Outlook 2010

The Group expects 2010 to be another challenging year for the financial sector, the Danske Bank Group and its customers. Recent macroeconomic indicators do, however, lend hope that the business environment will gradually improve.

Danish GDP growth in 2010 is estimated at around 1.7%. The Group expects similar growth rates in its other markets, with the exception of Ireland, which is expected to see zero growth, and the Baltic countries, which are expected to see their GDPs contract.

Short-term interest rates are expected to rise about 0.5 of a percentage point in Denmark, and on average the same in the Group’s other markets.

Unemployment rose in the Group’s principal markets in 2009, and the Group expects this
trend to continue throughout 2010. This rise in unemployment combined with falling house
prices has caused the financial situation of many households to deteriorate. Despite low interest rates and tax reform, the Group thus expects the credit quality of the retail segment to deteriorate further in 2010. Corporate customers are likely to see their creditworthiness improve gradually, although a few sectors, agriculture for example, will continue to occasion rising impairment charges.

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 extraordinarily high level of income of 2009 is unlikely to continue into 2010.

The level of expenses is expected to be lower in 2010 than in 2009. Nonetheless, the Group will continue to focus on cost control. IT investments in product development and improvement of processes and customer-facing functionality will remain high also in 2010.

Loan impairment charges are likely to be high, although lower than in 2009.

The robust banking activities, tight cost control and continued strong focus on risk, liquidity and capital management combined with the massive capital buffer give the Group a solid foundation for its operations at the threshold of the new year.

Last updated on 4 February 2010

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