Outlook for 2006Outlook for 2006

Overall, the Group expects its profit before credit loss expenses to remain unchanged from its guidance in the first quarter of 2006. The trends in prices on the financial markets in the second half of the year may, however, considerably affect the result.

Europe is likely to see moderate economic growth and slightly increasing interest rates in 2006. The Group expects growth in its principal markets to be higher than average European growth.

Income
Net interest income and net fee income from banking activities are expected to rise from the level recorded in 2005 as a result of double-digit growth in property financing and corporate lending. In addition, the Group will recognise income from its banking activities in Northern Ireland and the Republic of Ireland for the full year, as opposed to the 10-month period in 2005.

Net trading income will depend heavily on the trends in prices in the financial markets, and is likely to be lower than in 2005, which benefited from one-off income of about DKr1.6bn from the sale of property; unlisted shares, including HandelsFinans; and the loan portfolios of the New York and London branches.

Net income from insurance business is expected to be lower than in 2005, when it included a risk allowance for that year and also for previous years. In addition, it is assumed that the Group will not be able to book the risk allowance for 2006.

Despite considerable one-off income in 2005, the Group expects total income in 2006 to be slightly higher than that of 2005.

Expenses
Costs are expected to rise by about 5%. The main reasons are that the accounts of Northern Ireland and the Republic of Ireland will cover two months more than in 2005 and accelerated integration costs. Excluding these factors, expenses are expected to rise around 2%.

Profit before credit loss expenses
Disregarding the considerable one-off income in 2005, the profit before credit loss expenses is expected to rise by between 5% and 8%, although the rise is likely to be at the low end of the range since the Group, as mentioned above, currently assumes the booking of the risk allowance for the full year to be postponed.

Credit loss expenses
Based on the expected favourable economic trends and satisfactory loan portfolio quality, the Group expects to record modest credit loss expenses in the second half of 2006.

Tax
The pre-tax profit for 2006 is still expected to be lower than in 2005 due to the considerable one-off income in 2005. However, the result will continue to depend on the level of activity, economic trends and the trends in prices in the financial markets, among other factors.

The Group expects its tax rate to be 28%.

Archive
Date
May 2, 2006
February 9, 2006
November 1, 2005
August 11, 2005
May 3, 2005

Last updated/revised on 10 August 2006

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