Negative developments in macroeconomic conditions continue to create a difficult business environment, and the second half of 2009 will also be a very challenging period for the financial sector. Economic indicators have lately pointed to a stabilisation, although at a low level, and a clear trend is yet to be seen. It will take time before an improvement in macroeconomic conditions translates into improved customer creditworthiness.
Danish GDP is now expected to contract by 3.5% in 2009. At the publication of Annual Report 2008, the forecast was for a contraction of 0.7%. The Group’s other markets are expected to see similarly negative developments, and the outlooks for Ireland and the Baltic region are particularly bleak.
Danish short-term interest rates fell by nearly three percentage points in the first half of 2009. The remainder of 2009 is likely to see only a minor decline in interest rates.
The financial crisis has hit the labour market in Denmark hard. Unemployment has more than doubled over the past year, although from a low level, and is likely to rise further.
The Group expects the level of loan impairment charges to remain high throughout the rest of 2009, reflecting the general economic climate.
Expenses for the Danish state guarantee scheme and the increase of the capital base also reduce the Group’s expected earnings for 2009.
The performance of market-related activities – in Danske Markets, Danske Capital and Danica Pension – will depend greatly on trends in the financial markets, including the level of securities prices at the end of the year.
The Group’s solid earnings and capital base and its strong focus on risk, liquidity and capital management give it a good foundation for withstanding the effects of the economic slump. The Group will further strengthen its business foundation by adjusting prices, product ranges and costs, and by continuing to focus on risk, liquidity and capital management.
Last updated on 11 August 2009