Interim report 2009

Write-down ratio for the year % 0.8 0.0 0.7 0.0 Growth in loans for the year % 0.1 8.1 0.1 8.2 Loans in relation to equity *) 6.0 4.9 6.0 4.0 *) The B...

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Interim report 2009

AKTIESELSKABET

Interim report 2009 1 A/S Arbejdernes Landsbank – Key figures 2 Management review for first half year of 2009 4 Income statement for first half year of 2009 5 Balance sheet as at end of June 2009 8 Changes in equity 9 Notes to interim financial statements 2009 11 Group overview 12 Statement by management

Gert R. Jonassen Chief Executive

Ebbe Castella General Manager

Arbejdernes Landsbank

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Interim report 2009

A/S Arbejdernes Landsbank – Key figures

Group Bank 30.06.2009 30.06.2008 30.06.2009 30.06.2008 DKK ’000 DKK ’000 DKK ’000 DKK ’000 Income statement Core earnings, excl. trade earnings *) Trade earnings Total core earnings Costs and depreciation/amortisation Core results before write-downs Write-downs on loans, etc. Core results Investment portfolio earnings, excl. investment securities Investment securities Profit/loss before tax Tax *) Profit/loss

576,593 35,377 611,970 -564,486 47,484 -168,999 -121,515 247,327 -41,307 84,505 -26,347 58,158

477,845 44,841 522,686 -436,014 86,672 6,121 92,793 -93,650 46,347 45,490 -15,490 30,000

529,786 35,377 565,163 -528,026 37,137 -159,667 -122,530 247,327 -41,340 83,457 -25,299 58,158

439,718 44,841 484,559 -405,142 79,417 9,869 89,286 -93,650 46,876 42,512 -12,512 30,000

624,828 192,933 499,009

511,421 -59,934 410,958

593,382 193,047 475,135

485,991 -59,950 389,610

-24,504 17,377,345 21,108,507 2,905,696 30,216,020

2,947 14,300,061 14,575,141 2,921,311 27,510,260

-24,537 17,416,222 21,117,989 2,905,696 30,195,574

3,476 14,338,471 14,608,954 2,921,311 27,519,829

1,034

954

990

910

13.1 12.2 2.9 2.0 1.11 3.2 12.0 0.2 84.5

11.1 11.1 1.5 1.0 1.10 7.4 15.5 0.1 99.4

12.9 12.1 2.9 2.0 1.12 2.9 12.1 0.2 84.5

10.9 10.9 1.4 1.0 1.11 7.2 15.7 0.1 99.4

204.0 97.4 0.8 0.1 6.0

123.9 92.9 0.0 8.1 4.9

207.9 98.3 0.7 0.1 6.0

123.8 92.2 0.0 8.2 4.0

Key figures Net interest and fee income *) Value adjustments Staff and administration expenses Value adjustments for holdings in associated and group companies Loans Deposits, incl. pools Own funds *) Total assets Number of employees Average number of employees, converted to full-time employees Key figures **) Solvency ratio Core capital ratio Return on equity before tax *) Return on equity after tax *) Ratio of operating income to operating expenses *) Interest-rate risk Currency position Currency risk Loans and write-downs in relation to deposits Excess liquidity in relation to statutory requirements for liquidity Sum of large exposures Write-down ratio for the year Growth in loans for the year Loans in relation to equity *)

% % % % DKK % % % % % % % %

*) The Bank has implemented a new practice to accrue the annual budget account fee, which is charged before the start of the year. Comparative figures for the first half year of 2008 have been adjusted. **) The definition of key figures is in accordance with guidelines from the Danish Financial Supervisory Authority.

01

02

Management review for first half year of 2009 Income statement

current financial turbulence, including the financial

In the first six months of 2009, the Arbejdernes

burdens on the Bank as a consequence hereof.

Landsbank Group saw a satisfactory development in earnings, in particular when taking into account total

Trading income has dropped by 21.1 per cent as a

expenditure of DKK 65.4 million to participate in

consequence of low activity due to customers being

“Bank Package I”. Core earnings increased by 17.1 per

affected by societal developments.

cent, and positive investment portfolio earnings more than offset increasing needs for write-downs on loans

Costs and depreciation/amortisation represent DKK

etc. We are also pleased that we continued to acquire

564.5 million and increased by DKK 128.5 million

new customers, and succeeded in maintaining and

compared with 2008. The most important reasons for

developing deposits and loans in 2009.

the increase were the Bank’s takeover of 55 employees from Roskilde Bank and the Bank’s guarantee commis-

The Group earned a profit before tax of DKK 84.5

sion for the state guarantee to cover failing banks.

million, against DKK 45.5 million in 2008. Profit after tax amounted to DKK 58.2 million, compared with

Write-downs on loans etc. show a considerable increase

DKK 30.0 million in 2008.

to DKK 169.0 million, reflecting the general slow-down in society. A total amount of DKK 38.3 million has

The return on average Group equity was 2.9 per cent

been provided to cover losses from failing banks under

before tax and 2.0 per cent after tax.

“Bank Package I”, of which DKK 26.5 million has been recognised in the interim financial statements for 2009.

Of particular note for the first half year 2009 are: • •



Good increase in core earnings from DKK 522.7

Investment portfolio earnings, excluding results from

million to DKK 612.0 million.

investment securities, amount to DKK 247.3 million,

Investment portfolio earnings show a gain of net

and the Group has thus recovered the negative result

DKK 206.0 million against a loss of DKK 47.3

for all of 2008. The result under investment securities

million in 2008.

shows a loss of DKK 41.3 million against a gain of

Costs and depreciation/amortisation show an

DKK 46.3 million for the first half year of 2008. In

increase of 29.5 per cent, which in particular is

this respect, the result was extraordinarily affected

attributable to higher staff costs in connection with

by a profit of DKK 91.3 million in connection with an

the acquisition of five branches from Roskilde Bank

agreement made with Nykredit concerning final deter-

in the autumn of 2008 as well as the Bank’s payment

mination of the sales price of shares in Totalkredit.

of guarantee commission of DKK 38.9 million to the •

state guarantee scheme under “Bank Package I”.

Balance sheet

Write-downs on loans etc. represent DKK 169.0

The Group balance sheet total amounts to DKK 30.2

million against a modest revenue recognition for

billion against DKK 31.8 billion at the end of 2008.

the first half year in 2008. The Bank’s percentage

Despite a slowdown in the demand for loans, the loan

of provisions for bad debts in connection with

portfolio is intact because of customer growth, which

the Private Contingency Association’s takeover of

is a consequence of the Bank’s strategy to focus on sus-

failing banks of DKK 26.5 million is included

tainable growth. Group deposits, including deposits in

under this item.

pooled schemes have increased by 10.7 per cent compared with the turn of the year, and this development is

Core earnings, excluding trading income, have risen by

evidence of a product range at competitive terms. The

20.7 per cent or DKK 98.7 million, and are the result

Group has thus expanded the deposit surplus and the

of recent years’ growth, not least as a consequence of

excess liquidity in relation to the statutory requirement

the acquisition of five branches in the autumn of 2008.

is particularly solid at 204.0 per cent.

In addition, this increase is attributable to continued customer growth and expansion of the interest margin. The margin expansion was introduced following the

Arbejdernes Landsbank

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Interim report 2009

Solvency

form of interest-rate and share-price risk linked to the

Group solvency is 13.1 per cent. The statutory require-

Bank’s investment portfolio for which the interest-rate

ment of 8.0 per cent emphasises the Group’s solid

risk was calculated at 3.2 per cent against 7.4 per cent

financial position. The core capital ratio represents

as at 30 June 2008.

12.2 per cent and Arbejdernes Landsbank has chosen not to apply for state capital injections as provided by

The Group is also exposed to other risks, such as

“Bank Package II”. The Bank is strong, with solid capi-

liquidity and operational risks. For further information

tal backing and a loyal group of owners, providing the

about the risk composition, see the Annual Report

Group with the latitude required to maintain develop-

2008 and the Group Risk Report 2008, both of which

ment and focus on sustainable growth. Profits for the

are available at the Bank’s website www.al-bank.dk.

half-year are not included in the solvency statement. In addition to increasing expenses on losses and write-

Outlook for the second half of 2009

downs on loans and guarantees, and on failing banks,

In the second half of 2009 there are expectations of

none of the other risks are expected to significantly

continued difficult financial conditions with steady in-

influence the Group or its financial position negatively

terest rates and inflation. Many families are, or will be,

in the second half of 2009.

affected by unemployment, and the Group anticipates a great need for write-downs on loans etc.

The Group is not a party in legal proceedings or disputes which might significantly influence the Group

As part of the participation in “Bank Package I” under

or its financial position negatively in the second half

which, on behalf of the banks, the state guarantees cus-

of 2009.

tomers against losses on their deposits, Arbejdernes Landsbank has set up a guarantee of about DKK 219

No events have taken place after the end of the period

million, to cover losses from failing banks, of which

which have a material effect on the result for the half-

DKK 38.3 million has already been charged to the

year.

income statement. If the way failing banks cope in the rest of 2009 is ignored, the level of loss and write-

Accounting policies

downs at the end of the year is expected to be DKK

This interim report is presented in accordance with the

220-230 million.

Danish Financial Business Act, including the Executive Order on Financial Reports for Credit Institutions and

As a result of continued customer influx and sustain-

Investment Companies etc. (the Danish Executive Order

able growth, core earnings in 2009 are expected to be

on the Presentation of Financial Statements).

considerably higher than in 2008. We are also expecting a positive, yet moderate, development in investment

The accounting policies have not been changed com-

portfolio earnings for the second half year of 2009 as

pared with the Annual Report 2008, which is available

well as an expected profit before tax of around DKK 100

in English on the Bank’s website at www.al-bank.dk.

million for the whole of 2009.

However, the annual budget fee charged at the beginning of the year was accrued. In the financial state-

Risks and uncertainty

ments for the first half year of 2009 this amounts to

The revenue basis of Arbejdernes Landsbank is busi-

an accrual of DKK 10.4 million for the second half of

ness with private customers, corporate customers and

2009. Comparative figures for 2008 have been adjusted

organisations, of which private customers account for

in accordance herewith.

most of the growth in loans, primarily related to home loans in owner-occupied and cooperative properties.

Transactions with closely related parties Transactions with closely related parties are based on

Other than higher credit risks as a consequence of the

contractually agreed prices on market terms. The Bank

financial turbulence and fluctuating economic trends,

has no large transactions with closely related parties

the Group’s most important risks are market risk in the

in the first half year of 2009.

03

04

Income statement for first half year of 2009

Note

1

Group Bank 30.06.2009 30.06.2008 30.06.2009 30.06.2008 DKK ’000 DKK ’000 DKK ’000 DKK ’000

Interest income Interest paid Net interest income

829,161 -348,235 480,926

704,527 -356,037 348,490

800,589 -348,330 452,259

684,175 -356,748 327,427

Dividends from shares, etc. Fee and commission income Fees and commissions paid Net interest and fee income

13,409 139,923 -9,430 624,828

28,136 143,533 -8,738 511,421

13,409 130,510 -2,796 593,382

26,901 134,812 -3,149 485,991

192,933 28,967 -499,009

-59,934 25,704 -410,958

193,047 14,264 -475,135

-59,950 13,024 -389,610

-18,517 -51,194 -168,999

-13,847 -15,964 6,121

-6,732 -51,165 -159,667

-4,323 -15,964 9,868

-24,504 84,505

2,947 45,490

-24,537 83,457

3,476 42,512

-26,347 58,158

-15,490 30,000

-25,299 58,158

-12,512 30,000

Value adjustments Other operating income Staff and administration expenses Amortisation and depreciation as well as impairment losses on intangible and tangible assets Other operating costs Write-downs on loans and receivables etc. Value adjustments for holdings in associated and group companies Profit/loss before tax Tax Profit/loss

Arbejdernes Landsbank

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Interim report 2009

Balance sheet as at end of June 2009

Note

Group 30.06.2009 DKK ’000

Bank 31.12.2008 30.06.2009 DKK ’000 DKK ’000

274,941 1,585,281 17,377,345 8,483,246 973,706 310,623 0 270,821 13,794 443,188 443,188 139,888 4,506 35,717 2,873 263,274 36,817 30,216,020

299,975 2,896,123 17,351,571 8,723,912 971,023 322,195 0 253,267 20,846 444,328 444,328 135,779 2,527 62,233 0 326,771 23,526 31,834,076

31.12.2008 DKK ’000

Assets 2 3

Cash in hand and demand deposits with central banks Receivables from credit institutions and central banks Loans and other amounts receivable at amortised cost Bonds at fair value Shares, etc. Holdings in associated companies Holdings in group companies Assets linked to pool schemes Intangible assets Total land and buildings Owner-occupied properties Other tangible assets Current tax assets Deferred tax assets Assets held temporarily Other assets Prepayments Total assets

274,928 299,875 1,582,458 2,893,564 17,416,222 17,401,113 8,483,246 8,723,912 973,706 971,023 310,623 322,195 56,521 56,554 270,821 253,267 12,876 19,501 442,428 443,568 442,428 443,568 25,832 22,608 4,642 2,639 60,524 86,016 2,873 0 242,405 301,187 35,469 22,385 30,195,574 31,819,407

Liabilities Debt Debt to credit institutions and central banks Deposits and other debt Deposits in pool schemes Issued bonds Liabilities taken over temporarily Other liabilities Prepayments Total debt

4,283,793 8,320,133 4,283,793 8,320,133 20,837,686 18,815,925 20,847,168 18,826,269 270,821 253,267 270,821 253,267 802,902 499,487 802,902 499,487 2,605 0 2,605 0 657,411 662,330 631,639 641,471 14,762 25,637 10,606 21,483 26,869,980 28,576,779 26,849,534 28,562,110

Provisions Provisions for pensions and similar liabilities Provisions for losses on guarantees Other provisions Total provisions

13,933 51,886 46,525 112,344

13,413 25,402 42,943 81,758

13,933 51,886 46,525 112,344

13,413 25,402 42,943 81,758

Subordinated debt Subordinate loan capital Total subordinated debt

328,000 328,000

328,000 328,000

328,000 328,000

328,000 328,000

Equity Share capital Revaluation reserves Other reserves Statutory reserves Retained earnings or losses Total equity Total liabilities

300,000 300,000 300,000 300,000 100,675 100,675 100,020 100,020 184,615 184,615 228,338 228,338 184,615 184,615 228,338 228,338 2,320,406 2,262,249 2,277,338 2,219,181 2,905,696 2,847,539 2,905,696 2,847,539 30,216,020 31,834,076 30,195,574 31,819,407

05

Behind a rich life Poul is 85 years old and the world’s oldest kitesurfer. He is out on the water 300 days a year. A journalist and a cameraman joined him on the beach on Amager one day when the wind was good. This spurred a TV commercial and a documentary film. An honest portrait of a man to whom being rich is not about money but rather about values. A man with a rich life.

08

Changes in equity

Share capital DKK ’000

Revaluation reserves DKK ’000

Reserves DKK ’000

Retained earnings DKK ’000

Dividend DKK ’000

Total DKK ’000

300,000

100,675

184,615

2,262,249

0

2,847,539

The Group - first half year 2009 Equity as at 01.01.2009 Dividend paid for 2008 Profit for the year Income or expenses posted directly to equity: Change in the valuation of owner-occupied properties Total Total income Equity carried forward 30.06.2009

58,158

58,158

58,158

58,158

300,000

100,675

184,615

2,320,406

0

2,905,696

300,000

84,675

221,337

2,285,299

60,000 60,000

-44,774

-14,998

2,951,311 60,000 -59,772

-44,774 8,052

-14,998 -8,052

16,000 16,000 -43,772 0

100,675

184,615

2,262,249

0

2,847,539

100,020

228,338

2,219,181

0

2,847,539

Group 2008 Equity as at 01.01.2008 Dividend paid for 2007 Profit for the year Income or expenses posted directly to equity: Change in the valuation of owner-occupied properties Total Total income Other additions and disposals Equity carried forward 31.12.2008

16,000 16,000 16,000

The Bank - first half year 2009 Equity as at 01.01.2009 Dividend paid for 2008 Profit for the year Income or expenses posted directly to equity: Change in the valuation of owner-occupied properties Total Total income Equity carried forward 30.06.2009

300,000

58,158

58,158

58,158

58,158

300,000

100,020

228,338

2,277,338

0

2,905,696

300,000

84,020

289,996

2,217,295

60,000 60,000

-54,460

-5,312

2,951,311 60,000 -59,772

16,000 16,000 0 -43,772

Bank 2008 Equity as at 01.01.2008 Dividend paid for 2007 Profit for the year Income or expenses posted directly to equity: Change in the valuation of owner-occupied properties Total Liquidation of FIDANO A/S Total income Equity carried forward 31.12.2008

300,000

16,000 16,000 0 16,000

-7,198 -61,658

7,198 1,886

100,020

228,338

2,219,181

0

2,847,539

Arbejdernes Landsbank

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Interim report 2009

Notes to interim financial statements 2009

Note

Group Bank 30.06.2009 30.06.2008 30.06.2009 DKK ’000 DKK ’000 DKK ’000

30.06.2008 DKK ’000

1 Value adjustments Bonds Shares, etc. Currency Derivative financial instruments Currency contracts Interest rate contracts Share contracts Total derivative financial instruments Assets linked to pool schemes Deposits in pool schemes Other assets Total value adjustments

62,195 42,237 25,715

-97,611 27,239 4,901

62,195 42,237 25,829

-97,611 27,239 4,885

15,664 45,040 -437 60,267 19,619 -19,619 2,519 192,933

10,869 -1,661 -84 9,124 -11,573 11,573 -3,587 -59,934

15,664 45,040 -437 60,267 19,619 -19,619 2,519 193,047

10,869 -1,661 -84 9,124 -11,573 11,573 -3,587 -59,950

Bank 31.12.2008 30.06.2009 DKK ’000 DKK ’000

31.12.2008 DKK ’000

Group 30.06.2009 DKK ’000 2 Receivables from credit institutions Individual write-downs Accumulated write-downs brought forward Write-downs for the year Other movements Total accumulated write-downs carried forward

0 17,288 80 17,368

0 0 0 0

0 17,288 80 17,368

0 0 0 0

279,167 186,619 62,163 6,482 10,776 399,329

151,315 185,870 53,512 7,773 12,279 279,167

254,835 178,149 59,814 6,482 6,616 373,036

146,556 164,159 53,029 7,773 10,624 254,835

57,262 9,416 11,173 2,020 57,525

33,259 28,687 10,470 5,786 57,262

55,695 9,415 11,053 2,020 56,077

33,167 27,212 10,470 5,786 55,695

336,429 196,035 73,336 8,502 10,776 456,854

184,574 214,557 63,982 13,559 12,279 336,429

310,530 187,564 70,867 8,502 6,616 429,113

179,723 191,371 63,499 13,559 10,624 310,530

3 Loans and other receivables at amortised cost price Individual write-downs Accumulated write-downs brought forward Write-downs for the year Reversal of write-downs Other movements Actual loss (written off), previously written down Total accumulated write-downs carried forward Group-wise write-downs Accumulated write-downs brought forward Write-downs for the year Reversal of write-downs Other movements Total accumulated write-downs carried forward Total write-downs on loans Total accumulated write-downs brought forward Write-downs for the year Reversal of write-downs Other movements Actual loss (written off), previously written down Total accumulated write-downs carried forward

09

10

Other notes

Group 30.06.2009 DKK ’000

Note

Bank 31.12.2008 30.06.2009 DKK ’000 DKK ’000

31.12.2008 DKK ’000

4 Contingent liabilities Guarantees Financial guarantees Guarantees for losses on mortgage loans Private resources Land registration and conversion guarantees Guarantee for subsidiary Other guarantees Total guarantees

690,161 136,685 180,626 6,092 0 1,307,284 2,320,848

811,722 169,233 218,213 1,372 0 1,193,287 2,393,827

691,361 136,685 180,626 6,092 5,000 1,302,284 2,322,048

812,922 169,233 218,213 1,372 5,000 1,188,287 2,395,027

Other liabilities Irrevocable credit commitments less than 1 year Irrevocable credit commitments more than 1 year Unutilised pension commitments Other liabilities Total other liabilities

1,847,321 219,660 14,900 4,290 2,086,171

1,679,091 309,115 12,700 18,570 2,019,476

1,469,362 219,660 14,900 4,290 1,708,212

1,389,802 272,337 12,700 18,570 1,693,409

Total contingent liabilities

4,407,019

4,413,303

4,030,260

4,088,436

6,759,852 6,759,852

6,696,426 1,985,837

6,759,852 6,759,852

6,696,426 1,985,837

2,610,686 1,597,737

2,555,356 1,703,378

2,586,797 1,603,848

2,530,674 1,706,794

5 For collateral deposited with Danmarks Nationalbank, clearing centres, etc. Market value of bonds Of which, surplus collateral 6 Solvency statement Base capital after deduction Solvency requirement

Arbejdernes Landsbank

Group overview

AKTIESELSKABET

Arbejdernes Landsbank COPENHAGEN

AL Finans A/S G LO ST R U P

Share capital as at 31 December 2008 Equity as at 31 December 2008 Half-year result 2009

DKK ’000 6,000 43,831 -105

Handels ApS Panoptikon COPENHAGEN

Share capital as at 31 December 2008 Equity as at 31 December 2008 Half-year result 2009

DKK ’000 500 12,723 72

Both subsidiaries are fully owned by the parent company.

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Interim report 2009

11

12

Statement by management

The Board of Directors and Executive Management have today discussed and approved the interim report of Aktieselskabet Arbejdernes Landsbank for the period 1 January - 30 June 2009.

of the Group and the Bank as well as a description of the most significant risks and uncertainty factors that may influence the Group and the Bank.

The interim report is presented in accordance with the Danish Financial Business Act, including the Executive Order on financial reports for credit institutions and investment companies, etc.

We consider the accounting policies applied appropriate so that the interim report provides a true presentation of the assets, equity capital and liabilities of the Group and the Bank, their financial position as well as their result for the first half year 2009.

The management review provides a true review of the development of the activities and financial situation

The interim report has not been audited and it has not been reviewed by external auditors.

Copenhagen, 18 August 2009

Executive Management: Gert R. Jonassen

Ebbe Castella

Chief Executive

Board of Directors: Poul Erik Skov Christensen Chairman

Harald Børsting

Johnny Skovengaard

John Markussen

Thorkild E. Jensen

Ole Wehlast

Ulla Strøm Nordenhof

Mette Kindberg

Jette Kronborg

Henrik Thagaard

AKTIESELSKABET

Cop en h agen CVR- nr. 31 4 6 70 12 , Købe nha vn

Panoptikonbygningen Ve ster br o gad e 5 · D K- 1502 Co p en h agen V Phone +45 38 48 48 48 · www.al- ban k .d k

CVR-nr. 31 46 70 12 Copenhagen · advance.dk

Building on sound values