................................................65

Danske Bank Plc BoarD of Directors´

ProPosal to the annual General meetinG

for the DistriBution of the Profits of the

Parent comPany .........................................................................82

Danske Bank Plc is a Finnish bank which is part of the Danske Bank Group. Danske Bank Group is one of the largest

financial enterprises in the Nordic region. This Annual Report includes Danske Bank Plc and its subsidiaries.

CONTENTS

DANSKE BANK PLC / FINANCIAL STATEMENTS AND ANNUAL REPORT 2012 2


DANSKE BANK PLC BOARD OF DIRECTORS´ REPORT 2012

Changes in the operating environment

World economic growth slowed in 2012. the

international monetary fund estimates that world

growth in 2012 will remain at 3.3 per cent, down from

3.8 per cent in the previous year. europe’s weak

economic situ ation and worries about the endurance

of the euro area were particular causes of uncertainty

for the global economy. Growth was stronger in the

usa than in europe, but the economic outlook became

more cautious also on the other side of the atlantic.

the presidential and congressional elections in

november and the economic tightening measures in

late 2012 caused uncertainty in the us economy. on

the emerging markets, growth was generally clearly

faster than in the western countries, but the growth

rate declined from the previous level. in china, annual

growth fell below the 8 per cent level in the second

and third quarters. in uncertain conditions, price

pressures on raw materials eased, and inflation

remained low in various parts of the world. on the

other hand, unemployment was higher than its natural

level, and the employment trend was downward at the

end of the year.

the poor state of the economy and low inflation led

to exceptional support measures by the european

central Bank (ecB). at the end of December 2011 and

february 2012, the ecB lent nearly eur 1,000 billion

to the european banking sector on favourable terms.

the ecB also lowered its refinancing rate to a record

low level of 0.75 per cent in July. these measures

contributed to the decline of market interest rates, and

the 12-month euribor was at 0.54 per cent at the end

of the year. housing loan interest rates fell to record-

low levels in finland, although credit margins were

raised during the year. housing loan interest rates in

finland were the lowest of the euro states, with the

average interest rate at 1.68 per cent in november.

the interest rates of the most creditworthy states,

such as Germany and finland, remained at historically

low levels. the outcome of Greece’s debt arrangement

was that investors and banks had to record losses in

march. the interest rates of spain and italy rose at the

beginning of the year as investors doubted the

countries’ debt sustainability. it was only after the

ecB President mario Draghi promised in July that the

central bank would do whatever it takes to save the

euro and would, if necessary, buy large quantities of

euro area crisis states’ government bonds that the

markets calmed down, and the interest rates of the

crisis countries fell to a clearly lower level. the crisis

and the lack of confidence raised banks’ refinancing

costs, and in order to secure profitability they sought

to transfer these to customer financing margins.

Banks also tightened credit policy in the euro area.

economic integration in the euro area was deepened,

and in late June, the first steps towards a euro area

bank union were taken when the establishment of a

european bank supervisor and the possibility of direct

assistance to banks from shared european assets

were agreed upon at the eu summit.

finland’s gross domestic product remained near the

previous year’s level in 2012. household consumer

demand partially protected finland against the euro

crisis. Private consumption grew by 2 per cent in

January-september, while exports and imports

contracted by around 1 per cent. however, the outlook

deteriorated towards the end of the year, as the private

consumption peak was not reached, the value of new

industrial orders declined virtually throughout the

year, and the number of granted building permits and

housing starts declined. early in the year, consumer

demand was supported by pay rises in line with a

framework decision and an amendment to vehicle tax

in april, which encouraged households and companies

to focus their consumption on the early part of the

year. the uncertain economic situation was reflected

in the postponement of investments. the economy was

steadied by the moderate house price rise and the low

number of bankruptcies, causing banks’ credit losses

to remain reasonable. the number of corporate

bankruptcies in January-november 2012 remained

on the same level as previous year.

the seasonally adjusted unemployment rate remained

at 7.5 per cent in the early part of the year. in the latter

part of the year, the unemployment rate rose to 8 per

cent. the financial situation of households was


improved by historically low interest rates. early in the

year, consumer prices were still rising at an annual

rate of over 3 per cent, but in november inflation fell

to 2.2 per cent. the amendments to indirect taxes

carried out during the year raised inflation by nearly

a percentage point. consumer confidence rose early in

the year, but in June, outlooks fell to exceptionally low

levels again. consumers had cautious expectations

regarding their own finances, and their outlooks on

the finnish economy were gloomy.

Revenue performance

total income for the full financial year was near the

2011 level and amounted to eur 637.5 million

(649.8 million). net interest income for the financial

year increased to eur 358.1 million (345.7 million),

an increase of 4 per cent on the previous year. the

performance of market interest rates was visible in both

credit and lending. the Group’s funding costs continued

to grow during the financial year, as expected.

the Group’s net commission income declined by 3 per

cent compared with the same period a year earlier,

and was eur 196.4 million (202.2 million). the net

commission income performance was affected by

one-off commissions from lending recognised in the

corresponding period in 2011, for which there were no

corresponding items in this review period. net income

from transactions in securities and foreign exchange

dealing increased by 4 per cent on the previous year,

to eur 41.6 million (40.1 million). net trading income

also include a positive change in value in the units of

suomen luotto-osuuskunta held by the bank, as the

cooperative sold the entire stock of luottokunta oy

in august 2012. the Group’s other income decreased

by 34 per cent year on year to eur 39.1 million (58.9

million). in the financial statements for 2011, non-

recurring items were recognised in the Group’s other

income for which there were no corresponding items

in this review period.

Banking activities

net revenue from banking decreased by 8.3 per cent

on the previous year to eur 518.1 million (565.3

million). revenue was positively affected by the

increase in net interest income, which was due to

market interest rate movements and their effect on

credit and lending. net commission income from

banking also increased by 2.3%. income performance

was negatively influenced by the development of other

income, where there were a number of non-recurring

income items in the previous financial year but there

were no corresponding income items in the 2012

financial year. the increase in funding costs continued

during the financial year, and as a result, loan pricing

has been tightened. the organisational structure and

business practices of banking were renewed during

the financial year to respond to the market challenges

imposed on banks by low interest rates, lacklustre

economic growth, the increased cost of refinancing,

regulatory changes in the business, and the change in

customer behaviour in the internet and mobile age.

a key aspect of the renewal of business practices is

that the bank will be able to harness all available

channels (branches, financial centres, private bank

units, telephone services and electronic channels) into

a single entity for serving the customer.

When customers are given a chance to choose their

method of banking, they increasingly choose a remote

banking method. this has allowed us to reassess the

bank’s branch network, and we have consequently

been able to reduce the number of branches.

improving the features of the eBank, together with

other efficient channels, has been one of the most

important development areas for a long time, and

Danske Bank currently has 534,000 active eBank

users. Demand for mobile banking services also

continued to grow significantly during the financial

year. investment functions were added to the tablet

Bank. Danske Bank Plc currently has 155,000 mobile

and tablet bank customers.

at the beginning of the year, an iPad version of

investment-themed magazine was launched, and the

navigator asset management strategy was included in

the asset management service package. a total of 26

new investment bonds were also launched on the

market during the financial year. over 6,300 new long-

term savings agreements were made during the year.

Markets

Despite the prolonged uncertainty in the capital

markets, the income of the Danske markets business

was positive and amounted to eur 61.6 million (51.6

million). income and customer activity remained at the

high level attained in the previous year both in fixed

income and foreign currency products. the business

area received positive feedback in a number of

customer satisfaction surveys conducted during the

year and has solidified its market share position

among the top two in several product areas.


During the financial year, the Danske markets

business area arranged bonds for the finnish

government and for major finnish corporations,

including elisa corporation, metso corporation,

kesko corporation and stockmann plc.

Capital

Despite the cost pressures created by nervy markets

and increasing regulations, the business area’s income

was reasonably good at eur 29.1 million (36.3 million).

Danske capital continued its strong performance in

institutional asset management. according to a

survey by scandinavian financial research, Danske

capital became finland’s preferred institutional asset

manager in 2012 measured in terms of customer

relationships. the ratings for quality of operations

also continued to rise. Danske capital received

excellent marks especially in customer service. the

number of institutional customer relationships rose

substantially in 2012.

Danske invest fund management ltd is the third-

largest fund management company in finland with

a market share of 13.7 per cent. assets under

management were eur 9.1 billion at the end of

December (7.8 billion on 31 December 2011). net

subscriptions by fund management companies

registered in finland were eur 4,635 million in

January-December. in the same period, net

subscriptions by Danske invest fund management

were eur 327 million.

according to a comparison by the global fund analysis

company morningstar, Danske invest had the most

top-rated five-star funds in finland. a total of 19 of

Danske invest’s funds had either the highest (five-star)

or second-highest ranking in the comparison survey

that included 52 of the company’s funds. the average

overall star rating was 3.4.

the Danske invest european small cap fund was

ranked number one in european equity funds

registered in finland, with a return of 30.5 per cent in

2012. Danske invest excelled in emerging market

equity funds, taking first place with the Danske invest

Black sea fund, which returned 61.3% in 2012.

measured in terms of the number of unit holders, the

Danske invest compass 25 fund remained finland’s

most popular balanced fund, with nearly 63,000 unit

holders.

Result and cost structure

the Danske Bank Plc Group’s profit before taxes for

the full financial year was eur 156.8 million (147.3

million). the result was eur 115.3 million (109.8

million). net interest income and the Group’s costs

throughout the year, in particular, had a positive

impact on the result. correspondingly, the increase in

impairment charges and one-off costs had a negative

impact on the result. net impairment on loans and

receivables was eur 63.9 million (53.4 million).

individually assessed impairment charges and final

write-offs totalled eur 63.6 million (68.0 million).

eur 18.9 million (0.3 million) was recorded in

collective impairments, and recoveries came to eur

18.5 million (15.0 million). During the review period

the Group modified the parameters used in the

impairment charge models, following which an

additional one-off entry was made in receivables.

impairment charges and write-offs were mainly from

a few corporate customers.

the Danske Bank Plc Group’s operating expenses

totalled eur 416.7 million (eur 449.0 million),

a decrease of 7.2 per cent (eur 32.4 million) on the

previous year. the consolidated result for the year

was burdened by a number of one-off expenses

– over eur 14 million - from projects associated

with the reorganising of operations and expenses

associated with the Group’s name change. the Group’s

fixed costs in the financial year decreased by 8.1 per

cent year on year.

Balance sheet and funding

the Danske Bank Plc Group’s balance sheet total for

2012 was eur 31,812.8 million (27,406.1 million).

loans and receivables from customers grew by eur

938.4 million to a total of eur 25,672.0 million

(24,733.6 million). Demand for housing loans

continued to be good, and the housing loan portfolio

grew 2.8 per cent on the previous year. Deposits

increased by eur 1,228.4 million to a total of eur

16,462.9 million (15,234.6 million).

the financial and liquidity situation remained good,

and short-term funding performed well during the

year. the continuation of the exceptional market

situation was reflected in the fact that long-term

funding prices remained at a high level. Danske Bank

Plc issued eur 2 billion worth of covered bonds and

eur 47.3 million in other bonds during the year.

capital securities and terms are described in note 24.


Capital adequacy

Danske Bank Plc applies the standard method (capital

requirement for credit and operational risk) and

regulatory approaches (capital requirement for market

risks) to capital adequacy calculations. the Danske

Bank Plc Group’s capital adequacy ratio was 15.8 per

cent (14.4), which clearly exceeds the regulatory

minimum requirement. the tier 1 capital ratio was

15.8 per cent (14.4). the total capital included in

capital adequacy was eur 2,586.0 million on 31

December 2012 (eur 2,617.3 million). the Group’s

risk weighted assets were eur 16,324.7 million

(18,155.0 million).

at the request of the european Banking authority

(eBa), Danske Bank Plc’s parent company, Danske

Bank a/s, published an updated test of its

SOLVENCY Danske Bank Plc Group Danske Bank Plc

Own funds EURm 31.12.2012 31.12.2011 31.12.2012 31.12.2011

Tier 11) 2 586.0 2 617.3 2 586.7 2 632.8

Share capital 106.0 106.0 106.0 106.0

Legal reserve 271.1 271.1 261.7 261.7

Capital securities 350.0 350.0 350.0 350.0

Distributable capital 2 001.0 1 886.3 2 010.4 1 919.0

Non-controlling interest 0.6 8.2 - -

Intangible assets -2.7 -3.7 -1.4 -3.4

Proposed/actual dividend -140.0 - -140.0 -

Other deductions from Tier 1 -0.1 -0.6 -0.1 -0.6

Tier 2 - - - -

Total capital 2 586.0 2 617.3 2 586.7 2 632.8

Risk-weighted assets (on-balance sheet and off-balance sheet) 16 324.7 18 155.0 16 303.3 16 911.1

Capital requirement (8% of risk-weighted assets) 1 306.0 1 452.4 1 304.3 1 352.9

Credit and counterparty risk 1 196.0 1 345.2 1 197.3 1 248.6

Market risk 22.9 17.2 22.9 17.2

Operational risk 87.1 90.0 84.1 87.1

Solvency ratio, %

- total capital/risk-weighted assets 15.8% 14.4% 15.9% 15.6%

- Tier 1 capital/risk-weighted assets 15.8% 14.4% 15.9% 15.6%

Group capital adequacy ratio has been calculated in accordance with Credit Institutions Act Sect 5:44-48§ and 54-66§. For calculation of credit, market and

operational risk’s risk-weighted assets, Danske Bank Plc Group applies standard method.1) Danske Bank Plc Group Tier 1 includes capital securities 14% (14%). Danske Bank Plc Tier 1 includes capital securities 14% (14%).

capitalisation level in october 2012 that was

calculated in accordance with the methods used in the

2011 stress test. the capital adequacy of the Danske

Bank Group exceeded the level required to pass the

stress test by a clear margin, as was the case in the

previous year.

as a result of the financial crisis, banks’ capital

adequacy requirements are being tightened. the

objective of the tighter regulations is to improve the

quality of banks’ capital, reduce the cyclical nature of

the capital requirement and banks’ indebtedness, and

impose quantitative limits on liquidity risks. the

changes, planned for entry into force during 2013–

2019, are still being drafted and their eventual effects

cannot be assessed with certainty


Employees and organization

the Group had 2,252 employees (2,501) at the end of

the financial year, which was 249 persons, or 10.0 per

cent, less than at the end of 2011. During the review

period, 16 people transferred from Danske Bank Plc

to the helsinki branch of Danske Bank a/s. of all the

employees, 94.7 per cent were employed in banking

activities, 2.8 per cent in markets and 2.5 per cent in

capital.

Credit ratings

in may 2012 both standard & Poor’s and moody’s

downgraded Danske Bank Plc’s ratings. standard &

Poor’s lowered its counterparty credit ratings to

a-/a-2 (from a/a-1) and changed outlook from

negative to stable. in the course of a major review

of 114 european financial institutions that was

announced on 15 february 2012, moody’s

downgraded Danske Bank Plc’s the long-term

deposit rating to a2 (from (a1) with stable outlook.

the Prime-1 short term rating was affirmed. the

announcements were simultaneous with downgrade

announcements for the parent company Danske Bank

a/s. in november 2012 standard & Poor’s revised its

outlook for the bank rating from stable to positive.

Danske Bank Plc’s Board of Directors and auditors

During the financial year, the members of Danske

Bank Plc’s Board of Directors were thomas f. Borgen

(chairman until 1 June 2012), tonny thierry

andersen (chairman from 1 June 2012), Per Damborg

skovhus (Vice chairman until 1 June 2012), henrik

ramlau-hansen (Vice chairman from 1 June 2012),

niels-ulrik mousten, mikael ericson (until 1 June

2012), Georg schubiger (until 1 June 2012), ilkka

hallavo (from 1 september 2012), esko mäkeläinen

and maija strandberg.

the annual General meeting of Danske Bank Plc

chose kPmG oy ab, a firm of authorised public

accountants, as its auditor, with Petri kettunen, aPa,

as the auditor with principal responsibility.

related party loans and receivables can be found in

note 28 and corporate governance from page 25.

Changes in Danske Bank Plc’s shares, ownership and

group structure

sampo Bank Plc changed its name to Danske Bank Plc

as of november 15th 2012.

the Danske Bank Plc Group is part of the Danske

Bank Group. the parent company of the Danske Bank

Group is Danske Bank a/s. the parent company of the

Danske Bank Plc Group is Danske Bank Plc.

the following were also Danske Bank Plc Group

companies on 31 December 2012: Danske invest fund

management ltd, kiinteistömaailma oy, aurinkopihan

Palvelut oy, mB equity Partners oy and mB

mezzanine funD ii ky. as Danske Bank Plc’s holding

in as. oy espoon leppävaaran aurinkopiha fell below

50 per cent at the end of may 2012, the company is

now presented under associated companies.

Danske Bank Plc’s share capital is eur 106 million,

divided into 106,000 shares. Danske Bank a/s holds

the entire stock of Danske Bank Plc.

Risk management

the main objective of risk management is to ensure

that the capital base is adequate in relation to the risks

arising from the business activities. the Board of

Directors of Danske Bank Plc establishes the

principles of risk management, risk limits and other

general guidelines according to which risk

management is organised at Danske Bank Plc. to

ensure that the bank’s risk management organisation

meets both the external and internal requirements,

the Board of Directors has set up a risk committee,

the main objective of which is to ensure Danske Bank

Plc’s compliance with the risk management guidelines

issued by the Board of Directors and that Danske

Bank Plc monitors all types of risk and provides

reports to the appropriate parties. the Board has also

established an asset and liability committee (alco),

which is responsible for monitoring and directing the

management of structural balance sheet interest rate

risk positions in accordance with Danske Bank Plc’s

policies and delegated limits. alco also determines

the operating target levels for liquidity risk

management and oversees the management of

liquidity risk. the risk management unit monitors

daily business operations together with the finance

department’s market risk team.

in addition to the capital adequacy calculation, risks

in the Danske Bank Plc Group are described and

assessed internally through economic capital

indicators, which describe the amount of capital

needed to bear different kinds of risks. the capital


requirement is adequately covered by equity, capital

securities and debenture loans. the principal risks

associated with the Danske Bank Plc Group’s

activities are credit risk, interest rate and liquidity

risks of banking book, operational risks and various

business risks.

the Group’s risk position remained at a good level. the

principal risks associated with the Group’s business

operations involve developments in the general

economic operating environment and investment

market and future changes in financial regulations.

in relation to the loan and guarantee portfolio, bad

and doubtful debts were at a low level. the majority of

net write-offs and impairment charges consisted of

customer-specific impairment charges. there was

a decrease in the volume of bad and doubtful debts

in comparison with the previous year, and these

amounted to eur 180.6 million (197.0 million) or 0.79

per cent (0.85) of the loan and guarantee portfolio.

the Danske Bank Plc Group has not invested in the

bonds of GiiPs countries.

a more detailed account of risks and risk management

can be found in the risk management note at page 31.

Events after the reporting period

the Board of Directors of Danske Bank Plc has 28th

of January 2013 decided to transfer its asset finance

business to a subsidiary. Danske finance ltd is

established for the purpose.

Outlook

the weak economic situation in europe is causing

uncertainty in the financial markets. the main risks

from the Bank’s point of view concern the trends in the

global economy and the financial markets. the

unpredictability in the financial markets and the weak

state of the economy are having a negative impact on

the economy in general and consequently on the result

for the Group.

helsinki, 6 february 2013

Danske Bank Plc

Board of Directors


FINANCIAL HIGHLIGHTS

EURm 2012 2011 2010 2009 2008

Revenue 1 001 1 087 959 1 177 1 803

Net interest income 358 346 322 459 481

% of revenue 35.8 31.8 33.6 39.0 26.7

Profit before taxes 157 147 152 33 182

% of revenue 15.7 13.6 15.9 2.8 10.1

Total income1) 637 650 623 698 742

Total operating expenses2) 417 449 438 438 508

Cost to income ratio 65.4 69.1 70.3 62.8 68.5

Total assets 31 813 27 406 26 158 24 868 29 592

Equity 2 379 2 272 2 157 2 038 2 022

Return on assets, % 0.4 0.4 0.5 0.1 0.5

Return on equity, %3) 5.0 5.0 5.6 0.9 6.9

Equity/assets ratio, %3) 7.5 8.3 8.3 8.2 6.8

Solvency ratio, %4) 15.8 14.4 15.2 15.5 14.3

Impairment on loans and receivables5) 64 53 33 227 52

Off-balance sheet items 6 026 6 236 5 385 4 949 4 369

Average number of staff 2 765 3 035 3 026 3 291 3 466

The financial highlights have been calculated as referred to in the regulations of the Finnish Financial Supervision Authority, taking into account renamed income

statement and balance sheet items due to changes in the accounting practice.

1) Total income comprises the income in the formula for the cost to income ratio.

2) Total operating expenses comprise the cost in the formula for the cost to income ratio.

3) Capital securities have not been included in the equity.

4) Group capital adequacy ratio has been calculated in accordance with Credit Institutions Act Sect 5:44-48§ and 54-66§. For calculation of credit, market and

operational risk’s risk-weighted assets, Danske Bank Plc Group applies standard method.

5) Impairment on loans and receivables includes impairment losses, reversals of them, write-offs and recoveries. (-) net loss positive.

Formulas used in calculating the financial highlights

revenues: interest income, net income from investments, fee and commission income,

net income from financial transactions and other operating income.

cost to income ratio, %: staff costs + other operating expenses

net interest income + net income from financial transactions + net fee and

commission income + net income from investments + other operating income

return on equity, % profit before taxes - taxes

equity (average) + non-controlling interests (average)

return on assets, % profit before taxes - taxes

average total assets

equity/assets ratio, % equity + non-controlling interests

total assets


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

EURm Note 1–12/2012 1–12/2011

Interest income 1 665.2 723.0

Interest expense 1 -307.1 -377.3

Net interest income 358.1 345.7

Fee income 2 252.9 261.7

Fee expenses 2 -56.6 -59.5

Net trading income 3 41.6 40.1

Other operating income 4 39.1 58.9

Net income from investments 5 2.2 2.9

Total operating income 637.5 649.8

Staff costs 6 -169.2 -175.8

Other operating expenses 8 -221.8 -237.2

Depreciations and impairments 8 -25.7 -36.0

Total operating expenses -416.7 -449.0

Loan impairment charges 10 -63.9 -53.4

Profit before taxes 156.8 147.3

Taxes 11 -41.6 -37.5

Total comprehensive income for the year 115.3 109.8

Attributable to

Equity holders of parent company 114.7 108.3

Non-controlling interest 0.6 1.5

IFRS FINANCIAL STATEMENTS


CONSOLIDATED BALANCE SHEET

EURm Note 12/2012 12/2011

Assets

Cash and balances at central banks 14 3 034.9 814.1

Loans and receivables 15 25 672.0 24 733.6

Trading portfolio assets 13 2 781.0 1 646.8

Investments in associated undertakings 17 12.7 8.2

Intangible assets 18 2.7 3.7

Investment property 19 0.0 33.7

Property, plant and equipment 20 19.3 37.2

Other assets 21 263.7 103.1

Current tax assets 22 0.8 23.6

Deferred tax assets 22 25.7 2.0

Total assets 31 812.8 27 406.1

Liabilities

Due to credit institutions and central banks 23 2 404.8 1 954.7

Amounts owed to customers and public entities 23 16 462.9 15 234.6

Debt securities in issue 24 6 645.0 4 514.5

Financial liabilities at fair value through p/l 24 1 231.6 1 697.0

Trading portfolio liabilities 13 2 203.1 1 312.4

Other liabilities 25. 26 481.0 421.4

Current tax liabilities 22 5.5 0.0

Deferred tax liabilities 22 0.0 0.0

Total liabilities 29 434.0 25 134.5

Equity

Share capital 29 106.0 106.0

Reserves 29 271.1 271.1

Retained earnings 29 2 001.0 1 886.3

Equity attributable to parent company's equityholders 2 378.1 2 263.4

Non-controlling interest 0.6 8.2

Total equity 2 378.8 2 271.6

Total equity and liabilities 31 812.8 27 406.1

STATEMENT OF CHANGES IN EQUITYEURm

Share capital

Legal reserve

Retained earnings Total

Non-control-ling interest Total

Equity at 1 Jan. 2011 106.0 271.1 1 778.0 2 155.1 2.1 2 157.2

Total comprehensive income 108.2 108.2 1.5 109.8

Total income and expenses recognised for the period 108.2 108.2 1.5 109.8

Dividend distribution

Change in non-controlling interest 4.6 4.6

Equity at 31 December 2011 106.0 271.1 1 886.3 2 263.4 8.2 2 271.6

Equity at 1 Jan. 2012 106.0 271.1 1 886.3 2 263.4 8.2 2 271.6

Total comprehensive income 114.7 114.7 0.6 115.3

Total income and expenses recognised for the period 114.7 114.7 0.6 115.3

Dividend distribution

Change in non-controlling interest -8.1 -8.1

Equity at 31 December 2012 106.0 271.1 2 001.0 2 378.1 0.6 2 378.8


CASH FLOW STATEMENT

EURm 2012 2011

Cash flow from operations

Profit before tax 156.8 147.3

Adjustment for non-cash operating items

Adjustment of income from associated undertakings -1.4 -1.7

Amortisation and impairment charges for intangible assets 2.2 3.0

Depreciation and impairment charges for tangible assets 25.2 31.8

Loan impairment charges 63.9 53.4

Tax paid -38.3 -37.2

Other non-cash operating items 4.1 19.0

Total 212.6 215.6

Changes in operating capital

Cash in hand and demand deposits with central banks 454.7 -502.9

Trading portfolio -244.4 -86.6

Loans and receivables 93.2 -1 074.2

Deposits 1 228.4 86.9

Other assets/liabilities*) 1 576.2 1 420.0

Cash flow from operations 3 320.7 58.8

Cash flow from investing activities

Acquisition of group undertakings and other business units 0.0 -0.4

Acquisition of intangible assets -1.2 -0.1

Acquisition of tangible assets -5.6 -5.3

Sale of tangible assets 14.7 18.6

Cash flow from investing activities 7.9 12.8

Cash flow from financing activities

Redemption of subordinated debt and hybrid core capital 0.0 -200.0

Change in non-controlling interests -7.6 6.1

Cash flow from financing activities -7.6 -193.9

Cash and cash equivalents, beginning of year 4 504.5 4 626.6

Change in cash and cash equivalents 3 321.0 -122.1

Cash and cash equivalents, end of year 7 825.5 4 504.5

Cash in hand and demand deposits with central banks 3 034.9 814.1

Amounts due from credit institutions and central banks within

3 months 4 790.6 3 690.4

Total 7 825.5 4 504.5

*) Amount in row Other assets/liabilities is mainly caused by net change in issued bonds and notes 1,979.0 million euros (514.4 milj. euros).

NOTE TO THE CASH FLOW STATEMENT

Acquisitions and disposals in 2012

No acquisitions and disposals during 2012.


DANSKE BANK PLC GROUPNOTES TO THE FINANCIAL STATEMENTS

ACCOunTing PRinCiPLEsgroup in brief

Danske Bank Plc Group is part of the Danske Bank

Group, which is one of the largest financial enterprise

in the nordic region. Danske Bank Group operates in

15 countries and has more than five million private

customers. the Group is headquartered in

copenhagen and Danske Bank’s share is quoted on

the copenhagen stock exchange.

Danske Bank Plc has more than 1.1 million personal

customers and about 90,000 corporate and

institutional customers in finland. at the moment

Danske Bank Plc has 93 branches.

signiFiCAnT ACCOunTing POLiCiEsgeneral

Danske Bank Plc Group presents its consolidated

financial statements in accordance with the

international financial reporting standards (ifrss),

issued by the international accounting standards

Board (iasB) and ifric interpretations issued by

ifrs interpretations committee, as endorsed by the

eu. certain additional requirements in accordance

with finnish accounting act, finnish act on credit

institutions and finnish financial supervision

standards have also been applied. Danske Bank Plc

Group has not changed its significant accounting

policies from those followed in annual report 2011.

the consolidated financial statements are presented

in euro (eur), in million euros with one decimal,

unless otherwise stated. figures in notes are rounded

so combined individual figures might differ from the

presented total amount.

standards and interpretations not yet in force

the iasB has issued a number of amendments to

international financial reporting standards that have

not yet come into force. similarly, the ifric has issued

a new interpretation that has not yet come into force.

the paragraphs below list the standards and inter-

pretations that are likely to affect the Group’s financial

reporting.

in october 2010, the iasB amended ifrs 9, financial

instruments. this version is the first part of a standard

expected to replace the requirements of ias 39 in

2012. the amended ifrs 9 now includes principles on

classification and derecognition of financial

instruments. Principles for impairment and hedge

accounting are expected to follow in 2013 or later.

the transitional rules adopted in the amended ifrs 9

imply implementation of the standard by 2015. the eu

has decided to postpone adoption of the amended ifrs

9 until the details of the entire standard are known.

under ifrs 9, financial assets are classified on the

basis of the business model adopted for managing the

assets and on the basis of their contractual cash flow

characteristics, including any embedded derivatives

(unlike ias 39, ifrs 9 no longer requires bifurcation).

assets held with the objective of collecting contractual

cash flows that are solely payments of principal and

interest on the principal amount outstanding are

measured at amortised cost. other assets are

measured at fair value through profit or loss.

the principles applicable to financial liabilities are

largely unchanged from ias 39. Generally, financial

liabilities are still measured at amortised cost with

bifurcation of embedded derivatives not closely

related to a host contract. financial liabilities

measured at fair value comprise derivatives, the

trading portfolio and liabilities designated at fair value

through profit or loss. however, value adjustments

relating to the inherent credit risk of financial

liabilities designated at fair value are recognised

in other comprehensive income unless this leads

to an accounting mismatch.

ifrs 9 incorporates the existing derecognition

principles of ias 39.

meaningful classification of financial instruments

is not possible without information about the future

parts of ifrs 9 to clarify the overall accounting

effects of the standard.


the iasB ended its project on consolidation in

may 2011 by issuing a number of new international

financial reporting standards (ifrs 10, ifrs 11 and

ifrs 12) and revised standards (ias 27 and ias 28).

With these standards the iasB establishes a uniform

definition of control to be used for determining

whether an entity should be consolidated and

introduces enhanced disclosure requirements for

consolidated and unconsolidated entities, joint

arrangements and associated undertakings.

Danske Bank Plc Group will adopt the standard

form 1 January 2014 in accordance with the eu’s

postponement of the effective date by one year.

the Group does not expect the new requirements to

significantly change its consolidation of undertakings.

in may 2011, the iasB issued ifrs 13, fair Value

measurement. the standard introduces a new

definition of fair value and provides guidance on how

to measure and disclose fair value. ifrs 13 applies

when another standard requires fair value to be used

or *disclosed. the standard was adopted from 1

January 2013. adoption did not result any significant

effect on the Group’s financial results.

in June 2011, the iasB issued an amended ias 19,

employee Benefits. the amended standard eliminates

the option to defer the recognition of actuarial gains

and losses on defined benefit pension plans, known as

the “corridor method”. the present value of net pension

assets and obligations must be recognised in the

balance sheet instead. the Group will adopt the

standard from the beginning of 2013, but this

standard will not affect its present financial results.

in December 2011, the iasB clarified the ias 32

requirements for offsetting financial instruments.

the clarification is not expected to change the

offsetting of financial instruments to any significant

degree. the iasB also enhanced its ifrs 7 disclosure

requirements to include both gross and net amounts

when offsetting financial instruments and rights to

additional set-off in the event of counterparty default.

the changes, which have not yet been adopted by

the eu, must be implemented in 2014 and 2013,

respectively.

COnsOLiDATiOnsubsidiaries

the consolidated financial statements cover Danske

Bank Plc and group undertakings in which the Group

has control over financial and operating policy

decisions. control is said to exist if Danske Bank Plc

directly or indirectly holds more than half of the voting

rights in an undertaking or otherwise has power to

control management and operating policy decisions,

provided that most of the return on the undertaking

accrues to the Group and that the Group assumes most

of the risk. operating policy control may be exercised

through agreements about the undertaking’s activities.

Potential voting rights that are exercisable on the

balance sheet date are included in the assessment of

whether Danske Bank Plc controls an undertaking.

the consolidated financial statements are prepared by

consolidating items of the same nature and

eliminating intra-group transactions, balances and

trading profits and losses.

undertakings acquired are included in the accounts

at the time of acquisition. the net assets of such

undertakings (assets including identifiable intangible

assets, less liabilities and contingent liabilities) are

included in the financial statements at fair value on

the date of acquisition according to the acquisition

method.

if the cost of acquisition (including direct transaction

costs until 1 January 2010) exceeds the fair value of

the net assets acquired, the excess amount is

recognised as goodwill. Goodwill is recognised in the

functional currency of the undertaking acquired. if the

fair value of the net assets exceeds the cost of

acquisition (negative goodwill), the excess amount is

recognised as income at the date of acquisition. the

portion of the acquisition that is attributable to non-

controlling interests does not include goodwill.

Divested undertakings are included in the accounts

until the transfer date.

Associated undertakings

associated undertakings are businesses, other than

subsidiaries, in which the Group has holdings and

significant influence but not control. the Group

generally classifies undertakings as associated

undertakings if Danske Bank Plc, directly or

indirectly, holds 20-50% of the share capital and

has influence over management and operating

policy decisions.

holdings are recognised at cost at the date of

acquisition and are subsequently measured according

to the equity method. the proportionate share of the


net profit and loss of the individual undertaking is

included under net income from investments.

the proportionate share of the profit and loss on

transactions between associated undertakings and

group undertakings is eliminated.

list of subsidiaries and associated undertakings

included in the consolidated annual report can be

found from page 81.

segment reporting

the Group consists of a number of business units and

resource and support functions. the business units

are segmented according to organizational structure.

inter-segment transactions are settled on an arm’s-

length basis. expenses incurred centrally, including

expenses incurred by support, administrative and

back-office functions, are charged to the business

units according to consumption and activity at

calculated unit prices or market prices, if available.

segment assets and liabilities are assets and

liabilities that are used for maintaining the operating

activities of a segment or have come into existence as

a result of such activities and that are either directly

attributable or may be reasonably allocated to a

segment. a calculated share of shareholders’ equity is

allocated to each segment. other assets and liabilities

are recognised in the other activities segment.

liquidity expenses are allocated on the basis of a

maturity analysis of loans and deposits. Prices are

based on interbank rates and funding spreads.

Offsetting

assets and liabilities are netted when the Group has

a legally enforceable right to set off recognised

amounts and intends either to settle the balance

on a net basis or to realise the asset and settle the

liability simultaneously.

Translation of transactions in foreign currency

the presentation currency of the consolidated

financial statements is euro which is also the

functional currency. monetary assets and liabilities in

foreign currency are translated at the exchange rates

at the balance sheet date. exchange rate adjustments

of monetary assets and liabilities arising as a result of

differences in the exchange rates at the transaction

date and at the balance sheet date are recognised in

the income statement.

transactions in foreign currency are translated at the

exchange rate of the unit’s functional currency at the

transaction date. Gains and losses on exchange rate

differences between the transaction date and the

settlement date are recognised in the income

statement. non-monetary assets and liabilities in

foreign currency that are subsequently revalued at fair

value are translated at the exchange rates at the date of

revaluation. exchange rate adjustments are included in

the fair value adjustment of an asset or liability. other

non-monetary items in foreign currency are translated

at the exchange rates at the transaction date.

Critical accounting policies and estimates

management’s judgment, estimates and assumptions of

future events that will significantly affect the carrying

amounts of assets and liabilities underlie the preparation

of the Group’s consolidated financial statements.

the estimates and assumptions that are deemed

critical to the consolidated financial statements are

• t hefairvaluemeasurementoffinancial

instruments

• t hemeasurementofloansandadvances

• t hemeasurementofgoodw ill

• t herecognit ionofdeferredtaxassets

the estimates and assumptions are based on

premises that management finds reasonable but are

inherently uncertain and unpredictable. the premises

may be incomplete, unexpected future events or

situations may occur, and other parties may arrive at

other estimated values.

Fair value measurement of financial instruments

measurements of financial instruments based on

prices quoted in an active market or based on

generally accepted models employing observable

market data are not subject to critical estimates.

measurements of financial instruments that are only

to a limited extent based on observable market data,

such as unlisted shares and certain bonds for which

there is no active market, are subject to estimates.

the estimated fair value of illiquid bonds significantly

depends on the estimated current credit spread.

Measurement of loans and advances

the Group makes impairment charges to account for

any impairment of loans and advances that occurs after

initial recognition. impairment charges consist of

individual and collective charges and rely on a number


of estimates, including identification of loans or

portfolios of loans with objective evidence of

impairment, expected future cash flows and the

value of collateral. the Group determines the need for

impairment charges on the basis of customers’ expected

ability to repay their debts. their ability depends on a

number of factors, including the customers’ earnings

capacity and trends in general economic growth and

unemployment. expectations of deteriorating repayment

ability reduce credit quality and lead to downgrading of

customers. the extent of losses incurred under non-

performing loan agreements depends, among other

factors, on the value of collateral provided.

Measurement of goodwill

Goodwill on acquisition is tested for impairment once

a year or more frequently if indications of impairment

exist. impairment testing requires management to

estimate future cash flows from acquired units.

a number of factors affect the value of such cash

flows, including discount rates.

Recognition of deferred tax assets

Deferred tax assets arising from unused tax losses

are recognised to the extent that such losses can be

offset against tax on future profit. recognition of

deferred tax assets requires management to assess

the probability and amount of future taxable profit at

units with unused tax losses

Classification and recognition of financial

instruments in balance sheet

Purchases and sales of financial instruments are

measured at fair value at the settlement date.

Classification

at initial recognition, a financial asset is assigned to

one of the following two categories:

• t radingport foliomeasuredatfairvaluet hrough

profit and loss

• loansandadvancesmeasuredatamort isedcost

at initial recognition, a financial liability is assigned to

one of the following three categories:

• t radingport foliomeasuredatfairvaluet hrough

profit and loss

• financialliabilit iesdesignatedatfairvalue

through profit or loss

• ot herfinancialliabilit iesmeasuredatamort ised

cost

Recognition

the purchase and sale of financial assets and

liabilities at fair value through profit or loss are

recognised in the balance sheet on the settlement

date, or the date on which the Group agrees to buy or

sell the asset or liability in question. loans granted

are recognised as financial assets on the date on

which the customer draws the loan and other

receivables on the trans action date.

Derivative instruments, quoted securities and foreign

exchange spot transactions are recognized on and

derecognized from the balance sheet on the

settlement date.

financial assets and liabilities are offset and the

net amount reported in balance sheet only if there

is a legally enforceable right to offset the recognised

amounts and there is an intention to settle on a net

basis.

financial assets are derecognised when the

contractual right to receive cash flows from the

financial assets has expired or the Group has

transferred all risks and rewards of ownership.

financial liabilities are derecognised when they are

extinguished, i.e. when the obligation is discharged,

cancels or expires.

transaction costs are included in the initial carrying

amount, unless the item is measured at fair value

through the profit and loss.

Due from credit institutions and central banks

amounts due from credit institutions and central banks

comprise amounts due from other credit institutions

and term deposits with central banks. reverse

transactions (purchases of securities from credit

institutions and central banks that the Group agrees

to resell at a later date) are recognised as amounts

due from credit institutions and central banks.

amounts due from credit institutions and central

banks are measured at amortised cost as described

under loans and advances at amortised cost.

Trading portfolio (assets and liabilities)

the trading portfolio includes financial assets and

liabilities acquired or undertaken by the Group for sale

or repurchase in the near term. the trading portfolio

also contains collectively managed financial assets

and liabilities for which a pattern of short-term profit


taking exists. Derivatives, including bifurcated

embedded derivatives, form part of the trading

portfolio.

the trading portfolio is measured at fair value through

profit and loss. realised and unrealised capital gains

and losses and dividends are carried in the income

statement under net trading income.

Fair value option – financial liabilities designated as at

fair value through profit and loss

financial liabilities at fair value through profit and loss

includes issued certificates of deposits.

financial liabilities at fair value through profit and loss

are measured at fair value. interest income and

expenses on financial instruments carried at fair

value are presented in net interest income, realised

and unrealised capital gains and losses are included

in net trading income.

Hedge accounting

the Group uses derivatives to hedge the interest rate

risk on fixed-rate assets and fixed-rate liabilities

measured at amortised cost. hedged risks that meet

specific criteria qualify for fair value hedge accounting

and are treated accordingly. the interest rate risk on

the hedged assets and liabilities is measured at fair

value through profit or loss.

if the hedge criteria cease to be met, the accumulated

value adjustments of the hedged items are amortised

over the term to maturity.

Loans and advances at amortised cost

loans and advances consists of loans and advances

disbursed directly to borrowers and loans and

advances acquired after disbursement. loans and

advances extended or acquired by the Group for

resale in the near term are included in the trading

portfolio. loans and advances includes conventional

bank loans, finance leases and reverse transactions,

except for transactions with credit institutions and

central banks.

at initial recognition, loans and advances are

measured at fair value plus transaction costs.

subsequently, they are measured at amortised cost,

according to the effective interest method, less any

impairment charges. the difference between the value

at initial recognition and the redemption value is

amortised over the term to maturity and recognised

under interest income. if fixed-rate loans and

advances and amounts due are accounted for under

hedge accounting that is determined effective, the fair

value of the hedged interest rate risk is added to the

amortised cost of the assets.

impairment

if objective evidence of impairment of a loan, an

advance or an amount due exists, and the effect of

the impairment event or events on the expected cash

flow from the loan is reliably measurable, the Group

determines the impairment charge individually.

significant loans, advances and amounts due are

tested individually for impairment at the end of each

reporting period.

objective evidence of impairment of loans and

advances exists if at least one of the following events

has occurred:

• Theborrowerisexperiencingsignificantfinancial

difficulties

• Theborrower’sact ions,suchasdefaultor

delinquency in interest or principal payments, lead

to a breach of contract

• TheGroup,forareasonsrelat ingtot heborrower’s

financial difficulty, grants to the borrower a

concession that the Group would not otherwise

grant

• Itbecomesprobablet hatt heborrowerw illenter

bankruptcy or other financial restructuring

the impairment charge equals the difference between

the carrying amount of the loan and the present value

of the most likely future cash flows from the loan and is

assessed by credit officers. the present value of fixed-

rate loans and advances is calculated at the original

effective interest rate, whereas the present value of

loans and advances with a variable rate of interest is

calculated at the current effective interest rate.

the customer’s debt is written down to the amount

that the borrower is expected to be able to repay after

a financial restructuring. if financial restructuring is

not possible, the write-down equals the estimated

recoverable amount in the event of bankruptcy. if the

borrower’s ability to repay depends significantly on

the assets that have been provided as collateral (asset

financing), the customer’s debt is written down to the

fair value of the collateral.


loans and advances without objective evidence of

impairment are included in an assessment of

collective impairment at portfolio level. collective

impairment is calculated for portfolios of loans and

advances with similar credit characteristics when

impairment of expected future cash flows from a

portfolio has occurred. the collective impairment

charge reflects downgrading of customer ratings over

time (migration). the loans and advances are divided

into portfolios on the basis of current ratings.

calculation of charges also factors in loan portfolios

for customers with upgraded ratings.

the cash flows are specified by means of parameters

used for solvency calculations and historical loss

data adjusted for use in the financial statements,

for example. the adjustment reflects the loss

identification period shown by the Group’s empirical

data. this period is the period from the first evidence

of impairment to the determination of a loss at

customer level.

collective impairment is calculated as the difference

between the carrying amount of the loans and

advances of the portfolio and the present value of

expected future cash flows.

the collective impairment charge based on migration

is adjusted if the Group is aware of market conditions

at the balance sheet date that are not fully reflected in

the Group’s models. in times of favourable economic

conditions, adjustments will reduce the impairment

charge, while it may increase in an economic

downturn. examples of such market conditions are

levels of unemployment and housing prices.

impairment charges for loans, advances and

guarantees are booked in an allowance account and

set off against loans and advances or recognised as

provisions for guarantees. impairment charges for

loans and advances are recorded under loan

impairment charges in the income statement. if

subsequent events show that impairment is not

permanent, charges are reversed.

loans and advances that are considered uncollectible

are written off. Write-offs are debited to the allowance

account. loans and advances are written off once the

usual collection procedure has been completed and

the loss on the individual loan or advance can be

calculated. if the full loss is not expected to be realised

until after a number of years, for example in the event

of administration of complex estates, a partial write-

off is recognised, reflecting the Group’s claim less

collateral, estimated dividend and other cash flows.

in accordance with the effective interest method,

interest is recognised on the basis of the value of

the loans and advances less impairment charges.

consequently, part of the allowance account balance

is set aside for future interest income until the time

of write-off.

Leases

Group as a lessor

leases in which assets are leased out and

substantially all the risks and rewards of ownership

are transferred to the lessee are classified as finance

leases. finance leases are recognised as receivables

in the balance sheet at an amount equal to the net

investment in the leases. the lease payment is

allocated between the repayment of principal and

interest income. the interest income is amortised over

the lease period so as to achieve a constant periodic

rate of return on the remaining net investment for the

lease term. finance leases are included in loans and

receivables and interest in interest income.

leases in which assets are leased out and the Group

retains substantially all the risks and rewards of

ownership are classified as operating leases. these

rented assets are included in Property, plant and

equipment in the balance sheet. they are depreciated

over their expected useful lives on the basis consistent

with similar owned property, plant and equipment, and

thy impairment losses are recognised on the same

basis as for these items. rental income on assets held

as operating leases is recognised on a straight-line

basis over the lease term in profit and loss.

Group as a lessee

leases of assets in which substantially all the risks

and rewards of ownership are transferred to the

Group are classified as finance leases. finance leases

are recognised at the lease’s inception at the lower of

the fair value of the leased asset and the present value

of the minimum leases payments. the corresponding

obligation is included in other liabilities in the balance

sheet. the assets acquired under financial leases are

amortised or depreciated over the shorter of the

asset’s useful life and the lease term. each lease

payment is allocated between the liability and the

interest expense. the interest expense is amortised

over the lease period to produce a constant periodic


rate of interest on the remaining balance of the

liability for each period.

assets in which the lessor retains substantially all the

risks and rewards of ownership are classified as

operating leases and they are included in the lessor’s

balance sheet. Payment made on operating leases are

recognised on a straight-line basis over the lease term

as rental expenses in profit and loss.

inTAngiBLE AssETsgoodwill

Goodwill arises on the acquisition of an undertaking

and is calculated as the difference between the cost

of the undertaking and the fair value of its net assets,

including contingent liabilities, at the time of acquisition.

Goodwill is allocated to cash-generating units at the

level at which management monitors the investment.

Goodwill is not amortised; instead each cash-

generating unit is tested for impairment once a year or

more frequently if indications of impairment exist.

Goodwill is written down to its recoverable amount

through profit or loss if the carrying amount of the net

assets of the cash-generating unit exceeds the higher

of the assets’ fair value less costs to sell and their

value in use, which equals the present value of the

future cash flows expected from the unit.

Other intangible assets

software acquired is measured at cost, including

expenses incurred to make each software application

ready for use. software acquired is amortised over its

expected useful life, which is usually three years,

according to the straight-line method.

software developed by the Group is recognised as an

asset if the cost of development is reliably measurable

and analyses show that the future earnings from

using the individual software applications exceed

cost. cost is defined as development costs incurred to

make each software application ready for use. once a

software application has been developed, the cost is

amortised over the expected useful life, which is

usually three years, according to the straight-line

method. the cost of development consists primarily of

direct remuneration and other directly attributable

development costs. expenses incurred in the planning

phase are not included but booked when incurred.

identifiable intangible assets taken over on the

acquisition of undertakings are measured at the time

of acquisition at their fair value and amortised over

their expected useful lives, which are usually three

years, according to the straight-line method. the value

of intangible assets with indefinite useful lives is not

amortised, but the assets are tested for impairment at

least once a year according to the principles applicable

to goodwill.

other intangible assets to be amortised are tested for

impairment if indications of impairment exist, and the

assets are subsequently written down to their

recoverable amount.

costs attributable to the maintenance of intangible

assets are expensed in the year of maintenance.

investment property

investment property is real property, including real

property let under operating leases, which the Group

owns for the purpose of receiving rent and/or

obtaining capital gains. the section on domicile

property below explains the distinction between

domicile and investment property.

on acquisition, investment property is measured at cost,

including transaction costs, and subsequently measured

at fair value. fair value adjustments and rental income

are recognised under other income in the income

statement. real property taken over by the Group under

non-performing loan agreements that is expected

to be sold within 12 months of classification is valued

in accordance with principled used for investment

property but presented as assets held for sale.

the fair value is assessed at least once a year.

assessment is based on the actual selling prices,

market prices and evaluations made by external

valuators. Based on the assessment of future events

and information available management has

determined the fair value.

Tangible assets

tangible assets includes domicile property, machinery,

furniture and fixtures. machinery, furniture and

fixtures covers equipment, vehicles, furniture, fixtures,

leasehold improvement and leased assets.

Domicile property

Domicile property is real property occupied by the

Group’s administrative departments, branches and

other service units. real property with both domicile

and investment property elements is allocated


proportionally to the two categories if the elements

are separately sellable. if that is not the case, such real

property is classified as domicile property, unless the

Group occupies less than 10% of the total floorage.

Domicile property is measured at cost plus property

improvement expenditure and less depreciation and

impairment charges. the straight-line depreciation of

the property is based on the expected scrap value and

an estimated useful life of 20 to 50 years. real

property held under long-term leases is depreciated

on a progressive scale.

investment property which becomes domicile property

because the Group starts using it for its own activities

is measured at fair value at the time of reclassification.

Domicile property which becomes investment property

is measured at fair value at the time of reclassification.

Domicile property which, according to a publicly

announced plan, the Group expects to sell within 12

months is recognised as an asset held for sale under

other assets. the same principle applies to property

taken over in connection with the settlement of debt if

such property is likely to be sold within 12 months.

however, if such property is unlikely to be sold within

this period, it is classified as investment property.

Machinery, furniture and fixtures

equipment, vehicles, furniture, fixtures and property

improvement expenditure are measured at cost less

depreciation and impairment charges. assets are

depreciated over their expected useful lives, which

are usually three years, according to the straight-line

method. leasehold improvements are depreciated

over the term of the individual lease, with a maximum

of 10 years.

Lease assets

lease assets consists of assets, except real property,

let under operating leases. lease assets are measured

using the same valuation technique as that applied by

the Group to its other equipment, vehicles, furniture

and fixtures. When, at the end of the lease period,

lease assets are put up for sale, the assets are

transferred to other assets.

impairment

tangible assets are tested for impairment if indications

of impairment exist. an impaired asset is written down

to its recoverable amount, which is the higher of its fair

value less costs to sell and its value in use.

Other assets

other assets includes interest and commission due,

prepayments and lease assets put up for sale at the

expiry of lease agreements.

lease assets put up for sale are measured at the lower

of their carrying amount at the time of reclassification

(expiry of lease agreements) and their fair value less

expected costs to sell.

Amounts due to credit institutions and central banks/

Deposits

amounts due to credit institutions and central banks

and Deposits include amounts received under repo

transactions (sales of securities which the Group

agrees to repurchase at a later date).

amounts due to credit institutions and central banks

and Deposits are measured at amortised cost and

where hedge accounting applies at amortised cost

plus the fair value of the hedged interest rate risk.

Other issued bonds/subordinated debt

other issued bonds and subordinated debt comprise

bonds issued by the Group. subordinated debt is

liabilities in the form of subordinated loan capital and

other capital investments which, in case of the Group’s

voluntary or compulsory winding-up, will not be repaid

until the claims of its ordinary creditors have been met.

other issued bonds and subordinated debt are

measured at amortised cost plus the fair value of the

hedged interest rate risk.

the yield on some issued bonds depends on an index

that is not closely linked to the bonds’ financial

characteristics, for example an equity or commodity

index. such embedded derivatives are bifurcated and

measured at fair value in the trading portfolio.

Other liabilities and provisions

other liabilities includes accrued interest, fees and

commissions that do not form part of the amortised

cost of a financial instrument. other liabilities also

includes pension obligations and provisions for other

obligations, such as lawsuits and guarantees.

a provision is recognised if, as a result of a past event,

the Group has a present legal or constructive

obligation that can be estimated reliably, and it is

probable that an outflow of economic benefits will be

required to settle the obligation.


if a lawsuit is likely to result in a payment obligation, a

liability is recognised if it can be measured reliably.

the liability is recognised at the present value of

expected payments.

Fair value

the fair value of financial assets and liabilities is

measured on the basis of quoted market prices of

financial instruments traded in active markets.

if an active market exists, fair value is based on the

most recently observed market price at the balance

sheet date.

if a financial instrument is quoted in a market that is

not active, the Group bases its valuation on the most

recent transaction price. it adjusts the price for

subsequent changes in market conditions, for instance

by including transactions in similar financial

instruments that are motivated by normal business

considerations.

if an active market does not exist, the fair value of

standard and simple financial instruments, such as

interest rate and currency swaps and unlisted bonds,

is measured according to generally accepted

measurement methods. market-based parameters are

used to measure fair value. the fair value of more

complex financial instruments, such as swaptions,

interest rate caps and floors, and other otc products,

is measured on the basis of internal models, many of

which are based on valuation techniques generally

accepted within the industry.

the results of calculations made on the basis of

valuation techniques are often estimates, because

exact values cannot be determined from market

observations. consequently, additional parameters,

such as liquidity and counterparty risk, are

sometimes used to measure fair value.

if, at the time of acquisition, a difference arises

between the value of a financial instrument calculated

on the basis of non-observable inputs and actual cost

[day-one profit and loss] and the difference is not the

result of transaction costs, the Group calibrates the

model parameters to the actual cost.

Pension obligations

the Group’s pension obligations consist of defined

contribution benefit pension plan for its personnel.

under defined contribution pension plans, the Group

pays regular contributions to insurance company and

has no legal of constructive obligations to pay future

contribution. such payments are expensed as they are

earned by the staff, and the obligations under the

plans are taken over by the insurance companies and

other institutions.

irrevocable loan commitments and guarantees

at initial recognition, irrevocable loan commitments

and guarantees are recognised at the amount of

premiums received. subsequently, guarantees are

measured at the higher of the received premium

amortised over the guarantee period and the provision

made, if any. Provisions for irrevocable loan

commitments and guarantees are recognised under

other liabilities if it is probable that drawings will be

made under a loan commitment or claims will be made

under a guarantee and the amount payable can be

reliably measured. the liability is measured at the

present value of expected payments. irrevocable loan

commitments are discounted in accordance with the

interest terms.

Deferred tax assets/Deferred tax liabilities

Deferred tax on all temporary differences between the

tax base of assets and liabilities and their carrying

amounts is accounted for in accordance with the

balance sheet liability method. Deferred tax is

recognised under Deferred tax assets and Deferred

tax liabilities.

the Group does not recognise deferred tax on

temporary differences between the tax base and

the carrying amounts of goodwill not subject to

amortisation for tax purposes and other items if the

temporary differences arose at the time of acquisition

without effect on net profit or taxable income. if the tax

base may be calculated according to several sets of tax

regulations, deferred tax is measured in accordance

with the regulations that apply to the use of the asset or

settlement of the liability as planned by management.

tax assets arising from unused tax losses and unused

tax credits are recognised to the extent that such

unused tax losses and unused tax credits can be used.

Deferred tax is measured on the basis of the tax

regulations and rates that, according to the rules in

force at the balance sheet date, are applicable in the

relevant countries at the time the deferred tax is

expected to crystallise as current tax. changes in

deferred tax as a result of changes in tax rates are

recognised in the income statement.


Current tax assets/Current tax liabilities

current tax assets and liabilities are recognised on

the balance sheet as the estimated tax payable on the

profit for the year adjusted for prepaid tax and accrued

and due tax payments for previous years.

tax assets and liabilities are netted if permitted by law

and provided that the items are expected to be subject

to net or simultaneous settlement.

Fiduciary activities

the fiduciary services supplied by Danske Bank Plc

Group are discretionary asset management services,

mutual fund services and securities custody services.

in these activities, assets are held and placed on behalf

of customers. these assets and the income arising

thereon are excluded from these financial statements,

as they are not asset of Danske Bank Plc Group.


interest income and expenses

interest income and expenses arising from interest-

bearing financial instruments measured at amortised

cost are recognised in the income statement according

to the effective interest method on the basis of the

cost of the individual financial instrument. interest

includes amortised amounts of fees that are an

integral part of the effective yield on a financial

instrument, such as origination fees, and amortised

differences between cost and redemption price, if any.

interest income and expenses also include interest on

financial instruments measured at fair value, but not

interest on assets and deposits under pooled schemes

and unit-linked investment contracts; the latter is

recognised under net trading income. origination fees

on loans measured at fair value are recognised under

interest income at origination.

interest on loans and advances subject to individual

impairment is recognised on the basis of the impaired

value.

Fee income and expenses

fee income and expenses are broken down into fees

generated by activities and fees generated by portfolios.

income from and expenses for services provided over

a period of time, such as guarantee commissions and

investment management fees, are accrued over the

period. transaction fees, such as brokerage and

custody fees, are recognised on completion of the

individual transaction.

net trading income

net trading income includes realised and unrealised

capital gains and losses on trading portfolio assets

and other securities as well as exchange rate

adjustments and dividends. the effect on profit or loss

of fair value hedge accounting is also recognised

under net trading income.

Other income

other income includes rental income and lease

payments under operating leases, fair value

adjustments of investment property, amounts received

on the sale of lease assets and gains and losses on the

sale of other tangible and intangible assets.

income from associated undertakings

income from associated undertakings comprises the

Group’s proportionate share of the net profit or loss of

the individual undertakings.

Profit on sale of associated undertakings

the profit on sale of associated and group

undertakings is the difference between the selling

price and the carrying amount, including goodwill, if

any, of such sale.

sTAFF COsTs AnD ADMinisTRATivE ExPEnsEsstaff costs

salaries and other remuneration that the Group

expects to pay for work carried out during the year

are expensed under staff costs and administrative

expenses. this item includes salaries, performance-

based pay, expenses for share-based payments,

holiday allowances, anniversary bonuses, pension

costs and other remuneration.

Performance-based pay and share-based payments

Performance-based pay is expensed as it is earned.

Part of the performance-based pay for the year is paid

in the form of equity-settled options (suspended in

2008) and conditional shares. share options may not

be exercised until three years after the grant date and

are conditional on the individual employee’s not

having resigned from the Group. rights to conditional

shares vest up to five years after the grant date,

provided that the employee, with the exception of

retirement, has not resigned from the Group. in

addition to this requirement, the vesting of rights

earned from 2010 is conditional on certain

performance targets.

the fair value of share-based payments at the grant

date is expensed over the service period that

unconditionally entitles the employee to the payment.

the intrinsic value of the options is expensed in the

year in which the share-based payments are earned,

while the time value is accrued over the remaining

INCOME STATEMENT


service period. expenses are set off against

shareholders’ equity. subsequent fair value

adjustments are not carried in the income statement.

Amortisation, depreciation and impairment charges

in addition to amortisation, depreciation and

impairment charges for intangible and tangible assets,

the Group expenses the carrying amount of lease

assets sold at the expiry of a lease agreement.

Loan impairment charges

loan impairment charges includes losses on and

impairment charges for loans, advances, amounts

due from credit institutions and guarantees, as well

as fair value adjustments of the credit risk on loans

measured at fair value.

the item also includes impairment charges and

realised gains and losses on tangible assets and

businesses taken over by the Group under non-

performing loan agreements if the assets qualify as

held-for-sale assets. similarly, subsequent value

adjustments of assets that the Group has taken over

and does not expect to sell within 12 months are

recognised under loan impairment charges.

Tax

calculated current and deferred tax on the profit for

the year and adjustments of tax charges for previous

years are recognised in the income statement. current

tax is calculated based on the valid tax rate.

Cash flow statement

the Group has prepared its cash flow statement

according to the indirect method. the statement is

based on the pre-tax profit for the year and shows the

cash flows from operating, investing and financing

activities and the increase or decrease in cash and

cash equivalents during the year.

cash and cash equivalent consists of cash in hand and

demand deposits with central banks and amounts due

from credit institutions and central banks with

original maturities shorter than three months.


CORPORATE GOVERNANCE

general meeting

the ultimate decision-making power in the company

is exercised by its shareholders at a General meeting

of shareholders.

Board of Directors

a chairman, vice chairman and at least three but no

more than seven ordinary members are elected to

the Board of Directors for an indefinite term by the

General meeting of shareholders.

the Board of Directors comprised the follow persons:

tonny thierry andersen (chairman), henrik ramlau-

hansen (vice chairman), niels-ulrik mousten, ilkka

hallavo, esko mäkeläinen and maija strandberg.

among the current Board members esko mäkeläinen

and maija strandberg are independent of the Danske

Bank Group.

the Board of Directors is responsible for looking after

the company’s administration and appropriate

organization of operations, and ensuring that the

supervision of the company’s accounting and asset

management has been arranged suitably. the Board

handles all matters that are of extensive and

fundamental importance for the operation of the

company and the entire Group. the Board takes

decisions on matters such as the Danske Bank Plc

Group’s business strategy, and it approves the budget

and the principles for arranging the Danske Bank Plc

Group’s risk management and internal control. the

Board also approves the objectives for the Group’s

human resources planning and monitors the

implementation of these objectives, and it decides the

basis for the Group’s remuneration system and other

far-reaching matters that concern the personnel. in

accordance with the principles of good governance,

the Board also ensures that the company, in its

operations, endorses the corporate values set out

for compliance.

the Board of Directors approved written rules of

procedure on 4 march 2010, defining the Board’s

duties and its meeting arrangements. the Board

conducts an annual review of its activities and

working practices in the form of an internal self-

assessment. the Board of Directors and the chief

executive officer (ceo) shall manage the company and

the entire Group in a professional manner and in

accordance with sound and prudent business

principles.

the Board of Directors of Danske Bank Plc convened

eleven times during 2012. in accordance with the

decision of the General meeting, Board members who

are not from within the Danske Bank Group were paid

an annual fee of eur 35,000.

Committees appointed by the Board of Directors

to ensure that the bank’s risk management

organisation meets both the external and internal

requirements, the Board of Directors has set up a

risk committee chaired by Danske Bank Plc’s ceo.

the principal function of the risk committee is to

ensure that:

• DanskeBankPlccompliesw it ht heguidanceon

risks issued by the Board of Directors

• DanskeBankPlcmonitorsallt y pesofriskand

reports on these to the relevant parties including

Danske Bank Plc’s Board of Directors

• DanskeBankPlc’sv iewofrisksisconsistentw it h

the risk strategy of the Danske Bank Group

• DanskeBankPlcfollowst heriskpoliciesoft he

Danske Bank Group

• DanskeBankPlccompliesw it hallt heregulator y

requirements.

Danske Bank Plc’s Board of Directors has also set up

the asset and liability committee (alco). the alco

is responsible for monitoring and administering the

structural interest rate risk in the balance sheet in

accordance with the committee’s view of interest

rates, Danske Bank Plc’s policies and delegated limits,

and it also decides on measures to protect the balance

sheet within the framework of the risk management

strategy and limits. the alco also determines the

operating target levels for liquidity risk management

and oversees the management of liquidity risk.

Chief Executive Officer and group Executive Committee

Danske Bank Plc’s Board of Directors appoints the

ceo and if necessary Deputy ceo. the ceo is


responsible for the company’s day-to-day management

in accordance with the limited liability companies

act and the instructions and orders issued by the

Board of Directors. the ceo’s duties include managing

and overseeing the company’s business operations,

preparing matters for consideration by the Board of

Directors and executing the decisions of the Board.

Danske Bank Plc’s ceo until 1.9.2012 was ilkka

hallavo (b. 1956) and as from 1.9.2012 Johanna

lamminen (b. 1966). risto tornivaara (b. 1958) acted

as Deputy ceo until 1.6.2012.

in 2012, the ceos were paid a salary and fringe

benefits of eur 384,434.95 in total. the ceos and

Deputy ceo received no shares or share-based rights

as remuneration during the financial year.

ceos period of notice is six months and the severance

compensation payable to the ceo in addition to the

salary paid for the period of notice equal to six months’

salary. ilkka hallavo’s, who was ceo until 1.9.2012,

period of notice has been eight months and the

compensation payable in addition to the salary for the

period of notice corresponds to 12 months’ salary.

in managing the company’s operations the ceo is aided

by the Group executive committee, which convenes at

the invitation of its chairman once a month. the Group

executive committee is responsible for supporting the

ceo in the preparation and implementation of

corporate strategy, coordination of the Group’s

operations, preparation and implementation of

significant or fundamental matters, and ensuring

internal cooperation and communication.

in managing its operations, Danske Bank Plc complies

with high moral and ethical standards. the company

constantly ensures that its operations comply with all

applicable laws and regulations. the responsibility for

supervising compliance with laws and regulations lies

with the operating management and the Board of

Directors. Various rules and regulations have been

issued to support operations and ensure that applicable

laws and regulations are observed throughout the

organisation.

Remuneration

the Danske Bank Plc Group operates a remuneration

scheme covering the entire personnel. the aim of the

remuneration scheme is to support the implementation

of the company’s strategy and to achieve the targets

set for the business areas. the Danske Bank Plc

Group is part of the Danske Bank Group. the

compensation committee set up by the Board of

Directors of Danske Bank a/s is responsible for

preparation of the Danske Bank Group’s remuneration

policy and any modifications to that policy.

Preparation of Danske Bank Plc’s remuneration policy

is based on the remuneration policy of Danske Bank

Group and takes due account of local regulations.

Preparation of Danske Bank Plc’s remuneration policy

is the responsibility of its compensation committee,

which is led by the head of human resources and

includes representatives of the bank’s business and

control functions. the remuneration policy is subject

to the approval of Danske Bank Plc’s Board of

Directors, which also monitors the implementation

and functioning of the policy each year. as a result of

the monitoring, the compensation committee submits

proposals and recommendations to the Board

concerning remuneration or modifications to the

existing remuneration scheme. the compensation

committee also monitors compliance with the

remuneration system and oversees the remuneration

for personnel responsible for the company’s risk

management and control functions.

the Group’s system of awarding variable bonuses is

part of its personnel incentives and part of the system

for committing staff to the company and to its targets.

in accordance with the remuneration policy, fixed

remuneration is nevertheless the most significant

element of the remuneration system. fixed salaries

rise either on the basis of a collective bargaining

agreement or on the basis of a personal increment

determined by the person’s superior. Pay rises require

the approval of the superior’s superior in accordance

with the remuneration policy guidelines. the Group

has no separate fringe benefits of any significance.

the Danske Bank Plc Group’s remuneration system

includes restrictions to ensure that no variable

bonuses are paid if the Group’s profit performance is

not favourable. the proportion given as variable

bonuses may not exceed the amount of fixed salaries

under most of the circumstances; instead, bonuses

can be no more than approx. 75% of fixed salaries.

the remuneration indicators are specified each year

by the directors of the business areas, and based on

the outcome of these the bonus for each business unit

is divided among the areas, teams and individual

employees. in all measurements a significant


weighting at the team and individual level is given to

the achievement of financial targets. supervisors also

give an assessment of whether all the Danske Bank

Plc Group personnel have performed their work in

compliance with the Group’s ethical rules and values.

the Board of Directors maintains an up-to-date list of

so-called risk takers and the bonuses paid to them.

risk takers are defined as those who work in the

company’s managerial positions, in internal control

tasks or who otherwise, on the basis of their work,

have a material influence on the Group’s risk position.

under the remuneration scheme principles, average

40% of the bonus for risk takers is paid only after

three years have elapsed.

Personnel Fund

the members of the Danske Bank Plc Group’s

Personnel fund comprise all personnel of Danske

Bank Plc and its subsidiaries except for those

members of the management teams and boards of

directors of Group companies who have an

employment contract, the chief executives/managing

directors of Group companies and other personnel

who are part of the management and who fall within

the sphere of the management remuneration system.

in respect of Danske Bank Plc and its finnish

subsidiaries, the estimate of the profit-sharing

bonuses to be paid on 2012 from the Personnel fund

is eur 0.0 million (eur 0.2 million).

Auditors

Danske Bank Plc has one auditor, which must be a firm

of authorised public accountants approved by the

central chamber of commerce. the term of the

auditor lasts until the next annual General meeting

following the auditor’s appointment.

Danske Bank Plc’s auditor is kPmB oy ab, a firm of

authorised public accountants, with Petri kettunen,

authorized Public accountant as the auditor with

principal responsibility. the primary function of the

statutory audit is to verify that the company’s financial

statements provide a true and fair view of the

company’s performance and financial position for

each accounting period.

in 2012, the Danske Bank Plc Group paid eurm 0.2

and the parent company eurm 0.1 in auditing fees.

the auditing firm also charged other fees, which

amounted to eurm 0.4 for the Group and eurm 0.4

for the parent company.

Description of the main features of the internal

control and risk management systems related to the

financial reporting process

Danske Bank Plc is a wholly owned subsidiary of

Danske Bank a/s. Danske Bank a/s is a listed

company and is the parent company of the Danske

Bank Group. the governance of the Danske Bank

Group accords with the legislative requirements

concerning Danish listed companies and especially

with the legislative requirements concerning

companies in the financial sector. the Danske Bank

Group complies in all essential respects with the good

governance recommendations issued by Denmark’s

committee on corporate Governance. further

information on the principles concerning corporate

governance in the Danske Bank Group is available at

the following internet address: www.danskebank.com.

Danske Bank Plc is a bond issuer and therefore

publishes the following description of the main

features of the internal control and risk management

systems related to its financial reporting process.

at Danske Bank Plc internal control is used for

purposes that include ensuring

• t hecorrect nessoffinancialreport ingandofot her

information used in management decision-making

• compliancew it hlawsandregulat ionsandw it h

the decisions of administrative organs and other

internal rules and procedures.

the company’s management operates the system of

control and supervision in order to reduce the

financial reporting risks and to oversee compliance

with reporting rules and regulations. With the controls

imposed the aim is to prevent, detect and rectify any

errors and distortions in financial reporting, though

this cannot guarantee the complete absence of errors.

Danske Bank Plc ’s Board of Directors regularly

assesses whether the company’s internal control

and risk management systems are appropriately

organised. the Board’s assessment is based on e.g.

documentation prepared by the company’s internal

audit unit. the Board also receives the report of an

external auditor on the bank’s administration and

on the state of its internal control. the Board and the

ceo regularly receive information on the company’s

financial position, changes in rules and regulations

and compliance with these within the Group.


the work of internal audit is subject to the Danske

Bank Group’s term of reference. this guidance states

that the internal auditing tasks include ensuring the

adequacy and efficiency of internal control and of the

controls on administrative, accounting and risk

management procedures. internal audit also ensures

that reporting is reliable and that laws and regulations

are complied with appropriately. in the auditing

process internal audit complies with the international

internal auditing standards and ethical principles and

audit also uses auditing procedures approved by the

Group that are based on examining and testing the

functioning of the control arrangements. local

internal auditing is undertaken in cooperation with the

Group’s internal audit.

internal audit performs function-specific and product-

specific audits and issues recommendations

concerning these and also monitors implementation of

the recommendations. internal audit also participates

in the auditing of annual and interim accounts and

provides internal consultancy and issues independent

expert opinions.

internal audit reports its auditing work to the Board of

Directors. the auditing strategy requires the approval

of the Board each year.

Good accounting practice is based on carefully

specified authorisations within the Group, appropriate

division of work tasks, regular reporting and the

transparency of activities. in management’s internal

reporting the same principles are observed as in

external reporting, and the principles are the same

throughout the Group. the Group’s common it system

creates the basis for reliable documentation of

accounting data and reduces the financial reporting

risks.

management accounting supports the bank’s senior

management by producing monitoring and analysis of

the performance of different business segments. the

reporting is produced not only for the bank’s top/

senior management but also for its segment and area

management. the indicators monitored vary from

monitoring of the quantity and quality of activities

and sales to reporting of risk-adjusted profitability.

most of the indicators are monitored monthly, but

selected indicators are monitored weekly or even

daily. management accounting also monitors the

bank’s market share and developments among

competitors and in the operating environment.

Besides the parties referred to above, supervision at

Danske Bank Plc is also undertaken by the risk

committee set up by the Board of Directors. the

committee’s chairman is the bank’s ceo. the purpose

of the risk committee is to oversee the bank’s

compliance with all guidance on risk management set

by the Board. more on the Danske Bank Plc Group’s

risk management can be read on page 31 of the

financial statements.


Risk Management general principles and governance

the main objectives of the risk management

processes are to ensure that risks are properly

identified, risk measurement is independent and the

capital base is adequate in relation to the risks. the

risks related to the Danske Bank Plc Group’s activities

and the sufficiency of the companies’ capitalisation in

relation to these risks is regularly evaluated. clearly

defined strategies and responsibilities, together with

strong commitment to the risk management process,

are our tools to manage risks.

the Board of Directors of Danske Bank Plc, together

with the Boards of Danske Bank Plc’s subsidiaries,

is responsible for ensuring that the Danske Bank Plc

Group’s risks are properly managed and controlled.

the Danske Bank Plc’s Board sets the principles of

risk management and provides guidance on the

organisation of risk management and internal control

in the business areas. to ensure that the risk

governance structure is adequate both in terms of

internal and external needs, the Board has established

a risk committee and nominated Danske Bank Plc’s

ceo as chairman of the committee.

the committee’s main tasks are:

• toensuret hatDanskeBankPlciscompliantw it h

the risk instructions issued by the Board of

Directors

• toensuret hatallriskt y pesinDanskeBankPlc

are monitored and reported to relevant parties

including the Board of Directors

• toensuret hatDanskeBankPlc’sv iewonriskis

aligned with Danske Bank Group’s risk strategy

• toensuret hatDanskeBankGroup’sriskpolicies

are implemented in Danske Bank Plc

• toensuret hatDanskeBankPlcf ulfilsall

regulatory requirements.

the asset and liability committee (alco) has also

been set by the Board. alco is responsible for

monitoring and directing the management of

structural interest rate risk of the balance sheet in

accordance with its own interest rate views, the

Bank’s policies and delegated limits including

approving any required balance sheet hedging activity

in line with risk management strategies and limits.

alco also determines the operational targets for the

liquidity risk management and oversees the liquidity

risk management.

DANSKE BANK RISK MANAGEMENT DISCLOSURES

Figure 4.1 Risk governance

structure

Business linesCredit

ALCO

Risk Committee

Board of Directors

OperationsLegal & ComplianceFinanceRisk

Management


Danske Bank Plc Group’s risk management, which is

an independent unit outside the business areas,

monitor Danske Bank Plc Group’s risk position

according to the principles and limits set by the Board

of Danske Bank Plc. the head of risk management is

chief risk officer who reports to Danske Bank Plc’s

ceo and is responsible for adequate and sound

oversight of Danske Bank Plc Group’s risk

management, providing an overview of Danske Bank

Plc Group’s risks and creating an overall risk picture.

the cro’s responsibilities cover all of the Bank’s

risks across risk types and organisational units, and

risks relating to outsourced activities. the credit risk

team is responsible for independent monitoring and

reporting of credit risks.

finance is responsible for market and liquidity risk

day-to-day monitoring and follow up, asset and

liability management as well as solvency reporting

(including the icaaP process).

it is the responsibility of each business area that all

the principles and limits set by the Danske Bank Plc’s

Board of Directors, committees set by the Board or

risk management unit are followed in the business

processes and decision making.

Principles and practices of risk management in

Danske Bank Plc Group are carried out consistently

with risk policies of Danske Bank Group and

supported by corresponding Danske Bank Group

functions. additional information on Danske Bank

Group level risks and Danske Bank Group’s risk

approaches can be found in Danske Bank Group’s

annual report and risk management report for 2012.

CAPiTAL REQuiREMEnTs AnD MAnAgEMEnTMinimum regulatory capital

Banking is a highly regulated business. there are

formal rules for minimum capital and capital structure

in capital adequacy regulation. also banks largest

exposures are limited based on capital included in the

capital adequacy own funds.

credit institutions act gives multiple options for

methods institutions may use in capital adequacy

calculation. Danske Bank Plc Group applies standard

method for credit and operational risks. market risks

are calculated according to regulatory approaches;

internal models are not used in regulatory reporting.

capital adequacy is reported quarterly to financial

supervision authority (fin-fsa). all Danske Bank Plc

Group companies fulfilled the regulatory minimum

capital requirements during 2012. minimum capital

requirements set by capital adequacy regulation are

presented in the risk table 1 below. total capital

requirement has decreased eur 146 million due to a

decrease in credit and counterparty risk.

RISK TABLE 1

Pillar 1 regulatory capital requirements by portfolio, EURm 2012 2011

Capital requirements for credit and

counterparty credit risk 1196 1345

Central governments and central banks 0 1

Administrative bodies and non-commercial

undertakings 2 4

Institutions 65 65

Corporates 574 641

Retail 141 244

Real estate 380 351

Past due items 27 30

Items belonging to regulatory high-risk

categories 3 1

Covered bonds 0 0

Other items 5 9

Securitisations positions 0 0

Capital requirement for market risk 23 17

General and specific risk 20 15

Commodity risk 3 2

Settlement risk 0 0

Capital requirement for operational risk 87 90

Total capital requirement 1306 1452

Total own funds 2586 2617

Capital management process

the basis of the Danske Bank Plc Group’s capital

management practices is the regulatory framework in

the capital requirements Directive (crD) with the

icaaP (internal capital adequacy assessment

Process) in Pillar 2.

Danske Bank Plc Group’s icaaP consists of

evaluating all relevant risks that the Danske Bank Plc

Group is exposed to. Besides the Pillar i risk types –

credit, market and operational risks – the Bank sets

capital aside for interest rate risk of the banking book,

business risk and, if required by stress tests, for

business cycle volatility buffer. liquidity risk is taken

into account through stress testing.


the latest Danske Bank Plc Group icaaP report was

prepared, approved by Danske Bank Plc’s Board and

delivered to fin-fsa in December 2012. the report

includes assessment of all internal and external

capital requirements Danske Bank Plc Group must

fulfil. the requirements have been stressed to reflect

severe negative development in economic

environment over three years’ time horizon. the

report shows that Danske Bank Plc Group is well

capitalized and has adequate capital buffers against

possible negative changes in market environment.

Main risk types

the major risks associated with Danske Bank Plc

Group’s activities are the credit risk arising from

banking, interest rate risk and liquidity risk.

operational and business risks are inherent in all

business areas.

the banking result mainly depends on loan and

deposit margins, business volumes, the size and

structure of the balance sheet, the general level of

interest rates, impairment losses and cost efficiency.

the margin between loans and deposits in banking,

with a moderate interest rate and liquidity risk profile,

changes slowly. Possible sources of result fluctuations

are unexpected losses in the credit and operational

risk areas. in banking and investment services, the

fees gathered from customer business are also

an important source of earnings. Because fees are

exposed to changes in business volume, profitability

is mostly exposed to changes in general economic

activity and customer behaviour.

Credit risk

credit risk is the risk of losses arising because

counterparties or debtors fail to meet all or part of their

payment obligations to the Bank. credit risk includes

country, settlement and counterparty credit risk.

Danske Bank Plc Group’s guidelines lay down uniform

principles for credit risk taking, with the aim of

ensuring high quality in the credit process. Danske

Bank Plc’s Board of Directors annually approves the

credit risk appetite policy, which sets the parameters

for new lending and diversification of credit risk from

different viewpoints. lending is focused on customers

operating in finland. limits are set for risk

concentrations, measured by the ratio of a customer

group’s nominal exposures to the Bank’s total capital.

risk concentration parameters are set at a

substantially more conservative level than the

minimum required by regulation. in addition limits are

set to some industries.

Based on Danske Bank Plc’s Board of Directors

delegation, credit decision authority is given to

Danske Bank a/s Board of Directors and delegated to

the management of the Danske Bank Plc’s credit

department and to authorised credit officers in the

business units. the amount of the authorisation varies

according to customer rating, total exposure and

collateral level. all credit applications are initiated

and prepared in the business units. credit decisions

are primarily based on rating, loan repayment ability,

collateral and other risk mitigates offered, as well as

acceptable return on allocated capital.

Credit risks of corporate customers

all major corporate customers have a customer

account officer, who is familiar with the customer’s

business and monitors its development. customers

with significant exposures are analysed by credit

analysts independent of the business. customers

with smaller exposures are continuously assessed

with scoring models.

credit risk monitoring consists of continuous

monitoring of macro-economic and industry

development, as well as customer creditworthiness,

collateral values and covenants. Business units’ credit

positions are reviewed systematically at least once a

year. the credit review includes monitoring the quality

of credit decisions and implementation of action plans

initiated in order to reduce the risks of the lowest rated

customers. Development of new lending is monitored

on a monthly basis against credit policy targets.

Product limits, overdrafts, delayed payments, arrears

and excesses are monitored on a daily basis.

Credit risks of personal customers

Personal customers are credit scored by application

and behavioural scorecards. these scoring models

utilise public and internal information on borrower

payment behaviour, education, employment and other

relevant factors as explanatory variables in

forecasting customer creditworthiness.

as part of loan granting process, the debt servicing

capacity is assessed and stressed by using higher

interest rates compared to current levels. long-term

loans to personal customers are mainly collateralised

by housing company shares or residential real estate.


Credit exposure

the figures in risk tables 2 to 7 show the Danske

Bank Plc Group’s credit exposure. internal receivables

between Danske Bank Plc Group companies have

been eliminated from these figures. exposures to

Danske Bank a/s Group are reported separately in

the risk tables 3 to 5.

reporting of credit exposure relating to lending

activities covers credit limits in use, guarantees and

irrevocable loan commitments. credit exposure of

trading and investing activities includes positive fair

value of derivative contracts, as well as fair value of

trading book bonds and shares.

RISK TABLE 2.

Total credit exposure, EURm 2012 2011

Credit exposure relating to lending activities 32 861 29 642

Credit exposure relating to trading and

investing activities 2 781 1 647

Total 35 642 31 289

credit exposure relating to lending activities does not

directly reconcile to the balance sheet notes, because

cash and certain off-balance sheet items are not

included in the credit exposure.

Credit exposure relating to lending activities

Danske Bank Plc Group’s lending-related credit

exposure activities amounted to eur 32.9 billion at

end of 2012, of which personal customers account for

42 per cent and corporate customers 31 per cent.

compared to 2011 the portfolio has increased by eur

3.2 billion. 99 percent of exposures were in eu

countries. new lending was concentrated in finland

during 2012.

RISK TABLE 3

Credit exposure relating to lending activities by segment , EURm 2012 2011

Personal 13 918 13 594

Corporate 10 095 10 352

Financials 695 740

Public 3 610 1 424

Total 28 318 26 110

Group internal 4 543 3 532

Total 32 861 29 642

Danske Bank Plc Group’s lending-related credit

exposure is presented by industry in risk table 4.

the portfolio is well diversified across industries, with

a high share of private sector lending, which is

composed mainly of housing loans covered with real

estate collateral.

RISK TABLE 4

Credit exposure relating to lending activities by industry, EURm 2012 2011

Central and local governments 3 610 1 424

Subsidised housing companies 993 942

Banks 334 383

Diversified financials 320 329

Other financials 41 27

Energy and utilities 780 748

Consumer Discretionary 1 103 1 222

Consumer Stables 708 822

Commercial property 2 228 2 182

Constructions and building products 912 901

Transportation and shipping 454 633

Other industrials 1 207 1 199

IT 136 144

Materials 1 033 1 114

Health care 318 255

Telecommunication services 223 192

Personal customers 13 918 13 594

Total 28 318 26 110


Total 32 861 29 642

Danske Bank Plc Group’s credit exposure by credit

classification is presented in risk table 5. in line with

Danske Bank a/s Group’s credit process, Danske

Bank Plc Group’s customers are classified according

to risk and the classification is updated whenever new

information about the customers is received. the main

objectives of the risk classification are to rank Danske

Bank Plc Group’s customer base according to default

risk, estimating the probability of default (PD) of each

customer.

RISK TABLE 5

Credit exposure relating to lending activities by rating, EURm

Rating 2012 2011

1 3 376 694

2 798 673

3 2 999 2 490

4 4 976 3 977

5 4 941 5 126

6 3 667 4 245

7 4 238 5 258

8 2 260 2 611

9 512 536

10 227 156

11 325 346

Total 28 318 26 110


Total 32 861 29 642


the rating distribution has remained fairly similar in

2012 compared to 2011, with the exposure increase

in rating class 1 explained by the increase of the

exposures to Bank of finland. at the end of 2012, the

share of customers classified into the seven highest

rating classes was 88 percent of the total, when

exposures to Danske Bank a/s Group are excluded. in

2011 the corresponding share was 86 percent.

additional information on the classification scale can

be found in the Danske Bank a/s Group risk

management report for 2012.

impairment charges increased during 2012 and

amounted eur 63.9 million at the end of year, against

eur 53.4 million at the end of 2011. net non-performing

assets amounted to eur 180.6 million at the end of

2012, eur 16.4 million less than at the end of 2011.

mitigating risks in the credit portfolio is a key element

of the Danske Bank Plc’s business strategy. Personal

and small corporate customer exposures are mainly

covered by collateral. in the large corporate segment,

market practise favours covenants and more limited

use of collateral in risk mitigation. collateral is also a

key component in the Group’s calculation of economic

capital and rWa.

all collateral is valued at the time it is pledged and

regularly thereafter. regional housing price indices

are used to incorporate latest price information into

the calculation of fair value estimates for these

collateral types. other collaterals are revalued at least

annually. estimation of collateral fair value is done by

a competent valuator who is independent of the credit

process. the risk of changes in fair value is covered by

a similar haircut process throughout Danske Bank

a/s Group. risk table 6 presents the amount of

collateral allocated to agreements after haircuts.

RISK TABLE 6

Types of collateral, EURm 2012 2011

Real property 15 394 14 845

Bank accounts 73 107

Custody accounts/securities 148 170

Vehicles 398 451

Equipment 393 266

Vessels/aircraft 71 129

Guarantees 570 661

Dues 124 113

Other assets 26 28

Total 17 198 16 770

collateral figures have been adjusted to account for

asset finance collateral for both 2012 and 2011.

Credit exposure relating to trading and investing

activities

at the end of 2012 Danske Bank Plc Group’s credit

exposure relating to trading and investing activities

amounted to eur 2.8 billion. exposure consisted

almost entirely of exposure to bonds and derivatives.

Derivatives with positive fair value were the largest

single class at eur 2.4 billion. increase of eur 0.9

billion in trading and investing activities was due to

increase in financials derivative portfolio.

RISK TABLE 7Credit exposure relating to trading and investing activities, EURm

2012 Private Commercials Financials Public Total

Bonds 0 12 8 280 300

Shares 0 43 15 0 57

Derivatives 2 349 1 991 82 2 424

Total 2 404 2 014 362 2 781

2011

Bonds 0 11 160 12 183

Shares 0 18 2 0 20

Derivatives 1 316 1 060 67 1 444

Total 1 346 1 221 79 1 647


Forbearance practices

under certain circumstances, the Group will grant

concessions in borrowing terms to customers that

have financial difficulties, for example if a personal

customer becomes unemployed or a business

customer sees a drop in turnover. concessions are

granted mainly if the financial difficulties are

considered to be temporary, but may also be granted

if a restructuring is considered necessary to limit

the Group’s losses on an exposure.

forbearance measures include interest-only

schedules and interest rate reductions applying for

short periods. if a customer is expected to be able to

resume normal repayments after such period, the

exposure is not considered to be subject to objective

evidence of impairment, and the impaired exposure

will be covered by collective impairment charges.

in other cases, including in connection with

restructuring, the customer will be downgraded to

rating category 10, and the entire exposure will be

impaired. the exposure is then written down to the

amount that the customer is estimated to be able to

service in the future. if the customer’s ability to repay

depends significantly on the assets that have been

provided as collateral (asset financing), the exposure

is written down to the fair value of the collateral.

once a customer has proven able to service the

restructured facility, the exposure will, after a certain

period, no longer be considered subject to objective

evidence of impairment, and the customer will move

from rating category 10 to a better category. in case of

asset financing, the write-down to the fair value of

collateral will be reversed.

Market risk

market risk is defined as the risk of losses caused by

changes in the market value of financial assets,

liabilities and off-balance sheet items resulting from

changes in market prices or rates. market risk in

Danske Bank Plc is constituted of trading activities and

the interest rate risk in the banking book. most material

risk for the Bank is the interest rate risk arising from

banking book and trading book positions. the Bank

measures the effects of interest rate changes on both

net interest income and economic value.

governance and limit structure

Danske Bank Plc’s Board of Directors sets out the risk

policy and overall limits for market risk. the Board

also decides on the general principles for managing

and monitoring market risks based on the guidelines

and allocated market risk limits provided by the

Danske Bank Group. the management of the individual

business areas is responsible for the risks the area

incurs and for actively managing these risks within the

set of allocated limits.

the Board of Directors delegates the market risk limits

to the chief executive officer of Danske Bank Plc.

market risk limits are allocated for trading activities

and for the alco position. the alco position is

decided at regular alco meetings and trades are

executed by Danske Bank markets finland, which is

part of the Danske Bank Plc.

measurement, monitoring and management reporting

on market risks is carried out on a daily basis in a

separate risk control unit. market risk exposure is

calculated in a limit control system that is linked to the

trading systems. limits are monitored systematically,

and procedures in case of limit violations have been

established for follow-up in the organization. in

addition, the risk control unit conducts intra-day spot

checks of the risks in the trading units and the alco

positions.

the chart below illustrates the limit structure and

hierarchy in Danske Bank Plc.

Limit structure and hierarchy in

Danske Bank Plc.

Chief Executive Officer

Board of Directors

Trading Positions varainhallinta/ALCOLimits: Trading Limits for Danske Bank PlcResponsible: Head of Danske Bank Markets FI

Limits: ALCO Limits for Danske Bank PlcResponsible: Danske Bank Plc’s ALCO


Market risk exposure

Danske Bank Plc markets, trades and takes positions

in products that entails a variety of market risk

components. the main activities are concentrated

around a range of fixed income assets, money-market

instruments and other assets with interest rate risk.

further more, the bank may take on interest rate risk

as part of the treasury management in accordance

with the alco limits and decisions.

Alco positions

Danske Bank Plc’s banking book interest rate risk

arises primarily from retail and corporate based

customer business which is hedged by derivatives.

interest rate risk in the banking book related to

demand deposits has been modeled separately and

included in the overall risk calculations and limits. as

part of the limit monitoring banking book interest rate

position is stress tested by a 1 percentage point

parallel increase and decrease of yield curves by

currencies.

Danske Bank Plc also estimates interest rate risk

exposure in the banking book from the earnings

perspective, called net interest income (nii) risk. it is

calculated as the greatest loss of earnings over a 12

month period from the Bank’s assets and liabilities

upon a parallel shift in yields of 1 percentage point.

Given the structure of the Bank’s balance sheet, the

greatest loss is the -1% shift scenario indicating that

Bank’s nii will decrease if interest rates fall.

the Bank also has a modest holding of unlisted shares,

which is primarily related to the banking activities.

Trading positions

trading operations in Danske Bank Plc covers

customer related business in interest rate, foreign

exchange, commodity, credit and structured products.

risk arises mainly from the movements of interest

rates in eur, ruB, usD and the Baltic currencies,

of which eur is dominating the others. foreign

exchange positions are small and are denominated

mainly in Baltic currencies along with relatively

short-term positions typically in usD and ruB. the

Bank’s commodity positions includes mainly deals

related to energy, eu allowances (eua) and certified

emission reductions (cer). commodity related

business is customer-based trading, and the unit’s

own holdings are very modest. the Bank has no direct

positions in listed shares.

trading book risks are measured and limited by

means of sensitivities, pre-defined worst case

scenarios and exposure limits by risk types. limits

are set by currencies and maturity buckets and

calculated as net and gross risks.

Risk overview

table 8 shows Danske Bank Plc’s market risk

exposure as of year-end 2012. risk figures represent

net positions, changes in economical value or risk of

loss in the Bank’s nii calculated according to

conventional risk measures.

RISK TABLE 8

Market risk exposure, EURm 2012 2011

Interest Rate Risk (1% yield curve shift up, net) 14.8 4.1

Net Interest Income Risk (1% yield curve shift) -25.3 -39.4

Net Foreign Exchange Rate Position -16.7 -22.8

Commodity Risk (10% change up in prices, net) -0.2 -0.1

Listed Equity Position -0.2 0.0

Unlisted Equities and Shares 27.9 2.0

Interest Rate Volatility Risk (1% -point change) 0.0 0.0

Foreign Exchange Volatility Risk

(1% -point change) 0.0 0.0

Liquidity risk

liquidity risk is defined as the risk of losses arising

due to:

• Lackoff undingpreventst heBankf rommeet ing

its obligations

• TheBank’sf undingcostsincrease

disproportionately

• Breachofregulator yrequirementsforliquidit y

• TheBank’sliquidit yposit ionis,orisperceived

to be, weak resulting in adverse actions from

counterparties, rating agencies or regulators.

taking liquidity risk is an inherent part of Danske

Bank Plc’s business strategy and it is managed in

support of a cautious and conservative risk profile.

the Board of Directors has approved a liquidity

policy and a contingency funding plan for the Bank.

the policy specifies the aims, limits, calculation and

responsibilities of all parts of the Bank’s liquidity risk

control and management. the purpose of the

contingency funding plan (cfP) is to ensure an

efficient and co-ordinated action plan for situations

where Danske Bank Plc or the banking system comes

under pressure in terms of liquidity.


the asset and liability committee (alco) is

responsible for ensuring that the liquidity risk is

managed in accordance with the Policy. Danske Bank

markets finland (as operating within Danske Bank

Plc) is responsible for the practical and day-to-day

liquidity management and execution of the Policy,

including assuring that the liquidity buffer is in

accordance with the Policy. the alm unit in finance

oversees the liquidity position, reports breaches

according to the escalation process, monitors triggers

as set out in cfP and conducts the stress tests and

liquidity buffer calculations. market risk in finance is

responsible for day-to-day monitoring, controlling and

reporting the liquidity risk limits. Both alm and

market risk report to alco, risk committee and

the Board as specified in the Policy.

liquidity management is based on monitoring and

management of short-term and long-term liquidity

risks. the management of operational liquidity risk

aims primarily at ensuring that Danske Bank Plc

always has a liquidity buffer that is able, in the short

term, to absorb the net effects of current transactions

and expected changes in liquidity, under both normal

and stressed conditions. Danske Bank Plc’s liquidity

buffer consists mainly of ecB eligible bonds and cash

assets in Bank of finland.

Danske Bank Plc conducts stress tests to measure its

immediate liquidity risk and to ensure that it has an

adequate amount of time to respond to crises. the

stress tests estimate liquidity risk in scenarios

covering bank-specific and systemic crises, their

combination and a capital market cut-off.

need for long term funding will be determined by

structural liquidity risk, liquidity stress test scenarios

and the maturity profile of long term funding.

structural liquidity risk is based on a breakdown by

maturity of the Bank’s assets, liabilities and off-

balance-sheet items. Danske Bank Plc bases these

calculations on the contractual due dates of individual

products but takes into account that some balance

sheet items have maturities that make their actual due

dates deviate materially from their contractual due

dates. the maturities of such items are therefore

modified to provide a more accurate view of the actual

behaviour. Danske Bank Plc also monitors its funding

mix to make sure that it is well diversified in terms of

financing sources.

liquidity risk has been in focus for Danske Bank Plc,

as well as for many other banks in europe, throughout

the year 2012. a conservative risk profile and high

rating ensured that Danske Bank Plc was able to issue

two covered bonds, eur 1 billion each, despite the

strain in funding markets. Danske Bank Plc also

estimates liquidity ratios introduced in crD iV.

though Danske Bank Plc is well prepared in terms of

funding structure in order to comply with the

requirements when they come into force, it will be

important how the rules are finalised in terms of

treatment of covered bonds in the liquidity buffer.

risk table 9 presents Danske Bank Plc’s financial

liabilities as of 31 December by maturity classes

based on contractual maturities. financial liabilities

without contractual maturity are included in the

maturity class ‘less than 3 months’.

RISK TABLE 9

Maturity profile of financial liabilities 31 December 2012 based on contractual maturities, EUR m

Liabilities Total < 3 months 3–12 months 1–5 years > 5 years

Due to credit institutions and central banks 2 418.9 2 315.2 13.6 90.0 0.0

Amounts owed to customers and public entities 16 514.4 15 332.8 1 041.0 138.3 2.3

Derivatives settled on a gross basis (cash outflows) 27 695.6 17 985.7 8 733.5 891.1 85.3

Derivatives settled on a gross basis (cash inflows) 27 713.2 17 928.3 8 736.1 965.1 83.6

Derivatives settled on a gross basis (net cash flows) 17.6 -57.4 2.6 74.0 -1.7

Derivatives settled on a net basis -1.4 40.8 -42.2 0.0 0.0

Debt securities in issue 7 536.5 1 202.3 804.5 3 364.4 2 165.3

Subordinated liabilities 358.5 125.2 0.0 233.2 0.0

Financial liabilities total 26 844.4 18 958.9 1 819.6 3 900.0 2 165.9

Guarantees and pledges 1 796.7 586.5 424.7 728.2 57.3

Undrawn loans, overdraft facilities and other 4 229.6 3 918.2 8.4 43.7 259.4


Operational risk

Danske Bank Plc Group defines operational risk in

line with the crD definition as losses resulting from

inadequate or failed internal processes, people and

systems or from external events, including legal risk.

the crD definition does not include strategic risk

and reputation risk. however, reputation risk can be

seen as a consequence of operational risk events as

well as failure to comply with laws, rules, related

self-regulatory organisation standards and code

of conducts applicable to the banking activities.

Danske Bank Plc Group thus manages reputation

risk through, among other things, high standards in

operational risk management.

operational risks are divided in Danske Bank Plc Group

into the following categories (in line with the crD):

• Internalf raud

• Externalf raud

• Deficienciesinemploymentpract icesand

workplace safety

• Deficienciesinpract icesconcerningcustomers,

products or business

• Damagetophysicalassets

• Businessdisrupt ionandsystemfailures

• Deficienciesinexecut ion,deliver yandprocess

management

operational risks are reflected, for example, in costs,

claims, loss of reputation, business disruptions or

false information concerning positions, risks and

results. the management of operational risks

enhances the efficiency of the Bank’s internal

processes and decreases fluctuations in returns.

Danske Bank Plc Group operates a culture of open

disclosure of risks in which staff should report errors

and weaknesses within the Bank so future losses may

be minimised by taking preventative measures. it is

the responsibility of business lines and resource areas

to disclose information on loss events and each

employee within Danske Bank Plc Group is

responsible for the day to day management of

operational risks and reporting of actual events within

their respective area. the risk management

organisation develops methods to manage operational

risks and co-ordinates the risk management

operations of the business units. internal audit

assesses the adequacy and efficiency of internal

control and risk management. the compliance function

assists management in ensuring that the Group and its

employees comply with applicable laws and

regulations as well as ethical standards in order to

mitigate the Group’s compliance risk as appropriate.

operational risk events data is collected

systematically in operational risk information

system (oris). events are reported to Danske Bank

Plc Group’s risk committee, Board of Directors and,

when requested, to Danske Bank Group’s operational

risk committee. events are classified into risk

categories and costs of the events are analysed.

Danske Bank Plc Group applies Danske Bank Group’s

approach for identification and management of

operational risks. Danske Bank Plc Group yearly

performs the operational risk identification and

assessment (ria) process to identify the largest

internal and external risks facing the organisation.

a report of the Bank’s key risks is approved by Danske

Bank Plc Group’s risk committee. the process also

includes monitoring of the identified risks. local key

controls and possible key risk indicators are identified

for the risks, such that the status of the risk can be

monitored over time. the results of the local ria

process are delivered to Group and thereby they are

included to the group-wide process. Possible

mitigation strategies for key risks are developed and

implemented by the business lines and resource areas

in Danske Bank Group.


segment principles

the Group consists of number of business units and

resource and support functions. the Group’s activities

are segmented into business units according to

Danske Bank Group’s organisational structure in 2012.

inter-segment transactions are settled on an arm’s-

length basis. expenses incurred centrally, including

expenses incurred by support, administrative and

back-office functions, are charged to the business

units according to consumption and activity at

calculated unit prices or at market prices, if available.

segment assets and liabilities are assets and

liabilities that are used to maintain the operating

activities of a segment or have come into existence as

a result of such activities and that are either directly

attributable to or may reasonably be allocated to a

segment. a calculated share of sharelholders’ equity

is allocated to each segment.

in the consolidated financial statements the inter-

segment transactions, assets and liabilities have been

eliminated. segment results are reported after

eliminations.

Operating segments

the Group follows business functions in four different

segments; Banking activities, markets, capital and

other.

markets is responsible for operations in the capital

markets and advisory services related to markets

area. markets consists also a part of Group’s treasury

functions. capital is responsible for Group’s asset

management operations and mutual funds. other

activities includes primarily Group’s funding and

Group’s support functions such as it services,

contact centre, product development and logistics.

The new organisation

on 1 June 2012, Danske Bank Plc Group implemented

a new organisational structure in order to strengthen

its focus on customers. With a view to a clearer

segmentation of customers, the Group now consists of

the following units:

•PersonalBank ing

•BusinessBank ing

•Corporates&Inst it ut ions

•Ot heract iv it ies(incl.DanskeCapital)

Danske Bank Plc Group will include these changes to

segment reporting as from 2013. comparative figures

for 2012 will be shown from the first half of 2013.

the Banking activities area will be split into Personal

Banking, Business Banking and corporates &

institutions. Danske markets’ performance will be

reported under corporates & institutions.

Personal Banking serves personal and private

banking customers. the unit focuses on offering first-

class self-service products and proactive advice to

customers with more complex finances. the strategy

is to concentrate efforts on mass affluent customers,

private banking customers and young customers.

Business Banking serves small and medium-sized

businesses. the unit offers strategic financial advisory

services and other business banking products.

corporates & institutions serves the largest

institutional clients and corporate customers in the

nordic region. Products and services include cash

management services and trade finance solutions.

corporates & institutions also offers fixed-income and

foreign exchange products for hedging purposes.

other activities encompasses Group treasury,

expenses for the Group’s support functions and

eliminations. Group treasury is responsible for the

Group’s strategic fixed income, foreign exchange and

equity portfolios and serves as the Group’s internal

bank. Danske capital is included in the other activities

segment and will continue to offer asset management

products to private individuals and businesses.

SEGMENT INFORMATION


OPERATING SEGMENTS, JANUARY–DECEMBER 2012

EURmBanking

Activities Markets Capital Other EliminationsDanske Bank

Plc Group

Total operating income 518.1 61.6 29.1 28.7 0.0 637.5

Total operating expenses -363.9 -21.3 -19.2 -12.2 0.0 -416.7

Loan impairment charges -63.9 0.0 0.0 0.0 0.0 -63.9

Profit before taxes 90.2 40.3 9.8 16.4 0.0 156.8

DECEMBER 31, 2012

Total assets 40 433 5 945 53 3 253 -17 872 31 813

of which loans and advances to credit inst. & customers 33 309 9 180 32 553 -17 402 25 672

Total liabilities and equity 40 433 5 945 53 3 253 -17 872 31 813

of which liabilities to credit inst. & customers 34 733 2 067 19 -549 -17 402 18 868

OPERATING SEGMENTS, JANUARY–DECEMBER 2011

EURmBanking

Activities Markets Capital Other EliminationsDanske Bank

Plc Group

Total operating income 565.3 51.6 36.3 -3.5 0.0 649.8

Total operating expenses -399.8 -22.2 -19.6 -7.5 0.0 -449.0

Loan impairment charges -59.8 6.4 0.0 0.0 0.0 -53.4

Profit before taxes 105.7 35.8 16.7 -11.0 0.0 147.3

DECEMBER 31, 2011

Total assets 39 673 4 979 50 7 179 -24 476 27 406

of which loans and advances to credit inst. & customers 38 429 9 431 156 442 -23 725 24 734

Total liabilities and equity 39 673 4 979 50 7 179 -24 476 27 406

of which liabilities to credit inst. & customers 39 168 1 638 11 -51 -23 578 17 189

In accordance with IFRS 8, Danske Bank Plc Group is required to disclose business with a single external customer that generates 10% or more of the combined

revenue. The Group has no such customers.


1 nET inTEREsT inCOMEEURm

Interest income 2012 2011

Loans and receivables to credit institutions 67.5 89.6

Loans and receivables to customers

and public entities 537.6 588.4

Debt securities 4.2 4.7

Derivatives, net 48.8 38.8

Other interest income 7.1 1.5

Total 665.2 723.0

Interest expenses

Amounts owed to credit institutions -68.6 -81.3

Amounts owed to customers and public entities -91.7 -152.3

Debt securities in issue -133.3 -127.2

Subordinated liabilities -13.0 -15.5

Other interest expenses -0.5 -1.0

Total -307.1 -377.3

net interest income 358.1 345.7

Interest income includes 10.0 million euros (8.0 million euros) income accrued

on impaired financial assets.

2 FEE inCOME AnD ExPEnsEsEURm

Fee income 2012 2011

Financing (loans, advances and guarantees) 48.0 61.3

Investment

(securities trading and advisory services) 7.4 6.0

Services (foreign exchange trading) 0.1 0.1

Fees generated by activities 55.5 67.3

Financing (guarantees) 12.4 12.2

Investment

(asset management and custody services) 86.2 97.8

Services (payment services and cards) 98.8 84.4

Fees generated by portfolios 197.4 194.4

Total 252.9 261.7

Fee expenses 2012 2011

Financing (loans, advances and guarantees) 0.5 2.0

Investment

(securities trading and advisory services) 4.9 4.5

Services (foreign exchange trading) - 0.0

Fees generated by activities 5.4 6.5

Financing (guarantees) 0.0 0.0

Investment

(asset management and custody services) 35.3 37.2

Services (payment services and cards) 15.8 15.8

Fees generated by portfolios 51.2 53.0

Total 56.6 59.5

nET fee income 196.4 202.2

Fees generated by activities comprises fees for the execution of one-off

transactions. Fees generated by portfolios comprises recurring fees form the

product portfolio. Fees that form an integral part of the effective rates of

interest loans, advances and deposits are carried under Interest income or

Interest expense. Fees for Loans and advances at fair value are carried under

Fee income.

3 nET TRADing inCOME EURm

Trading assets/liabilities 2012 2011

Debt securities and interest rate derivatives -18.1 -14.1

Equity securities and equity derivatives 17.1 -15.0

Other -1.0 22.8

Total -2.0 -6.3

Financial assets/liabilities designated as at fair value through p/l


Total 18.8 20.6

Foreign exchange dealing

Foreign exchange dealing 24.7 25.9

Gains/losses from hedge accounting

Fair value hedging

Change in fair value of hedging derivative

instruments, net 118.9 77.9

Change in fair value of hedged items, net -118.7 -78.0

Total 0.2 -0.1

net trading income, total 41.6 40.1

OTHER NOTES


4 OTHER OPERATing inCOMEEURm 2012 2011

Rental income 3.5 3.3

Operating lease income 18.5 30.3

Fair value adjustment of investment property -1.7 -1.2

Other income 18.8 26.4

Other operating income, total 39.1 58.9

Other income includes e.g. revenues from services sold to Danske Bank A/S

Helsinki Branch 10.6 million euros (7.3 million euros).

5 nET inCOME FROM invEsTMEnTsEURm 2012 2011

Income from associated undertakings 1.4 1.7

Sales profit of investment property 0.8 1.2

net income from investments, total 2.2 2.9

6 sTAFF COsTsEURm

Staff costs 2012 2011

Wages and salaries -137.9 -145.1

Pension costs - defined contribution plans -23.3 -23.1

Other social security costs -7.9 -7.7

staff costs, total -169.2 -175.8

2012

Salaries and remunerationFixed

salaries

Variable remune-ration 1)

Top Management 0.6 0.1

Risk takers 6.4 1.4

Others 117.8 13.4

2011

Salaries and remunerationFixed

salaries

Variable remune-ration 1)

Top Management 0.7 0.1

Risk takers 5.8 2.0

Others 124.9 10.3

Variable remuneration 1) 2012 2011

Cash items 14.3 11.8

Share-related items 0.5 0.6

Other items - -

Postponed salaries and remuneration

Granted during accounting period, payment

postponed to next accounting periods 8.0 6.5

Amounts paid during the accounting period,

right granted in earlier accounting periods 6.4 6.1

Compensation paid by the company for termination of employment contracts

is determined in accordance with legislation in force. During the accounting

period the company has paid signing bonuses (3 pcs) for new employees

350,000 euros.

7 sHARE-BAsED PAYMEnTuntil 2008, the Group offered top management and

management incentive programmes that consisted of

share options and rights to conditional shares.

incentive payments reflected individual performance

and also depended on financial results and other

measures of value creation for a given year. options

and rights were granted in the first quarter of the year

following the year in which they were earned.

share options – programs 2007 A and 2008 A

issued options carry a right to buy Danske Bank a/s

shares exercisable from three to seven years after

options are granted provided that the employee, with

exception of retirement, has not resigned from the

Group. Program 2007a may be exercised from 1 april

2007 until 1 april 2014 and program 2008a may

be exercised from 1 april 2008 until 1 april 2015.

the exercise price of the options is computed as the

average price of Danske Bank a/s shares for 20 stock

exchange days after the release of the annual report

plus 10%.

the fair value of the share options is calculated

according to a dividend-adjusted Black & scholes

formula. calculation of the fair value at the end of

2012 is based on the following assumptions: share

price: 12.87 eur (2011: 9.81 eur). Dividend payout

ratio: 2,5% (2011: 2,5%). rate of interest: 0.2-0.3%

(2011: 0.8-0.9%), equal to the swap rate. Volatility:

35% (2011: 50%). average time of exercise: 0–1 years

(2011: 0-2 years).the volatility is estimated on the

basis of historical volatility.

intrinsic value is expensed in the year in which the

share options are earned, while the time value is

accrued over the remaining service period, which is

the vesting period of up to five years.

Conditional shares – program 2008

rights to buy Danske Bank a/s shares under the

conditional share programme vest up to five years

after being granted provided that the employee, with

the exception of retirement, has not resigned from the

Group. in addition to this requirement, rights to shares

earned in 2011 and 2012 vest only if the Group as a

whole and the employee´s department meet certain

performance targets within the next five years. rights

to buy Danske Bank a/s shares under the conditional

share programme are granted as a portion of the

annual bonus earned


Share options Number Fair value (FV) EURm

Top Management Management Total

Exercise price (EUR) At issue

End of year 31.12.2012

granted in 2007

2011 beg. 24 800 132 000 156 800 39.56 0.6 0.2

Exercised 2011

Forfeited 2011

Other changes 2011 2 000 10 637 12 637

2011, end 26 800 142 637 169 437 36.61 0.6 0.0

Exercised 2012

Forfeited 2012

Other changes 2012

2012, end 26 800 142 637 169 437 36.48 0.6 0.0

grannted in 2008

2011 beg. 40 660 52 520 93 180 26.20 0.3 0.3

Exercised 2011

Forfeited 2011

Other changes 2011 3 279 -4 273 -994

2011, end 43 939 48 247 92 186 24.61 0.3 0.0

Exercised 2012

Forfeited 2012

Other changes 2012

2012, end 43 939 48 247 92 186 24.53 0.3 0.0

Conditional shares Number Fair value (FV) EURm

Top Management Management Total

Employee payment price (EUR) At issue

End of year 31.12.2012

granted in 2008

2011 beg. 5 026 30 457 35 483 0.24 0.9 0.6

Vested 2011 -5 026 -30 457 -35 483 0.24

Forfeited 2011

Other changes 2011

2011, end 0 0 0

granted in 2011

Granted 2011 42 627 42 627 0.16 0.7 0.4

Forfeited 2011 -2 761 -2 761

Other changes 2011

2011, end 39 866 39 866 0.16 0.7 0.4

Vested 2012

Forfeited 2012 -19 507 -19 507

Other changes 2012

2012, end 20 359 20 359 0.16 0.3 0.3

granted in 2012

Granted 2012 87 147 87 147 0.12 1.1 1.1

Forfeited 2012

Other changes 2012

2012, end 87 147 87 147 0.12 1.1 1.1

the fair value of the conditional shares is calculated as

the share price less the payment made by the employee.

intrinsic value is expensed in the year in which rights

to conditional shares are earned, while the time value

is accrued over the remaining service period, which is

the vesting period of up to five years.

effective from 2010, Danske Bank Plc Group has

granted rights to conditional shares to the top

management and management as part of the variable

remuneration.


Note 1: Share options: Adjustment of exercise price due to the share issue in 2011:

Prior to issue (DKK)

Prior to issue (EUR)

After issue (DKK)

After issue (EUR) %

2007 294.13 39.56 272.18 36.61 1.08

2008 194.74 26.20 182.98 24.61 1.06

Share options: Fair value of options translated into EUR as of 31 December 2012

FV (DKK) EUR : DKK FV (EUR)

2007 0.00 7.4604 0.00

2008 0.86 7.4604 0.12

Share options: Fair value of options translated into EUR as of 31 December 2011

FV (DKK) EUR : DKK FV (EUR)

2007 0.21 7.4342 0.03

2008 2.43 7.4342 0.33

Note 2: Conditional shares: Calc. used to calculate the fair value of conditional shares as of 31 December 2012

Share price at grant date

(DKK)

Share price at year end

(DKK) EUR : DKK


(EUR)


(EUR)

Granted in 2011 125.83 95.65 7.4604 16.87 12.82

Granted in 2012 92.66 95.65 7.4604 12.42 12.82

Conditional shares: Calc. used to calculate the fair value of conditional shares as of 31 December 2011


(DKK)


(DKK) EUR : DKK


(EUR)


(EUR)

Granted in 2011 125.83 72.95 7.4342 16.93 9.81

8 OTHER OPERATing ExPEnsEs, DEPRECiATiOns AnD iMPAiRMEnTs

EURm

Other operating expenses 2012 2011

IT costs -50.3 -69.7

Other staff costs -17.2 -22.0

Marketing expenses -20.0 -20.1

Postage and telephone expenses -10.7 -12.1

Rental expenses -36.7 -38.4

Other -86.8 -74.9

Other operating expenses, total -221.8 -237.2

Depreciations and impairments

Depreciations of leased assets -13.5 -24.0

Other -12.2 -11.9

Depreciations and impairments, total -25.7 -36.0

Other operating expenses, depreciations and

impairments, total -247.5 -273.2

9 AuDiT FEEsEURm 2012 2011

Audit 0.2 0.3

Audit-related services - 0.0

Tax 0.0 0.1

Other services 0.4 0.1

Audit fees, total 0.6 0.5


10 LOAn iMPAiRMEnT CHARgEs

EURm

2012

Individual impairment

charges

Collective impairment

charges Recoveries Total

From loans and receivables to credit institutions - -

From loans and receivables to customers

- impairment charges 92.6 19.6 112.2

- write-offs 42.2 18.5 23.6

- reversals -92.7 -92.7

Impairment of investments in group companies 20.3 20.3

From guarantees and other off-balance sheet items

- impairment charges 1.1 1.1

- write-offs 0.0

- reversals -0.7 -0.7

Total 1–12/2012 63.6 18.9 18.5 63.9

2011

From loans and receivables to credit institutions 0.0 0.0

From loans and receivables to customers

- impairment charges 126.7 0.4 127.1

- write-offs 73.1 73.1

- reversals -119.9 15.0 -134.9

Impairment of investments in group companies

From guarantees and other off-balance sheet items

- impairment charges 0.0

- write-offs 0.0 0.0

- reversals -11.9 0.0 -11.9

Total 1–12/2011 68.1 0.3 15.0 53.4

11 TAxEsEURm 2012 2011

Taxes on taxable income for the year 44.1 21.5

Taxes arising from previous years 4.2 -1.9

Deferred taxes -6.8 17.9

Taxes for the financial year total 41.6 37.5

Reconciliation between income taxes in income statement and taxes calculated at Finnish tax rate (24,5%)

Profit before taxes 156.8 147.3

Taxes calculated at Finnish tax rate 38.4 38.3

Tax-exempt income -1.8 -0.9

Net profit from associates -0.3 -0.5

Undeductible expenses 1.0 1.3

Change of tax rate - -0.1

Other - 1.3

Taxes arising from previous years 4.2 -1.9

Taxes in income statement 41.6 37.5


12 THE BALAnCE sHEET CLAssiFiCATiOn AnD MATuRiTY AnALYsis

EURm

Assets 2012Amortised

cost

Financial assets at fair value through p/l

Derivatives held for

hedging Total

Cash and balances with central banks 3 034.9 3 034.9

Loans and receivables to customers and public entities 20 844.6 20 844.6

Loans and receivables to credit institutions 4 827.4 4 827.4

Trading portfolio assets


Shares and participations 57.5 57.5

Derivatives 2 305.1 118.9 2 423.9

Holdings in associated undertakings 12.7 12.7

Investment property - 0.0

Intangible assets 2.7 2.7

Tangible assets 19.3 19.3

Other assets 290.1 290.1

Total 31.12.2012 29 019.0 2 674.9 118.9 31 812.8

Assets 2011

Cash and balances with central banks 814.1 814.1

Loans and receivables to customers and public entities 21 001.7 21 001.7

Loans and receivables to credit institutions 3 731.9 3 731.9

Trading portfolio assets 0.0


Shares and participations 20.2 20.2

Derivatives 1 171.9 271.9 1 443.8

Holdings in associated undertakings 8.2 8.2

Investment property 33.7 33.7

Intangible assets 3.7 3.7

Tangible assets 37.2 37.2


Total 31.12.2011 25 717.3 1 416.9 271.9 27 406.1

Liabilities 2012

Due to credit institutions and central banks 2 404.8 2 404.8

Amounts owed to customers and public entities 16 462.9 16 462.9

Debt securities in issue

Bonds 6 288.2 6 288.2

Financial liabilities at fair value through p/l

Sertificates 1 231.6 1 231.6

Derivatives and other financial liabilities held for trading 2 084.4 118.7 2 203.1

Subordinated liabilities 356.8 356.8

Other liabilities 486.6 486.6

Total 31.12.2012 25 999.3 3 316.0 118.7 29 434.0

Liabilities 2011

Due to credit institutions and central banks 1 954.7 1 954.7

Amounts owed to customers and public entities 15 234.6 15 234.6


Bonds 4 157.8 4 157.8

Financial liabilities at fair value through p/l

Sertificates 1 697.0 1 697.0




Total 31.12.2011 22 125.2 2 777.8 231.6 25 134.5


MATURITY ANALYSIS OF THE BALANCE SHEET

EURm 2012 Total < 1 year > 1 year

Assets

Cash and balances with central banks 3 034.9 3 034.9 -

Loans and receivables to credit institutions 4 827.3 4 783.3 44.0

Loans and receivables to customers and public entities 20 844.6 3 908.1 16 936.5

Trading portfolio assets 2 781.0 694.0 2 087.0

Holdings in associated undertakings 12.7 - 12.7

Intangible assets 2.7 - 2.7

Tangible assets 19.3 - 19.3

Other assets 290.1 290.1 -

Total 31 812.8 12 710.6 19 102.2

Liabilities

Due to credit institutions and central banks 2 404.8 2 314.8 90.0

Amounts owed to customers and public entities 16 462.9 16 335.9 127.0

Debt securities in issue 7 519.8 1 990.1 5 529.7


Other liabilities 486.6 486.6 -

Subordinated debt 356.8 123.6 233.2

Equity 2 378.8 - 2 378.8

Total 31 812.8 21 771.9 10 040.9

2011

Assets

Cash and balances with central banks 814.1 814.1 -

Loans and receivables to credit institutions 3 731.9 3 689.4 42.5

Loans and receivables to customers and public entities 21 001.7 3 997.7 17 004.1

Trading portfolio assets 1 646.8 636.1 1 010.7

Holdings in associated undertakings 8.2 - 8.2

Intangible assets 3.7 - 3.7

Tangible assets 71.0 - 71.0

Other assets 128.7 128.7 -

Total 27 406.1 9 265.9 18 140.1

Liabilities

Due to credit institutions and central banks 1 954.7 1 864.7 90.0

Amounts owed to customers and public entities 15 234.6 15 094.0 140.7

Debt securities in issue 5 854.8 1 753.6 4 101.1

Derivatives and other financial liabilities held for trading 1 312.3 496.6 815.7

Other liabilities 421.4 421.4 -

Subordinated debt 356.7 123.5 233.2

Equity 2 271.6 - 2 271.6

Total 27 406.1 19 753.8 7 652.3

Maturity analysis of past due financial assetsEURm 2012 2011

Assets past due 30-90 days 139.4 140.0

Nonperforming assets past due at least

90 days but no more than 180 days 31.4 34.9

Nonperforming assets past due at least 180 days 137.8 123.9

Nonperforming assets of companies in

bankruptcy and guarantee claims 11.4 38.2

fixed-term deposits and demand deposits are included

in amounts owed to customers and public entities.

fixed-term deposits are recognised according to

maturity. Demand deposits have short contractual

maturities but are considered a stable funding source

with an expected maturity of more than one year.

maturity analysis for derivatives is included in note

16.


13 FAiR vALuE inFORMATiOnfinancial instruments are carried on the balance sheet

at fair value or amortised cost. summary of significant

account policies describes classification of financial

assets and liabilities by valuation type and detailed

measurement bases of financial assets and liabilities.

Financial instruments measured at fair value

the fair value is the amount for which a financial asset

can be exchanged between knowledgeable, willing

parties. if an active market exists, the Group uses a

quoted price. if a financial instrument is quoted in a

market that is not active, the Group bases its valuation

on the most recent transaction price. adjustment is

made for subsequent changes in market conditions,

for instance, by including transactions in similar

financial instruments that are assumed to be

motivated by normal business considerations. for a

number of financial assets and liabilities, no market

exists. in such cases, the Group uses recent

transactions in similar instruments and discounted

cash flows or other generally accepted estimation and

valuation techniques based on market conditions at

the balance sheet date to calculate an estimated value.

Generally, the Group applies valuation techniques to

otc derivatives and unlisted trading portfolio assets

and liabilities. the most frequently used valuation

and estimation techniques include the pricing of

transactions with future settlement and swap models

that apply present value calculations, credit pricing

models and options models, such as Black & scholes

models. in most cases, valuation is based substantially

on observable input. the valuation of unlisted shares is

based substantially on non-observable input.

financial instruments valued on the basis of quoted

prices in an active market are recognised in the

Quoted prices category (level 1). financial instruments

valued substantially on the basis of other observable

input are recognised in the observable input category

(level 2). other financial instruments are recognised

in the non-observable input category (level 3). this

category covers unlisted shares.

During the reporting period ending 31 December 2012,

there were no transfers between level 1 (Quoted

prices) and level 2 (observable input) fair value

measurements, and no transfers into and out of level 3

(non-observable input) fair value measurements.

EURm

2012Quoted

pricesObservable

input

Non- observable

input Total

Financial assets

Assets held for trading 299.0 3.0 55.0 357.0

Derivative financial instruments 43.0 2 288.0 93.0 2 424.0

Total 342.0 2 291.0 148.0 2 781.0

Financial liabilities

Debt securities at fair value - 1 231.6 - 1 231.6


Total 68.0 3 260.6 106.0 3 434.6

2011

Financial assets

Assets held for trading 184.0 - 19.0 203.0


Total 250.0 1 300.8 96.0 1 646.8




Total 72.0 2 844.4 93.0 3 009.4


Shares and bond valued on non-observable input2012 Shares Bonds Total Derivatives Total

Fair value 1 January 20.0 20.0 -16.0 -16.0

Value adjustment through profit and loss -9.0 -9.0 13.0 13.0

Acquisitions 44.0 44.0 -9.0 -9.0

Fair value 31 December 55.0 - 55.0 -12.0 -12.0

2011

Fair value 1 January 23.0 23.0 -12.0 -12.0

Value adjustment through profit and loss -14.0 -14.0 0.0 0.0

Acquisitions 11.0 11.0 -4.0 -4.0

Fair value 31 December 20.0 - 20.0 -16.0 -16.0

Financial instruments at amortised cost

for vast majority of amounts due to the Group, loans,

advances and deposits, active market does not exist.

consequently, the Group bases its fair value estimates

on data showing changes in market conditions after the

initial recognition of the individual instrument and

affecting the price that would have been fixed if the

terms had been agreed at the balance sheet date. other

EURm 2012 2011

Financial assets Fair value Carrying amount Fair value Carrying amount

Cash and balances at central banks 3 034.9 3 034.9 814.1 814.1

Loans and receivables 20 774.5 20 844.6 21 058.7 21 001.7

Other financial assets 4 827.4 4 827.4 3 731.9 3 731.9

Total 28 636.8 28 706.9 25 604.7 25 547.7


Amounts owed to credit institutions and customers 18 867.9 18 867.7 17 209.3 17 189.3

Debt securities in issue 6 441.2 6 288.2 4 253.6 4 514.5

Total 25 309.1 25 155.9 21 462.9 21 703.8

14 CAsH AnD BALAnCEs AT CEnTRAL BAnKsEURm 2012 2011

Cash 18.3 22.6

Balances with central banks 3 016.7 791.5

Total 3 034.9 814.1

people may make other estimates. the maturity of items

included in cash and balances at central bank is so

short, that carrying amount represents also fair value.

in the table below are presented fair values and

carrying amounts of financial assets and liabilities at

amortised costs, including the fair value adjustment of

hedged interest rate risk.


15 LOAns AnD RECEivABLEsEURm

Loans and receivables to customers and public entities 2012 2011

By type of loan

Home loans 11 716.0 11 341.7

Consumer loans 1 216.8 1 229.5

Other retail loans 1 421.1 1 470.4

Finance lease assets1) 540.4 555.3

Other commercial loans 6 303.7 6 737.4

Impairment charges -353.5 -332.6

Total 20 844.6 21 001.7

Loans and receivables to credit institutions

Deposits 1 525.6 2 155.1

Repo agreements 3 053.0 1 450.1

Other loans 248.7 126.8

Impairment charges - -

Total 4 827.4 3 731.9

Total loans and receivables 25 672.0 24 733.6

EURm Impairment charges from loans and receivables 2012 Individual Collective Total

At January 1, 2012 308.3 24.3 332.6

+New and increased impairment charges 92.6 19.6 112.3

-Reversals of impairment charges -22.7 - -22.7

-Write-offs debited to allowance account -70.0 - -70.0

-Foreign currency translation and other items 1.3 - 1.3

At December 31,2012 309.6 43.9 353.5

2011

At January 1, 2011 297.4 25.7 323.1

+New and increased impairment charges 129.2 - 129.2

-Reversals of impairment charges -59.0 -1.4 -60.4

-Write-offs debited to allowance account -61.0 - -61.0

-Foreign currency translation and other items 1.7 - 1.7

At December 31,2011 308.3 24.3 332.6

FINANCE LEASE ASSETS INCLUDED IN LOANS1)

Reconciliation of gross investments and present value of future minimum lease payments:EURm 2012 2011

Gross investments 569.2 596.7

Less unearned finance income -28.7 -34.4

net investments in finance leases 540.4 562.3

Less unguaranteed residual values accruing to the benefit fo the lessor - -

Present value of future minimum lease payments receivable 540.4 562.3

Accumulated allowance for uncollectible minimum lease payments receivable 6.8 8.5

EURm 2012 2011

Maturities for finance lease assetsGross

investmentNet

investmentGross

investmentNet

investment

not later than one year 154.9 142.1 172.7 155.2

later than one year and not later than five years 362.7 351.7 403.0 386.5

later than five years 51.6 46.7 21.0 20.6

Total 569.2 540.4 596.7 562.3


16 FinAnCiAL insTRuMEnTsEURm 2012 2011

Assets Liabilities Assets Liabilities

Assets/liabilities held for trading 357.1 - 203.1 -

Derivative financial instruments 2 423.9 2 203.1 1 443.8 1 312.4


Financial instruments, total 2 781.0 3 434.7 1 646.8 3 009.4

Assets held for trading 2012 Listed Unlisted Total

Government bonds and treasury bills 264.8 - 264.8

Local authority paper 2.0 13.1 15.1

Certificates of deposit and commercial paper 0.3 4.2 4.5

Debentures - - 0.0

Bonds 4.5 10.8 15.2

Equity securities 0.1 17.2 17.3

Other 40.1 0.1 40.2

Total assets held for trading 311.7 45.4 357.1

Assets held for trading 2011

Government bonds and treasury bills 7.0 - 7.0

Local authority paper - 5.1 5.1

Certificates of deposit and commercial paper - 5.6 5.6

Debentures - - 0.0

Bonds 156.0 9.1 165.1

Equity securities - 2.9 2.9

Other 16.7 0.7 17.3

Total assets held for trading 179.7 23.3 203.1

Trading securities pledged as collateral are presented in note 27.

Present value of minimum lease payments receivable EURm 2012 2011

not later than one year 142.1 155.2

later than one year and not later than five years 351.7 386.5

later than five years 46.7 20.6

Unearned finance income 28.7 34.4

gross investments in the finance lease 569.2 596.7

Accumulated impairment losses 6.8 8.5

Finance lease assets comprise IT and office automation equipment, cars and transport equipment, manufacturing equipment and factory, office and business property.


DERIVATIVES

EURm 2012 2011

Derivatives held for tradingContract/no-

tional amount

Fair value Contract/no-tional amount

Fair value


interest rate derivatives

OTC derivatives

Interest rate swaps 58 467.5 768.0 1 107.9 34 177.5 518.8 459.0

Forward rate agreements 301.0 0.1 0.1 838.6 1.1 1.0

Interest rate options, bought and sold 5 779.4 38.0 44.7 4 869.2 34.8 36.9

Total OTC derivatives 806.1 1 152.7 554.7 496.9

Exchange traded derivatives

Interest rate futures 0.1 - - 41.3 - 0.5

Interest rate options, bought and sold 1 231.7 2.7 1.9 118.4 0.6 0.6

Total exchange traded derivatives 2.7 1.9 0.6 1.1

Total interest rate derivatives 808.8 1 154.6 555.3 498.0

Foreign exchange derivatives

OTC derivatives

Cross-currency interest rate swaps 10 211.8 433.0 418.0 5 397.7 184.4 167.7

Forward foreign exchange contracts 25 433.1 337.8 343.6 19 147.8 316.8 321.2

Currency options, bought and sold 2 250.6 9.0 9.1 1 870.0 12.6 13.0

Total OTC derivatives 779.8 770.7 513.8 501.9

Total foreign exchange derivatives 779.8 770.7 513.8 501.9

Equity derivatives

OTC derivatives

Equity and equity index options, bought and sold 1 258.0 8.6 8.9 4 402.7 16.2 14.4

Equity index futures - - - - - -



Equity index futures - - - - - -

Total exchange trade derivatives 0.0 0.0 0.0 0.0

Total equity derivatives 8.6 8.9 16.2 14.4

Other derivatives

OTC derivatives

Commodity forwards - - - - - -

Commodity futures 533.5 59.6 22.9 545.5 72.4 32.5

Credit derivatives 8.2 - - 8.0 - -



Commodity futures 418.1 16.7 45.9 360.7 14.2 34.0

Total exchange trade derivatives 16.7 45.9 14.2 34.0

Total other derivatives 76.3 68.8 86.6 66.5

Total derivatives held for trading 1 673.5 2 003.0 1 171.9 1 080.8


interest rate and interest rate and cross currency

interest rate swaps are designated as fair value

hedges, using them as hedges against changes in

market interest rates and foreign exchange rates.

the Group uses derivative instruments for trading and

for hedging purposes. the derivatives used are foreign

exchange, interest rate, equity, commodity and credit

derivatives. Derivatives held for trading relate

primarily to customer business and, to a lesser degree

to proprietary trading. Derivatives held for hedging

purposes are used for hedging loans and liabilities.

DERIVATIVES

EURm 2012 2011

Derivatives held for hedgingContract/no-

tional amount

Fair value Contract/no-tional amount

Fair value


Derivatives designated as fair value hedges


Interest rate swaps 7 738.4 748.8 186.1 5 564.2 271.4 219.3

Foreign exchange derivatives

Currency options, bought and sold - - - - - -

Cross-currency interest rate swaps 496.3 1.6 14.0 95.4 0.5 12.3

Equity derivatives

Equity and equity index options, bought and sold - - - - - -

Total derivatives designated as fair value hedges 750.4 200.1 271.9 231.6

Derivatives designated as cash flow hedges


Interest rate swaps - - - - - -

Total derivatives designated as cash flow hedges - - - -

Total derivatives held for hedging 750.4 200.1 271.9 231.6

Total derivative financial instruments 2 423.9 2 203.1 1 443.8 1 312.4

Nominal value of the underlying instrumentRemaining maturity

Less than 1 year

1–5 years

Over 5 years

Less than 1 year 1–5 years

Over 5 years

49 791.3 43 875.1 20 461.4 29 366.5 28 871.6 19 198.5


17 invEsTMEnTs in AssOCiATED unDERTAKingsEURm 2012 2011

At beginning of year 8.2 8.0

Additions 4.6 -

Share of loss/profit -0.1 0.2

Disposals - -

At end of year 12.7 8.2

Associated undertakings that have been accounted for by the equity method at 31 Dec. 2012

EURm Carrying amount Fair value

% Interest held

Assets/ liabilities Revenue Profit/loss

name

MB Equity Fund Ky 0 0 20.91 0/0 0 0

Automatia Pankkiautomaatit Oy 8 8 33.33 373/349 56 5

Tapio Technologies Oy 0 0 20.00 2/1 1 0 *)

As Oy Espoon Leppävaaran Aurinkopiha 8 8 35.10 32/9 0 0

*) 31.3.2012

Associated undertakings that have been accounted for by the equity method at 31 Dec. 2011

name

MB Equity Fund Ky 0 0 20.91 0/0 0 0

Automatia Pankkiautomaatit Oy 8 8 33.33 291/266 57 4

Tapio Technologies Oy 0 0 20.00 2/1 1 0 *)

*) 31.3.2011

18 inTAngiBLE AssETs AnD gOODWiLLEURm 2012 2011

GoodwillIntangible

assets Total GoodwillIntangible

assets Total

Opening net carrying amount 3.4 0.3 3.7 6.3 0.4 6.6

Additions 1.2 1.2 0.1 0.1

Disposals 0.0 0.0

Amortisation charge -2.0 -0.2 -2.2 -2.9 -0.2 -3.0

Closing net carrying amount 1.4 1.3 2.7 3.4 0.3 3.7

At 31 December

Cost 6.3 1.9 8.2 6.3 0.7 7.0

Accumulated amortisation -4.9 -0.6 -5.5 -2.9 -0.4 -3.3

net carrying amount at 31 December 1.4 1.3 2.7 3.4 0.3 3.7

Total intangible assets 1.4 1.3 2.7 3.4 0.3 3.7

Intangible assets comprise mainly IT software.

the goodwill in the Group has been formed by

acquiring asset management companies in 2008 and

2009. the background for the goodwill impairments,

eur 2.0 million (eur 2.9 million), are plans that the

names of the funds managed by the acquired

companies will be changed and the funds will be

integrated to other funds during 2012 and 2013.


19 invEsTMEnT PROPERTYEURm 2012 2011

Carrying amount at January 1 32.0 31.5

Additions - 0.5

Disposals -32.0 -

Carrying amount at December 31 0.0 32.0

Fair value adjustments at January 1 1.7 2.8

Fair value adjustments for the period -1.7 -1.2

Fair value adjustments at December 31 0.0 1.7

net carrying amount at December 31 0.0 33.7

20 PROPERTY, PLAnT AnD EQuiPMEnT EURm2012

Land and buildings

Leaseassets*)

Leaseholdimprovements Other Total

At 1 January

Opening net carrying amount 1.4 16.7 12.2 6.9 37.2

Additions 0.0 3.9 2.1 5.9

Disposals -1.7 -2.1 -1.9 -5.7

Transfers to and from items

Transferred to lease assets held for sale -26.3

Impairment losses

Reversals of impairment charges

Depreciations -0.1 14.5 -4.3 -2.1 8.0

Closing net carrying amount 1.4 3.2 9.7 5.0 19.3

At 31 December

Cost 3.5 8.4 38.5 106.7 157.2

Accumulated depreciation -1.8 -5.2 -28.9 -101.7 -137.5

Accumulated impairment losses -0.4 0.0 0.0 0.0 -0.4

net carrying amount 1.4 3.2 9.7 5.0 19.3

Total property, plant and equipment 1.4 3.2 9.7 5.0 19.3

2011

At 1 January

Opening net carrying amount 1.5 42.8 12.0 8.6 64.9

Additions 0.1 4.0 2.8 6.9

Disposals -3.6 -2.1 -5.7


Transferred to lease assets held for sale -35.1

Impairment losses


Depreciations -0.1 12.5 -3.8 -2.4 6.3

Closing net carrying amount 1.4 16.7 12.2 6.9 37.2

At 31 December

Cost 3.5 36.4 36.8 106.5 183.2

Accumulated depreciation -1.7 -19.7 -24.6 -99.6 -145.6

Accumulated impairment losses -0.4 0.0 0.0 0.0 -0.4

net carrying amount 1.4 16.7 12.2 6.9 37.2

Total property, plant and equipment 1.4 16.7 12.2 6.9 37.2

*) Assets under Lease assets are operating leases and mainly comprise cars.


21 OTHER AssETsEURm 2012 2011

Accrued interest 41.0 48.7

Items in transit 0.5 0.4

Other 222.1 54.0

Total 263.7 103.1

Item Other include i.a. collaterals 153.5 EURm, sales and fee receivables

about 20.1 EURm, employee pension insurance receivables 1.5 EURm,

prepaid costs 3.7 EURm.

22 TAx AssETs AnD TAx LiABiLiTiEsEURm 2012 2011

Income tax assets 0.8 23.6

Deferred tax assets 25.7 2.0

Total tax assets 26.5 25.6

Income tax liabilities 5.5 0.0

Deferred tax liabilities - -

Total tax liabilities 5.5 0.0

Deferred tax assets

Due to provisions and impairments on loans -23.1 -10.9

Due to consolidated eliminations - -3.9

Due to other items -4.8 -5.1

Set-off against deferred tax liabilities 2.2 17.9

Total -25.7 -2.0

Deferred tax liabilities

Due to provisions and impairments on loans - 11.6

Due to depreciation and impairments 2.2 5.9

Fair value measurement of investment property - 0.4

Set-off against deferred tax assets -2.2 -17.9

Total 0.0 0.0

net deferred tax asset (-)/liability (+) -25.7 -2.0

Changes in deferred taxes

Deferred tax assets/liabilities 1 January -2.0 -4.2

Recognised in the income statement:

Provisions and impairments on receivables -23.7 13.5

Amortisation/depreciation and impairments -3.7 -6.9

Valuation of investments -0.4 -0.3

Other 4.1 -4.1

net deferred tax assets (-)/liabilities (+), total

31.12. -25.7 -2.0

income tax assets, asset (-)/liability (+), net 4.8 -23.6

Total tax assets (-)/liabilities (+), net -20.9 -25.6

23 AMOunTs OWED TO CREDiT insTiTuTiOns AnD CusTOMERs

EURm

Amounts owed to credit institutions and central banks 2012 2011

Liabilities to central banks 0.3 0.4

Deposits from credit insitutions 1 898.2 1 504.6

Other liabilities owed to credit institutions 506.2 449.7

Total 2 404.8 1 954.7

Amounts owed to customers and public entities

Deposits

Demand deposits 2 805.7 2 674.6

Savings accounts 2 827.7 2 867.6

Current accounts 7 586.8 6 623.5

Money market deposits 182.6 365.9

Time deposits 3 060.1 2 702.9

Total 16 462.9 15 234.6

Total amounts owed to credit institutions

and customers 18 867.7 17 189.3


24 DEBT sECuRiTiEs in issuEEURm

Debt securities in issue 2012 2011

Certificates of deposit 1 231.6 1 697.0

Bonds and notes*) 6 288.2 4 157.8

of which in foreign currency 33.0 34.8

Total debt securities in issue 7 519.8 5 854.8

Subordinated debt securities

Capital securities 356.8 356.7

of which perpetuals 356.8 356.7

Total subordinated debt securities 356.8 356.7

Total debt securities in issue 7 876.6 6 211.5

*) Of which Finnish covered bonds EUR 5 billion (3 billion).

EURmSubordinated loan capital

Year of issueRedemption

price

Carrying amount

Borrower Principal Interest rate Maturity 2012 2011

Danske Bank Plc 125 5.407 2004 Perpertual 100% 131.3 134.0

Danske Bank Plc 100 2,410/variable 2004 Perpertual 100% 101.9 99.2

Danske Bank Plc 125 1,783/variable 2005 Perpertual 100% 123.6 123.5

Danske Bank Plc issued on 18 march 2004 eur 125

million preferred capital securities. the loan pays fixed

interest rate for the first ten years and floating rate

interest after that. the interest can be paid only from

the distributable capital. the loan is perpetual and is

repayable only with the consent of the finnish

financial supervision authority at the earliest on 31

march 2014 and on any interest payment after that.

Danske Bank Plc issued on 13 october 2004 eur 100

million preferred capital securities. the loan paid fixed

interest rate for the first year and floating rate interest

after that, however capped to 8,5 per cent p.a. the

interest can be paid only from the distributable capital.

the loan is perpetual and is repayable only with the

consent of the finnish financial supervion authority

at the earliest on 13 october 2014 and on every

interest payment date after that.

Danske Bank Plc issued on 16 December 2005 eurm

125 capital securities. the loan is a floating rate and

pays an interest at 3-month euribor plus 1.6 per cent.

the interest on the loan can be paid only from the

distributable capital. the loan is perpetual and is

repayable only with the consent of the finnish financial

supervision authority at the earliest on 18 march 2013

and on every interest payment date after that.

Danske Bank Plc Group had in issue on 31 December

2012 three capital securities included in tier 1 capital,

all of them repayable with the consent of the finnish

financial supervision authority and in one of them a

step-up clause at the earliest call. the amount included

in the own funds of primary loans in Danske Bank Plc

Group at 31 Dec. 2012 was eur 350,0 (350,0).

Danske Bank Plc issued 27 June 2012 a covered bond

with a principal of eur 1 billion and a maturity of 5

years. the loan pays an interest at 3-month euribor

plus 0.70 per cent.

Daanske Bank Plc issued 27 september 2012 a

covered bond with a principal of eur 1 billion and a

maturity of 7 years. the loan pays fixed interest rate of

1.625 per cent, which was swapped to floating rate

at 0.370 per cent over euribor.


25 OTHER LiABiLiTiEsEURm 2012 2011

Deferred interest 69.3 73.6


Staff commitments 30.0 33.0

VAT debt 2.3 1.6

Other 350.8 182.7

Total other liabilities 481.0 421.4

Item Other includes i.a. collateral liabilities 153.5 EURm, fee and commission

liabilities 10.6 EURm and provisions 1.7 EURm.

26 PROvisiOnsEURm 2012 2011

From off-balance sheet items 1.7 2.1

EURm From off-balance sheet items

At 1 January 2.1 2.1

Additions - -

Spent - -

Reversals of provisions 0.4 -

At 31 December 1.7 2.1

Danske Bank Plc makes individual and collective

impairment charges from irrevocable loan

commitments and guarantees. impairment charges on

loans and receivables are presented in notes 10 and 15.

27 COnTingEnT LiABiLiTiEs AnD COMMiTMEnTsEURm

Off-balance sheet items 2012 2011

Guarantees and pledges 1 796.7 1 858.9

Undrawn loans, overdraft facilities and other commitments to lend 4 229.6 4 377.0

Total 6 026.4 6 235.9

off-balance sheet items consist mainly of guarantees

and commitments to extend credit. the termination

clauses of unutilized credit facilities have been

reviewed and classification of unused credit facilities

to irrevocable commitments is partly updated.

comparative figures have been adjusted accordingly.

Guarantees including irrevocable letters of credit

comprise commitments written on behalf of

customers. commitments to extend credit are

irrevocable commitments and comprise undrawn

loans, overdraft facilities and other commitments to

lend. the commitments are stated to the amount

that can be required to be paid on the basis of the

commitment. for guarantees a provision is recognised

when the Group considers it more likely than not that

an obligation exists under its guarantees.

Danske Bank Plc Group companies are party to

various lawsuits. in view of its size, the Group does

not expect the outcomes of these pending to have

any material effect on its financial position.

ASSETS PLEDGED AS COLLATERAL FOR LIABILITIES OR CONTINGENT LIABILITIES

EURm 2012 2011

Assets pledged as collateral for liabilities Assets

pledgedLiabilities/

commitmentsAssets

pledgedLiabilities/

commitments

Trading portfolio assets

Trading securities 375.2 605.8 406.9 606.4

Loans and receivables

Loans and deposits 6 518.9 5 262.4 4 026.8 3 184.1


Danske Bank Plc has entered into long-term deposit

contracts called Guaranteed investment contracts.

in each contract the maximum amount permitted to be

invested and the fixed interest rate to be paid for the

investment are specified with the customer. this

means that the amount to be invested varies during the

term of the contract but the interest rate is fixed. the

maximum amount permitted to be invested under these

contracts was eurm 80.6 at the balance sheet date

(96.8 eurm). contracts mature in 2025 at the latest.

loans to the public amounting to eur 5 billion (eur

3 billion) have been registered as collateral for issued

finnish covered bonds amounting to eur 6.0 billion

(eur 3.6 billion). in the event of the company’s

insolvency, the holders of these bonds have priority to

the assets registered as collateral.

collateral of the mortgage-backed credit is valued as

part of a credit decision or as an independent credit

decision. collateral is valued at the time of its

acceptance and regularly thereafter.

residential properties, shares in a housing companies

and shares in real estate companies in residential use

must be assessed by a valuer independent of the credit

decision process. an independent valuer refers to a

person who has sufficient qualifications for and

experience in valuation.

an independent outside valuer can be authorized

estate agents who have taken an examination of

property valuers (aka), estate agents of the

kiinteistömaailma chain who have taken an

examination of property valuers (kat) or estate

agents who have taken an examination for real estate

brokers (lkV competence).

employee of the parent company can be an

independent valuer for regular houses and shares in

housing companies, if the person has at least 5 years

of experience as a credit manager and at least 5 years

of experience in the particular collateral type and its

valuation and up-to-date statistics are available as

the basis of the valuation. it is also required that the

person is not (and has not been) a presenting or

deciding party in the credit for which the collateral is

assessed and the person is not a relative of the party

to the credit or the pledge holder, or is not in a close

financial relationship with the party to the credit or

pledge holder.

the requirement for an independent values is also met

if a genuine (not between related parties) and

maximum one year old contract of sale exist.

the collateral values of residential properties and

shares in housing companies are followed and

updated automatically in a system on a quarterly

basis using indexes received from statistics finland.

if collateral value cannot be updated automatically

for e.g. missing reference transactions, the value will

be updated yearly manually.

EURm

Non-cancellable operating leases (from premises) 2012 2011

Minimum lease payments under

non-cancellable operating leases



later than five years 13.4 24.5

Total 110.9 131.9

total of sublease payments expected to be received

under non-cancellable operating sub-leases at 31 Dec

eur 8.9 million (10.9 million).

sublease payments from premises recognised as an

expense in the period eur 3.4 million (3.2 million).

EURm

Non-cancellable operating leases (from cars) 2012 2011

Future minimum lease payments receivables

are distributed as follows:



later than five years - -

Total 0.7 3.7


28 RELATED PARTY DisCLOsuREsKey management personnel

the key management personnel in Danske Bank Plc

Group consists of the members of the Board of

Directors of Danske Bank Plc, managing Director and

Deputy managing Director.

KEY MANAGEMENT COMPENSATION

EURm 2012 2011

Short-term employee benefits 1.0 0.8

Post employment benefits 0.7 0.6

Other long-term benefits 0.0 0.1

Total 1.7 1.5

short-term employee benefits comprise salaries and

fees, including profit-sharing bonuses accounted for the

year, and social security costs.

Post employment benefits include benefits under the

employees’ Pensions act (tyel) in finland and voluntary

supplementary pension benefits.

other long-term benefits consists of the benefits under

the long-term incentive schemes for executives

accounted for the year. the benefits are determined by

terms on Group level. Danske Bank Plc pays the benefits

allocated to its key management.

LOANS AND RECEIVABLES

EURm 2012 2011

Key management personnel with close family

members and entities that are controlled or

significantly influenced by these 0.2 0.7

the interest on loans to the key management personnel

is as required in the staff loans. also other terms of the

loans equal to the terms of the staff loans confirmed

in the Group. the loans are secured. the terms of

the loans to the entities controlled or significantly

influenced by the above mentioned persons equal to

those granted to other corporate customers.

RELATED PARTY TRANSACTIONS WITH GROUP COMPANIES AND OTHER RELATED PARTIES

EURm

Parties with significant influence


Key management personnel Other

2012 2011 2012 2011 2012 2011 2012 2011

Loans and receivables 4 444.5 3 445.7 96.2 83.4 0.2 0.5 92.4 58.4

Securities 117.1 0.2 15.2 9.2 - - 1.0 0.4

Deposits 1 649.0 1 269.3 0.0 0.0 0.2 0.0 36.8 43.4

Derivatives -15.4 -226.8 - - - -

Guarantees and pledges 1.5 3.5 - - - - 5.8 5.6

Undrawn loans and overdraft facilities 0.7 6.8 11.8 0.1 0.2

Collaterals 29.3 0.0 0.2 0.7

Interest income 23.7 21.0 3.2 3.2 0.0 0.0 3.7 1.9

Interest expenses 19.8 21.0 0.9 0.5 0.0 0.0 0.9 0.4

Dividend income 1.5 1.5

Impairments 0.1 0.2 -1.3 -

Purchases from group companies 95.9 90.3

Sales to group companies 10.3 14.8

related party comprises the parent company,

associated undertakings, key management personnel

and other related-party companies. Parties with

significant influence include the parent company and

its branches. key management personnel comprises

Board of Directors and executive management,

including close family members and companies, in

which key management personnel or their close family

members have considerable influence. other related-

party entities include sister companies.


29 EQuiTY AnD REsERvEs

EquityNumber

of shares

Share capital EURm

At 1 January 2012 106 000 106.0

At 31 December 2012 106 000 106.0

Total amount of shares at

31 December 2012 106 000 106.0

Danske Bank a/s owns all the share capital of

Danske Bank Plc. each share has one vote.

EURmReserves and retained earnings

Reserves at 31 December 2011

Legal reserve 271.1

Total 271.1

Reserves at 31 December 2012

Legal reserve 271.1

Total 271.1

Movements in reserves:

Legal reserve

the legal reserve comprises the amounts that shall be

transferred from the distributable equity according to

the articles of association or on the basis of the

decision of the aGm. no change has been in the legal

reserve during the financial years of 2012 or 2011.

Retained earnings EURm

At 1 January 2011 1 778.0

Profit for the financial year 108.2

At 31 December 2011 1 886.3

Profit for the financial year 114.7

At 31 December 2012 2 001.0


inCOME sTATEMEnTEURm 1–12.2012 1–12.2011

Interest income 644.8 608.1

Net income from leasing 29.7 29.4

Interest expenses -307.4 -291.8

net interest income 367.1 345.7

Dividend income

from Group companies 8.0 68.7

from associated companies 1.5 1.5

from other companies 5.7 15.2 0.1 70.3

Fee and commission income 215.2 219.1

Fee and commission expenses -31.8 -34.2

net income from transactions in securities

and foreign exchange dealing

from transactions in securities -32.9 28.3

from foreign exchange dealing 24.8 -8.2 25.9 54.2

gains (losses) from hedge accounting 0.2 0.3

net income from investment property 0.8 1.4

Other operating income 15.4 18.4

Administrative expenses

Staff costs

Wages and salaries -129.8 -140.7

Social security costs

Pension costs -26.8 -22.7

Other -7.8 -164.4 -7.6 -171.0

Other administrative expenses -166.2 -330.6 -176.3 -347.3

Depreciation and impairment on property, plant and equipment

and intangible assets -10.0 -8.8

Other operating expenses -49.3 -47.3

impairment on loans and advances -45.6 -51.6

Operating profit 138.5 220.1

Appropriations 66.4 24.1

income taxes

Taxes for the financial year -36.8 -18.1

Taxes for previous financial years -5.7 1.9

Change in deferred taxes 1.9 -40.5 -28.7 -44.9

Profit for the year 164.4 199.4

DANSKE BANK PLCFINANCIAL STATEMENTS (FAS)


BALAnCE sHEETASSETS

EURm 12/2012 12/2011

Cash and balances at central banks 3 034.9 814.1

Treasury bills and other eligible bills

Treasury bills 0.0 0.0

Other 258.5 258.5 0.7 0.7

Loans and advances to credit institutions

Repayable on demand 410.6 448.8

Other 4 416.7 4 827.3 3 283.1 3 731.9

Loans and advances to customers

Repayable on demand - -

Other 20 304.4 20 304.4 20 475.5 20 475.5

Lease assets 544.9 579.9

Debt securities

Issued by public bodies 21.4 11.4

Other 19.7 41.1 170.7 182.1

shares and participations 56.1 18.9

shares and participations in associated companies 5.1 5.1

shares and participations in group companies 6.3 6.3

Derivative financial instruments 2 423.9 1 443.8

Property, plant and equipment

Investment property and shares and participations in investment

property companies 4.0 6.7

Other property and shares and participations in property companies 1.4 1.4

Equipment 14.7 20.1 19.0 27.1


Prepayments and accrued income 51.9 59.4

Deferred tax assets 29.0 6.5

31 814.6 27 418.6


BALAnCE sHEETLIABILITIES

EURm 12/2012 12/2011

Liabilities to credit institutions

Central banks 0.3 0.4

Credit institutions

Repayable on demand 654.0 663.4

Other 1 227.8 1 881.8 1 882.1 830.0 1 493.4 1 493.8

Liabilities to customers

Deposits

Repayable on demand 13 672.6 12 483.5

Other 2 597.2 16 269.8 2 319.8 14 803.3

Other liabilities

Repayable on demand - 60.1

Other 227.2 227.2 16 497.1 408.3 468.4 15 271.7


Bonds and notes 6 288.2 4 157.8

Other 1 231.6 7 519.8 1 697.0 5 854.8

Derivative financial liabilities and other liabilities held for trading 2 203.1 1 312.4

Other liabilities


Provisions for liabilities and charges 1.7 846.2 2.8 728.5

Accruals and deferred income 131.6 127.2

subordinated liabilities

Capital securities 347.3 347.1

Other 9.5 356.8 9.6 356.7

Deferred tax liabilities 5.5 -

Accumulated appropriations

Depreciation in excess or less than plan 14.3 32.6

untaxed reserves 0.0 14.3 47.3 79.9

Equity

share capital 106.0 106.0

undistributable reserves

Legal reserve 261.7 261.7

Distributable reserves

Other reserves 43.8 43.8

Retained earnings 1 782.1 1 582.8

Profit for the year 164.4 2 358.0 199.4 2 193.6

31 814.6 27 418.6

EURm

Off-balance sheet items 12/2012 12/2011

Contingent liabilities

Guarantees and assets pledged 1 796.7 1 858.9

Other - 1 796.7 - 1 858.9

Commitments

Sale and option to resell transactions - -

Other 4 229.6 4 229.6 4 377.0 4 377.0

6 026.4 6 236.0


ACCOunTing POLiCiEs the separate financial statements of Danske Bank Plc

for 2012 have been prepared in accordance with the

provisions of chapter 9 of the act on credit

institutions (121/2007), the Decree of the ministry of

finance (150/2007) concerning annual accounts an

Group accounts of financial institutions and

investment services companies, and standard 3.1

financial statements and annual report issued by the

finnish financial supervisory authority. in addition,

the provisions of the accounting act and companies

act are followed, with the exceptions mentioned in the

act on credit institutions, 146 §.

accounting policies applied to the separate financial

statements of Danske Bank Plc are practically the

same as those applied to the consolidated financial

statements of Danske Bank Plc Group. Danske Bank

Plc Group has prepared the consolidated financial

statements in compliance with the international

financial reporting standards (ifrss) as adopted

by the eu. Policies that differ are defined below.

LEAsE AssETs lease assets are recognised in the balance sheet at

cost, less depreciation according to plan and possible

additional depreciation. the depreciation is

recognised at the amount of principal recovered from

the lease payments. Prepayments of lease assets are

also included in this item.

in income statement, net income from leasing

activities comprise lease payments less depreciation

according to plan. the item includes also additional

depreciation on lease assets, profits and losses on

disposal of the assets, fee and commission income

and other income and expenses directly attributable

to the leasing activities. other income and expenses

attributable to leasing are included in items according

to their nature.

iMPAiRMEnT OF inTAngiBLE AssETs AnD PROPERTY, PLAnT AnD EQuiPMEnTin the end of the financial year the Group assesses

whether there is any indication that an intangible

asset or an item of property, plant or equipment may

be impaired. if any such indication exists, the Group

will estimate the recoverable amount of the asset.

APPROPRiATiOnsin accordance with the finnish regulations on

accounting and taxation, companies are allowed to

include in the accounts certain untaxed reserves and

depreciation in excess or less than plan, which impact

on the taxation of the companies. companies use them

in planning their accounts and taxation. the amount of

those appropriations or changes in them does not

reflect the risks of the companies.

in the accounts the untaxed reserves and the

difference between the depreciation according to plan

and the amount deductible in the corporate taxation

are shown as a separate item in the income statement

under “appropriations” and in the Balance sheet under

“accumulated appropriations”. the appropriations

shown in income statement and Balance sheet are

presented without deducting the deferred tax liability

arising from them.

DANSKE BANK PLC

NOTES TO THE FINANCIAL STATEMENTS


1 inTEREsT inCOME AnD ExPEnsEs BY BALAnCE sHEET iTEM

EURm

Interest income 2012 2011

Loans and advances to credit institutions 68.0 91.8

Loans and advances to customers 516.8 500.1


Derivative financial instruments 48.8 9.6

Other interest income 7.1 1.4

Total 644.8 608.1

Interest expenses

Liabilities to credit institutions 68.7 77.2

Liabilities to customers 91.8 152.6

Debt securities in issue 133.3 45.5

Derivative financial instruments - -


Other interest expenses 0.4 1.0

Total 307.4 291.8

of which due from/due to Group

companies and associates

Interest income 2.2 13.3

Interest expenses 0.1 30.8

2 nET inCOME FROM LEAsing ACTiviTiEsEURm 2012 2011

Lease payments receivable 187.8 213.9

Depreciation on lease assets according to plan -167.0 -189.8

Impairment on lease assets 1.3 -1.9

Gains and losses on disposal

of lease assets (net) 5.2 5.2

Fee and commission income 1.3 1.6

Other income 6.9 6.5

Other expenses -5.9 -6.0

Total 29.7 29.4

3 DiviDEnD inCOMEEURm 2012 2011

Financial assets designated as available for sale 5.7 0.1

Group companies 8.0 68.7

Associates 1.5 1.5

Total 15.2 70.3

4 FEE AnD COMMissiOn inCOME AnD ExPEnsEs

EURm

Fee and commission income 2012 2011

Lending 65.5 74.8

Borrowing 10.7 8.1

Payment transactions 50.6 44.0

Asset management 32.0 38.0

Transactions in securities 6.5 4.9

Guarantees 13.4 14.3

Other 36.6 35.1

Total 215.2 219.1

Fee and commission expenses

Service fees 15.8 15.7

Other 16.0 18.5

Total 31.8 34.2

OTHER NOTES


6 gAins/LOssEs On HEDgE ACCOunTingEURm

Fair value hedging 2012 2011

Change in fair value of hedging instruments,

net, of which 118.9 -41.0

Derivatives hedging assets -29.5 -17.8

Derivatives hedging liabilities 148.4 -23.2

Change in fair value of hedged items,

net, of which -118.7 41.3

Assets 29.5 17.7

Liabilities -148.2 23.6

Total 0.2 0.3

7 OTHER OPERATing inCOME AnD ExPEnsEsEURm

Other operating income 2012 2011

Other 15.4 18.4

Total 15.4 18.4

Other operating expenses

Rental expenses 25.6 27.6

Expenses on properties and property companies 0.0 0.0

Other 23.6 19.7

Total 49.3 47.3

8 DEPRECiATiOn AnD iMPAiRMEnT On PROPERTY, PLAnT AnD EQuiPMEnT AnD inTAngiBLE AssETs

EURm 2012 2011

Depreciation and amortisation according

to plan 10.0 8.8

5 nET inCOME FROM TRAnsACTiOns in sECuRiTiEsEURm2012

Gains/losses on sales

Change in fair value Total

Debt securities - 1.1 1.1

Shares and participations -20.3 11.4 -8.9

Derivative financial instruments - 5.5 5.5

Financial liabilities designated as at fair value through p/l - -0.5 -0.5

Others - -30.1 -30.1

net income from transactions in securities -20.3 -12.6 -32.9

Net income from foreign exchange dealing 24.8 24.8

Total 4.4 -12.6 -8.2

2011

Debt securities - 5.9 5.9

Shares and participations 1.3 -16.4 -15.1

Derivative financial instruments - 58.4 58.4

Financial liabilities designated as at fair value through p/l - -0.3 -0.3

Others - -20.6 -20.6

net income from transactions in securities 1.3 26.9 28.2

Net income from foreign exchange dealing 25.9 25.9

Total 27.2 26.9 54.2


9 iMPAiRMEnT On LOAns, COMMiTMEnTs AnD OTHER FinAnCiAL AssETs

EURm

2012

Individually assessed impair-

ment, gross

Collective impairment,

charges

Reversalsand

recoveriesRecognised

in profit or loss

On loans and advances to credit institutions - -

On loans and advances to customers 136.8 19.6 111.2 45.1

Guarantees and other off-balance sheet items 1.1 0.7 0.5

impairment on loans and advances and

on off-balance sheet items total 137.9 19.6 111.9 45.6

Shares and participations in Group companies

Shares and participations in associated companies

impairment losses on other financial assets total - - - -

Total 137.9 19.6 111.9 45.6

2011

On loans and advances to credit institutions - -

On loans and advances to customers 198.0 0.4 134.9 63.5

Guarantees and other off-balance sheet items -11.9 -11.9

impairment on loans and advances and

on off-balance sheet items total 186.1 0.4 134.9 51.6

Shares and participations in Group companies

Shares and participations in associated companies

impairment losses on other financial assets total - - - -

Total 186.1 0.4 134.9 51.6

Impairment charges are presented as net amounts at customer and branch level.


10 inFORMATiOn On BusinEss AREAsEURm2012

Banking Activities Markets Capital Other Total

Net interest income 321.3 52.9 0.0 -7.0 367.1

Other income, net 140.0 8.7 17.4 40.7 206.9

Total income 461.3 61.6 17.4 33.7 574.0

Total operating expenses -345.3 -21.3 -12.8 -10.4 -389.9

Impairment charges -45.6 - - - -45.6

Profit before taxes 70.3 40.3 4.6 23.3 138.5

Total assets 40 420.8 5 945.1 11.5 -14 562.9 31 814.6

of which loans and advances to credit institutions and customers 32 766.5 9 179.7 0.2 -16 814.7 25 131.7

Total liabilities 40 420.8 5 945.1 11.5 -14 562.9 31 814.6

of wich liabilities to credit institutions and customers 34 226.8 2 067.0 2.2 -17 916.8 18 379.2

Average staff number 2 133 66 49 486 2 734

2011

Net interest income 312.8 32.9 -0.9 1.0 345.7

Other income, net 256.1 18.8 22.0 32.5 329.4

Total income 568.9 51.6 21.1 33.5 675.1

Total operating expenses -360.4 -22.2 -13.5 -7.4 -403.4

Impairment charges -58.0 6.4 0.0 0.0 -51.6

Profit before taxes 150.5 35.8 7.6 26.1 220.1

Total assets 39 618.5 4 978.9 12.0 -17 190.8 27 418.6

of which loans and advances to credit institutions and customers 37 862.8 9 431.5 124.1 -23 211.0 24 207.3

Total liabilities 39 618.5 4 978.9 12.0 -17 190.8 27 418.6

of wich liabilities to credit institutions and customers 38 706.0 1 638.5 0.0 -23 579.0 16 765.5

Average staff number 2 348 68 54 537 3 007


11 LOAns AnD ADvAnCEs TO CREDiT insTiTuTiOnsEURm2012 Total

Repeyable on demand Other

Domestic credit institutions 992.5 0.3 992.1

Foreign credit institutions 3 834.9 410.3 3 424.6

Total 4 827.3 410.6 4 416.7

2011

Domestic credit institutions 1 124.9 31.4 1 093.6

Foreign credit institutions 2 607.0 417.4 2 189.5

Total 3 731.9 448.8 3 283.1

12 LOAns AnD ADvAnCEs TO CusTOMERsEURm 2012 2011

Corporates and housing companies 5 340.0 5 766.7

Financial and insurance institutions 219.6 209.4

Public sector entities 387.1 364.7

Households 13 998.8 13 705.7

Non-profit institutions serving households 209.5 215.1

Foreign 149.3 213.9

Total 20 304.4 20 475.5

Impairment charges

At January 1 329.6 311.6

+ New and increased impairment charges 106.6 129.2

– Reversals of impairment charges -21.1 -53.4

– Write-offs debited to allowance account -69.8 -57.7

– Exchange rate differences and other items 1.3 -

At December 31 346.6 329.6


13 DEBT sECuRiTiEsEURm

2012Issued by public bodies Listed Other Total

Held for trading 266.8 13.1 279.9


Local authority paper 2.0 13.1 15.1

Government bonds 258.7 258.7

Other bonds issued by public bodies -

Debt securities issued by other borrowers* 4.8 15.0 19.7

Debt securities total 271.5 28.1 299.6

of which treasury bills and other eligible bills 258.5 258.5

of which subordinated debt securities - -

* broken down in the table below

Debt securities issued by other borrowers


Certificates of deposit -

Commercial paper 0.3 4.2 4.5

Bonds issued by banks -

Other bonds 4.5 10.8 15.2

Available-for-sale -

Other bonds -

Debt securities issued by other borrowers total 4.8 15.0 19.7

2011Issued by public bodies



Local authority paper 5.1 5.1

Government bonds 0.9 0.9

Other bonds issued by public bodies -

Debt securities issued by other borrowers* 156.0 14.7 170.7

Debt securities total 163.1 19.7 182.8

of which treasury bills and other eligible bills 0.7 0.7

of which subordinated debt securities 0.0

* broken down in the table below

Debt securities issued by other borrowers


Certificates of deposit -

Commercial paper 5.6 5.6

Bonds issued by banks 0.5 0.5

Other bonds 155.5 9.1 164.6

Available-for-sale -

Other bonds -

Debt securities issued by other borrowers total 156.0 14.7 170.7

14 AssETs HELD unDER FinAnCE LEAsEsEURm 2012 2011

Prepayments 49.2 18.4

Equipment 430.0 506.6

Properties and building 62.5 50.3


Total 544.9 579.9


15 sHAREs AnD PARTiCiPATiOns EURm 2012 Listed Others Total

of which in credit institutions

shares and participations 40.2 15.9 56.1 -

Held for trading 40.2 15.9 56.1 -

shares and participations in group companies - 6.3 6.3 -

shares and participations in associated companies - 5.1 5.1 -

Total 67.5 0.0

2011

shares and participations 16.7 2.2 18.9 0.6

Held for trading 16.7 2.2 18.9 0.6

shares and participations in group companies - 6.3 6.3 -

shares and participations in associated companies - 5.1 5.1 -

Total 30.3 0.6

16 DERivATivE FinAnCiAL insTRuMEnTsEURm2012

Nominal value of the underlying instrument Remaining maturity Fair value

For hedging purposes Less than 1 year 1–5 years Over 5 years Positive Negative

interest rate derivatives 17.5 3 261.7 4 459.2 748.8 186.1

Interest rate swaps 17.5 3 261.7 4 459.2 748.8 186.1

Exchange rate contracts 295.0 173.5 27.8 1.6 14.0

Options

Purchased

Written

Interest rate and cross currency swaps 295.0 173.5 27.8 1.6 14.0

Equity contracts 0.0 0.0 0.0 0.0 0.0

Options

Purchased

Written

Futures and forward rate agreements

For other purposes

interest rate contracts 18 765.9 32 024.9 14 989.0 809.0 1 154.5

Futures and forward rate agreements 301.1 - - 0.1 0.1

Options

Purchased 1 463.0 1 302.1 745.8 39.1 1.7

Written 1 452.3 1 302.2 745.8 1.7 45.0

Interest rate swaps 15 549.5 29 420.6 13 497.4 768.1 1 107.7

Exchange rate contracts 29 373.4 7 599.0 923.1 779.7 770.7

Futures and forward exchange 25 078.7 341.5 12.8 337.8 343.6

Options

Purchased 1 117.1 - - 8.9 -

Written 1 133.5 - - - 9.1

Interest rate and cross currency swaps 2 044.1 7 257.5 910.3 433.0 418.0


Options

Purchased 448.1 127.1 - 8.5 -

Written 464.5 218.3 - - 8.9

Futures and forward exchange

Other derivatives 426.9 470.6 62.4 76.4 68.8

Contracts with Group companies 25 036.1 21 855.7 15 474.6 1 126.5 1 030.6


EURm2011

Nominal value of the underlying instrument Remaining maturity Fair value

For hedging purposes Less than 1 year 1–5 years Over 5 years Positive Negative

interest rate derivatives 156.1 1 310.4 4 097.7 271.4 219.3

Interest rate swaps 156.1 1 310.4 4 097.7 271.4 219.3

Exchange rate contracts 35.3 19.2 41.0 0.5 12.3

Options

Purchased

Written

Interest rate and cross currency swaps 35.3 19.2 41.0 0.5 12.3


Options

Purchased

Written

Futures and forward rate agreements

For other purposes

interest rate contracts 6 714.3 19 124.2 14 206.2 555.3 497.8

Futures and forward rate agreements 879.8 - - 1.1 1.5

Options

Purchased 395.5 1 620.1 460.7 34.0 1.2

Written 417.9 1 632.6 460.7 1.3 36.2

Interest rate swaps 5 021.1 15 871.5 13 284.8 518.9 458.9

Exchange rate contracts 21 502.5 4 121.6 791.2 513.8 501.9

Futures and forward exchange 18 241.8 893.0 13.0 316.8 321.2

Options

Purchased 924.0 - - 12.6 0.1

Written 945.9 - - - 12.9

Interest rate and cross currency swaps 1 390.8 3 228.6 778.2 184.4 167.7

Equity contracts 406.0 3 977.0 19.6 16.2 14.4

Options

Purchased 152.8 1 948.1 - 16.1 -

Written 253.2 2 028.9 19.6 0.1 14.4

Futures and forward exchange

Other derivatives 552.3 319.2 42.7 86.6 66.5

Contracts with Group companies 13 396.2 12 913.7 14 986.9 655.7 782.9


17 MOvEMEnTs in PROPERTY, PLAnT AnD EQuiPMEnTEURm Tangible assets

2012At 1 January

Investment property and shares in property

companies

Other property and shares in property

companies Equipment

Opening net carrying amount 6.7 1.4 19.0

Additions 6.3

Disposals -2.7 -4.3


Impairment losses


Depreciations -0.1 -6.3

Closing net carrying amount 4.0 1.4 14.7

At 31 December

Cost at the end of the year 4.0 3.5 123.3

Accumulated depreciation - -1.8 -108.7

Accumulated impairment losses - -0.4 -

net carrying amount 4.0 1.4 14.7

2011At 1 January

Opening net carrying amount 11.2 1.5 20.4

Additions 0.4 6.7

Disposals -4.9 -2.1


Impairment losses


Depreciations -0.1 -6.0

Closing net carrying amount 6.7 1.4 19.0

At 31 December

Cost at the end of the year 6.7 3.5 118.9

Accumulated depreciation - -1.7 -99.9

Accumulated impairment losses - -0.4 -

net carrying amount 6.7 1.4 19.0

18 OTHER AssETsEURm 2012 2011


Margin accounts related to derivatives - 7.4

Other 210.4 59.6

Total 211.0 67.4

Item Other include i.a. collaterals 153.5 EURm, sales and fee receivables

about 17.7 EURm and employee pension insurance receivables 1.5 EURm.

20 DEFERRED TAx EURm 2012 2011

Deferred tax assets -29.0 -18.1

Timing differences -29.0 -18.1

Confirmed losses - -

Deferred tax liabilities - 11.6

Timing differences - 11.6

Deferred tax assets (-)/ liabilities (+), net -29.0 -6.5

Comparative figures have been changed to reflect 2012 presentation.

19 PREPAYMEnTs AnD ACCRuED inCOMEEURm 2012 2011

Accrued interest 41.0 48.7

Other 10.9 10.7

Total 51.9 59.4


22 OTHER LiABiLiTiEsEURm 2012 2011


Obligatory provision 1.7 2.8

Other 309.5 145.5

Total 846.2 728.5

Comparative figures have been changed to reflect 2012 presentation.

Item Other includes i.a. collateral liabilities 153,5 EURm.

23 ACCRuALs AnD DEFERRED inCOMEEURm 2012 2011

Deferred interest 69.2 73.5

Other 62.4 53.6

Total 131.6 127.2

21 DEBT sECuRiTiEs in issuEEURm 2012 2011

Carrying amount Nominal amount Carrying amount Nominal amount

Certificates of Deposits 1 231.6 1 235.3 1 697.0 1 701.6

Bonds and notes 6 288.2 6 027.8 4 157.8 4 058.5

Total 7 519.8 7 263.0 5 854.8 5 760.1

24 suBORDinATED LiABiLiTiEsEURm 2012 2011

Subordinated liabilities with a carrying amount more than 10% of the total

amount of such liabilities 356.8 356.7

Other subordinated liabilities - -

Total 356.8 356.7

of which perpetuals 356.8 356.7

Due to Group companies - -

Due to associated companies - -

IssuerCarrying amount

in EURmNominal amount

in EURm Currency Interest % Due date

Danske Bank Plc 1) 131.3 125.0 EUR 5.407 perpetual

Danske Bank Plc 2) 101.9 125.0 EUR 2.410/variable perpetual

Danske Bank Plc 3) 123.6 100.0 EUR 1.783/variable perpetual

Total 356.8 350.0

1) Repayable on interest payment date in March 2014 and thereafter on every interest payment date. In capital adequacy calculation the capital securities are

included in their entirety in Tier 1 capital.

2) Repayable on interest payment date in March 2013 and thereafter on every interest payment date. In capital adequacy calculation the capital securities are


3) Repayable on interest payment date in October 2014 and thereafter on every interest payment date. In capital adequacy calculation the capital securities are


EURm 2012

Capital securities at 31 December 2012 350.0

Danske Bank Plc had on 31 December 2012 three capital securities in issue.

The main terms of these loans are disclosed in IFRS consolidated financial

statements/Note 24 Debt Securities in Issue.


25 MATuRiTY AnALYsis OF AssETs AnD LiABiLiTiEs, BY REMAining MATuRiTYEURm 2012 2011

Assets

Less than 3 months 6 726.1 5 924.3

Loans and advances to credit institutions 4 765.2 3 670.9

Loans and advances to customers 1 936.8 2 079.9


3–12 months 1 965.6 1 880.7

Treasury bills and other eligible bills 153.1 -




1–5 years 7 445.7 7 276.8

Treasury bills and other eligible bills 105.5 0.7




5–10 years 5 049.0 5 131.8

Loans and advances to credit institutions - 0.2



Over 10 years 4 245.1 4 176.6


Debt securities - 0.0

Liabilities

Less than 3 months 18 440.1 16 379.8

Liabilities to credit institutions 1 778.5 898.3

Liabilities to customers 15 352.4 13 967.5

Debt securities in issue 1 185.6 1 390.5


3–12 months 1 835.7 2 032.2


Liabilities to customers 1 017.6 1 163.5

Debt securities in issue 804.5 363.2

1–5 years 3 814.7 3 418.3





5–10 years 2 165.3 1 146.7



Over 10 years 0.0 0.0



26 AssETs AnD LiABiLiTiEs DEnOMinATED in DOMEsTiC CuRREnCY (EuRO) AnD in FOREign CuRREnCiEs (OTHER CuRREnCiEs)

EURm 2012Assets EURm

Other currencies Total

To or from Group

companies

Loans and advances to credit institutions 4 099.4 728.0 4 827.3 4535.3

Loans and advances to customers 19 776.7 527.7 20 304.4 96.4

Debt securities 293.6 6.1 299.6 -

Derivative financial assets 2 423.9 - 2 423.9 105.7

Other assets 3 953.4 5.9 3 959.3 0.6

Total 30 547.0 1 267.6 31 814.6 4 738.0

Liabilities

Liabilities to credit institutions 979.8 902.3 1 882.1 1669.0

Liabilities to customers 16 043.5 453.5 16 497.1 34.8

Debt securities in issue 7 494.3 25.5 7 519.8 -

Derivative financial liabilities and other liabilities held for trading 2 203.1 - 2 203.1 -

Other liabilities 1 336.5 18.0 1354.5 0.3

Total 28 057.2 1 399.4 29 456.6 1 704.1

2011Assets

Loans and advances to credit institutions 3 117.5 614.4 3 731.9 3504.2

Loans and advances to customers 19 918.9 556.6 20 475.5 12.4

Debt securities 176.6 6.2 182.8 0.0

Derivative financial assets 1 443.8 0.0 1 443.8 -103.1

Other assets 1 577.4 7.2 1 584.6 -

Total 26 234.2 1 184.4 27 418.6 3 413.6

Liabilities

Liabilities to credit institutions 835.6 658.2 1 493.8 1323.9

Liabilities to customers 14 964.4 307.3 15 271.7 34.5

Debt securities in issue 5 830.3 24.5 5 854.8 -

Derivative financial liabilities and other liabilities held for trading 1 312.4 - 1 312.4 -

Other liabilities 1 120.6 91.8 1212.4 -

Total 24 063.3 1 081.8 25 145.1 1 358.4


27 FAiR vALuEs AnD CARRYing AMOunTs OF FinAnCiAL AssETs AnD LiABiLiTiEs EURm 2012 2011

Financial assets Carrying amount Fair value Carrying amount Fair value

Cash in hand 3 034.9 3 034.9 814.1 814.1

Treasury bills and other eligible bills 258.5 258.5 0.7 0.7

Loans and advances to credit institutions 4 827.3 4 827.3 3 731.9 3 731.9

Loans and advances to customers (1 20 849.3 21 319.4 21 055.3 21 094.8

Debt securities 41.1 41.1 182.1 182.1

Shares and participations 56.1 56.1 18.9 18.9

Shares and participations in associated companies 5.1 5.1 5.1 5.1

Derivative financial instruments 2 423.9 2 423.9 1 443.8 1 443.8


Liabilities to credit institutions 1 882.1 1 882.1 1 493.8 1 493.8

Liabilities to customers 16 497.1 16 497.3 15 271.7 15 251.7

Debt securities in issue 7 519.8 7 531.2 5 854.8 5 720.5

Derivative financial liabilities and other liabilities held for trading 2 203.1 2 203.1 1 312.4 1 312.4

Subordinated liabilities 356.8 297.7 356.7 230.1

1) Includes lease assets

Financial instruments are carried on the balance sheet at fair value or amortised cost. In IFRS consolidated financial statements, chapter Summary of significant

account policies describes classification of financial assets and liabilities by valuation type and detailed measurement bases of financial assets and liabilities.

IFRS note 13 Fair value information discloses additional information for used valuation and estimation techniques.


28 MOvEMEnTs in EQuiTY EURm2012

Share capital

Legal reserve

Other reserves

Retained earnings Total

Carrying amount at 1 Jan. 2012 106.0 261.7 43.8 1 782.1 2 193.6


Carrying amount at 31 Dec. 2012 106.0 261.7 43.8 1 946.5 2 358.0

Retained earnings at 1 Jan. 2012 1 782.1

Profit for the year 164.4

Retained earnings at 31 Dec. 2012 1 946.5

Distributable equity at 31 December 2012

Parent company

Other reserves 43.8

Retained earnings 1 782.1


Total 1 990.3

2011

Carrying amount at 1 Jan. 2011 106.0 261.7 43.8 1 582.8 1 994.3


Carrying amount at 31 Dec. 2011 106.0 261.7 43.8 1 782.1 2 193.6


Correction -72.2



Retained earnings at 31 Dec. 2011 1 782.1

Distributable equity at 31 December 2011

Parent company

Other reserves 43.8

Retained earnings 1 582.8


Total 1 825.9

29 sHARE CAPiTAL Danske Bank Plc

the share capital of Danske Bank Plc amounts to

eur 106,000,000.00, comprising 106,000 shares.

each share has one vote.

30 sHARE issuEs, OPTiOn RigHTs AnD issuE OF COnvERTiBLE BOnDsDanske Bank Plc has not issued new shares, option

rights nor convertible bonds during the year. the Bank

has no valid authority granted by the annual general

meeting to issue new shares, option rights or

convertible bonds.

31 sHAREHOLDings AnD PRinCiPAL sHAREHOLDERsDanske Bank a/s owns all the share capital of

Danske Bank Plc.


32 AssETs PLEDgED As COLLATERAL sECuRiTY

EURm2012Pledged for own liabilities Pledges Other Total

Balance sheet item


Liabilities to the public and general government 6.1 6.1


Derivative financial liabilities and other liabilities held for trading 199.6 199.6

Other liabilities

Subordinated liabilities

Off-balance sheet commitments 686.4 686.4

For own liabilities in total 6 888.1 - 6 888.1

Pledged on behalf of others 6.0 6.0

2011

Balance sheet item


Liabilities to the public and general government 6.2 6.2


Derivative financial liabilities and other liabilities held for trading 132.1 132.1

Other liabilities

Subordinated liabilities

Off-balance sheet commitments 729.2 729.2

For own liabilities in total 4 423.3 - 4 423.3

Pledged on behalf of others 10.4 10.4

33 PEnsiOn LiABiLiTYthe basic and supplemantery pension benefits of

the staff in Danske Bank Plc are handled through

insurance.

34 FuTuRE REnTAL COMMiTMEnTsEURm 2012 2011

Not more than one year 26.3 27.9

Over one year but not more than five years 71.2 79.5

Over five years 13.4 24.5

Total 110.9 131.9

35 OFF-BALAnCE sHEET iTEMsEURm 2012 2011

guarantees and pledges 1 796.7 1 858.9

of which on behalf of Group companies 7.4 9.2

on behalf of associated companies

sale and option to resell transactions

undrawn loans, overdraft facilities and

commitments to lend 4 229.6 4 377.0

to Group companies 1.7 1.2

to associated companies 6.8 11.8

underwriting commitments

Other commitments

to or on behalf of Group companies

to or on behalf of associated companies

Total off-balance sheet items 6 026.4 6 235.9

to or on behalf of Group companies 9.1 10.3

to or on behalf of associated companies 6.8 11.8

The termination clauses of unutilized credit facilities have been reviewed and

classification of unused credit facilities to irrevocable commitments is partly

updated. Comparative figures have been adjusted accordingly.


36 inFORMATiOn On sTAFF AnD MAnAgEMEnTSTAFF NUMBERS

2012 Average number Change during the year

Full-time staff 2 314 -221

Part-time staff 181 -3

Temporary staff 239 -49

Total 2734 -273

The staff number by business area and geographical market area is disclosed in Note 10.

MANAGEMENT’S REMUNERATION (EUR 1,000)

Managing Director ja Deputy Managing Director 2012

Managing Director 1.9.–31.12.2012 Johanna Lamminen 72.0

Managing Director 1.1.–31.8.2012 Ilkka Hallavo 312.0 *)

Deputy Managing Director 1.1.–31.5.2012 Risto Tornivaara 141.0

*) EUR 796 thousand and supplementary pension of EUR 308 thousand for Managing Director Ilkka Hallavo will be paid in future periods,

but have been booked as a cost during 2012.

Board of directors

the members of the Board of Directors of Danske

Bank Plc, who are employees of the Group, receive no

fee for the membership of the Board of Directors of

Danske Bank Plc. for other members of the Board are

paid in total 70 000 euros fee.

Pension benefits

the retirement age of the managing Director is

statutory.

MANAGEMENT LOANS AND OFF-BALANCE SHEET ITEMS

EURm 2012

Balance at beginning of year 0.7

Additions 0.2

Repayments -0.7

Balance at end of year 0.2

the interest on loans to the management is as

required in the terms of staff loans. also other terms

of the loans correspond to the terms of staff loans

comfirmed in the Group. the loans are secured.

37 RELATED PARTY TRAnsACTiOns 2012

EURm

Parties with significant influence Subsidiaries


Key management personnel Other

2012 2011 2012 2011 2012 2011 2012 2011 2012 2011

Loans and receivables 4 444.5 3 445.7 0.2 12.4 96.2 83.4 0.2 0.5 92.4 58.4

Securities 117.1 0.2 11.9 23.3 15.2 9.2 - - 1.0 0.4

Deposits 1 649.0 1 269.3 34.7 34.5 0.0 0.0 0.2 0.0 36.8 43.4

Derivatives -15.4 -226.8 - - - - - -

Guarantees and pledges 1.5 3.5 - - - - - - 5.8 5.6

Undrawn loans and overdraft facilities 0.7 1.0 1.0 6.8 11.8 0.1 0.2

Collaterals - 25.0 29.3 0.0 0.2 0.7

Interest income 23.7 21.0 0.2 0.3 3.2 3.2 0.0 0.0 3.7 1.9

Interest expenses 19.8 21.0 0.1 0.0 0.9 0.5 0.0 0.0 0.9 0.4

Dividend income 8.0 9.1 1.5 1.5 - -

Impairments - - 0.1 0.2 - - -1.3 -

Purchases from group companies 95.9 90.3

Sales to group companies 10.3 14.8

Related party comprises the parent company, associated undertakings, key management personnel and other related-party companies. Parties with significant influence

include the parent company and its branches. Key management personnel comprises Board of Directors and executive management, including close family members

and companies, in which key management personnel or their close family members have considerable influence. Other related-party entities include sister companies.


38 sHAREs HELD

Company name, registered office, nature of business Note

Percentage of equity

capital held %

Carrying amount of shares total EUR million

subsidiaries of Danske Bank Plc

MB Equity Partners Oy, Helsinki, mutual fund management 1 40.0 0.0

MB Mezzanine Fund II Ky, Helsinki, mezzanine financing 1 60.0 0.0

Realty World Ltd, Helsinki, estate agency 1 100.0 2.4

Danske Invest Fund Management Ltd, Helsinki, investment services 1 100.0 3.8

Aurinkopihan Palvelut Oy, Helsinki, letting of other real estate 1 100.0 0.1

Associates of Danske Bank Plc

Automatia Pankkiautomaatit Oy, Helsinki, electronic banking services 2 33.3 5.1

MB Equity Fund Ky, Helsinki, investment 2 20.9 0.0

Tapio Technologies Oy, Espoo, manufacturer of electrical equipments 2 20.0 0.0

As Oy Espoon Leppävaaran Aurinkopiha, Espoo, operation of dwellings

and residential real estate 2 28.2 4.0

1 Consolidated in full

2 Accounted by the equity method

39 AssET MAnAgEMEnT AnD CusTOMER AssETs HELDDanske Bank Plc provides asset management

services self and through subsidiaries.

Assets under management EURm

Discretionary mandates 9 062.5

Consultative mandates 2 074.4

Total assets under management 11 136.9

40 AuDiTing FEEsEURm

Auditor fees 2012 2011

KPMg Ltd. (2012), Ernst & Young Ltd. (2011)

Auditing 0.1 0.2

Assignments acc. to auditing law - -

Tax consulting 0.0 0.0

Other services 0.4 0.0

Auditor fees, total 0.5 0.3

41 inFORMATiOn On A CREDiT insTiTuTiOn WHiCH is A gROuP COMPAnYin 2012, Danske Bank Plc belonged to Danske Bank

Group, whose parent company is Danske Bank a/s.

Danske Bank a/s annual report 2012 is available at

www.danskebank.com.

the registered office of Danske Bank Plc is helsinki


DANSKE BANK PLC BOARD OF DIRECTORS’ PROPOSAL TO THE ANNUAL GENERAL MEETING FOR THE DISTRIBUTION OF PROFIT AND SIGNING OF ANNUAL REPORT 2012

the parent company’s distributable assets in the

financial statements total eur 1,990,255,795.10

of which profit for the financial year totals eur

164,393,007.95.

henrik ramlau-hansen

(Deputy chairman)

maija strandberg

helsinki, 6th february 2013

niels-ulrik mousten

ilkka hallavo

tonny thierry andersen

(chairman)

esko mäkeläinen

Johanna lamminen

(ceo)

the Board of Directors proposes to the annual

General meeting of shareholders that:

1. a dividend of eur 140,000,000.00 be paid and

2. eur 1,850,255,795.10 be left in shareholders’

equity.

a annu annual report 2012 - danske bank...danske bank currently has 534,000 active ebank users....

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