OREANDA-NEWS. August 16, 2010.

Profit before loan impairment charges: EEK 313m (EEK 404m in H1 2009)
Loan impairment charges: EEK 195m (EEK 971m)
Profit before tax: EEK 118m (EEK -567m)
Cost/income ratio: 38.5 (34.7)
Deposits up: EEK 4,088m (18.8%)
Lending down: EEK -4,110m (-13%)
Loan/deposit ratio: 1.06 (1.45)
Customer base: 175,000 (-2.4%)
Number of branches: 19 (23)
Number of employees: 548 (561)

This interim report presents the financial results of the banking activities of the Danske Bank Group in Estonia. Sampo Bank has been a member of the Danske Bank Group since February 2007, reported the press-centre of Sampo Bank.

In addition to banking, Danske Bank is represented in Estonia in the areas of asset management (Danske Capital) and financial markets (Danske Markets Estonia).

Aivar Rehe, the CEO of Sampo Bank, comments on the financial results for the first half of 2010 as follows:

“The Estonian economy stabilised further in the second quarter of 2010. One positive sign was a recovery of external demand that spurred export growth. Estonia’s adoption of the euro at the beginning of 2011 will improve its economic outlook.

“Sampo Bank is still pursuing two main objectives in its activities: maintaining the profitability of its operations and continuing its conservative loan impairment charges policy.

“Profit from banking operations before loan impairment charges in Q2 amounted to EEK 166m (EEK 147m in Q1 2010). Profit before loan impairment charges in the first half of 2010 totalled EEK 313m (EEK 404m in H1 2009).

“Profit before tax in Q2 came to EEK 91m (EEK 27m in Q1 2010). Profit before tax in the first half of 2010 totalled EEK 118m (loss of EEK 567m in H1 2009).

“In Q2 2010, operating income amounted to EEK 265m (EEK 244m in Q1 2010) and operating expenses amounted to EEK 99m (EEK 97m in Q1 2010). In the first half of 2010, income fell 18% and operating expenses fell 9% from the level in H1 2009. The decline in the loan portfolio was the main reason for the drop in income.

“The bank managed to maintain good efficiency in its activities in the first half of 2010, with a cost/income ratio of 38.5% (34.7% in H1 2009).

“Sampo Bank followed the conservative loan portfolio evaluation policy of the Danske Bank Group and made loan impairment charges of EEK 75m in Q2 2010 (EEK 120m in Q1 2010). The charges made in the first half of 2010 totalled EEK 195m (EEK 971m in H1 2009).

“The ratio of the loan impairment charges reserve to the loan portfolio at the end of the period was 9.8% (4.3% at June 30, 2009). The reserves amounted to EEK 2.7bn. Loans in arrears for over 90 days, which represented 5.7% of the loan portfolio, amounted to EEK 1.5bn.

At June 30, 2010, the loan portfolio totalled EEK 27.4bn. The portfolio declined 13% in the preceding year. The loan portfolio for personal customers fell by 6.2%, or EEK 0,9bn, and the loan portfolio for corporate customers fell by 18.9%, or EEK 3.2bn, over the period. In Q2, the loan portfolio declined by EEK 1.2bn.

“Sampo Bank continued to demonstrate strong growth on the deposit market. Deposits increased by 7.8%, or EEK 1.86bn, in the second quarter. Deposits totalled EEK 25.8bn at the end of the period (an 18.% increase since June 30, 2009). Deposits from personal customers declined EEK 634m, or 12.3%, to EEK 4.5bn over the year, while deposits from corporate customers rose EEK 4.7bn, or 28.5%, to EEK 21.3bn. At June 30, 2010, the loan-to-deposit ratio was 106% (145% in Q1 2009).

“At the end of 2009, Sampo Bank launched its unique service model, ISEKAS, which allows customers to select the banking services they need under special terms with a personal adviser and discounts for the entire family. Thus far, almost one-third of Sampo Bank’s active personal customers have joined the programme.

“In Q2 Sampo Bank also launched a unique travel insurance product through which customers can take out travel insurance for their entire families under special discounted terms and which is valid throughout the world. The new product quickly became popular among our customers.

“In recent months Sampo Bank has been preparing for the arrival of the euro, and this work will continue during the remainder of the year.”

EU-wide stress test of the banking sector
The Committee of European Banking Supervisors (CEBS) included Danske Bank in the group of 91 European banks covered by the comprehensive 2010 EU-wide stress testing exercise. In the worst adverse scenario, Danske Bank had excess capital of DKK40 bn above the minimum capital threshold set by CEBS. The results placed Danske Bank among the top 25% of the banks covered in the exercise and confirms the Group’s significant financial strength.

The www.danskebank.com/ir site provides more details on the stress test.

The Danske Bank Group’s Interim Report - First Half 2010 can be viewed on the Internet at www.danskebank.com/reports.