Danske Andelskassers Bank

Earnings Release • Aug 22, 2012

Company announcement no. 12/2012

In H2, Danske Andelskassers Bank obtained core earnings before tax of DKK 123m,
corresponding to an increase of 7% relative to the same period in 2011. The
realisation of 261,000 shares in GrønlandsBANKEN A/S and an increased need for
impairment, especially in relation to agricultural customers as well as small
and medium-sized business customers, contributes to the bank posting a loss
before tax of DKK -75m. Danske Andelskassers Bank revises down its outlook for
core earnings from the previously announced DKK 270-300m to DKK 245-265m due to
particularly a fall in loans.

The Board of Directors of Danske Andelskassers Bank A/S has on this day adopted
the financial statements for H1 2012.
The financial statements show core earnings before tax (profit before tax less
market value adjustments, impairment and sector solutions) of DKK 123m for H1
2012. This corresponds to an increase of 7% relative to H1 2011, where core
earnings before tax were DKK 115m.

It should be noted that core earnings in H1 2011 were favoured by a DKK 17m due
to a reversal on the pension obligation in the form of defined-benefit plans.
Excluding this one-time income the core earnings of H1 2012 is 25 % higher than
the core earnings of H1 2011, which is considered very satisfactory.

Despite solid core earnings, Danske Andelskassers Bank posted a loss before tax
of DKK -75m in H1 2012 against a loss before tax of DKK -40m in H1 2011. The
net loss for H1 2012 amounted to DKK -64m.

The results are considered unsatisfactory.

The results are, to a marked degree, affected by partly the realisation of
261,000 shares in GrønlandsBANKEN A/S (The Bank of Greenland) by 9 march 2012
which seen in isolation increased the excess solvency by 1.1 percentage point
but induced a capital loss of DKK 38m and partly increasing impairment. Such
impairment is primarily related to the agricultural sector where several
customers are experiencing difficulties despite the positive trends
characterising certain subsectors. Moreover, the duration and severity of the
economic crisis mean that also small and medium-sized enterprises are still
facing financial challenges.

Naturally, Danske Andelskassers Bank adheres to the new specified impairment
rules laid down by the Danish FSA, although these rules have not resulted in
any significant increase in the level of impairment.

Danske Andelskassers Bank’s liquidity situation is very satisfactory with a
deposit-loan gap and a surplus cover relative to the statutory requirement of
183%. This should be seen in light of the fact that, on 18 June 2012, the bank
made an early repayment of a government guaranteed bond loan with a nominal
value of DKK 1,000m. The bank’s solvency situation is considered acceptable.

Highlights from the interim report
Highlights from the interim report are as follows (figures for H1 2011 are
shown in brackets):

-- Loss before tax of DKK -75 m (DKK -40m)
-- Core earnings of DKK 123m (DKK 115m), corresponding to an increase of just
above 7%
-- Impairment and losses of DKK 166m (DKK 100m), corresponding to an
impairment percentage of 1.6% (0.8%)
-- Market value adjustments of DKK 20m (DKK -23m)
-- Profit/loss from equity investments in associates of DKK -36m (DKK 1m)
-- Staff costs and administrative expenses of DKK 254m (DKK 248m)
-- Deposits of DKK 9,377m (DKK 9,115m)
-- Loans of DKK 8,181m (DKK 9,443m)
-- Solvency ratio of 14.6% (15.4%) against a solvency requirement of 12.2%
(10.3%), corresponding to a surplus cover of 2.4 percentage points (5.1
percentage points)
-- Core capital ratio of 14.5% (15.8%)
-- Liquidity surplus cover relative to Section 152 of 183% (141%)
-- Equity of DKK 1,553m (DKK 1,796m).

Outlook
Since the conversion of the company in may 2011 Danske Andelskassers Bank has
initiated and completed a number of projects, thereby strengthening the bank in
the long run. The expenses related to these projects has turned out to have a
more significant impact on the core earnings than expected and the
implementation phase has turned out to be longer than expected as well.

At the same time Danske Andelskassers Bank is experiencing significant
repayment of loans combined with a limited demand for loans and the outlook for
core earnings in 2012 thus have to be revised down.

The outlook for core earnings is thus revised from the previously announced DKK
270-300m to DKK 245-265m. As a result of the lower core earnings Danske
Andelskassers Bank alters the expectations of a pre-tax profit in 2012 to a
minor pre-tax loss.

Comments on the interim report
Managing Director of Danske Andelskassers Bank, Jan Pedersen, says about the
interim report:

“We have a acceptable solvency surplus cover, a very satisfactory liquidity and
solid as well as stable core earnings everything considered. Unfortunately, the
interim results are characterised by increasing impairment. The duration and
severity of the economic crisis mean that we still have customers who are
facing financial challenges, and this was particularly the case among our
agricultural customers in H1.”

“The sound core earnings have to be seen in light of the fact that we have
realised a number of projects during the past year aimed at gearing the
organisation for future development and growth. Several of these projects have
entailed extraordinary expenses for and in some cases the expenses has been
larger than expected. As the implementation of the projects is moving ahead, we
are able to realise the values from the projects, while at the same time
reducing project-related expenses, which will strengthen core earnings further.
Furthermore, more synergies are constantly being realised as a result of the
conversion of the company.”

“We have a sound foundation for the years ahead but we have to acknowledge that
the bank related activities of our customers are still at a very low level,
especially when it comes to loans. This trend appears to continue in H2 which
contributes to lower core earnings than previously expected as well as an
expected and unfortunate pre-tax profit. This is of course unsatisfactory."

Read more in the attached interim report

Further information
For further information, please contact the Board of Executives of Danske
Andelskassers Bank via

Martin Rask Pedersen, HR and Communications Director
Tel.: +45 87 99 30 33

This company announcement contains certain forward-looking statements,
including statements on Danske Andelskassers Bank’s activities. Such statements
are based on information, assumptions and assessments deemed reasonable by
Danske Andelskassers Bank. The forward-looking statements comprise known and
unknown risks, uncertainties and other significant matters which may result in
Danske Andelskassers Bank’s actual results, development or performance or the
performance of the sector as a whole deviating significantly from the future
results, development or performance expressed or implied in the forward-looking
statements. If one or more of these risk or uncertainty factors are triggered,
or if the underlying assumption turns out to be incorrect, Danske Andelskassers
Bank’s actual financial position or operating profit/loss may deviate
significantly from the expressed assumptions, assessments, estimates or
outlook.