Danske Bank — Earnings Release 2016

Jul 21, 2016

Return on shareholders' equity of 12.4%

Press release
21 July 2016

     Danske Bank: Net profit of DKK 9.4 billion for first half 2016

                Return on shareholders’ equity of 12.4%

Danske Bank has announced its financial results for the first half of 2016.

“We have had a satisfactory first half of 2016 despite difficult market
conditions with continued negative interest rates, low economic growth and
subdued demand. Generally, the period has been characterised by low activity,
except within financial markets. The results reflect our well-diversified
business model, increased lending and our efforts to become an even more
customer-focused, simple and efficient bank,” says Thomas F. Borgen, Chief
Executive Officer.

“We have launched a number of new products and solutions to support our
customers with their financial needs, and we have seen a positive customer
inflow in key markets. Our lending book grew while we maintained high credit
quality and kept impairments at a very low level.

Even though the market conditions have become more challenging owing to the
UK’s vote to leave the EU, we maintain our outlook for 2016.”

The interim report for the first half of 2016 is available at danskebank.com.
Highlights are shown below:

First half 2016 vs first half 2015

-- For the first half of 2016, Danske Bank delivered a satisfactory net profit
of DKK 9.4 billion. The result was at the same level as in the first half
of 2015.

-- The return on shareholders’ equity after tax was 12.4%, against 12.5% in
the first half of 2015.

-- Total income amounted to DKK 23.0 billion, against DKK 23.8 billion a year
ago. The decrease of 3% was caused mainly by lower net fee and net trading
income.

-- Net interest income totalled DKK 10.7 billion and was unchanged from the
year-earlier level. Lending growth of 4% from the level in the first half
of 2015 and lower funding costs were able to offset the pressure on
margins.

-- Net fee income amounted to DKK 6.7 billion and decreased 10% from the level
in the first half of 2015, among other things because remortgaging activity
normalised compared with the high level in the first half of 2015.

-- Net trading income totalled DKK 3.7 billion, representing a decrease of 15%
from the extraordinarily high level in the first half of 2015, even though
market conditions, which were difficult in the first quarter, improved in
the second quarter.

-- Other income amounted to DKK 1.8 billion and rose 59%. The rise was caused
primarily by the sale of properties in the first quarter of 2016.

-- Operating expenses amounted to DKK 11.1 billion and were reduced 3% from
the level in the first half of 2015. The main reasons for the fall in
expenses were our ongoing efforts to reduce operational costs, a lower net
contribution to the Danish Resolution Fund and the Deposit Guarantee Fund
and lower amortisation of intangibles. Regulatory costs increased in the
period, especially in relation to anti-money-laundering activities. The
cost/income ratio stood at 48.3%, against 47.9% a year ago.

-- Loan impairments continued to decline and posted a net reversal of DKK 107
million. The lower impairment level reflected higher collateral values and
our ongoing work to improve credit quality. In the agricultural and oil
sectors, however, impairments increased. Loan impairments in core
activities equalled -0.01% of lending and guarantees, against 0.03% a year
ago.

Strong capital ratios

At the end of June 2016, the CET1 capital ratio and the total capital ratio
were strong at 15.8% and 21.1%, respectively, against 16.1% and 21.0% at the
end of 2015. The liquidity coverage ratio (LCR) was 136% at 30 June 2016.

The reduction of the CET1 capital ratio in the first half of 2016 was expected
and caused primarily by the share buy-back programme of DKK 9 billion initiated
on 4 February 2016. The programme is expected to run until no later than 3
February 2017.

Increased uncertainty after the UK referendum

The outcome of the UK referendum on EU membership will not have any significant
short-term impact on Danske Bank. Our business in Northern Ireland accounted
for 3% of total lending at 30 June 2016 and 5% of total income in the first
half of 2016. The outcome will probably impact economic activity in all of our
markets, however. It is too early to predict the extent of the impact, but
uncertainty concerning future growth has increased.

Outlook maintained

In the light of weak activity levels and uncertainty in the financial markets,
we expect net fee income in 2016 to be lower than in 2015. On net interest
income, we now expect somewhat less pressure on margins for the remainder of
2016, and we will benefit from volume growth and somewhat lower funding costs.
We therefore maintain our outlook for net profit for 2016 to be in line with
net profit before goodwill impairments in 2015.

                              Danske Bank

Contact: Kenni Leth, Group Press Officer, tel. +45 45 14 14 00

More information about Danske Bank Group’s financial results is available at
danskebank.com/reports.