Danske Bank (DANSKE) Investor update summary

FSA orders and risk-weighted assets

• Corporate-exposure IRB changes raise risk weights from 31 Dec 2013, including a minimum 10pp uplift, adding ~DKK100bn to RWA by year-end versus Q1 2013's DKK797bn.

• Additional Pillar 2 capital for exposures to other financial institutions applies from 30 Jun 2013; a new model is expected in 2014, with potential RWA impact below DKK20bn.

• Removal of the expected-loss deduction from Pillar 2 takes effect 30 Jun 2013; net Pillar 2 add-ons are expected to fall ~DKK2bn, excluding the transitional floor.

• 2015 RWA guidance is ~DKK930bn versus ~DKK870bn previously; the bridge includes regulatory changes of DKK30–50bn, model and parameter updates of DKK40–60bn, and capital efficiency of DKK50–70bn.

• The DKK50bn–70bn capital-efficiency program remains on track, citing Finnish IRB coverage and risk-optimization initiatives.

Capital and solvency

• Q1 2013 Core Tier 1 was 15.1% on DKK797bn RWA; the orders imply a pro forma decline of 1.8pp to 13.3%, with the impact phased through 2013.

• At 31 Mar 2013, the total capital ratio would be ~19.1% versus 21.6% reported; the Pillar I capital requirement rises DKK8bn, from DKK64bn to DKK72bn.

• Minimum solvency need is DKK91bn and the capital buffer remains DKK81.5bn; management characterized the orders as a rearrangement of requirements, not a capital shortfall.

• Core Tier 1 target remains above 13%; intention to start a 2013 dividend remains, potentially below the full amount, subject to board and general assembly decisions.

• Repayment of DKK24bn state hybrid capital in 2014 remains the goal; the amount of any related new capital issuance was still under discussion.

Earnings outlook and targets

• 2013 profit guidance was reaffirmed at DKK7.5bn–10bn; the ambition to raise earnings considerably toward 2015 remains unchanged.

• The 2015 ROE target remains above 12%, assuming normalized impairments and short-term rates rising ~2 percentage points in main markets; additional equity issuance is not part of the base case.