Outlook 2010

The Group expects the rest of 2010 to be challenging for the financial sector, the Danske Bank Group and its customers. Recent macroeconomic indicators offer hope, however, that the business environment will gradually improve, even though the recovery is still fragile and the debt level in the euro zone adds to the uncertainty.

Danish GDP growth in 2010 is estimated at around 1.5%. The Group expects GDP growth in Norway of 1.8%, while Sweden is expected to see a somewhat higher growth rate of 2.7%. In Ireland, Lithuania and Estonia, growth is expected to be weak. Latvia is likely to continue to experience economic contraction.

Recent figures for house prices in Denmark show a slight rise during the second half of 2009, a trend that has continued into 2010. As interest rates are likely to remain low, house prices are expected to stabilise. A rise in house prices is forecast for Norway and Finland. Swedish house prices are forecast to be unchanged, while Ireland and Northern Ireland are likely to see a fall in house prices.

Short-term money market rates are expected to be largely unchanged in Denmark and also in the Group’s other markets on average.

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

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 does not expect its net trading income in 2010 to reach the same extraordinarily high level as in 2009.

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

Loan impairment charges are likely to remain high in 2010, although somewhat lower than in 2009.

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.

Last updated on 10 August 2010

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