OREANDA-NEWS. August 14, 2009.

Efficient operations and conservative credit policy

Profit before loan impairment charges: EEK 404m (against EEK 373m in H1 2008)

Profit before tax: EEK -567m (EEK 374m)

Loan impairment charges of EEK 971m

Cost/income ratio: 34.7 (44.6)

Deposits up EEK 5,912m (37%)

Lending down EEK 487m (-2%)

Loan/deposit ratio: 1.45 (2.03)

Customer base: 179,000 (up 6%)

Bank branches: 23

Employees: 561 (637)

This interim report presents the financial results of the banking activities of the Danske Bank Group in Estonia. Sampo Pank has been a member of the Danske Bank Group since February 2007.
 
In addition to banking, Danske Bank operates in Estonia in the areas of asset management (Danske Capital) and financial markets (Danske Markets Estonia).
 
Aivar Rehe, CEO of Sampo Pank, comments on the financial results for the first half of 2009 as follows:
 
“In the first half of 2009, we maintained a high level of efficiency in our banking activities, with a cost/income ratio of 34.7%. Profit before loan impairment charges was EEK 404m, which represents an increase of 9% over the level in the first half of 2008. Higher loan impairment charges, however, caused a net loss of EEK 567m for the period (against a profit of EEK 374m in H1 2008).
 
“Operating income totalled EEK 619m, a decline of 8%. Operating expenses fell 28% to EEK 215m. Lower staff, marketing and other operating expenses were the main reasons for the drop in expenses.
 
“The economic situation in Estonia remains challenging. Customers’ solvency is likely to weaken in the second half of 2009. Because of this, and in keeping with Danske Bank Group’s conservative loan portfolio assessment policy, the bank increased loan impairments considerably. Loan impairment charges amounted to EEK 971m for the first half of the year (EEK -2m).
 
“Individual impairment charges totalled EEK 478m, and collective impairment charges EEK 493m. The allowance account increased to 4.2% as a result of the additional loan impairment charges (0.6%).
 
“Realised loan losses in the first half of 2009 amounted to EEK 52m, or 0.32% of the average loan portfolio (against EEK 7.5m and 0.05%, respectively). At the end of June 2009, some 5.5% of loans were in arrears for more than 90 days was (0.9%).
 
Total lending volume at the end of the period was EEK 31.5bn. Lending to retail customers increased by 4%, or EEK 0.5bn, and lending to corporate customers fell by 6%, or EEK 1.1bn. The loan portfolio declined EEK 1.7bn, or 5.0%, in the second quarter.
 
“Deposits totalled EEK 21.7bn at June 30, 2009. Deposits from retail customers rose 43%, or EEK 1.5bn, while deposits from corporate customers increased 36%, or EEK 4.3bn. There were no significant changes in the level of deposits in the second quarter.
 
“The bank improved the ratio of loans to deposits considerably. At the end of June, the ratio stood at 1.45 (2.03).
 
“The number of payment transactions rose 39% over the year. This confirms that the bank is attractive to customers and they are satisfied with our services.
 
“We continue to offer our customers professional financial consultation and everyday banking services through electronic channels as well as at branches. Several new functions have been added to the Sampo Internet Bank, for example logon with Mobile ID. Our ATM network has grown considerably and now consists of 92 terminals.”
 
The Danske Bank Group’s Interim Report – First Half 2009 is available at www.danskebank.com/reports.