Outlook 2010

The Group expects the rest of 2010 to be challenging for the financial sector, the Danske Bank Group and its customers.

The business environment is expected to benefit from positive macroeconomic developments. The global economic recovery remains fragile, though.

Danish GDP growth in 2010 is estimated at around 2.1%. The Group expects GDP growth of 1.8% in Norway and 4.6% in Sweden. In Ireland, Lithuania and Estonia, growth is expected to be weak. Latvia is likely to see another year of economic contraction.

Recent figures for house prices in Denmark show a slight rise in the second half of 2009 and the first nine months of 2010. Since interest rates are likely to remain low, house prices are expected to show a stable trend. A rise in prices is forecast for Norway and Finland. Swedish house prices are forecast to be unchanged for the remainder of the year, while Ireland and Northern Ireland are likely to see a fall.

Unemployment rose in the Group’s principal markets in 2009. The labour market in Denmark showed signs of stabilisation in the first nine months of 2010, however. This trend is likely to continue, and the unemployment rate is expected to stand at more or less the present level throughout the next 12 months.

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 net trading income in 2010 will not reach the same extraordinarily high level as in 2009.

Although the Group expects expenses to increase above their third-quarter level because of usual seasonal fluctuations, IT expenses and marketing costs, expenses are expected to be lower in 2010 than in 2009. The expiry of the commitment to pay an annual guarantee commission under Bank Package I will reduce expenses by DKK 625 million in the fourth quarter. The Group will continue to focus on tight cost control.

Loan impairment charges are likely to remain high in 2010 but considerably lower than in 2009. Loan impairment charges will benefit from the expiry of the commitment to cover the losses of distressed banks.

Robust banking activities, tight cost control and a strong focus on risk, liquidity and capital management combined with the massive capital buffer give the Group a solid foundation for its operations.