Outlook for 2006

On the basis of the first quarter results, the Group raised its expectations for income in 2006 relative to the expectations announced in the annual report for 2005.

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

Net interest 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. Generally, business volume is expected to see healthy growth in 2006. Securities trading activity and remortgaging activity in particular are unlikely to continue at the same fast pace, however.

Net trading income is expected to be lower due to the one-off revenue and extraordinarily high level of activity recorded in 2005. The Group expects to maintain its market position, but trading income will continue to depend greatly on the trends in the financial markets, including the level of securities prices at the end of the year.

The positive trend in insurance activities is likely to continue in 2006. However, net income from insurance business is expected to be lower than in 2005 as result of the booking of the risk allowance from previous years in 2005.

The sale of real property, unlisted shares (including HandelsFinans) and the loan portfolios of the Group's units in New York and London - together with the booking of a risk allowance from previous years - generated one-off income of DKr1.6bn in 2005. Despite the considerable one-off income, the Group now expects total income in 2006 to be slightly higher than that received in 2005.

The Group expects costs to increase by some 5%, with expenses incurred by the banking operations in Northern Ireland and the Republic of Ireland accounting for just over half of this increase. As opposed to the 10-month accounting period of the two banks in 2005, the 2006 accounting year will cover a full year and include increased, planned integration costs. Excluding these factors, expenses are expected to rise around 2%. The increase reflects the general trend in costs and the continuation of strong activity in the Danish, Norwegian and Swedish retail operations.

Profit before credit loss expenses
Excluding the considerable one-off income in 2005, the profit before credit loss expenses is now expected to increase by 5-8%.

Credit loss expenses
Assuming favourable economic trends and satisfactory loan portfolio quality, the Group expects to record modest credit loss expenses in 2006.

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

The Group expects its tax rate to be 28%.

February 9, 2006
November 1, 2005
August 11, 2005
May 3, 2005

Last updated/revised on 2 May 2006

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