The Group’s markets have suffered from very negative macroeconomic developments, including sharply declining industrial output and declining asset values. Economic indicators are showing the first signs of stabilisation, although with low growth and rising unemployment. It will take time before an improvement in macroeconomic conditions translates into a general improvement in customer creditworthiness.
Danish GDP is now expected to decline 4.5% in 2009. At the publication of Interim Report – First Half 2009, it was forecast to fall 3.5%, and at the publication of Annual Report 2008, it was forecast to fall 0.7%.
Danish short-term interest rates fell by nearly 3.5 percentage points in the first nine months of 2009. Interest rates are likely to be largely unchanged in the remainder of 2009.
The economic crisis has hit the labour market in Denmark hard. Although from a very low level, unemployment has more than doubled over the past year and is likely to rise further.
The Group expects its level of activity to be unchanged in the fourth quarter, with net interest income and net fee income at roughly the same levels as in the third quarter.
The performance of market-related activities in Danske Markets and Danica Pension will depend greatly on market conditions and trends in the financial markets, including the level of securities prices at the end of the year. Even though Danica Pension’s investment result would have enabled the Group to book its risk allowance at September 30, 2009, the decision on whether to book the allowance will be made at the end of the year on the basis of the trends in the financial markets in 2009.
Expenses for the full year are likely to match the level in 2008.
Loan impairment charges are expected to remain high in the fourth quarter, reflecting the general economic climate.
The Group’s solid earnings capacity and capital base as well as 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.
Last updated on 3 November 2009