alm. brand bank · well as to the bond portfolio of its subsidiary alm. brand ... posted a value...

Alm. Brand Bankfirst half of year

Alm. Brand Bank A/S · Midtermolen 7 · 2100 Copenhagen Ø · Registration (CVR) NO. 81753512

Alm. Brand Bank A/S – H1 2013

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CONTENTS

COMPANY INFORMATION

2 Company information

2 Group structure

MANAGEMENT’S REVIEW

3 Financial highlights and key ratios

4 Report

7 Business activities

SIGNATURES

11 Statement by the Board of Directors and the Management Board

FINANCIAL STATEMENTS

12 Income statement and comprehensive income

14 Balance sheet

16 Statement of changes in equity

17 Cash flow statement

18 Notes to the financial statements


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COMPANY INFORMATION MANAGEMENT BOARD Kim Bai Wadstrøm , Chief Executive BOARD OF DIRECTORS Jørgen H. Mikkelsen , Chairman Boris N. Kjeldsen , Deputy Chairman Arne Nielsen Jan Skytte Pedersen Ebbe Castella Søren Boe Mortensen Christian Bundgaard , elected by the employees Torben Jensen , elected by the employees Pia Støjfer , elected by the employees AUDITORS Deloitte Statsautoriseret Revisionspartnerselskab

INTERNAL AUDITOR Poul-Erik Winther , Group Chief Auditor REGISTRATION Alm. Brand Bank A/S Company registration (CVR) no. 81 75 35 12 ADDRESS Midtermolen 7 DK-2100 Copenhagen Ø Phone: +45 35 47 48 49 Fax: +45 35 47 47 35 Internet: www.almbrand.dk E-mail: [email protected]

GROUP STRUCTURE

100% 43%

ALM. BRANDLEASING

ALM. BRAND

ALM. BRANDBANK

FORMUE

The bank has two subsidiaries: • Alm. Brand Leasing A/S • Alm. Brand Formue A/S The group also comprises four wholly-owned subsidiaries, which have been established or acquired in connection with properties taken over temporarily.

In addition, the bank acts as depositary bank for: • Investeringsforeningen Alm. Brand Invest

OWNERSHIP The bank is wholly-owned by the listed company Alm. Brand A/S. The consolidated financial statements of Alm. Brand Bank A/S are a component of the consolidated financial statements of Alm. Brand A/S and Alm. Brand af 1792 fmba.


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FINANCIAL HIGHLIGHTS AND KEY RATIOS

DKKm Q2 2013 Q2 2012 H1 2013 H1 2012 Year 2012 Q2 2013 Q2 2012 H1 2013 H1 2012

Year 2012

INCOME STATEMENT

Interest receivable 145 179 297 379 720 148 181 303 382 728

Interest payable 80 118 178 246 452 81 120 180 248 457

Net interest income 65 61 119 133 268 67 61 123 134 271

Fees and commissions receivable (net) and dividend etc. 43 31 75 63 125 44 32 76 64 124

Net interest and fee income 108 92 194 196 393 111 93 199 198 395

Value adjustments (excl. credit-related) -36 24 -45 34 37 -56 14 -50 48 75

Other operating income 15 12 31 22 50 15 13 31 22 51

Profit before expenses 87 128 180 252 480 70 120 180 268 521

Staff costs and administrative expenses 106 135 209 248 441 107 136 210 249 443

Depreciation, amortisation and impairment of property, plant and equipment 11 7 21 14 33 11 7 21 14 33

Other operating expenses 16 11 28 21 43 16 11 28 21 43

Profit from investments in associates and group enterprises 2 -1 -1 0 -2 2 -1 -1 0 -2

Profit before credit losses and tax -44 -26 -79 -31 -39 -62 -35 -80 -16 0

Writedowns and credit-related value adjustments 91 81 183 166 480 90 81 183 166 480

Profit before tax -135 -107 -262 -197 -519 -152 -116 -263 -182 -480

Tax 6 -27 -25 -49 -128 6 -27 -25 -49 -128

Profit for the period -141 -80 -237 -148 -391 -158 -89 -238 -133 -352

Share attributable to minority interests - - - - - -17 -9 -1 15 39

Profit after tax excluding minority interests - - - - - -141 -80 -237 -148 -391

Profit before tax excluding minority interests - - - - - -135 -107 -262 -197 -519

BALANCE SHEET

Loans and advances 8,266 9,566 8,266 9,566 8,698 7,838 9,377 7,838 9,377 8,396

Deposits 11,086 10,451 11,086 10,451 11,325 11,086 10,451 11,086 10,451 11,325

Shareholders' equity 1,458 1,241 1,458 1,241 996 1,624 1,393 1,624 1,393 1,169

Share attributable to minority interests - - - - - 166 152 166 152 173

Total assets 17,898 22,108 17,898 22,108 17,550 18,261 22,461 18,261 22,461 17,903

KEY RATIOS ETC.

Average number of employees, full-time equivalents 263 279 261 279 275 263 279 261 279 275

Interest margin (%) - - - - - 1.7 1.3 1.5 1.4 1.4

Income/cost ratio 0.23 0.44 0.24 0.49 0.37 0.14 0.39 0.24 0.53 0.42

Impairment ratio 0.4 0.3 0.8 0.8 2.8 0.4 0.3 0.8 0.9 2.8

Solvency ratio - - - - - 18.5 17.0 18.5 17.0 18.5

Financial highlights and key ratios have been prepared in accordance with IFRS and "Recommendations & Financial Ratios 2010" issued bythe Danish Society of Financial Analysts.

PRO RATA GROUP


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REPORT

Financial results

The bank posted a loss of DKK 135 million before tax in Q2 2013. Excluding losses and writedowns, the bank's loss amounted to DKK 44 million. The performance was not satisfactory and almost DKK 35 million short of the expected level. The performance was mainly attributable to negative value adjustments. The rising level of interest rates in the latter half of June caused prices on the bank's bond portfolio to decline, as reflected in the bank's interest rate risk. This applied to the bank's bond portfolio as well as to the bond portfolio of its subsidiary Alm. Brand Formue A/S, in which the bank has an ownership interest of 43%. The bank posted an operating loss of DKK 8 million excluding losses and writedowns and value adjustments in Q2 2013, marking an improvement of DKK 18 million compared with Q1 2013. The bank's total impairment writedowns on loans, including credit-related value adjustments, amounted to DKK 91 million in Q2 2013. Losses and writedowns were within the projected range but remain high. In H1 2013, the bank posted a pre-tax loss of DKK 262 million. Excluding losses and writedowns, the bank posted a loss of DKK 79 million, and total impairment writedowns on loans, including credit-related value adjustments, amounted to DKK 183 million. Net interest and fee income Net interest and fee income rose by DKK 22 million to a total of DKK 108 million in Q2 2013 from DKK 86 million in Q1 2013. Interest income and expenses Net interest income rose by DKK 11 million to DKK 65 million in Q2 2013 from DKK 54 million in Q1 2013. The positive trend was driven primarily by a decline of DKK 18 million in interest expenses, of which DKK 14 million was attributable to the partial repayment in March of state-funded hybrid core capital and government guaranteed bonds. The remaining DKK 4 million was related to lower interest expenses for fixed-interest deposits due

to a declining deposit balance, which is in line with the bank's strategy. Interest income from the bank's bond portfolio declined by DKK 5 million due to a reduction of the average bond portfolio by close to DKK 1 billion from Q1 to Q2. In Q2, the interest margin for the parent company and the banking group was 1.6% and 1.7%, respectively, against 1.2% and 1.3%, respectively, in Q1. The increase was primarily attributable to the DKK 18 million decline in interest expenses. Net interest income was DKK 119 million in H1 2013, against DKK 133 million in the same period of last year. In H1, the interest margin for the parent company and the banking group was 1.4% and 1.5%, respectively, against 1.3% and 1.4% in the H1 2012. Fee income and expenses Net fee income for Q2 2013 was DKK 43 million, marking an increase of DKK 11 million from the DKK 32 million reported in Q1 2013. The increase was attributable to higher brokerage income in Financial Markets, driven by existing customers and a fair increase in the number of new customers. Net fee income rose to DKK 75 million in H1 2013 from DKK 63 million in the same period of last year. Value adjustments The bank posted negative value adjustments of DKK 84 million in Q2. Excluding credit-related value adjustments of DKK 48 million, the bank posted a value adjustment loss of DKK 36 million, compared with a value adjustment gain of DKK 24 million in Q2 2012. The DKK 36 million value adjustment loss was composed of negative interest-related value adjustments of DKK 24 million on bonds, negative equity-related value adjustments of DKK 6 million and negative currency-related value adjustments of DKK 6 million. The negative value adjustments on the bond portfolio were a result of the rising level of interest rates at the end of June 2013.

In order to increase the transparency of Alm. Brand Bank A/S’ financial statements, the bank publishes pro rata consolidated figures. The figures are set out in the financial highlights and key ratios above and, unless otherwise indicated, the comments provided in the review below concern pro rata figures. Banking group figures are commented on only when found relevant. To the extent it is deemed relevant, H1 2012 and Q1 2013, respectively, are used as benchmarks. The pro rata figures reflect the bank's proportionate ownership interests in the subsidiaries.


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REPORT In H1 2013, the bank’s bond portfolio produced a return equal to 1.6% p.a., which was satisfactory compared with the benchmark. In H1 2013, value adjustments, excluding credit-related value adjustments, amounted to a loss of DKK 45 million, against a gain of DKK 34 million in H1 2012. Other operating income Other operating income was DKK 15 million in Q2 2013, against DKK 16 million in Q1 2013. In H1 2013, this item amounted to DKK 31 million, against DKK 22 million in H1 2012. Other operating income primarily consists of leasing activities, and the volume of operating leases has increased. Costs The bank’s payroll costs and administrative expenses totalled DKK 106 million in Q2 2013, which was largely unchanged from the DKK 102 million reported in Q1 2013. In H1 2013, payroll costs and administrative expenses totalled DKK 209 million, against DKK 248 million in the same period of last year. Total depreciation, amortisation and impairment charges amounted to DKK 21 million in H1 2013, against DKK 14 million in H1 2012. The increase was attributable to the higher level of leasing activity. Other operating expenses Other operating expenses came to DKK 16 million in Q2 2013, against DKK 12 million in Q1 2013. Of the DKK 16 million reported in Q2, DKK 8 million related to the bank's expenses to the Guarantee Fund for Depositors and Investors and DKK 8 million related to costs and value adjustment of properties taken over temporarily. In H1 2013, other operating expenses amounted to DKK 28 million, against DKK 21 million in the same period of last year. Impairment of loans, etc. The bank’s impairment writedowns on loans amounted to DKK 43 million in Q2 2013, compared with DKK 42 million in Q1 2013. Losses and writedowns remain affected in particular by the tough economic conditions faced by agricultural customers as well as by private customers, who are impacted by a persistently weak housing market. In addition, the bank recognised credit-related value adjustments of DKK 48 million in Q2 2013,

against DKK 50 million in Q1 2013. Accordingly, total impairment writedowns on loans, including credit-related value adjustments, amounted to DKK 91 million in Q2 2013, against DKK 92 million in Q1 2013. In H1 2013, this item amounted to DKK 183 million, against DKK 166 million in H1 2012. Balance sheet

Loans and advances The bank’s loans and advances amounted to DKK 8.3 billion at 30 June 2013, against DKK 8.7 billion at 31 December 2012. Excluding developments in reverse transactions, intra-group transactions and writedowns, this marked a decline in loans and advances of DKK 426 million, of which DKK 260 million was attributable to the bank's discontinued activities. Debt to credit institutions The bank had debt to credit institutions of DKK 2.6 billion at 30 June 2013, against DKK 1.2 billion at 31 December 2012. The increase was attributable to repo contracts entered into. Deposits The bank had deposits of DKK 11.1 billion at 30 June 2013, against DKK 11.3 billion at 31 December 2012. The bank's deposit surplus increased to DKK 2.8 billion at 30 June 2013 from DKK 2.6 billion at 31 December 2012. Liquidity At 30 June 2013, the bank had cash funds of DKK 4.8 billion and excess liquidity of DKK 3.1 billion, equivalent to an excess cover of 190% relative to the statutory requirement. This was an expected decline relative to the excess cover of 256% reported at 31 December 2012. The excess liquidity of DKK 3.1 billion at 30 June 2013 was reduced by DKK 950 million at 1 July in connection with the bank's repayment of the remaining government guaranteed bonds. Capitalisation The bank’s equity stood at DKK 1.5 billion at 30 June 2013. The capital base totalled DKK 1.9 billion, and the risk-weighted items amounted to DKK 10.2 billion at 30 June 2013. Accordingly, the solvency ratio was 19.0, and the core capital ratio was 17.5. The bank's individual solvency need was calculated at 14.1%, which means that its solvency ratio exceeded the


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REPORT individual solvency need by 4.9 percentage points. The banking group's equity stood at DKK 1.6 billion at 30 June 2013, and the capital base totalled DKK 2.0 billion. Risk-weighted items in the banking group totalled DKK 10.7 billion at 30 June 2013. Accordingly, the banking group had a solvency ratio of 18.5, and a core capital ratio of 17.1. The banking group's individual solvency need was calculated at 14.2%, which means that its solvency ratio exceeded the individual solvency need by 4.3 percentage points. New capital adequacy rules (CRD IV) New capital adequacy rules adopted by the EU will enter into force on 1 January 2014. The new rules prescribe, among other things, that equity should constitute a greater part of the capital base and that stricter requirements are set for the capital. The rules also scale down the inclusion of supplementary capital and tighten the requirements for hybrid capital. The rules will be phased in from 2014 to 2019. As a result of the new rules, the bank's excess capital adequacy will drop by about DKK 75 million with effect from 1 January 2014. Supervisory diamond

At 30 June 2013, the bank was in compliance with all five threshold values of the Danish FSA's supervisory diamond as shown in the figure below.

The changes in the bank's supervisory diamond indicators reflect that loans related to the bank's discontinued activities are developing according to plan. Lending growth remains negative, which had been expected considering the bank's lending strategy of focusing exclusively on private customers. The fall in the bank's excess liquidity was due to the bank's repayment in March 2013 of loans raised through bonds issued under Bank Package II.

Major events

Capital injection into the bank and repayment of hybrid core capital On 22 August 2013, Alm. Brand A/S injected DKK 200 million into Alm. Brand Bank A/S as equity. The capital injection will be used to repay an additional DKK 200 million of the remaining state-funded hybrid core capital, which totalled DKK 426 million before repayment. Repayment will take place when permission has been received. Repayment of government guaranteed bonds On 1 July 2013, the bank repaid the remaining DKK 950 million of the original DKK 6 billion bond issue, and the bond issue has now been fully repaid. Reduction of the value of deferred tax assets On 27 June 2013, the Danish parliament adopted a gradual reduction of the corporate tax rate in three steps over the next three years. The tax rate will be scaled down from the current 25% to 22% in 2016. The scale-down to 22% reduced the value of the bank's deferred tax assets by DKK 41 million. This amount was expensed in full in the second quarter. Changes to the Board of Directors At the bank's annual general meeting held on 17 April 2013, Ebbe Castella was elected as a new member of the Board of Directors. Outlook

The full-year guidance excluding losses and writedowns is lowered by DKK 55 million to a loss of DKK 100 million. The downgrade is primarily based on negative value adjustments on the bank's portfolio of securities but also on the customers' declining borrowing requirements and on the higher than expected operating expenses for properties taken over and higher than expected expenses to the Guarantee Fund for Depositors and Investors. Expectations for the reduction in lending excluding losses and writedowns related to the bank's discontinued activities are maintained at around DKK 0.6 billion in 2013. The bank maintains its guidance for losses and writedowns in 2013 of DKK 300-400 million. The amount of losses and writedowns and credit-related value adjustments is subject to considerable uncertainty and the guidance is based on current economic and market conditions.

Large exposures Growth in lendingThreshold value < 125% Threshold value < 20%

30 June 2013 2012 30 June 2013 201231% 32% - 3% - 13%

Funding ratio Property exposureThreshold value < 1 Threshold value < 25%

30 June 2013 2012 30 June 2013 20120.63 0.62 18% 17%

Excess liquidity coverageThreshold value > 50%

30 June 2013 2012190% 256%


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BUSINESS ACTIVITIES Developments in the business areas Private Customers, Leasing and Financial Markets as well as in the bank's discontinued activities for the six months ended 30 June 2013 are reviewed below. Continuing activities

The continuing activities consist of the business areas Private Customers, Leasing and Financial Markets. Private Customers handles activities related to servicing the bank's new and existing private customers. The business area Leasing is focused on private leasing of passenger and commercial vehicles with related car fleet management for businesses. Financial Markets handles the bank’s activities related to financial markets and comprises the areas Markets and Asset Management. In H1 2013, the continuing activities produced a loss of DKK 18 million excluding losses and writedowns. The performance was adversely affected by negative value adjustments on the bond portfolio of DKK 36 million. Private Customers This business area saw a fair increase in the number of full-service customers in H1 2013. The increase was driven both by entirely new customers and by existing customers who increased the scope of their business, thereby becoming full-service customers. However, the increase in the number of full-service customers and the gross increase in lending of DKK 200 million were not enough to offset the persistently weak borrowing appetite and the focus on debt reduction among private customers. Despite the weak borrowing appetite among private customers, the bank increased its average earnings per household by more than 3% in the H1 period. Lending to private customers represents the majority of the bank's continuing lending portfolio. This portfolio consists of loans and advances to private customers and is geographically diversified across Denmark. The portfolio includes car loans to private customers. Total loans and advances to private customers declined by DKK 114 million from 31 December 2012 to 30 June 2013. Adjusted for losses and

writedowns, the decline was DKK 56 million. Among other things, the decline was attributable to conversion of home loans to mortgage loans through the bank's business partner Totalkredit. The portfolio of Totalkredit loans for which the bank acted as intermediary grew by close to 5%, or about DKK 180 million, in the first six months of 2013. At 30 June 2013, the portfolio of Totalkredit loans represented more than DKK 3.9 billion in aggregate. As total lending activities decline due to the winding up of discontinued activities, the bank will focus continuously on aligning the deposit balance in the Private Customer segment. In H1 2013, the bank reduced its deposit balance by more than DKK 200 million. In the first six months of 2013, losses and writedowns amounted to DKK 58 million, equivalent to 2.4% of the average portfolio value. Writedowns on the bank's private customers remain high, reflecting a persistently weak housing market that is still only showing signs of improvement in and around the major cities. Leasing In the first six months of 2013, Alm. Brand Leasing A/S delivered and ordered about 30% more cars than it did in all of 2012. In particular, car leasing and car fleet management for businesses developed favourably in H1 2013. This trend was reflected in a fair increase in the number of new business customers and in a reasonable replacement rate in the existing portfolio. Alm. Brand Leasing was the second largest provider of private car leasing measured in terms of new business in H1 2013. Part of the strategy for Alm. Brand Leasing is to step up direct sales of car leases to private customers, both directly to end customers and through partnerships with car importers. Financial Markets Earnings in Financial Markets were better than expected in H1 2013. Growth was generated primarily by Markets, which experienced a fair increase in the number of new customers. This combined with stronger than expected customer activity to produce higher average earnings per customer.


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BUSINESS ACTIVITIES In terms of earnings, Asset Management performed marginally better than expected in the H1 period. Most of the mandates under management generated a reasonable performance. In the lending portfolio table, the segment “Other loans and advances” covers exposures for which

an investment mandate has also been placed with Markets. These loans form part of the bank's continuing portfolio. Other loans and advances declined by DKK 108 million relative to 31 December 2012. The decline was mainly attributable to the discontinuation of a single exposure.

Discontinued activities

The discontinued activities are continuously reduced and relate mainly to loans provided to agricultural and commercial customers and for mortgage deeds. As part of the implementation of a controlled winding up of the individual exposures, the bank intends to grant additional loans as part of its credit defence efforts in relation to its collateral. This means that lending may increase in individual segments, even if a lending segment is being wound up. In H1 2013, the discontinued activities produced a loss of DKK 61 million excluding losses and writedowns. Total loans and advances provided to discontinued activities declined by DKK 386 million to DKK 5,256 million in H1 2013, now representing close to 64% of the bank's overall

lending portfolio. Adjusted for losses and writedowns, loans and advances were reduced by DKK 260 million, which was in line with the expected level. Agriculture The portfolio increased by DKK 16 million to DKK 971 million in H1 2013. Adjusted for losses and writedowns, the portfolio increased by DKK 60 million because the bank has granted loans for necessary investments and to secure continuing operations, thereby protecting the underlying value to the bank. In H1 2013, losses and writedowns amounted to DKK 44 million, equivalent to 4.6% of the average portfolio value. The level of losses and writedowns reflects the difficult conditions agricultural customers continue to face. In spite of slightly improving market conditions, impairment writedowns continue to

LOSSES AND WRITEDOWNS

DKKm 31.12.2012 30.06.2013 Year 2012 Q1 2013 Q2 2013 H1 2 013

Continuing portfolio 2,647 2,425 29.4% 57 29 27 56 2.2%

Lending to private customers 2,442 2,328 28.2% 57 28 30 58 2.4%

Other loans and advances 205 97 1.2% - 1 -3 -2 -1.3%

Discontinuing portfolio 5,642 5,256 63.5% 423 63 64 127 2.3%

Agriculture 955 971 11.7% 156 26 18 44 4.6%

Car finance b) 230 170 2.1% -1 - - - 0.0%

Commercial lending 1,158 1,074 13.0% 73 -18 -7 -25 -2.2%

Property development projects 254 275 3.3% 1 2 - 2 0.8%

Mortgage deed financing 115 66 0.8% 23 3 5 8 8.8%

Mortgage deeds c) 2,930 2,700 32.6% 155 50 47 97 3.4%

Shares d) - - - 16 - 1 1 -

8,289 7,681 92.9% 480 92 91 183 2.3%

107 158 1.9% - - - - -

Total group lending 8,396 7,839 94.8% 480 92 91 183 2.3%

Minority interests 302 427 5.2% - - - - -

Total pro rata 8,698 8,266 100.0% 480 92 91 183 2.2%

a) Losses and writedowns as a percentage of the average portfolio in H1 2013. The percentage is not comparable with the impairment ratioin the bank's financial highlights and key ratiosb) Leases (continuing portfolio) is not included, as it is recognised as other property, plant and equipment and not as loans and advancesc) Credit losses and writedowns on mortgage deeds are recognised in value adjustmentsd) Shareholding taken over in connection with the winding up of a former credit exposure. Value adjustment of the shareholding is recognisedunder value adjustments

Loss

ratio % a)

Loans

Reverse Transactions including intercompany transactions

Share of portfolio (%)

Total group lending - excl. Reverse Transactions

Total loss and writedowns


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BUSINESS ACTIVITIES increase on agricultural customers with high debt ratios. Car finance The overall portfolio declined by DKK 60 million to DKK 170 million in H1 2013. No losses or writedowns were recognised on this segment in the first six months of 2013. Commercial lending The portfolio consists of loans for financing of investment properties, loans provided to small businesses and syndicated loans provided to medium-sized Danish businesses. The overall portfolio declined by DKK 84 million to DKK 1,074 million in H1 2013. Adjusted for losses and writedowns, the portfolio declined by DKK 109 million. In H1 2013, losses and writedowns produced an income of DKK 25 million, resulting from writedowns reversed in connection with the partial closing down of an exposure and to the underlying operations of certain commercial customers. Property development projects The portfolio consists of a limited number of property development projects. The bank will only finance the completion of ongoing projects pursuant to existing agreements. At 30 June 2013, almost 90% of lending in this segment related to a single project. The portfolio increased by DKK 21 million in H1 2013. Losses and writedowns amounted to DKK 2 million in H1 2013, corresponding to 0.8% of the average portfolio value. Mortgage deed exposure The bank's overall mortgage deed exposure, comprising mortgage deed financing and mortgage deeds, declined by DKK 279 million to DKK 2,766 million in H1 2013. Mortgage deeds run off naturally as a result of regular payments and redemptions. In H1 2013, the natural run-off on the overall mortgage deed portfolio was approximately 7% p.a. Mortgage deed financing This DKK 66 million portfolio consists of investment exposures secured against mortgage deeds. The portfolio fell by DKK 49 million in H1 2013. The main reason for the decline was that

the bank closed out a number of investment exposures, in that connection taking over the collateral provided in the form of mortgage deeds. Losses and writedowns amounted to DKK 8 million in H1 2013, corresponding to 8.8% of the average portfolio value. Mortgage deeds This segment comprises the bank’s own portfolio of private mortgage deeds and commercial mortgage deeds. Private mortgage deeds amounted to DKK 2,012 million, comprising the bank’s portfolio of mortgage deeds secured primarily against single-family houses, commonhold flats and summer houses. The properties are located throughout Denmark. Commercial mortgage deeds amounted to DKK 688 million and comprise mortgage deeds secured against residential rental property, commercial property for office, trade and industrial use as well as land and mixed residential/ commercial property. The portfolio is marked to market on a current basis using a cash flow-based pricing model, which takes into account factors such as estimated prepayments and credit losses. Individual writedowns are taken on all delinquent mortgages or mortgages known to be showing signs of weakness. The portfolio declined by DKK 230 million in H1 2013. Credit-related value adjustments amounted to DKK 97 million in the reporting period, equivalent to 3.4% of the average portfolio value. Of this amount, DKK 55 million was private mortgage deeds and DKK 42 million was commercial mortgage deeds. The private mortgage deed portfolio was adversely affected by the general economic conditions. The number of private mortgage delinquencies remains high, although the delinquency rate was downtrending in Q2 2013. The bank continues to feel the effects of a weak commercial property letting market and the pressure on rent levels is seen to be mounting. Higher vacancy rates have resulted in revaluations, causing impairment writedowns to increase.


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BUSINESS ACTIVITIES Capital reservation

The banking group's total capital reservation amounted to DKK 3,335 million at 30 June 2013, against DKK 3,478 million at 31 December 2012, corresponding to a decline of DKK 143 million. The capital reservation equalled 33% of gross loans and advances and the residual debt on mortgage deeds at 30 June 2013, which was unchanged relative to 31 December 2012. The capital reservation on the continuing portfolio corresponds to 19% of gross loans and advances,

and the capital reservation on the discontinued portfolio represents 39% of gross loans and advances and the residual debt on mortgage deeds. Of the banking group's total capital reservation at 30 June 2013, accumulated writedowns amounted to DKK 1,465 million, compared with DKK 1,557 million at 31 December 2012. Accumulated writedowns in H1 2013 broke down as follows: DKK 235 million on the continuing portfolio and DKK 1,230 million on the discontinued portfolio.

CAPITAL RESERVATION

DKKm

Continuing portfolio 2,660 2,425 235 282 517 19% 515 18%

Discontinuing portfolio 7,242 5,256 1,986 809 2,795 39% 2,952 38%Total - excl. Reverse Transactions 9,902 7,681 2,221 1,091 3,312 33% 3,467 33%

158 158 - 23 23 15% 11 10%

Total group 10,060 7,839 2,221 1,114 3,335 33% 3,478 33%

a) Accumulated writedowns and value adjustments of mortgage deeds

Reverse Transactions including intercompany transactions

31.12.2012Gross lending/

outstanding debt Balance Difference a)

Required capital

Total reservation

Reservation relative to

gross lendingTotal

reservation

Reservation relative to

gross lending

31.06.2013

Disclaimer The forecast is based on the interest rate and price levels that prevailed at mid-August 2013. All other forward-looking statements are based exclusively on the information available when this interim report was released. The actual performance may be affected by major changes in a number of factors. Such impacts include changes in conditions in the financial market, legislative changes, changes in the competitive environment, loans and advances, etc. and guarantees, etc. The above-mentioned risk factors are not exhaustive. Investors and others who base their decisions on the information contained in this report should independently consider any uncertainties of significance to their decision. This interim report has been translated from Danish into English. In the event of any discrepancy between the Danish text and the English-language translation, the Danish text shall prevail.


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STATEMENT BY THE BOARD OF DIRECTORS AND THE MANAGEMENT BOARD The Board of Directors and the Management Board have today considered and adopted the interim report for the six months ended 30 June 2013 of Alm. Brand Bank A/S. The consolidated interim financial statements have been prepared in accordance with IAS 34, “Interim Financial Reporting” as adopted by the EU, and the interim financial statements of the parent company have been prepared in accordance with the Danish Financial Business Act. In addition, the consolidated and parent company interim financial statements have been presented in accordance with additional Danish disclosure requirements for the interim financial statements of listed financial companies.

In our opinion, the consolidated and parent company interim financial statements give a true and fair view of the group's and the parent company's assets and liabilities and financial position at 30 June 2013 and of the results of the group's and the parent company's operations and the cash flows of the group for the six months ended 30 June 2013. Moreover, in our opinion, the management’s review includes a fair review of developments in the activities and financial position of the group and the parent company and fairly describes significant risk and uncertainty factors that may affect the group and the bank.

MANAGEMENT BOARD Copenhagen, 22 August 2013 Kim Bai Wadstrøm Chief Executive BOARD OF DIRECTORS Copenhagen, 22 August 2013 Jørgen H. Mikkelsen Boris N. Kjeldsen Arne Nielsen Chairman Deputy Chairman Jan Skytte Pedersen Ebbe Castella Søren Boe Mortens en Christian Bundgaard Torben Jensen Pia Støjfer


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INCOME STATEMENT AND COMPREHENSIVE INCOME

Parent company

DKK '000 Note Q2 2013 Q2 2012 H1 2013 H1 2012 Year 2012

Interest receivable 1 141,172 174,033 289,135 369,518 702,373

Interest payable 2 78,781 116,365 175,929 243,045 447,448

Net interest income 62,391 57,668 113,206 126,473 254,925

Dividend on participating interests 783 694 783 694 694

Fees and commissions receivable 47,394 36,495 85,577 75,021 149,815

Fees and commissions payable 7,267 8,664 15,078 16,704 31,338

Net interest and fee income 103,301 86,193 184,488 185,484 374,096

Value adjustments 3 -69,268 -10,208 -139,151 -40,711 -165,476

Other operating income 830 1,061 2,485 2,046 5,952

Profit before expenses 34,863 77,046 47,822 146,819 214,572

Staff costs and administrative expenses 4 98,215 127,305 191,964 233,312 409,912

Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 30 92 86 197 354

Other ordinary expenses 15,989 10,904 27,976 21,226 42,557

Impairment of loans, advances and receivables, etc. 5 43,587 38,208 85,629 103,833 309,657

Profit from participating interests in associated and group undertakings -20,839 -8,213 -12,416 13,566 28,776

Profit before tax -143,797 -107,676 -270,249 -198,183 -519,132

Tax -3,382 -26,784 -33,913 -49,695 -127,939

Profit for the period -140,415 -80,892 -236,336 -148,488 -391,193

Other comprehensive income - - - - -

Total comprehensive income -140,415 -80,892 -236,336 -148,488 -391,193

PROFIT/LOSS ALLOCATION

Share attributable to Alm. Brand Bank -140,415 -80,892 -236,336 -148,488 -391,193

Transferred to Total shareholders' equity -140,415 -80,892 -236,336 -148,488 -391,193


Page 13 of 26

INCOME STATEMENT AND COMPREHENSIVE INCOME

Group

DKK '000 Note Q2 2013 Q2 2012 H1 2013 H1 2012 Year 2012

Interest receivable 1 148,092 179,963 302,990 382,140 727,497

Interest payable 2 80,696 118,901 179,664 248,170 456,620

Net interest income 67,396 61,062 123,326 133,970 270,877

Dividend on participating interests 4,147 3,978 5,949 5,419 6,168

Fees and commissions receivable 47,394 36,553 85,071 75,284 149,533

Fees and commissions payable 7,303 8,701 15,131 16,743 31,435


Value adjustments 3 -103,732 -28,021 -148,292 -14,370 -96,125

Other operating income 15,018 11,349 30,849 21,822 50,485

Profit before expenses 22,920 76,220 81,772 205,382 349,503

Staff costs and administrative expenses 4 107,469 135,336 209,740 248,907 442,560

Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 11,013 7,346 21,411 14,060 32,638

Other ordinary expenses 16,083 10,935 28,209 21,277 42,773

Impairment of loans, advances and receivables, etc. 5 42,905 38,650 85,143 103,156 309,120

Profit from participating interests in associated and group undertakings 1,975 -347 -528 -55 -2,345

Profit before tax -152,575 -116,394 -263,259 -182,073 -479,933

Tax 5,197 -26,369 -25,442 -48,590 -127,410

Profit for the period -157,772 -90,025 -237,817 -133,483 -352,523

Other comprehensive income - - - - -

Total comprehensive income -157,772 -90,025 -237,817 -133,483 -352,523

PROFIT/LOSS ALLOCATION

Share attributable to Alm. Brand Bank -140,415 -80,892 -236,336 -148,488 -391,193

Share attributable to minority interests -17,357 -9,133 -1,481 15,005 38,670

Transferred to Total shareholders' equity -157,772 -90,025 -237,817 -133,483 -352,523


Page 14 of 26

BALANCE SHEET

Parent company Group

DKK '000 Note 30.06.2013 30.06.2012 31.12.2012 30.06.2013 30.06.2012 31.12.2012

ASSETS

Cash in hand and receivables at call from central banks 756,088 1,036,528 304,623 756,088 1,036,528 304,623

Receivables from credit institutions and central banks 1,012,635 1,505,538 554,086 1,012,635 1,505,538 554,086

Loans, advances and other receivables at fair value 2,699,590 3,058,449 2,930,050 2,699,590 3,058,449 2,930,050

Loans, advances and other receivables at amortised cost 6 6,125,029 6,670,539 6,213,956 5,138,878 6,318,752 5,465,944

Bonds at fair value 5,261,936 7,737,982 5,785,654 6,312,856 8,391,138 6,643,258

Shares etc. 276,520 278,975 247,873 581,813 569,768 539,356

Participating interests in associated undertakings 42,466 42,537 43,748 42,466 42,537 43,748

Participating interests in group undertakings 198,185 360,510 223,090 - - -

Other property, plant and equipment 489 1,751 1,322 186,081 137,241 158,000

Current tax assets 360,309 273,909 299,314 365,591 253,766 286,009

Deferred tax assets 259,654 404,140 286,736 366,861 530,399 420,250

Assets held temporarily 104,968 147,774 117,461 258,081 168,355 136,455

Other assets 490,314 427,488 392,411 521,083 441,952 414,480

Prepayments 19,352 6,778 6,370 19,362 6,805 6,381

Total assets 17,607,535 21,952,898 17,406,694 18,261,385 22,461,228 17,902,640


Page 15 of 26

BALANCE SHEET


DKK '000 Note 30.06.2013 30.06.2012 31.12.2012 30.06.2013 30.06.2012 31.12.2012

LIABILITIES AND EQUITY

Payables

Payables to credit institutions and central banks 2,444,729 4,160,873 1,105,289 2,761,354 4,487,498 1,396,914

Deposits and other payables 11,086,832 10,450,651 11,324,932 11,085,832 10,450,648 11,324,932

Issued bonds 950,000 4,000,000 2,000,000 950,000 4,000,000 2,000,000

Liabilities temporarily acquired 17,789 28,769 19,214 167,261 47,568 36,899

Other liabilities 741,293 629,131 522,040 764,217 640,242 535,480

Deferred income 912 1,528 1,216 912 1,546 1,216

Total payables 15,241,555 19,270,952 14,972,691 15,729,576 19,627,502 15,295,441

Provisions

Provisions for pensions and similar liabilities 1,361 1,893 1,361 1,361 1,893 1,361

Provisions for losses on guarantees 5,925 8,949 7,094 5,925 8,949 7,094

Total provisions 7,286 10,842 8,455 7,286 10,842 8,455

Subordinated debt

Supplementary capital 7 300,000 400,000 400,000 300,000 400,000 400,000

Hybrid tier 1 capital 7 600,650 1,029,848 1,030,108 600,650 1,029,848 1,030,108

Total subordinated debt 900,650 1,429,848 1,430,108 900,650 1,429,848 1,430,108

Shareholders' equity

Share capital 8 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000

Other reserves 79,398 1,456 78,734 - - -

Retained earnings 357,646 218,800 -104,294 437,044 220,256 -25,560

Minority interests - - - 165,829 151,780 173,196

Total shareholders' equity 1,458,044 1,241,256 995,440 1,623,873 1,393,036 1,168,636

Total liabilities and equity 17,607,535 21,952,898 17,406,694 18,261,385 22,461,228 17,902,640

See note 10 for a specification of off-balance shee t items.


Page 16 of 26

STATEMENT OF CHANGES IN EQUITY


DKK '000Share

capitalOther

reservesRetained earnings Total

Minority interests Total

Shareholders' equity at 1 January 2012 1,021,000 1,456 70,405 1,092,861 140,839 1,233,700

Equity movements in H1 2012

Other change in respect of subsidiaries - -4,064 -4,064

Profit/loss for the period -148,488 -148,488 15,005 -133,483

Comprehensive income in H1 2012 - - -148,488 -148,488 10,941 -137,547

Capital increases 300,000 300,000 300,000

Other change in respect of subsidiaries -3,490 -3,490 -3,490

Tax of equity entries 373 373 373

Dividend paid - - -

Total equity movements in H1 2012 - - 148,395 148,395 10,941 159,336

Shareholders' equity at 30 June 2012 1,021,000 1,456 218,800 1,241,256 151,780 1,393,036

Shareholders' equity at 1 January 2012 1,021,000 1,456 70,405 1,092,861 140,839 1,233,700

Equity movements in 2012

Dividend subsidiaries 0 0 - -

Profit/loss for the year 26,086 -417,279 -391,193 38,670 -352,523

Comprehensive income 2012 - 26,086 -417,279 -391,193 38,670 -352,523


Other change in respect of subsidiaries - 14,275 14,275

Other change in respect of subsidiaries 201,192 -207,420 -6,228 -20,588 -26,816

Dividend paid -150,000 150,000 - -

Total changes in equity in 2012 - 77,278 -174,699 -97,421 32,357 -65,064

Shareholders' equity at 31 December 2012 1,021,000 78,734 -104,294 995,440 173,196 1,168,636

Shareholders' equity at 1 January 2013 1,021,000 78,734 -104,294 995,440 173,196 1,168,636

Equity movements in H1 2013

Other change in respect of subsidiaries - -5,886 -5,886

Profit for the period -236,336 -236,336 -1,481 -237,817

Comprehensive income in H1 2013 - - -236,336 -236,336 -7,367 -243,703


Other change in respect of subsidiaries 664 -1,724 -1,060 -1,060

Tax of equity entries - - -

Dividend paid - - -

TotaI equity movements in H1 2013 - 664 461,940 462,604 -7,367 455,237

Shareholders' equity at 30 June 2013 1,021,000 79,398 357,646 1,458,044 165,829 1,623,873


Page 17 of 26

CASH FLOW STATEMENT

Group

DKK '000 H1 2013 H1 2012 Year 2012

Operating activities

Profit for the period before tax -263,259 -182,073 -479,933

Tax paid during the period -751 -687 156,039

Adjustment for amounts with no cash flow impact:

Depreciation, amortisation and impairment of intangible assets and property, plant and equipment 21,411 14,060 32,638

Impairment of loans, advances and receivables, etc. 77,438 105,428 271,244

Other adjustments to cash flows from operating activities 91,024 -42,574 -75,847

Total, operating activities -74,137 -105,846 -95,859

Working capital

Loans and advances 403,124 718,795 1,568,625

Deposits -239,100 2,455,951 3,330,235

Bonds 418,292 -118,613 1,512,227

Shares -33,054 549 59,426

Total, working capital 549,262 3,056,682 6,470,513

Investing activities

Investments in associates - - 9,200

Investments in group enterprises 2 - 1,486

Property, plant and equipment -49,469 -53,043 -81,086

Total, investing activities -49,467 -53,043 -70,400

Financing activities

Net proceeds from capital increase 700,000 300,000 300,000

Distribution of dividends -530,000 - -

Payables to credit institutions 1,364,356 327,556 -2,762,262

Bonds issued -1,050,000 -2,000,000 -4,000,000

Total, financing activities 484,356 -1,372,444 -6,462,262

Change in cash and cash equivalents 910,014 1,525,349 -158,008

Cash and cash equivalents, beginning of year 858,709 1,016,717 1,016,717

Change in cash and cash equivalents 910,014 1,525,349 -158,008

Cash and cash equivalents, end of period 1,768,723 2,542,066 858,709

Cash and cash equivalents, end of period

Cash in hand and balances at call with central banks 756,088 1,036,528 304,623

Balances due from credit institutions less than 3 months 1,012,635 1,505,538 554,086

Cash and cash equivalents, end of period 1,768,723 2,542,066 858,709


Page 18 of 26

NOTES TO THE FINANCIAL STATEMENTS


DKK '000 H1 2013 H1 2012 Year 2012 H1 2013 H1 2012 Year 2012

NOTE 1 Interest receivable

Balances due from credit institutions and central banks 289 3,513 3,916 289 3,513 3,916

Loans, advances and other receivables 231,881 283,495 544,002 227,110 284,500 543,922

Bonds 77,354 95,080 185,732 95,927 106,642 210,788

Total derivatives -20,395 -12,622 -31,354 -20,342 -12,573 -31,212

Of which:

Foreign exchange contracts -302 -2,609 -3,130 -249 -2,560 -2,988

Interest rate contracts -20,093 -10,013 -28,224 -20,093 -10,013 -28,224

Other interest income 6 52 77 6 58 83

Total interest receivable 289,135 369,518 702,373 302,990 382,140 727,497

Interest receivable from genuine purchase and resale transactions:

Balances due from credit institutions and central banks -29 32 35 -29 32 35

Loans, advances and other receivables -14 128 138 -14 128 138

NOTE 2 Interest payable

Credit institutions and central banks 1,810 21,276 26,998 5,540 26,401 36,164

Deposits and other payables 118,758 106,475 228,053 118,756 106,475 228,053

Bonds issued 10,662 56,655 75,550 10,662 56,655 75,550

Total subordinated debt 44,312 57,915 115,549 44,312 57,915 115,549

Other interest expenses 387 724 1,298 394 724 1,304

Total interest payable 175,929 243,045 447,448 179,664 248,170 456,620

Interest payable on genuine sale and repurchase transactions:

Payables to credit institutions and central banks 129 349 1,095 129 349 1,095

Deposits and other payables 3 15 18 3 15 18

NOTE 3 Value adjustments

Loans, advances and other receivables at fair value -151,637 8,951 -76,975 -151,637 8,951 -76,975

Bonds -28,717 -23,036 -26,902 -45,001 -22,749 -16,096

Shares, etc. 10,475 -5,182 4,200 22,255 21,412 65,392

Foreign currency -9,362 -4,609 -9,942 -11,819 -3,518 -8,791

Total derivatives 40,090 -17,014 -56,568 37,910 -18,645 -60,366

Other liabilities - 179 711 - 179 711

Total value adjustments -139,151 -40,711 -165,476 -148,292 -14,370 -96,125


Page 19 of 26



DKK '000 H1 2013 H1 2012 Year 2012 H1 2013 H1 2012 Year 2012

NOTE 4 Staff costs and administrative expenses

Remuneration to the Management Board and Board of Directors:

Remuneration to the Management Board:

Salaries and wages 1,346 1,262 2,730 1,346 1,262 2,730

Pensions 166 165 332 166 165 332

Total remuneration to the Management Board 1,512 1,427 3,062 1,512 1,427 3,062

Remuneration to the Board of Directors:

Fees 512 150 1,050 513 150 1,050

Total remuneration to the Management Board and Board of Directors 2,024 1,577 4,112 2,025 1,577 4,112

Staff costs:

Salaries and wages 82,699 103,691 170,794 82,924 103,951 171,270

Pensions 8,665 9,064 18,582 8,680 9,080 18,612

Social security costs 9,237 9,607 18,250 9,256 9,625 18,285

Total staff costs 100,601 122,362 207,626 100,860 122,656 208,167

Other administrative expenses 89,339 109,373 198,174 106,855 124,674 230,281

Total staff costs and administrative expenses 191,96 4 233,312 409,912 209,740 248,907 442,560

Number of employees

Average number of employees during the financial year, full-time equivalents 261 279 275 261 279 275

NOTE 5 Impairment of loans, advances and receiva bles, etc.

Individual assessment:

Impairment and value adjustments, respectively, during the year 172,047 199,489 434,356 173,201 201,364 436,165

Reversal of impairment in previous years 90,312 130,822 236,532 91,174 133,998 239,909

Total individual assessment 81,735 68,667 197,824 82,027 67,366 196,256

Group assessment:

Impairment and value adjustments, respectively, during the year 46,555 49,375 104,526 46,659 49,504 104,877

Reversal of impairment in previous years 39,450 10,066 22,660 40,366 11,442 25,278

Total group assessment 7,105 39,309 81,866 6,293 38,062 79,599

Losses not previously provided for 16,835 3,554 48,001 17,509 6,086 52,575

Bad debts recovered 20,046 7,697 18,034 20,686 8,358 19,310

Total impairment of loans, advances and receivables, etc., end of period 85,629 103,833 309,657 85,143 103,156 309,120


Page 20 of 26



DKK '000 30.06.2013 30.06.2012 Year 2012 30.06.2013 30.06.2012 Year 2012

NOTE 6 Loans, advances and other receivables at amortised cost

Loans and advances 7,580,110 8,332,747 7,758,431 6,532,346 7,901,103 6,941,835

Leases - - - 65,550 86,323 73,696

Total before impairment, etc. 7,580,110 8,332,747 7,758,431 6,597,896 7,987,426 7,015,531

Impairment, etc. 1,455,081 1,662,208 1,544,475 1,459,018 1,668,674 1,549,587

Loans, advances and other receivables at amortised cost, end of period 6,125,029 6,670,539 6,213,956 5,138,878 6,318,752 5,465,944

NOTE 7 Subordinated debts

Supplementary capital:

Floating rate bullet loans in DKK maturing 9 May 2013 - 100,000 100,000 - 100,000 100,000

Floating rate bullet loans in DKK maturing 9 May 2014 100,000 100,000 100,000 100,000 100,000 100,000

Floating rate bullet loans in DKK maturing 3 December 2015 200,000 200,000 200,000 200,000 200,000 200,000

Supplementary capital, end of period 300,000 400,000 400,000 300,000 400,000 400,000

Hybrid Tier 1 capital:

Fixed rate bullet loans in DKK with indefinite terms 175,000 175,000 175,000 175,000 175,000 175,000

State-funded capital injection, bullet loan in DKK with an indefinite term 425,650 854,848 855,108 425,650 854,848 855,108

Hybrid Tier 1 capital, end of period 600,650 1,029,848 1,030,108 600,650 1,029,848 1,030,108

Subordinated debt, end of period 900,650 1,429,848 1,430,108 900,650 1,429,848 1,430,108

Interest on subordinated debt 44,312 57,915 115,549 44,312 57,915 115,549

Of this, amortisation of costs incurred on raising the debt 542 257 517 542 257 517

Extraordinary instalments 430,000 - - 430,000 - -

Costs incurred in raising subordinated debt - - - - - -


Page 21 of 26



DKK '000 30.06.2013 30.06.2012 Year 2012 30.06.2013 30.06.2012 Year 2012

NOTE 8 Share capital

Unlisted share capital:

Nominal value at 1 January 2008 351,000 351,000 351,000 351,000 351,000 351,000

Capital increase April 2009 300,000 300,000 300,000 300,000 300,000 300,000

Capital increase September 2009 90,000 90,000 90,000 90,000 90,000 90,000

Capital increase November 2009 280,000 280,000 280,000 280,000 280,000 280,000

Nominal value, end of period 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000 1,021,000

The share capital consists of 1,021,000 shares of DKK 1,000 nominal value and is paid up in full.

NOTE 9 Capital Base

Shareholders' equity 1,458,044 1,241,256 995,440 1,623,873 1,393,036 1,168,636

Proposed dividends - - - - - -

Deferred tax assets -259,654 -404,140 -286,736 -366,861 -530,399 -420,250

Tier 1 capital after deductions 1,198,390 837,116 708,704 1,257,012 862,637 748,386

Hybrid Tier 1 capital 600,650 1,029,848 1,030,108 600,650 1,029,848 1,030,108

Transferred to Supplementary capital - -192,732 -321,404 - -167,211 -281,722

Deduction of ownership interest in financial institution -22,278 -15,735 -15,740 -28,627 -15,135 -15,740

Tier 1 capital including hybrid Tier 1 capital after deduction 1,776,762 1,658,497 1,401,668 1,829,035 1,710,139 1,481,032

Supplementary capital 300,000 400,000 400,000 300,000 400,000 400,000

Transferred from Hybrid Tier 1 capital - 192,732 321,404 - 167,211 281,722

Deduction of ownership interest in financial institution -22,278 -15,735 -15,740 -28,627 -15,135 -15,740

Reduction of 25% per year in the three final years of the term to maturity -125,000 -125,000 -175,000 -125,000 -125,000 -175,000

Capital base 1,929,484 2,110,494 1,932,332 1,975,408 2,137,215 1,972,014

Risk-weighted items:

Weighted items involving credit risk 8,366,708 9,489,000 8,313,354 8,169,067 9,254,513 8,102,528

Weighted items involving market risk 1,387,286 2,094,655 1,205,991 1,984,622 2,783,346 2,023,763

Weighted items involving operational risk 424,893 522,931 424,893 520,436 533,897 520,436

Risk-weighted items, end of period 10,178,887 12,106,586 9,944,238 10,674,125 12,571,756 10,646,727

The solvency requirement represents 8% of the risk-weighted items 814,311 968,527 795,539 853,930 1,005,740 851,738

Core capital including hybrid Tier 1 capital and capital base is calculated in accordance with the Executive Order on Calculation of Capital Base.


Page 22 of 26



DKK '000 30.06.2013 30.06.2012 Year 2012 30.06.2013 30.06.2012 Year 2012

NOTE 10 Off-balance sheet items

Contingent liabilities:

Financial guarantees 360,555 360,269 360,838 360,555 360,269 360,838

Loss guarantees for mortgage loans 340,857 379,136 370,841 340,857 379,135 370,841

Registration and conversion guarantees 17,694 14,476 17,575 17,694 14,476 17,575

Other contingent liabilities 338,634 234,223 220,661 338,634 234,223 220,661

Contingent liabilities, end of period 1,057,740 988,104 969,915 1,057,740 988,103 969,915

Other commitments:

Irrevocable loan commitments - - - - - -

Other miscellaneous commitments - - - - - -

Other commitments, end of period - - - - - -

Off-balance sheet items, end of period 1,057,740 988,104 969,915 1,057,740 988,103 969,915

Other contingent liabilitiesAlm. Brand Bank A/S is taxed jointly with Alm. Brand A/S as administration company. As from 1 July 2012, the bank is therefore jointly and severally liable with the other jointly taxed companies for any obligation to withhold tax on interest, royalties and dividends on behalf of the jointly taxed companies.

Alm. Brand Bank A/S has entered into operating leases with Alm. Brand Leasing A/S. The residual value of future lease payments under these operating leases totalled DKK 6 million at 30 June 2013.

Alm. Brand Bank A/S is a member of Bankdata, which operates the bank's key banking systems. Termination of this membership would cause the bank to incur a significant liability which would have to be calculated in accordance with Bankdata's by-laws.

Being an active financial services group, the group is a party to a number of lawsuits. The cases are reviewed on an ongoing basis, and the necessary provisions are made. Management believes that these cases will not inflict further losses on the group.

Collateral securityMonetary-policy counterparties with Danmarks Nationalbank can obtain credit only against security through the pledging of approved securities.

As part of its current operations, the bank provided collateral security to Danmarks Nationalbank at 30 June 2013 in the form of bonds representing a nominal value of DKK 1,448 million (H1 2012: DKK 4,313 million) and loans representing a loan value of DKK 468 million (H1 2012: DKK 0 million).

As collateral security for positive and negative fair values of derivative financial instruments, respectively, cash in the amount of DKK 0 million was received and cash in the amount of DKK 414 million was paid at 30 June 2013 (H1 2012: DKK 0 million and DKK 464 million).


Page 23 of 26


Group

H1 2013

DKK '000Banking

activities

Markets & Asset Ma-nagement

Alm. Brand Leasing

Alm. Brand Formue

Other/Elimina-

tions

Alm. Brand Bank

Group

NOTE 11 Segment infomation

Interest receivable 352,939 45,001 7,107 18,626 -120,683 302,990

Interest payable 287,933 1,818 4,015 11,597 -125,699 179,664

Net interest income 65,006 43,183 3,092 7,029 5,015 123,326

Net fee and commission income, etc. 22,249 50,728 2,947 1,659 -1,694 75,889

Value adjustments -105,250 -7,553 - -9,141 -26,347 -148,292

Other operating income 1,607 463 28,363 - 416 30,849

Profit/loss on ordinary activities before expenses (Net income) -16,388 86,821 34,402 -453 -22,611 81,772

Operating expenses 118,031 26,103 37,423 1,678 47,916 231,151

Other operating expenses 11,715 - 231 - 16,263 28,209

Impairment of loans, advances and receivables, etc. 87,495 -1,867 -485 - -1 85,143

Profit/loss on participating interests 2,214 408 - - -3,151 -528

Profit/loss on activities before tax -231,414 62,994 -2,767 -2,131 -89,941 -263,259

In 2013, the segment information will be changed so as to show the continuing activities and activities being wound up.

Group

H1 2012

DKK '000Banking

activities

Markets & Asset Ma-nagement

Alm. Brand Leasing

Alm. Brand Formue

Other/Elimina-

tions

Alm. Brand Bank

Group

Interest receivable 346,105 23,413 11,633 11,610 -10,621 382,140

Interest payable 240,054 2,991 5,524 10,222 -10,621 248,170

Net interest income 106,051 20,422 6,109 1,388 0 133,970

Net fee and commission income, etc. 19,440 42,872 2,874 2,076 -3,301 63,960

Value adjustments -14,785 16,583 - 26,341 -42,509 -14,370

Other operating income 931 650 19,775 - 465 21,822

Profit/loss on ordinary activities before expenses (Net income) 111,637 80,527 28,758 29,805 -45,345 205,382

Operating expenses 150,156 29,055 27,754 1,705 54,298 262,967

Other operating expenses - - 51 - 21,226 21,277

Impairment of loans, advances and receivables, etc. 105,344 111 -677 - -1,622 103,156

Profit/loss on participating interests - 743 - - -798 -55

Profit/loss on activities before tax -143,863 52,104 1,630 28,100 -120,045 -182,073


Page 24 of 26


Group

DKK '000 H1 2013 H1 2012 H1 2011 H1 2010 H1 2009

NOTE 12 Financial highlights and key ratios


Value adjustments -148,292 -14,370 -186,468 -83,562 -1,766

Staff costs and administrative expenses 209,740 248,907 237,592 256,452 263,286

Impairment of loans, advances and receivables, etc. 85,143 103,156 180,864 173,402 1,002,614

Profit/loss from investments in associates group enterprises -528 -55 -1,749 19,661 -295

Profit for the year -237,817 -133,483 -273,767 -106,497 -746,282

Loans and advances 7,838,468 9,377,201 11,358,282 14,049,087 15,768,338

Shareholders' equity 1,623,873 1,393,036 1,716,565 1,450,130 789,238

Total assets 18,261,385 22,461,228 23,920,311 26,394,082 26,542,678

Solvency ratio 18.5 17.0 18.6 14.9 13.2

Tier 1 ratio 17.1 13.6 16.3 12.3 8.0

Return on equity before tax (%) -22.4 -15.0 -23.4 -11.3 -107.9

Return on equity after tax (%) -20.2 -11.0 -17.7 -7.0 -81.1

Income/cost ratio 0.24 0.53 0.23 0.64 0.24

Interest rate risk (%) 0.9 0.3 -1.2 1.0 24.9

Foreign exchange position (%) 14.1 30.2 6.8 9.2 34.4

Foreign exchange risk (%) 0.3 0.1 0.2 0.1 1.3

Loans and advances as a percentage of deposits (%) 83.9 105.7 158.8 156.7 137.9

Gearing of loans and advances 4.8 6.7 6.6 9.7 20.0

Annual growth in lending (%) -6.6 -8.2 -9.0 -5.2 -8.8

Excess cover relative to statutory liquidity requirement (%) 182.6 230.7 310.6 266.9 119.9

Total amount of large exposures (%) 80.2 52.0 56.2 81.5 173.5

Impairment ratio for the year 0.8 0.9 1.3 1.0 5.2

Financial highlights and key ratios have been prepared in accordance with IFRS and "Recommendations & Financial Ratios 2010" issued by the Danish Society of

Financial Analysts.


Page 25 of 26


Parent company

DKK '000 H1 2013 H1 2012 H1 2011 H1 2010 H1 2009

NOTE 12 Financial hightlights and key ratios - c ontinued


Value adjustments -139,151 -40,711 -157,925 -65,101 -12,604

Staff costs and administrative expenses 191,964 233,312 221,680 234,005 235,259

Impairment of loans, advances and receivables, etc. 85,629 103,833 177,232 164,223 977,871

Profit/loss from investments in associates group enterprises -12,416 13,566 -12,799 5,869 -5,236

Profit for the year -236,336 -148,488 -259,268 -106,939 -750,058

Loans and advances 8,824,619 9,728,988 11,721,782 14,309,034 15,564,085

Shareholders' equity 1,458,044 1,241,256 1,552,984 1,255,264 486,668

Total assets 17,607,535 21,952,898 23,330,037 25,943,322 25,912,968

Solvency ratio 19.0 17.4 18.0 14.2 11.3

Tier 1 ratio 17.5 13.7 15.7 11.1 7.1

Return on equity before tax (%) -26.9 -18.5 -25.5 -13.1 -160.2

Return on equity after tax (%) -23.5 -13.9 -19.0 -8.2 -121.2

Income/cost ratio 0.12 0.45 0.21 0.61 0.21

Interest rate risk (%) -1.5 -1.3 -2.8 3.0 23.3

Foreign exchange position (%) 14.5 33.2 5.5 5.4 69.2

Foreign exchange risk (%) 0.2 0.1 0.2 0.1 1.4

Loans and advances as a percentage of deposits (%) 92.7 109.0 162.8 158.7 135.9

Gearing of loans and advances 6.1 7.8 7.5 11.4 32.0

Annual growth in lending (%) -3.5 -7.5 -8.8 -5.0 -8.4

Excess cover relative to statutory liquidity requirement (%) 190.5 236.4 318.7 270.6 117.8

Total amount of large exposures (%) 82.1 62.3 55.3 102.1 236.0

Impairment ratio for the year 0.8 0.8 1.3 0.9 5.2

Financial highlights and key ratios have been prepared in accordance with the Danish Financial Business Act.


Page 26 of 26


NOTE 13 Accounting policies group

In addition, the interim consolidated financial statements are presented in accordance with additional Danish disclosure requirements for interim financial statements of listed financial companies.

IFRS 13 “Fair value measurement” was implemented with effect from 1 January 2013, when the standard entered into force. The standard provides a single framework for measuring fair value and provides guidance on how to measure fair value along with disclosure requirements. The implementation did not have any significant effect on the financial results. The accounting policies are otherwise unchanged from the policies applied in the financial statements for 2012.

The interim financial statements for H1 of 2013 are unaudited.

The consolidated interim financial statements are prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the EU. The parent company interim financial statements are prepared in accordance with the provisions of the Danish Financial Business Act, including the Executive Order on financial reports presented by credit institutions and investment companies.

alm. brand bank · well as to the bond portfolio of its subsidiary alm. brand ... posted a value...

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