REG - Jyske Bank A/S - 1st Quarter Results

Jyske Bank A/SAnnouncement

09/05/2018 08:00

2018-05-09T06:57:49.746Zreuters.comtag:reuters.com,2018-05-09:newsml_RSI4671Na:13TXT
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RNS Number : 4671N
Jyske Bank A/S
09 May 2018
 

                            
 

 
Please click on the link below to see the full interim report:
http://www.rns-pdf.londonstockexchange.com/rns/4671N_1-2018-5-9.pdf
 
Jyske Bank
Interim Financial Report
First quarter of 2018
                     







Interim Financial Report, first quarter of 2018








 
Management's Review


 




 


The Jyske Bank Group


     3








Summary


4




 


Comments by Management


4




 


Financial Review


5








Capital and liquidity management


13








Other information


17
































Business segments








Banking activities


19




 


Mortgage activities


21




 


Leasing activities


23




 


 


 




 


 


 




Interim financial statements


 




 


The Jyske Bank Group


 




 


Income statement and statement of comprehensive income


24




 


Balance sheet


25




 


Statement of changes in equity


26




 


Capital statement


27




 


Summary of cash flow statement


28








Notes


29


















 


Jyske Bank A/S


48
































Statement by the Executive and Supervisory Boards


56




 
 
 
 
 
 
 
 
 
Jyske Bank A/S
Vestergade 8-16
DK-8600 Silkeborg
Tel.: +45 89 89 89 89
www.jyskebank.dk
Email: jyskebank@jyskebank.dk
Business Reg. No. (CVR): 17616617


 
 
 




 
 
The Jyske Bank Group



















































































Q1
 2018




Q1
 2017




Index 18/17




Q1
 2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017




Year
2017





Net interest income


1,407


1,370


103


1,407


1,537


1,381


1,386


1,370


5,674




Net fee and commission income


506


447


113


506


654


436


420


447


1,957




Value adjustments


-68


346


-


-68


38


96


97


346


577




Other income


65


60


108


65


-29


29


147


60


207




Income from operating lease (net)


26


16


163


26


-6


-43


-21


16


-54




Core income


1,936


2,239


86


1,936


2,194


1,899


2,029


2,239


8,361




Core expenses


1,272


1,390


92


1,272


1,326


1,270


1,388


1,390


5,374




Core profit before loan impairment charges


664


849


78


664


868


629


641


849


2,987




Loan impairment charges


308


-45


-


308


-139


-194


-75


-45


-453




Core profit


356


894


40


356


1,007


823


716


894


3,440




Investment portfolio earnings


407


349


117


407


-30


135


108


349


562




Pre-tax profit


763


1,243


61


763


977


958


824


1,243


4,002




Tax


153


267


57


153


197


210


185


267


859




Net profit or loss for the period


610


976


63


610


780


748


639


976


3,143























































































Loans and advances


447.7


424.9


105


447.7


447.7


441.0


435.0


424.9


447.7




- of which mortgage loans


309.4


287.4


108


309.4


306.8


303.0


295.8


287.4


306.8




- of which traditional loans and advances


102.5


96.3


106


102.5


101.3


99.1


98.6


96.3


101.3




- of which new home loans


13.3


14.2


94


13.3


12.2


11.0


11.7


14.2


12.2




- of which repo loans


22.5


27.0


83


22.5


27.4


27.9


28.9


27.0


27.4




Bonds and shares, etc.


75.1


84.4


89


75.1


79.1


75.2


76.0


84.4


79.1




Total assets


593.2


570.2


104


593.2


597.4


584.7


579.9


570.2


597.4














































Deposits


155.1


155.5


100


155.1


160.0


154.9


157.2


155.5


160.0




- of which bank deposits


136.4


132.5


103


136.4


139.9


134.0


134.1


132.5


139.9




- of which repo deposits and tri-party deposits


18.7


23.0


81


18.7


20.1


20.9


23.1


23.0


20.1




Issued bonds at fair value


307.9


276.5


111


307.9


302.6


295.2


285.5


276.5


302.6




Issued bonds at amortised cost


30.1


45.7


66


30.1


38.9


38.8


42.0


45.7


38.9




Subordinated debt


4.3


2.1


205


4.3


4.3


4.3


4.3


2.1


4.3




Holders of additional tier 1 capital


2.5


1.5


167


2.5


2.6


2.6


1.5


1.5


2.6




Shareholders' equity


31.5


31.4


100


31.5


32.0


31.8


31.3


31.4


32.0























































































Earnings per share  for the period (DKK)*


6.8


10.7


-


6.8


8.6


8.3


7.0


10.7


34.7




Profit for the period, per share  (diluted) (DKK)


6.8


10.7


-


6.8


8.6


8.3


7.0


10.7


34.7




Pre-tax profit p.a. as a percentage of average equity*


9.3


15.7


-


9.3


11.8


11.9


10.3


15.7


12.4




Profit for the period p.a. as a pct. of average equity*


7.4


12.3


-


7.4


9.4


9.2


7.9


12.3


9.7




Expenses as a percentage of income


65.7


62.1


-


65.7


60.4


66.9


68.4


62.1


64.2














































Capital ratio


20.0


17.6


-


20.0


19.8


19.8


19.4


17.6


19.8




Common Equity Tier 1 capital ratio (CET1 %)


16.5


15.8


-


16.5


16.4


16.2


16.5


15.8


16.4




Individual solvency requirement (%)


10.2


9.9


-


10.2


10.2


10.3


10.0


9.9


10.2




Capital base (DKKbn)


37.4


32.3


-


37.4


37.3


36.5


35.8


32.3


37.3




Weighted risk exposure (DKKbn)


186.8


183.3


-


186.8


188.0


184.1


184.5


183.3


188.0














































Share price at end of period (DKK)


358


353


-


358


353


363


377


353


353




Book value per share (DKK)*


371


353


-


371


374


363


355


353


374




Price/book value per share (DKK)*


1.0


1.0


-


1.0


0.9


1.0


1.1


1.0


0.9














































No. of full-time employees at end-period**


3,856


4,024


-


3,856


3,932


4,003


3,988


4,024


3,932

































Relationships between income statement items under 'The Jyske Bank Group' (key financial data) and the income statement page 24 appear from page 9 in the Management's review.
*Financial ratios are calculated as if AT1 capital is recognised as a liability.
** The number of employees at the end of the first quarter of 2018 and at the end of 2017 less 43 and 39 employees, respectively, who are financed externally.




SUMMARY




 




·     Profit before tax and excl. derived effects from IFRS 9: DKK 1,170m, corresponding to a return of 14.5% p.a. on average equity.
·     Profit after tax and excl. derived effects from IFRS 9: DKK 927m, corresponding to a return of 11.4% p.a. on average equity.
·     Profit before tax: DKK 763m (Q1 2017: DKK 1,243m), corresponding to a return of 9.3% p.a. on average equity (Q1 2017: 15.7% p.a.).
·     Profit after tax: DKK 610m (Q1 2017: DKK 976m), corresponding to a return of 7.4% p.a. on average equity (Q1 2017: 12.3% p.a.).




·     Core profit: DKK 356m (Q1 2017: DKK 894m).
·     Core expenses at DKK 1,272m fell by 8% relative to 2017 and by 1% when adjusted for one-off expenses.
·     Reversed loan impairment charges and provisions for guarantees due to improving credit quality of loans, etc. affected the core profit by DKK 99m. (Q1 2017: DKK 45m).




·     The implementation of IFRS 9 and related adjustments affected core profit by DKK -407m and equity by DKK -628m before tax, and the balance of impairment charges was increased by DKK 1,035m.                The range of DKK 1,000m-1,200m had been expected.
·     Capital ratio: 20.0%, of which the Common Equity Tier 1 capital ratio was 16.5% (end of 2017: 19.8% and 16.4%).




 
 




COMMENTS BY MANAGEMENT




 
In connection with the publication of the interim financial report for the first quarter of 2018, Anders Dam, CEO and Managing Director states:
 
"The Group generated a profit of DKK 927m in the first quarter of 2018, corresponding to a return on equity of 11.4% p.a. adjusted for IFRS 9.
 
Inclusive of IFRS 9, the Group generated a profit of DKK 610m for the first quarter of 2018, corresponding to a return of 7.4% p.a. on equity.
 
The financial statements show a satisfactory development when allowing for IFRS 9 in the Group.
 
Net interest and fee income amounted to DKK 1,913m against DKK 1,817m in the first quarter of 2018, i.e. a satisfactory increase by just above 5%.
 
Widening of yield spreads and increasing interest rates affected the value adjustments of the Group's bond portfolio adversely, and on the whole, value adjustments amounted to DKK -68m against DKK 346m in the first quarter of 2017 under core profit.
 
IFRS 9 affected the profit for the period by DKK -407m, as the effect from the changed estimates at BRFkredit are recognised as an expense in the income statement as opposed to the effect at Jyske Bank, where the effect is deducted directly from equity", concludes Anders Dam.




Financial Review
Material circumstances
 
Nordjyske Bank shareholding
On 18 April 2018, Nordjyske Bank and Ringkjøbing Landbobank announced that the boards of directors of the two banks had entered into a merger agreement, and that the boards of directors of both banks recommend their shareholders to vote in favour of the merger.
 
Jyske Bank has decided to support the planned merger of Nordjyske Bank and Ringkjøbing Landbobank and will therefore vote in favour of the merger at the upcoming general meetings of Nordjyske Bank.
 
Jyske Bank has entered into a conditional agreement with Nykredit to sell the shares in Ringkjøbing Landbobank that Jyske Bank will acquire following the merger. The shares will be bought by Nykredit at a price of DKK 372 per share.
 
In addition, Jyske Bank receives in cash DKK 9 per share in Nordjyske Bank following the merger.
 
Jyske Bank's conditional, voluntary offer to the shareholders of Nordjyske Bank, which was made in an offer document of 6 April 2018, will lapse when the merger has been approved.
 
The profit for the first quarter of 2018 was affected by DKK 356m due to increases in the price of and the dividend from the Nordjyske Bank shares.
 
Implementation of new impairment rules, IFRS 9 and the Group's adjustment
IFRS 9 took effect on 1 January 2018. As a consequence of the new rules, impairment charges are calculated as the expected loss on all loans, advances and guarantees.
 
Due to the Group's implementation of and adjustment to IFRS 9, the balance of impairment charges was increased by DKK 1,035m. The profit for the period was affected by DKK 407m and equity by DKK 628m before tax; hence the overall effect was fully recognised in the financial statements and solvency ratio in the first quarter of 2018.
 





















 








Q1 2018


 




Stage 1: Assets without material deterioration in credit quality


628


 




Stage 2: Assets with significant deterioration in credit quality


1,351


 




Stage 3: Assets in default


3,849


 




Discounts on acquired loans


454


 




Total balance of loan impairment charges and provisions for guarantees incl. balance of discounts


6,282


 










 
The Minimum requirement for own funds and eligible liabilities (MREL) and Standard and Poor's upgrade of outlook
For Jyske Bank, the FSA has defined the minimum requirement for own funds and eligible liabilities (the so-called MREL) at 12.7% of Jyske Bank's total liabilities and consolidated capital base, corresponding to 28.1% of the risk exposure amount. The MREL is to be met through capital instruments or a new class of senior debt, subordinated to the existing senior debt. The MREL takes effect on 1 January 2019 and must be met by 1 July 2019, but senior debt issued before 1 January 2018 can be included over the period up to and including 1 January 2022.
 
Calculations show that the Jyske Bank Group meets the MREL already today.
 
Based on the FSA's measurement of MREL as well as Jyske Bank's funding plan for the required issues, Standard & Poor's changed in April 2018 its view of Jyske Bank's senior ratings to 'positive outlook' from 'stable outlook'. Jyske Bank's long-term and short-term senior ratings are A-/A-2.
 
Capital and share buy-backs
Capital adjustment and restructuring continued in the first quarter of 2018.
 
In the first quarter, Jyske Bank concluded its share buy-back programme that ran over the period 1 March 2017 - 28 March 2018. Over this period, Jyske Bank bought back 4,214,000 of its own shares at a value of DKK 1,499,967,000 corresponding to 4.73% of the company's share capital. 




 
Net profit for the period
In the first quarter of 2018, the Jyske Bank Group generated a pre-tax profit of DKK 763m. Calculated tax amounted to DKK 153m, and after tax the profit amounted to DKK 610m. Post-tax profit corresponded to a return on average equity of 7.4% p.a. against 12.3% p.a. for the corresponding period of 2017.
 


































 









 




 




 




 




 




 




 




 




 









Q1
 2018


Q1
 2017


Index 18/17


Q1
 2018


Q4
 2017


Q3
 2017


Q2
 2017


Q1
 2017


Year
2017




Net interest income


1,407


1,370


103


1,407


1,537


1,381


1,386


1,370


5,674




Net fee and commission income


506


447


113


506


654


436


420


447


1,957




Value adjustments


-68


346


-


-68


38


96


97


346


577




Other income


65


60


108


65


-29


29


147


60


207




Income from operating lease (net)


26


16


163


26


-6


-43


-21


16


-54




Core income


1,936


2,239


86


1,936


2,194


1,899


2,029


2,239


8,361




Core expenses


1,272


1,390


92


1,272


1,326


1,270


1,388


1,390


5,374




Core profit before loan impairment charges


664


849


78


664


868


629


641


849


2,987




Loan impairment charges


308


-45


-


308


-139


-194


-75


-45


-453




Core profit


356


894


40


356


1,007


823


716


894


3,440




Investment portfolio earnings


407


349


117


407


-30


135


108


349


562




Pre-tax profit


763


1,243


61


763


977


958


824


1,243


4,002




Tax


153


267


57


153


197


210


185


267


859




Net profit or loss for the period


610


976


63


610


780


748


639


976


3,143


























 
The most important core income from net interest and fee income rose by 5% to DKK 1,913m against DKK 1,817m in the first quarter of 2017.
 
Net interest income amounted to DKK 1,407m against DKK 1,370m in the first quarter of 2017, i.e. an increase by 3%. Net interest income was still favourably affected by growth in home loans. The market place is still characterised by competition, a certain pressure on margins is seen, and high-yield bonds are after maturity replaced by low-yielding bonds, which are all factors limiting the development of the net interest income. At the beginning of 2018, parts of the return on the Group's portfolio of securities were moved from investment portfolio earnings to core income, having an effect on both net interest income and value adjustments.
 
Given a parallel yield increase by 100 bp on the current yield curve, the Group's net interest income will increase by about DKK 200m over the first year. A gradually stronger effect is anticipated in the subsequent years. The development will be favourably affected by the improving net interest income from deposits with the Group, while, on the other hand, a negative effect will be seen from the Group's liquidity buffer. This change of net interest income will in actual fact only materialise when Danmarks Nationalbank, the central bank of Denmark, hikes its leading rates.
 
Net fee and commission income amounted to DKK 506m against DKK 447m in the first quarter of 2017, i.e. an increase by 13%. The increase can in particular be attributed to fee income from Jyske Invest Fund Management and DLR Kredit.
 
Core expenses fell by 8% to DKK 1,272m against DKK 1,390m in 2017, which period was affected by one-off expenses in the amount of DKK 110m. Adjusting for this, core expenses fell by 1%, which is in line with the development that the Group strives to achieve. At the end of the first quarter 2018, the number of full-time employees in the Group was 3,856, i.e. a decline by 76 full-time employees relative to the number at the end of 2017.
 
Core profit was affected by value adjustments in the amount of DKK -68m against DKK 346m in 2017 and impairment charges, etc. in the amount of DKK 308m due to the Group's adjustment to IFRS 9 against reversed impairment charges of DKK 45m in 2017. For a more detailed description of impairment charges, please see page 11.
In the first quarter, investment portfolio earnings were favourably affected by DKK 356m in the form of dividend on and value adjustments of shares in Nordjyske Bank.
Business volume and financial position
 




















































































 








Q1
2018




Q1
 2017




Index 18/17




Q1
 2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017




Year
2017



 




Loans and advances


447.7


424.9


105


447.7


447.7


441.0


435.0


424.9


447.7


 




- of which mortgage loans


309.4


287.4


108


309.4


306.8


303.0


295.8


287.4


306.8


 




- of which traditional loans and advances


102.5


96.3


106


102.5


101.3


99.1


98.6


96.3


101.3


 




- of which new home loans


13.3


14.2


94


13.3


12.2


11.0


11.7


14.2


12.2


 




- of which repo loans


22.5


27.0


83


22.5


27.4


27.9


28.9


27.0


27.4


 




Bonds and shares, etc.


75.1


84.4


89


75.1


79.1


75.2


76.0


84.4


79.1


 




Total assets


593.2


570.2


104


593.2


597.4


584.7


579.9


570.2


597.4


 












































 




Deposits


155.1


155.5


100


155.1


160.0


154.9


157.2


155.5


160.0


 




- of which bank deposits


136.4


132.5


103


136.4


139.9


134.0


134.1


132.5


139.9


 




- of which repo deposits and tri-party deposits


18.7


23.0


81


18.7


20.1


20.9


23.1


23.0


20.1


 




Issued bonds at fair value


307.9


276.5


111


307.9


302.6


295.2


285.5


276.5


302.6


 




Issued bonds at amortised cost


30.1


45.7


66


30.1


38.9


38.8


42.0


45.7


38.9


 




Subordinated debt


4.3


2.1


205


4.3


4.3


4.3


4.3


2.1


4.3


 




Holders of additional tier 1 capital


2.5


1.5


167


2.5


2.6


2.6


1.5


1.5


2.6


 




Shareholders' equity


31.5


31.4


100


31.5


32.0


31.8


31.3


31.4


32.0


 




























 
Mortgage loans at fair value amounted to DKK 309bn at the end of the first quarter of 2018, corresponding to an increase by DKK 2.6bn relative to the level at the end of 2017. Driven by loans and advances to corporate clients, traditional bank loans and advances had at the end of the first quarter of 2018 increased to DKK 102.5bn against DKK 101.3bn at the end of 2017.
 
At the end of the first quarter of 2018, bank deposits exclusive of repo deposits amounted to DKK 136bn, i.e. a decline by DKK 3.5bn relative to the level at the end of 2017.
 
At the end of the first quarter of 2018, the business volume within asset management amounted to DKK 142bn compared to DKK 145bn at the end of 2017. The first quarter of the year was affected by increasing volatility and falling prices for most asset classes, where in particular equities were affected. This development resulted in negative returns, typically in the range of 0-4%, depending on the clients' risk profile, which affected the overall business volume. The inflow of new funds from most client segments was unchanged, while at the same time the quarter saw an outflow relating to one single institutional client.
 
At the end of the first quarter of 2018, shareholders' equity amounted to DKK 31.5bn against DKK 32.0bn at the end of 2017.
 




 
Investment portfolio earnings
 











































 



















































Q1
 2018




Q1
 2017




Index 18/17




Q1
 2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017




Year
2017



 




Net interest income


36


98


37


36


61


77


94


98


330


 




Net fee and commission income


0


0


-


0


-1


-2


0


0


-3


 




Value adjustments


328


222


148


328


-84


65


16


222


219


 




Other income


49


37


132


49


2


2


6


37


47


 




Income


413


357


116


413


-22


142


116


357


593


 




Expenses


6


8


75


6


8


7


8


8


31


 




Investment portfolio earnings


407


349


117


407


-30


135


108


349


562


 


































 
For the first quarter of 2018, investment portfolio earnings amounted to DKK 407m against DKK 349m for the corresponding period in 2017.
 
The general interest rate environment and the effect from the replacement of high-yield bonds after maturity with low-yielding bonds had an adverse effect on the development of net interest income. To this must be added the transfer of parts of the portfolio of bonds to core income.
 
Widening credit spreads resulted in negative value adjustments of the portfolio of Danish mortgage bonds as opposed to the situation in the first quarter of 2017. Moreover, to a lesser extent the positive value adjustments of the bank's holding of other securitizations as well as the value adjustment of the shares in Nordjyske Bank resulted - seen in isolation - in a positive value adjustment by DKK 325m in the first quarter of 2018.
 
 
Core profit and investment portfolio earnings
The pre-tax profit for the first quarter of 2018 broken down by core earnings and investment portfolio earnings is stated below:
 


































Q1 2018












Q1 2017









 
 
 


Core profit


Investment portfolio earnings


Reclassifi-cation


Total


Core profit


Investment portfolio earnings


Reclassifi-cation


Total




Net interest income


1,407


36


-18


1,425


1,370


98


62


1,530




Net fee and commission income


506


0


0


506


447


0


0


447




Value adjustments


-68


328


18


278


346


222


10


578




Other income


65


49


9


123


60


37


0


97




Income from operating lease (net)


26


0


106


132


16


0


117


133




Income


1,936


413


115


2,464


2,239


357


189


2,785




Expenses


1,272


6


115


1,393


1,390


8


117


1,515




Profit before loan impairment charges


664


407


0


1,071


849


349


72


1,270




Loan impairment charges


308


0


0


308


-45


0


72


27




Pre-tax profit


356


407


0


763


894


349


0


1,243



















 




 
Alternative performance targets
The alternative performance targets applied in the management's review constitute valuable information for readers of financial statements as they provide a more uniform basis for comparison of accounting periods. No adjusting entries are made, and therefore the net profit or loss for the period will be the same in the alternative performance targets of the management's review and in the IFRS financial statements.
 
Core profit is defined as the pre-tax profit exclusive of investment portfolio earnings. Hence earnings from clients are expressed better than in the IFRS financial statements.
 
Investment portfolio earnings are defined as the return on the Group's portfolio of shares, bonds, derivatives and equity investments, yet exclusive of the liquidity buffer and certain strategic equity investments. Investment portfolio earnings are calculated after expenses for funding and attributable costs.
 
The above table illustrates relationships between income statement items under 'The Jyske Bank Group' (key financial data), page 3, and income statement items in the IFRS financial statements, page 24.
 
Reclassification relates to the following:
-     Income of DKK 18m (first quarter of 2017: income of DKK 10m) due to value adjustments relating to the balance principle at BRFkredit were reclassified from value adjustments to interest income.
-     Income of DKK 9m (Q1 2017: Income of DKK 0m) from external sales was reclassified from income to offsetting against expenses.
-     Depreciation and amortisation of DKK 106m (first quarter of 2017: DKK 117m) were reclassified from expenses to income from operating lease (net).
 
Please see below for definitions of the additional financial ratios stated under the Jyske Bank Group, page 3.
 
"Earnings per share", "Earnings per share (diluted)", "Pre-tax profit p.a. as a percentage of average equity" and "Net profit p.a. as a percentage of average equity" are calculated as if AT1 capital was recognised as a liability. In the numerator, the profit is less interest expenses of DKK 31m (first quarter of 2017: DKK 19m) for Additional Tier 1 Capital (AT1), and the denominator is calculated as equity exclusive of Additional Tier 1 Capital (AT1) of DKK 2,528m. (first quarter of 2017: DKK 1,479m).
 
"Expenses as a percentage of income" is calculated as Core expenses divided by Core income.
 
"Book value per share" and "Price/book value per share" are calculated as if Additional Tier 1 Capital (AT1) is accounted for as liabilities. Book value has been calculated exclusive of Additional Tier 1 Capital (AT1) of DKK 2,528m (first quarter of 2017: DKK 1,479m).
 
 
 
 
 
 




 
Loan impairment charges and provisions for guarantees and value adjustments of acquired loans and advances
Under core profit, an amount of DKK 308m was recognised as an expense under loan impairment charges and provisions for guarantees against reversals of DKK 45m in the same period in 2017. The implementation of IFRS 9 and the Group's adjustment to these standards affected the profit for the period by DKK -407m, as the effect from the changed estimates at BRFkredit are recognised as an expense in the income statement as opposed to the effect at Jyske Bank, where the effect is deducted directly in equity.
 
Hence, the underlying credit quality was still improving, and the inflow of new non-performing loans continued to be at a low level for both corporate and personal clients, and a lower indication of impairment was seen for existing non-performing loans. Therefore, over the period, the underlying credit quality resulted in reversals of DKK 99m against DKK 45m in the same period of 2017.
 
IFRS 9 and the Group's adjustment
IFRS 9, which took effect on 1 January 2018, implies earlier recognition of impairment charges on financial assets at amortised cost, provisions for losses on guarantees as well as unutilised credit lines. The impairment model previously applied was based on objective evidence of impairment, and it was replaced with an impairment model based on expected losses on all loans, advances and guarantees as well as unutilised credit lines.  Therefore, already at the first recognition, impairment charges corresponding to a 12-month expected credit loss must be recognised. If, subsequently, the credit risk on the asset increases materially, the expected credit loss over the remaining life of the loan will be recognised.
 
According to the new rules, financial assets must be divided into three categories/stages depending on any deterioration of the debtor's credit rating relative to the first recognition.
·     Stage 1: Assets without material deterioration in credit quality
·     Stage 2: Assets with significant deterioration in credit quality
·     Stage 3: Assets in default
 
The ranking in the various stages will affect the calculation method applied, and it is determined, among other things, on the basis of the change in the probability of default over the expected remaining life of the exposure. The expected future loss is calculated on the basis of the probability of default, the exposure at the time of default  and the loss given default. These parameters are based on the Group's experience with loss history and early repayments, among other things, cf. the Group's advanced IRB set-up.
 
For exposures in stage 1, impairment charges corresponding to probability-weighted losses expected over the following 12 months are recognised, while for exposures in stages 2 and 3 impairment charges corresponding to losses expected over the remaining life of the exposures are recognised.
 
The assessment of the indication of impairment for stage 3 assets is based on individual expert assessments of the probability-weighted expected loss. The new rules have not resulted in any material changes in the extent of impairment of these exposures.
 
The impairment models are based on the Jyske Bank Group's approved advanced risk management set-up, adjusted to IFRS 9 in a number of specific areas. The purpose of the adjustment is to ensure that input variables applied express a true and fair view comprising all available information and expectations of the future.
 
The EU has adopted a 5-year transitional arrangement so that any negative effect from the new IFRS 9 impairment rules will only take full effect after five years.  Jyske Bank has chosen not to make use of the possibility of a 5-year transition period.
 
 
 


























Q1 2018


 




Stage 1: Assets without material deterioration in credit quality


628


 




Stage 2: Assets with significant deterioration in credit quality


1,351


 




Stage 3: Assets in default


3,849


 




Discounts on acquired loans


454


 




Total balance of loan impairment charges and provisions for guarantees incl. balance of discounts


6,282


 










 
 


























































































Q1
 2018




Q1
 2017




Index 18/17




Q1
 2018




Q4
 2017




Q3
 2017




Q2
2017




Q1
 2017




Year
2017





Non-performing loans and guarantees:








































Loans and advances before impairment charges and provisions, inclusive of discounts.


12,064


21,966


55


12,064


18,692


19,637


20,647


21,966


18,692




Impairment charges and provisions


3,721


5,561


67


3,721


4,748


5,250


5,384


5,561


4,748




Discounts on acquired loans


356


730


49


356


590


569


664


730


590




Loans, advances and guarantees after impairment charges


7,987


 
15,675


51


7,987


13,354


 
13,818


 
14,599


 
15,675


13,354














































NPL ratio


1.7%


3.5%


-


1.7%


2.9%


3.0%


3.2%


3.5%


2.9%




NPL coverage ratio


33.8%


28.6%


-


33.8%


28.0%


29.6%


29.3%


28.6%


28.0%














































Non-accrual loans and past due exposures


1,419


2,187


65


1,419


1,836


2,049


2,220


2,187


1,836














































Operational loan impairment charges etc.


308


27


-


308


-92


-70


-44


27


-179




Operating loss


429


321


134


429


397


114


173


321


1,005




























 
Non-performing loans, advances and guarantees fell significantly, which can materially be attributed to changed definitions in consequence of the implementation of IFRS 9.
 

























Loans, advances and
guarantees
 




Balance of loan impairment charges and provisions for guarantees




Impairment ratio
 
 









Q1
 2018


Q4
 2017


Q1
 2018


Q4
 2017


Q1
2018


Q4
2017




Dairy farmers


795


917


504


529


39%


37%




Pig farming


1,148


1,161


293


329


20%


22%




Total


1,943


2,078


797


858


29%


29%














 
At the end of the first quarter of 2018, the overall impairment ratio for dairy farmers and pig farming amounted to 29% of loans, advances and guarantees in line with the level at the end of 2017. For dairy farmers and pig farming the impairment ratios are 39% and 20%, respectively, which is also in line with the situation at the end of 2017.




 
Capital and liquidity management
 
Capital structure and capital management
Jyske Bank's long-term capital management objective after the implementation of the new Basel recommendations is a capital ratio of 17.5% and a Common Equity Tier 1 capital ratio of 14%. At these levels, Jyske Bank will have a safe distance to the capital base requirements and will at the same time have the required strategic scope. At the end of the first quarter of 2018, the Group more than met both targets due to its capital ratio of 20.0% and its Common Equity Tier 1 capital ratio of 16.5% compared to 19.8% and 16.4%, respectively, at the end of 2017.
 
On the basis of the Basel recommendations published in December 2017, Jyske Bank assesses that an increase by 3 percentage points relative to the capital targets will be necessary to meet the Group's long-term target when the revised Basel recommendations have been fully phased in.
 
Moreover, the Group aims to ensure a risk-adjusted capital ratio (RAC) determined by S&P at the level of 10.5% in order to maintain the score 'strong' in the category 'capital and earnings'. At the end of the first quarter of 2018, RAC was calculated at 10.1% against 10.2% at the end of 2017. The Group's RAC is adversely affected by the new financial reporting standards for impairment, IFRS 9.
 
Over the coming years, Jyske Bank will seek to maintain capital ratios above the targets in order to be prepared in due time for the legal requirements under the revised Basel recommendations to be implemented on 1 January 2022.
 





























































Q1
 2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017




End of
2017





Capital ratio


20.0


19.8


19.8


19.4


17.6


19.8




Core capital ratio incl. AT1 capital (%)


18.2


18.0


18.0


17.6


17.0


18.0




Common Equity Tier 1 capital ratio (CET 1) (%)


16.5


16.4


16.2


16.5


15.8


16.4




 
The Jyske Bank Group's total weighted risk exposure amounted to DKK 187bn at the end of the first quarter of 2018 against DKK 188bn at the end of 2017. The Jyske Bank Group's total weighted risk exposure with credit risk amounted to DKK 155bn, corresponding to 83% of the total weighted risk exposure. An increase by DKK 4.7bn in the total weighted risk exposure with credit risk can chiefly be attributed to the increase in loans and reclassification of bonds from market risk to credit risk.
 
Capital
In the first quarter of 2018, Jyske Bank did not issue any further AT1 or Tier 2 capital, but the general capital adjustment and restructuring continued in the first quarter of 2018, and Jyske Bank will at any time seek to adjust its capital structure to become even more cost efficient.
 
In the first quarter, Jyske Bank concluded its share buy-back programme that ran over the period 1 March 2017 - 28 March 2018. Over this period, Jyske Bank bought back 4,214,000 of its own shares at a value of DKK 1,499,967,000 corresponding to 4.73% of the company's share capital.
 
For Jyske Bank, the FSA has defined the minimum requirement for own funds and eligible liabilities (the so-called MREL) at 12.7% of Jyske Bank's total liabilities and consolidated capital base, corresponding to 28.1% of the risk exposure amount. The MREL is to be met through capital instruments or a new class of senior debt, subordinated to the existing senior debt. The MREL took effect on 1 January 2019 and must be met by 1 July 2019, but senior debt issued before 1 January 2018 can be included over the period up to and including 1 January 2022.
 
Calculations show that the Jyske Bank Group meets the MREL already today.
Based on the FSA's measurement of MREL as well as Jyske Bank's funding plan for the required issues, Standard & Poor's changed in April 2018 its view of Jyske Bank's senior ratings to 'positive outlook' from 'stable outlook'. Jyske Bank's long-term and short-term senior ratings are A-/A-2.
 
Individual solvency requirement and capital buffer
At the end of the first quarter of 2018, the Jyske Bank Group calculated its individual solvency requirement to be 10.2% of the total weighted risk exposure in line with the level at the end of 2017. To this must be added a SIFI requirement of 1.2% and a capital conservation buffer of 1.9% in 2018.
 
Compared with the actual capital base of DKK 37.4bn, the capital buffer amounted at the end of the first quarter of 2018 to DKK 12.5bn, corresponding to 6.7%. At the end of 2017, the capital buffer was at DKK 13.9bn, corresponding to 7.4%.
 
Liquidity buffer
At the end of the first quarter of 2018, the Jyske Bank Group's liquidity buffer amounted to DKK 64bn against DKK 73bn at the end of 2017.
 
The buffer consisted mainly of ultra-liquid and very liquid assets in the form of deposits with central banks as well as government bonds, Danish mortgage bonds and covered bonds ('SDO').  
 
 

 

 

 
The robustness of the liquidity buffer can be determined by measuring it dynamically in a stress scenario presuming that the Group will be precluded from re-financing in the international financial money markets for unsecured senior debt. Under such a scenario, the buffer will after a 12-month period amount to DKK 37bn. As the Group has limited senior debt falling due in 2019, the buffer will amount to DKK 35bn after 24 months.
 
 
 


































































Q1
2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017




End of 2017





End of period


64.0


72.8


69.0


72.1


71.6


72.8




3 mths.


49.3


54.2


56.0


63.6


52.9


54.2




6 mths.


46.6


49.6


42.5


55.3


47.3


49.6




9 mths.


40.3


47.8


38.5


42.8


42.0


47.8




12 mths.


36.9


42.8


37.4


38.5


29.7


42.8




 
Capital markets and issuance activity
Following the very low levels in 2017, the credit spreads increased in 2018, most significantly in the asset class Additional Tier 1 Capital (AT1). The most important reasons for the change in the market sentiment during the first quarter of 2018 were rising interest rates and volatility in the equity markets in February, expectations of a gradual reduction of the ECB's bond purchase programme in the second half of 2018 as well as a large supply of new issues in the euro markets.
 
Throughout 2017, the Group was a very active issuer in the international capital markets. Therefore there was no need for long-term issues in the first 3 months of the year. However, the Group is on an on-going basis active in the French CP market. At the end of the first quarter of 2018, the outstanding volume of bonds under the CP programme amounted to DKK 14.4bn against DKK 16bn at the end of 2017.
 
Refinancing profile
At the end of the first quarter of 2018, outstanding unsecured senior debt and subordinated Tier 2 capital under the Group's EMTN programme amounted to DKK 15.6bn and DKK 3.3bn, respectively, which levels were practically unchanged compared to those at the end of 2017. The run-off profile for the Group's unsecured senior debt as well as the call date profile on the Group's CRD 4 compliant Tier2 and AT1 capital determined at the end of the first quarter of 2018 is illustrated by the below chart.
 


 
 
 

 
 




 
Funding plans, MREL and credit rating
As part of the implementation of the bank recovery and resolution directive (BRRD) in Denmark, it is expected that a new act will be passed in the second quarter of 2018 and to take effect as of 1 January 2018. The act will introduce a new layer to the creditor hierarchy for financial services companies and a new type of debt in the form of contractual subordinated senior debt (Senior Non-preferred; SNP). SNP bonds will be positioned between regular unsecured senior debt and subordinated debt. It is expected that over the next 4 years, the Group's outstanding unsecured senior debt will gradually be replaced with senior non-preferred debt (SNP). Therefore the funding plan includes an annual SNP benchmark bond issue in the amount of EUR 500m. It is expected that SNP issues will total EUR 2.0bn to 2.5bn by the end of 2021.
 
Based on the FSA's measurement of MREL as well as Jyske Bank's funding plan for the required issues, Standard & Poor's change in April 2018 its view of Jyske Bank's senior ratings to 'positive outlook' from 'stable outlook'. Jyske Bank's long-term and short-term senior ratings are A-/A-2.
 
Liquidity Coverage Ratio (LCR)
At the end of the first quarter of 2018, the Group's LCR was at 186% compared to 189% at the end of 2017. The Group's internal guideline points to a LCR for the Group of at least 150%. The Group's LCR buffer after haircuts at the end of the first quarter of 2018 is shown below:
 











































































Q1
2018


%




Level 1a


















25.8


38.3




Level 1b


















38.7


57.5




Level 2a + 2b


















2.8


4.2




Total


















67.3


100.0




 
Being a Danish a systemically important financial institution, Jyske Bank must meet a modified LCR requirement in EUR. At the end of the first quarter of 2018, Jyske Bank met the requirement in full with a significant buffer.
 
As of 30 June 2018, Jyske Bank must also meet the FSA's liquidity benchmark in the supervisory diamond. The benchmark is a simplified version of LCR with a longer survival horizon of 90 days. At the end of the first quarter of 2018, the benchmark for Jyske Bank was at 146%, and therefore the bank already meets the requirement.



Other information
The supervisory diamond for Jyske Bank A/S
The supervisory diamond defines a number of special risk areas including specified limits that financial institutions should generally not exceed.
 


































































Q1 2018




Q4 2017




Q3 2017




Q2 2017




Q1 2017




End of
2017





Sum of large exposures < 125% of the adjusted capital base


0%


0%


0%


0%


0%


0%




Increase in loans and advances < 20% annually


4%


2%


2%


3%


5%


2%




Exposures to property administration and property transactions < 25% of total loans and advances


10%


9%


9%


9%


9%


9%




Stable funding < 1


0.59


0.56


0.57


0.57


0.58


0.56




Liquidity surplus > 50%


175%


228%


212%


223%


227%


228%




 
Jyske Bank A/S meets all the benchmarks of the supervisory diamond.
 
The supervisory diamond BRFkredit a/s
The supervisory diamond defines a number of special risk areas including specified limits that financial institutions should generally not exceed. The supervisory diamond takes effect in 2018 and 2020, respectively.
 


































































Q1 2018




Q4 2017




Q3 2017




Q2 2017




Q1 2017




End of
2017





Concentration risk < 100%


49.4%


47.5%


57.0%


60.5%


63.2%


47.5%




Increase in loans and advances < 15% annually in the segment:




























Owner-occupied homes and vacation homes


7.0%


11.7%


12.1%


14.4%


15.8%


11.7%




Residential rental property


7.9%


6.6%


6.6%


9.9%


6.7%


6.6%




Agriculture


-


-


-


-


-


-




Other sectors


6.5%


5.2%


4.5%


3.6%


6.7%


5.2%




Borrower's interest-rate risk < 25%




























Residential property


20.1%


20.8%


20.8%


22.0%


23.3%


20.8%




Interest-only schemes < 10%




























Owner-occupied homes and vacation homes


7.5%


7.9%


7.9%


8.3%


8.4%


7.9%




Loans with frequent interest-rate fixing:




























Refinancing (annually) < 25%


20.8%


19.9%


24.9%


20.7%


17.2%


19.9%




Refinancing (quarterly) < 12.5%


5.5%


4.7%


7.0%


4.0%


4.7%


4.7%




 
BRFkredit a/s meets all the benchmarks of the supervisory diamond.




 
Additional information
For further information, please see www.jyskebank.info. Here you will find an interview with Anders Dam, CEO and Managing Director, detailed financial information as well as Jyske Bank's Annual Report 2017 and Risk and Capital Management 2017, which give further information about Jyske Bank's internal risk and capital management as well as regulatory issues, including a description of the most important risks and elements of uncertainty that may affect Jyske Bank.
 
Also, please see www.brf.dk. BRFkredit's interim financial report for the first quarter of 2018, the Annual Report for 2017 and detailed financial information about BRFkredit are available on that website.
 
Contact persons:
Anders Dam (+45 89 89 89 89)
Birger Krøgh Nielsen (+45 89 89 64 44)
 
 
 
 
 
 
 




 
Business segments
 
The business segments reflect all activities with respect to banking, mortgage and leasing, inclusive of investing activities relating to clients' regular transactions. The investment portfolio earnings of the legal entities related to the activities of the relevant entities.
 
Banking activities
 











































 

















































Q1
2018




Q1
 2017




Index 18/17




Q1
2018




Q4
 2017




Q3
2017




Q2
2017




Q1
 2017




Year
2017



 




Net interest income


789


804


98


789


938


815


800


804


3,357


 




Net fee and commission income


468


412


114


468


572


391


393


412


1,768


 




Value adjustments


-41


342


-


-41


13


97


82


342


534


 




Other income


57


47


121


57


-34


21


136


47


170


 




Core income


1,273


1,605


79


1,273


1,489


1,324


1,411


1,605


5,829


 




Core expenses


1,044


1,136


92


1,044


1,083


1,014


1,117


1,136


4,350


 




Core profit before loan impairment charges


229


469


49


229


406


310


294


469


1,479


 




Loan impairment charges


-154


-143


108


-154


-239


-201


-113


-143


-696


 




Core profit


383


612


63


383


645


511


407


612


2,175


 




Investment portfolio earnings


407


305


133


407


-16


136


88


305


513


 




Pre-tax profit


790


917


86


790


629


647


495


917


2,688


 












































 



























 












































 




Loans and advances


121.5


122.2


99


121.5


124.6


122.0


123.5


122.2


124.6


 




- of which traditional loans and advances


85.7


81.0


106


85.7


85.0


83.1


82.9


81.0


85.0


 




- of which new home loans


13.3


14.2


94


13.3


12.2


11.0


11.7


14.2


12.2


 




- of which repo loans


22.5


27.0


83


22.5


27.4


27.9


28.9


27.0


27.4


 




Total assets


238.1


244.6


97


238.1


240.4


238.5


242.9


244.6


240.4


 












































 




Deposits


154.8


155.3


100


154.8


159.8


154.6


157.0


155.3


159.8


 




- of which bank deposits


136.1


132.3


103


136.1


139.7


133.7


133.9


132.3


139.7


 




- of which repo deposits and tri-party deposits


18.7


23.0


81


18.7


20.1


20.9


23.1


23.0


20.1


 




Issued bonds


30.1


42.0


72


30.1


37.0


35.9


38.3


42.0


37.0


 












































 




Profit
Core profit from banking activities amounted to DKK 383m against DKK 612m for the corresponding period in 2017. The decline in core profit can primarily be attributed to value adjustments. 
 
Net interest income amounted to DKK 789m and was 2% below the level in the first quarter of 2017. The primary reasons for the reduction were falling interest rate margins on bank loans and advances for corporate clients and lower as well as negative reinvestment rates on the liquidity portfolio, which is mainly invested in Danish mortgage bonds with a short duration.
 
Net fee and commission income increased by 14% relative to the first quarter of 2017. Loan application fees still increased and amounted to DKK 42m against DKK 32m for the corresponding period in 2017. Fees from payment services as well as other fees and commission also increased decently relative to the first quarter of 2017.
 
Value adjustments amounted to DKK -41m against DKK 342m in the first quarter of 2017. To a considerable extent, widening of credit spreads on Danish mortgage bonds had a negative effect on value adjustments of bond holdings, including the liquidity portfolio.
 
Other income amounted to DKK 57m against DKK 47m in the first quarter of 2017.
 
For the first quarter of 2018, core expenses amounted to DKK 1,044m against DKK 1,136m for the corresponding period in 2017, i.e. a decline by 8%. Disregarding one-off expenses of DKK 110m in 2017, core expenses increased by 1%.
 
Business volume
Traditional loans and advances amounted to DKK 85.7bn against DKK 85.0bn at the end of 2017. Hence, this was the fourth quarter in a row where an increase in traditional bank loans and advances was recorded.
 
Bank deposits and issued bonds amounted to DKK 136.1bn and DKK 30.1bn, and both items fell relative to the level at the end of 2017, at which time they amounted to DKK 139.7bn and DKK 37.0bn, respectively.
 




 




Mortgage activities
 


























































































Q1
 2018




Q1
2017




Index 18/17




Q1
 2018




Q4 2017




Q3 2017




Q2 2017




Q1 2017




Year
2017





Administration margin income, etc.1


465


458


102


465


481


468


474


458


1,881




Other net interest income


19


-15


-


19


4


-31


-19


-15


-61




Net fee and commission income


66


63


105


66


77


69


53


63


262




Value adjustments


-27


3


-


-27


24


0


2


3


29




Other income


4


9


44


4


4


5


8


9


26




Core income


527


518


102


527


590


511


518


518


2,137




Core expenses


182


212


86


182


199


212


225


212


848




Core profit before loan impairment charges


345


306


113


345


391


299


293


306


1,289




Loan impairment charges


428


92


465


428


102


-20


28


92


202




Core profit


-83


214


-


-83


289


319


265


214


1,087




Investment portfolio earnings


0


44


-


0


-14


-1


20


44


49




Pre-tax profit


-83


258


-


-83


275


318


285


258


1,136




1 Administration margin income, etc. covers administration margin income as well as interest rate margin on jointly funded loans.




 
























































































Mortgage loans


309.5


287.4


108


309.5


306.8


303.0


295.8


287.4


306.8




Total assets


335.6


307.5


109


335.6


337.8


327.1


318.1


307.5


337.8














































Issued bonds


307.9


280.2


110


307.9


304.5


298.1


289.2


280.2


304.5



































 
The return on BRFkredit's portfolio of securities (investment portfolio earnings) was at the beginning of 2018 moved to core income under 'Other net interest income' and 'Value adjustments, etc.', respectively.
 
Previously the purpose of the portfolio of securities was to maximise the return within a certain exposure limit. Following the introduction of the new rules, especially the LCR and the SDO rules, etc., BRFkredit's portfolio of securities is typically and generally invested with a view to supporting mortgage loan operations. Therefore the portfolio of securities is generally invested in bonds, etc. with a short time to maturity and low interest-rate risk, which meet the LCR rules on liquid assets, etc., while the return on the portfolio is of secondary importance.
 
Profit/loss
The pre-tax profit on mortgage activities amounted to DKK -83m against DKK 258m for the same period in 2017. The profit was affected by the implementation of the new new impairment models and adjustments to IFRS 9, which resulted in a one-off adjustment of impairment charges by DKK 407m. Without this effect, the pre-tax profit came to DKK 324m.    
 
Administration margin income, etc. amounted to DKK 465m against DKK 458m in the first quarter of 2017. Administration margin income was positively affected by the increasing portfolio, yet negatively affected by falling administration margin rates. With respect to corporate clients, the falling administration margin rates can mainly be attributed to the improving credit quality of the portfolio. Likewise, in the Personal client area, a minor decline of the average administration margin rate was recorded, which could be attributed to a shift to products, for which administration margins are lower.
 
Other net interest income consists, among other things, of interest on the portfolio of securities, interest expenses for senior debt incurred in order to comply with SDO and rating requirements, as well as various interest income. The item amounted to an income of DKK 19m against an expense of DKK 15m in the first quarter of 2017. To some extent, the increase can be attributed to reclassification of the portfolio of securities and also to the fact that BRFkredit redeemed senior debt in January 2018.
                            
Net fee and commission income amounted to DKK 66m against DKK 63m in the first quarter of 2017. The reason for the unchanged level is that BRFkredit distributed the refinancing dates for adjustable-rate loans evenly over the year, and this resulted, among other things, in an increasingly even distribution of fee and commission income over the quarters of the year. In addition, the lending activity in the first quarter of 2018 was at practically the same level as in the corresponding period of 2017.
 
Value adjustments, etc. amounted to an expense of DKK 27m against an income of DKK 3m in the first quarter of 2017. The difference can, among other things, be attributed to investment losses on the portfolio of securities as well as a fair value adjustment of mortgage loans.
 
Core expenses amounted to DKK 182m against DKK 212m in the first quarter of 2017. The decline by DKK 30m can be attributed to the on-going adjustment of the staff as well as the fact that a number of work functions and areas have been outsourced to Jyske Bank. Based on group-internal service agreements, BRFkredit pays Jyske Bank to perform these tasks.
                            
Core profit before loan impairment charges and provisions for guarantees then amounted to DKK 345m against DKK 306m for the first quarter of 2017.
 
Total loan impairment charges and provisions for guarantees for the first quarter of 2018 came to an expense of DKK 428m. The impairment charges for the period were affected by the implementation of the new impairment models and adjustments to IFRS 9, which resulted in a one-off adjustment of impairment charges by DKK 407m.
 
Loan impairment charges and provisions for guarantees exclusive of adjustments then amounted to DKK 21m against an expense of DKK 92m in the first quarter of 2017. Relative to total loans, the effect from the impairment charges on the income statement, exclusive of adjustments, amounted to 0.01% (0.14% inclusive of adjustments) against 0.03% in the first quarter of 2017.
 
Rising property prices in the major urban areas have a positive effect on BRFkredit's collateral. The number of credit events observed are still falling, both in the personal client as well as the commercial segment.
 
Business volume
The positive trend in the business volume of mortgage activities continued in the first quarter of 2018, yet at a slower pace, as the volume grew from DKK 306.8bn at the end of 2017 to DKK 309.5bn, corresponding to a growth of 0.9%.
 
The development in the first quarter of 2018 can chiefly be attributed to the corporate client segment.
 




 




Leasing activities
 




























































































Q1
2018




Q1
2017




Index 18/17




Q1
 2018




Q4
2017




Q3
 2017




Q2
 2017




Q1
2017




Year
2017





Net interest income


134


123


109


134


114


129


131


123


497




Net fee and commission income


-28


-28


100


-28


5


-24


-26


-28


-73




Value adjustments


0


1


-


0


1


-1


13


1


14




Other income


4


4


100


4


1


3


3


4


11




Income from operating lease (net)


26


16


163


26


-6


-43


-21


16


-54




Core income


136


116


117


136


115


64


100


116


395




Core expenses


46


42


110


46


44


44


46


42


176




Core profit before loan impairment charges


90


74


122


90


71


20


54


74


219




Loan impairment charges


34


6


567


34


-2


27


10


6


41




Pre-tax profit


56


68


82


56


73


-7


44


68


178





















































































































Loans and advances


16.8


15.3


110


16.8


16.2


16.0


15.7


15.3


16.2




Total assets


19.5


18.1


108


19.5


19.3


19.1


18.8


18.1


19.3














































Deposits


0.2


0.2


100


0.2


0.2


0.2


0.2


0.2


0.2

























 
Profit
In the first quarter of 2018, the segment Leasing developed in line with expectations. The positive development of net interest income was driven by a continued positive development for the volume of loans and advances. Income from operating lease increased compared to the previous quarters, which can be attributed, among other things, to the fact that in the first quarter of 2018 there was no need for further write-downs on the portfolio of cars as compared to the previous quarters.
 
Core income grew by 17% relative to the same period last year and was at a satisfactory level.
 
Compared to the same period last year, core expenses increased by 10%. The increase can primarily be attributed to increasing support costs in the Group and severance costs.
 
In the first quarter of 2018, the level of impairment charges was adversely affected by further impairment charges on one single exposure.
 
Business volume
Loans and advances grew by 10% relative to the same period last year, and this increase was achieved due to a large volume of new sales. A positive development of the volume of loans and advances is still expected for the coming period.


































DKKm











Q1
2018




Q1
2017



































Income statement














































5


Interest income










2,634


2,773




6


Interest expenses










1,209


1,243








Net interest income










1,425


1,530






























7


Fees and commission income










623


550








Fees and commission expenses










117


103








Net interest and fee income










1,931


1,977






























8


Value adjustments










278


578




9


Other income










255


230




10


Employee and administrative expenses










1,262


1,324








Amortisation, depreciation and impairment charges










131


191




12


Loan impairment charges










308


27








Pre-tax profit










763


1,243






























11


Tax










153


267








Net profit or loss for the period










610


976


































Distributed to:
























Jyske Bank A/S shareholders










579


957








Holders of additional tier capital










31


19








Total










610


976








 
 
























Earnings per share  for the period
























Earnings per share  for the period, DKK










6.79


10.73








Earnings per share  for the period, DKK, diluted










6.79


10.73




























































Statement of Comprehensive Income


















































Net profit or loss for the period










610


976








Other comprehensive income:
























Items that cannot be recycled to the income statement:
























Revaluation of real property










145


0








Tax on property revaluations    










-29


0








Items that can be recycled to the income statement:
























Foreign currency translation adjustment of international units










7


1








Hedge accounting of international units










-7


-1








Tax on hedge accounting










2


0








Other comprehensive income after tax










118


0


































Comprehensive income for the period










728


976




























































Distributed to:
























Jyske Bank A/S shareholders










697


957








Holders of additional tier 1 capital










31


19








Total










728


976






























 


































DKKm



31 March
2018




31 Dec.
2017




31 March
2017































BALANCE SHEET










































ASSETS




















Cash balance and demand deposits with central banks


18,975


19,347


3,706








Due from credit institutions and central banks


12,922


13,046


12,782




15, 16


Loans and advances at fair value


320,878


316,998


299,328




17


Loans and advances at amortised cost


126,867


130,675


125,586








Bonds at fair value


67,022


69,846


75,746








Bonds at amortised cost


2,905


4,280


4,039








Shares, etc.


5,172


4,972


4,574








Intangible assets


10


13


25








Property, plant and equipment


4,288


5,114


5,297








Tax assets


859


212


714








Assets held temporarily


1,580


577


591




18


Other assets


31,759


32,360


37,810








Total assets


593,237


597,440


570,198




















































EQUITY AND LIABILITIES










































Liabilities




















Due to credit institutions and central banks


25,647


17,959


15,260




19


Deposits


155,061


160,023


155,461




20


Issued bonds at fair value


307,854


302,601


276,502








Issued bonds at amortised cost


30,141


38,920


45,738




21


Other liabilities


34,442


37,238


40,517




22


Provisions


1,780


1,772


1,703




23


Subordinated debt


4,289


4,323


2,133








Liabilities, total


559,214


562,836


537,314






























Equity




















Share capital


892


892


950








Revaluation reserve


632


516


538








Currency translation reserve


0


0


0








Retained profit


29,971


30,093


29,418








Proposed dividend


0


522


499








Jyske Bank A/S shareholders


31,495


32,023


31,405








Holders of additional tier 1 capital


2,528


2,581


1,479








Total equity


34,023


34,604


32,884








Total equity and liabilities


593,237


597,440


570,198




















































OFF-BALANCE SHEET ITEMS






































17, 24


Guarantees, etc.


18,089


18,729


17,026




24


Other contingent liabilities, etc.


22,064


22,256


21,914








Total guarantees and other contingent liabilities


40,153


40,985


38,940




































































DKKm
















































Share
capital


Revalua-tion reserve


Cur-rency trans-lation reserve


Re-tained profit


Pro-posed
dividend


Jyske Bank A/S share-holders


Addi-tional tier 1 capital*


Total equity




Equity at 1 January 2018






892


516


0


30,093


522


32,023


2,581


34,604




Changes to accounting policies, IFRS 9






0


0


0


-628


0


-628


0


-628




Tax effect, IFRS 9






0


0


0


137


0


137


0


137




Adjusted equity, 1 January 2018






892


516


0


29,602


522


31,532


2,581


34,113




Net profit or loss for the period






0


0


0


579


0


579


31


610




Other comprehensive income:








































Revaluation of real property






0


145


0


0


0


145


0


145




Foreign currency translation for international units






0


0


7


0


0


7


0


7




Hedge of international units






0


0


-7


0


0


-7


0


-7




Tax on other comprehensive income






0


-29


0


2


0


-27


0


-27




Other comprehensive income after tax






0


116


0


2


0


118


0


118














































Comprehensive income for the period






0


116


0


581


0


697


31


728














































Interest paid on AT1 capital






0


0


0


0


0


0


-45


-45




Currency translation adjustment






0


0


0


39


0


39


-39


0




Tax






0


0


0


-2


0


-2


0


-2














































Dividends paid






0


0


0


0


-522


-522


0


-522




Dividends, own shares






0


0


0


24


0


24


0


24




Acquisition of own shares






0


0


0


-749


0


-749


0


-749




Sale of own shares






0


0


0


476


0


476


0


476




Transactions with owners






0


0


0


-212


-522


-734


-84


-818














































Equity at 31 March 2018






892


632


0


29,971


0


31,495


2,528


34,023














































Equity at 1 January 2017






950


538


-2


29,053


499


31,038


1,476


32,514














































Net profit or loss for the period






0


0


2


955


0


957


19


976




Other comprehensive income:








































Foreign currency translation for international units






0


0


1


0


0


1


0


1




Hedge of international units






0


0


-1


0


0


-1


0


-1




Tax on other comprehensive income






0


0


0


0


0


0


0


0




Other comprehensive income after tax






0


0


0


0


0


0


0


0














































Comprehensive income for the period






0


0


2


955


0


957


19


976














































Interest paid on AT1 capital






0


0


0


0


0


0


-19


-19




Currency translation adjustment






0


0


0


-3


0


-3


3


0




Tax






0


0


0


5


0


5


0


5














































Dividends paid






0


0


0


0


-499


-499


0


-499




Dividends, own shares






0


0


0


32


0


32


0


32




Proposed dividend  






0


0


0


-499


499


0


0


0




Acquisition of own shares






0


0


0


-633


0


-633


0


-633




Sale of own shares






0


0


0


508


0


508


0


508




Transactions with owners






0


0


0


-590


0


-590


-16


-606














































Equity at 31 March 2017






950


538


0


29,418


499


31,405


1,479


32,884




 
*Additional tier 1capital (AT1) has no maturity. Payment of interest and repayment of principal are voluntary. Therefore AT1 capital is recognised as equity. In September 2016, Jyske Bank issued AT1 amounting to SEK 1.25bn and DKK 500m. The AT1 issue with the possibility of early redemption in September 2021 at the earliest. The interest rates applicable to the issue until September 2021 are STIBOR+5.80% and CIBOR+5.30%, respectively. In September 2017, Jyske Bank made an issue amounting to EUR 150bn, AT1, with the possibility of early redemption in September 2027 at the earliest. The issue has a coupon of 4.75% until September 2027. It applies to all AT1 issues, that if the Common Equity Tier 1 capital of Jyske Bank A/S or the Jyske Bank Group falls below 7%, the loans will be written down.


















































DKKm



31 March

2018



31 Dec.

2017



31 March

2017






















Shareholders' equity


31,495


32,023


31,405




Net profit for the period not recognised in the capital base  


0


0


-957




Share buy-back programme, non-utilised limit


0


-281


-386




Expected/proposed dividend


-195


-522


-499




Intangible assets


-10


-13


-25




Deferred tax liabilities relating to intangible assets


2


3


6




Deferred tax assets  


-10


-10


0




Prudent valuation


-277


-271


-256




Difference between expected loss and the carrying amount of impairment charges


0


-174


-160




Other deductions


-117


-14


-120




Common Equity Tier 1 capital


30,888


30,741


29,008






















Additional Tier 1 capital after reduction


3,042


3,209


2,123




Other deductions


0


-27


-28




Core capital


33,930


33,923


31,103






















Subordinated loan capital after reduction


3,726


3,631


1,428




Other deductions


-275


-248


-247




Capital base


37,381


37,306


32,284






















Weighted risk exposure involving credit risk etc.


154,634


149,906


143,538




Weighted risk exposure involving market risk


15,313


21,355


23,003




Weighted risk exposure involving operational risk


16,887


16,737


16,737




Total weighted risk exposure


186,834


187,998


183,278






















Capital requirement, Pillar I


14,947


15,040


14,662




Capital requirement, transitional provisions


0


4,204


3,921




Capital requirement, total


14,947


19,244


18,583






















Capital ratio


20.0


19.8


17.6




Core Tier 1 Capital ratio (%)


18.2


18.0


17.0




Common Equity Tier 1 capital ratio (%)


16.5


16.4


15.8




 
 
Transitional rules for capital requirements according to Basel I ended at the end of 2017.
 
For a statement of the individual solvency requirement, please see Risk and Capital Management 2017 or
 investor.jyskebank.com/investorrelations/capitalstructure.
























DKKm



Q1 2018




Q1 2017



















Net profit or loss for the period


610


976


















Adjustment for non-cash operating items and change in working capital


-143


-3,627




Cash flows from operating activities


467


-2,651


















Acquisition and sale of property, plant and equipment


-51


-250




Acquisition of intangible assets


-3


-7




Cash flows from investment activities


-54


-257


















Dividends paid


-522


-499




Dividends, own shares


24


32




Acquisition of own shares


-749


-633




Sale of own shares


476


508




Cash flows from financing activities


-771


-592


















Cash flow for the period


-358


-3,500


















Cash and cash equivalents, beginning of period


32,255


19,988


















Cash and cash equivalents, end of period


31,897


16,488


















Cash and cash equivalents, end of period, comprise:












Cash balance and demand deposits with central banks


18,975


3,706




Due from credit institutions and central banks


12,922


12,782




Cash and cash equivalents, end of period


31,897


16,488













































1


Accounting Policies




















The Interim Financial Report for the period 1 January to 31 March 2018 was prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Furthermore, the Interim Financial Report was prepared in accordance with the additional Danish disclosure requirements for the interim reports of listed financial undertakings.
 
Except for the implementation of the below new standards, IFRS 9 and IFRS 15, the accounting policies are unchanged compared to those applied to and described in detail in the Annual Report 2017.
 
IFRS 9 Financial Instruments.
IFRS 9 on Financial Instruments covers new provisions on classification and measurement of financial assets and liabilities, impairment of financial assets as well as hedge accounting. IFRS 9 replaced IAS 39 and took effect on 1 January 2018.
 
In accordance with the transitional provisions of IFRS 9, no adjustment of comparative figures was made, as it is not possible to apply the impairment provisions to previous financial years without any subsequent rationalisation.
 
Classification and measurement
According to IFRS 9, classification and measurement of financial assets are based on the business model for the financial assets and related contractual cash flows. In consequence of this, financial assets must be classified as one of the following categories:
 
·      Financial assets that are held to generate the contractual cash flows and where the contractual cash flows solely consist of interest and instalments on the outstanding amounts are measured after the time of the first recognition at amortised cost. As a typical example, this measurement category comprises loans, advances and bonds included in an investment portfolio that is, in general, held to maturity.
 
·      Financial assets held in a mixed business model where financial assets are held both with a view to generating the contractual cash flows and returns on sales and where the contractual cash flows on the financial assets in the mixed business model solely consist of interest and instalments on the outstanding amount are measured after the time of the first recognition at fair value through other comprehensive income. In connection with a subsequent sale, recirculation of the change in fair value will take place to the income statement. As a typical example, this measurement category comprises bonds included in the day-to-day liquidity management, unless they are used by a risk management system or an investment strategy based on fair values, cf. below.
 
·      Financial assets that do not belong under one of the above-mentioned business models or where the contractual cash flows do not solely consist of interest and instalments on the outstanding amounts are measured after the time of the first recognition at fair value through the income statement. As a typical example, this measurement category comprises shares, derivatives and financial assets, which are otherwise included in the trading portfolio or in a risk management system or an investment strategy based on fair values and, on this basis, are included in the bank's internal management reporting. Moreover, financial assets can be measured at fair value through the income statement, if the measurement according to the two above-mentioned business models results in a recognition or accounting mismatch.
 
Based on Jyske Bank's assessment of the business models in IFRS 9, no material changes to classification and measuring will take place. Mortgage loans and certain other home loans are still measured at fair value though the income statement, and other loans and advances will still be measured at amortised cost. Jyske Bank has no financial assets that fall under the new measurement category with recognition of financial assets at fair value through Other comprehensive income. Instead, Jyske Bank's bond portfolio will be measured at fair value through the income statement either because they are included in a trading portfolio or because they are used by a risk management system or an investment strategy based on fair values and, on this basis, are included in the bank's internal management reporting, except for a minor holding of bonds that is kept under a business model where the bonds will be measured at amortised cost.
 
Impairment charges
IFRS 9 implies earlier recognition of impairment charges on financial assets at amortised cost, provisions for losses on guarantees and unutilised credit facilities, as the previous impairment model, which was based on objective evidence of impairment, will be replaced by an impairment model based on expected losses.  Therefore, already at the first recognition, impairment charges corresponding to a 12-month expected credit loss must be recognised. If, subsequently, the credit risk on the asset increases materially, the expected credit loss over the remaining life of the loan will be recognised.
 
According to the new rules, financial assets must be divided into three stages depending on any deterioration of the debtor's credit rating relative to the first recognition. Stage 1 covers exposures without material deterioration in credit quality, while stage 2 covers assets with significant deterioration in credit quality, and stage 3 covers exposures in default. The ranking in the various stages will affect the calculation method applied, and it is determined, among other things, on the basis of the change in the probability of default (PD) over the expected remaining life of the exposure. The definition of default applied is the same as the one applied in the Group's advanced IRB set-up.
 
 
























1


Accounting Policies, cont.








One characteristic of this is that it is assessed to be most probable that liabilities relating to assets cannot be honoured on the agreed terms and conditions.   Assessment of whether any material increase in credit risk has taken place will be based on the following circumstances:
 
a)    An increase in the PD for the expected remaining life of the financial asset by 100% and an increase in the 12-month PD of 0.5 percentage point when, at the first recognition, the 12-month PD was below 1.0%.
 
b)    An increase in the PD for the expected remaining life of the financial asset by 100% or an increase in the 12-month PD of 2.0 percentage points when, at the first recognition, the 12-month PD was 1.0% or above.
 
c)    The account manager's risk assessment, which among other things is based on an assessment of the client's ability and will to honour his payment obligations, possibly arrears and/or changes to the initial assumptions on which the client relationship rests.
 
The expected future loss is calculated on the basis of the probability of default (PD), the exposure at default (EaD) and the loss given default (LGD). These parameters are based on the Group's advanced IRB set-up, which is based on the bank's experience of loss history and early repayments, among other things.
 
For exposures in stage 1, impairment charges corresponding to probability-weighted losses expected over the following 12 months are recognised, while for exposures in stages 2 and 3 impairment charges corresponding to losses expected over the remaining life of the exposures are recognised.
 
The assessment of the indication of impairment for stage 3 exposures is based on individual expert assessments of the probability-weighted expected loss. The new rules have not resulted in any material changes in the extent of impairment of these exposures.
 
For financial assets measured at fair value, the expected element of credit exposure in the determination of fair value follows to a high degree the principles of the impairment model as described above for financial assets recognised at amortised cost. 
 
Implementation by and effect on Jyske Bank
Due to the implementation of the new impairment models, the Jyske Bank Group's balance of impairment charges increased by DKK 1,035m.  The amount includes both loans and advances at amortised cost and loans and advances at fair value. 
 
The amount from loans and advances at amortised cost, guarantees and unutilised credit lines is DKK 628m.  The amount is accounted for as a change in practice, and after a tax effect of DKK 137m it was recognised at net DKK 491m in equity on 1 January 2018.
 
The amount from loans and advances at fair value was DKK 407m. The amount is accounted for as a changed estimate, and with the ensuing tax effect it is recognised in the income statement for the first quarter of 2018.
 
A negative accounting outcome from the new expectations-based IFRS 9 impairment rules will basically have a corresponding effect on the capital position. To soften the potential, negative effect on and hence credit institutions' possibility of supporting the granting of credit, the European Commission has proposed a 5-year transitional arrangement so that any negative effect from the new IFRS 9 impairment rules will only take full effect after five years.  Jyske Bank has chosen not to make use of the possibility of a 5-year transition period.
 
Hedge accounting
The new rules on hedge accounting will ensure application of the hedging rules and then to a higher degree bring the companies' financial reporting in line with the companies' actual risk management.
 
The changed rules on hedge accounting are not expected to affect Jyske Bank as the existing hedging relationship also qualify as effective hedging relationship according to the new rules.
 
IFRS 15, Revenue from Contracts with Customers
IFRS 15 is a new standard that has been approved for use in the EU and took effect on 1 January 2018. The standard prescribes a five-step model, which is a process to ensure a systematic assess of all elements in contracts with clients. The standard did not have any impact on Jyske Bank's financial statements.
 
IFRS 16, Leases
IFRS 16 is a new standard that has been approved for use in the EU and will take effect on 1 January 2019. In consequence of the standard, practically all lease agreements must be recognised in the balance sheet of the lessee's financial statements in the form of a lease liability and an asset representing the lessee's right of use of the underlying asset. A distinction will no longer be made between operating and financial leases. The accounting treatment of leasing in the lessor's financial statements is practically unchanged. It is not expected that the standard will have any material impact on Jyske Bank's financial statements.
 
























2


Material accounting estimates




















Measurement of the carrying value of certain assets and liabilities requires the management's estimate of the influence of future events on the value of such assets and liabilities. Estimates of material importance to the financial reporting are, among other things, based on the impairment of loans and advances, the fair value of unlisted financial instruments and provisions already made, cf. the detailed statement in the Annual Report 2017. The estimates are based on assumptions which management finds reasonable, but which are inherently uncertain. Besides, the Group is subject to risks and uncertainties which may cause results to differ from those estimates.














 




 










































DKKm



Q1
2018




Q4
 2017




Q3
 2017




Q2
 2017




Q1
 2017



































3


Key figures and ratios, five quarters


























































Summary of Income Statement




























Net interest income


1,425


1,670


1,569


1,519


1,530








Net fee and commission income


506


653


434


420


447








Value adjustments


278


-71


174


105


578








Other income


255


140


165


287


230








Income


2,464


2,392


2,342


2,331


2,785








Expenses


1,393


1,507


1,454


1,551


1,515








Profit or loss before loan impairment charges


1,071


885


888


780


1,270








Loan impairment charges


308


-92


-70


-44


27








Pre-tax profit


763


977


958


824


1,243








Tax


153


197


210


185


267








Net profit or loss for the period


610


780


748


639


976




































































Financial ratios and key figures




























Pre-tax profit, per share (DKK)*


8.6


10.9


10.7


9.1


13.7








Earnings per share  for the period (DKK)*


6.8


8.6


8.3


7.0


10.7








Earnings per share for the period (diluted)  (DKK)*


6.8


8.6


8.3


7.0


10.7








Core profit per share (DKK)*


3.8


11.2


9.1


7.9


9.8








Share price at end of period (DKK)


358


353


363


377


353








Book value per share (DKK)*


371


374


363


355


353








Price/book value per share (DKK)*


1.0


0.9


1.0


1.1


1.0








Outstanding shares in circulation ('000)


84,934


85,705


87,389


88,198


88,854








Average number of shares in circulation ('000)


85,312


86,476


87,967


88,496


89,102








Capital ratio


20.0


19.8


19.8


19.4


17.6








Core Tier 1 Capital ratio (%)


18.2


18.0


18.0


17.6


17.0








Common Equity Tier 1 capital ratio (%)


16.5


16.4


16.2


16.5


15.8








Pre-tax profit as a pct. of average equity


2.3


3.0


3.0


2.6


3.9








Profit for the period as a pct. of av. equity*


1.8


2.3


2.3


2.0


3.1








Income/cost ratio (%)


1.4


1.7


1.7


1.5


1.8








Interest-rate risk (%)


0.9


0.8


0.9


0.7


0.8








Currency risk (%)


0.1


0.1


0.1


0.1


0.1








Accumulated impairment ratio (%)


1.2


1.1


1.2


1.2


1.3








Impairment ratio for the period (%)


0.1


0.0


0.0


0.0


0.0








No. of full-time employees at end-period


3,899


3,971


4,003


3,988


4,024








Average number of full-time employees in the period


3,935


3,987


3,996


4,006


4,003






































*Financial ratios are calculated as if AT1 capital is recognised as a liability.




 
 




 






















 
DKKm
 












4


Segmental financial statements







Banking activities
 




Mortgage activities




Leasing activities
 




The Jyske Bank
Group *









Q1 2018




























Net interest income






789


484


134


1,407








Net fee and commission income






468


66


-28


506








Value adjustments






-41


-27


0


-68








Other income






57


4


4


65








Income from operating lease (net)






0


0


26


26








Core income






1,273


527


136


1,936








Core expenses






1,044


182


46


1,272








Core profit before loan impairment charges






229


345


90


664








Loan impairment charges






-154


428


34


308








Core profit






383


-83


56


356








Investment portfolio earnings






407


0


0


407








Pre-tax profit






790


-83


56


763




































































Loans and advances






121,526


309,461


16,758


447,745








- of which mortgage loans






0


309,461


0


309,461








- of which bank loans






99,002


0


16,758


115,760








- of which repo loans






22,524


0


0


22,524








Total assets






238,126


335,613


19,498


593,237






































Deposits






154,845


0


216


155,061








- of which bank deposits






136,156


0


216


136,372








- of which repo deposits and tri-party deposits






18,689


0


0


18,689








Issued bonds






30,141


307,854


0


337,995






































Q1 2017




























Net interest income






804


443


123


1,370








Net fee and commission income






412


63


-28


447








Value adjustments






342


3


1


346








Other income






47


9


4


60








Income from operating lease (net)






0


0


16


16








Core income






1,605


518


116


2,239








Core expenses






1,136


212


42


1,390








Core profit before loan impairment charges






469


306


74


849








Loan impairment charges






-143


92


6


-45








Core profit






612


214


68


894








Investment portfolio earnings






305


44


0


349








Pre-tax profit






917


258


68


1,243




































































Loans and advances






122,224


287,380


15,310


424,914








- of which mortgage loans






0


287,380


0


287,380








- of which bank loans






95,215


0


15,310


110,525








- of which repo loans






27,009


0


0


27,009








Total assets






244,613


307,496


18,089


570,198






































Deposits






155,252


0


209


155,461








- of which bank deposits






132,259


0


209


132,468








- of which repo deposits and tri-party deposits






22,993


0


0


22,993








Issued bonds






42,024


280,216


0


322,240








 
* Relationships between income statement items under 'The Jyske Bank Group' (key financial data) and the income statement page 24 appear from page 9 in the Management's review.



















 
DKKm
 
















4


Segmental financial statements, cont.






Q1 2018


Q1 2017






























Revenue by country






Revenue


Full-time employees, end of period


Revenue


Full-time employees, end of period








Denmark






3,390


3,750


3,458


3,917








Gibraltar






35


97


35


98








Germany






1


9


4


9








Spain






0


0


0


0








Total






3,426


3,856


3,497


4,024






































Revenue is defined as interest income, fee and commission income and also other operating income.


















Jyske Bank has activities in the countries stated below in the form of subsidiaries or branches. The names of the subsidiaries appear from the group chart.


















Activities in individual countries:








Denmark: The Jyske Bank Group has activities within banking and mortgage banking, trading and wealth management advice as well as leasing.








Gibraltar: The Jyske Bank Group has activities within banking as well as trading and wealth management advice.








Germany: The Jyske Bank Group has activities within banking.








Spain: The Jyske Bank Group has activities within properties.
























 




 






























DKKm







Q1 2018




Q1 2017



























5


Interest income




















Due from credit institutions and central banks






0


-1








Loans and advances






1,903


2,071








Contribution






407


410








Bonds






214


276








Derivatives, total






102


49








Of which:




















    Currency contracts






94


16








    Interest-rate contracts






8


33








Other






0


0








Total






2,626


2,805








Interest on own mortgage bonds, set off against interest on issued bonds






81


101








Total after offsetting of negative interest






2,545


2,704








Negative interest income set off against interest income






48


33








Negative interest expenses set off against interest expenses






41


36








Total before offsetting of negative interest income






2,634


2,773






























Negative interest income amounted to DKK 89m (2017: DKK 69m) and related primarily to repo transactions. In the above table, negative interest income is set off against interest income. In the income statement, negative interest income is listed as interest expenses, and negative interest expenses are listed as interest income.




























































6


Interest expenses




















Due to credit institutions and central banks






32


7








Deposits






-28


5








Issued bonds






1,137


1,232








Subordinated debt






25


12








Other






35


19








Total






1,201


1,275








Interest on own mortgage bonds, set off against interest on issued bonds






81


101








Total after offsetting of negative interest






1,120


1,174








Negative interest expenses set off against interest expenses






48


33








Negative interest income set off against interest income






41


36








Total before offsetting of negative interest income






1,209


1,243






























Negative interest expenses amounted to DKK 89m (2017: DKK 69m) and related primarily to repo transactions. In the above table, negative interest expenses are set off against interest expenses. In the income statement, negative interest expenses are listed as interest income, and negative interest income is listed as interest expenses.






































 




 






























DKKm







Q1 2018




Q1 2017



























7


Fees and commission income




















Securities trading and custody services






312


325








Money transfers and card payments






52


46








Loan application fees






101


81








Guarantee commission






28


19








Other fees and commissions






130


79








Total






623


550
















































8


Value adjustments




















Loans and advances at fair value






-1,015


779








Bonds






-111


116








Other investment securities






333


182








Currency






-4


78








Currency, interest-rate, share, commodity and other contracts as well as other derivatives






31


77








Issued bonds






1,037


-657








Other assets and liabilities






7


3








Total






278


578
















































9


Other income




















Income on real property






16


17








Profit on the sale of property, plant and equipment






0


1








Income from operating lease¹






132


133








Dividends, etc.






86


54








Profit on investments in associates and group enterprises






0


1








Other income






21


24








Total






255


230








 
¹) Expenses relating to operating lease affected the item Amortisation, depreciation and impairment charges in the amount of DKK 106m in the first quarter of 2018 against DKK 117m in the same period of 2017.


























 




 






























DKKm







Q1 2018




Q1 2017



























10


Employee and administrative expenses










































Employee expenses




















Wages and salaries, etc.






605


599








Pensions






88


82








Social security






78


81








Total






771


762






























Salaries and remuneration to management bodies




















Executive Board¹






10


7








Supervisory Board






1


1








Shareholders' Representatives






0


0








Total






11


8






























¹I The Executive Board had an average of 5.0 members in the first quarter of 2018 in line with the same period of 2017.










































Other administrative expenses




















IT






315


289








Other operating expenses






50


55








Other administrative expenses






115


210








Total






480


554






























Employee and administrative expenses, total






1,262


1,324
















































11


Effective tax rate




















Corporation tax rate in Denmark






22.0


22.0








Non-taxable income and non-deductible expenses, etc.






-2.0


-0.5








Total






20.0


21.5
















































 




 




































DKKm











Q1 2018




Q1 2017































12


Loan impairment charges and provisions for guarantees recognised in the income statement


















































Loan impairment charges/provisions for the period










395


74








Impairment charges on balances due from credit institutions in the period










3


0








Provisions for commitments and unutilised credit lines in the period










-32


-








Recognised as a loss, not covered by loan impairment charges/provisions










82


78








Recoveries










-99


-125








Loan impairment charges and provisions for guarantees recognised in the income statement










349


27








Recognised discount for acquired loans










41


72








Net effect on income statement










308


-45
























































13


Balance of loan impairment charges and provisions for guarantees incl. balance of discounts 


















































Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, beginning of period










5,656


6,816








Implementation of IFRS 9 and adjustments to the standard










623


-








Loan impairment charges/provisions for the period










363


74








Recognised as a loss, covered by impairment charges/provisions










-347


-243








Recognised losses covered by discounts for acquired loans










-1


-25








Recognised discount for acquired loans










-41


-72








Other movements










29


22








Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, end of period










6,282


6,572


































Loan impairment charges










5,482


5,374








Provisions for guarantees










220


416








Provisions for commitments and unutilised credit lines










126


-








Balance of loan impairment charges and provisions, end of period










5,828


5,790








Balance of discounts for acquired loans










454


782








Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, end of period










6,282


6,572


































The regulatory balance of loan impairment charges and provisions for guarantees does not include the discount balance for acquired loans and advances.








































































14


The balance of loan impairment charges and provisions for guarantees broken down by stages


Stage 1


Stage 2


Stage 3


Total


































Balance according to IAS 39, beginning of period














5,157








Transitional effect, IFRS 9, incl. effect on loans at fair value


645


1,352


4,195


1,035








Movements over the period, net


-17


-1


-346


-364








Balance of loan impairment charges and provisions, end of period


628


1,351


3,849


5,828


































of which bank loans at fair value


256


748


576


1,580






























 




 






























DKKm



31 March

2018



31 Dec.

2017



31 March

2017


























15


Loans and advances at fair value




















Mortgage loans, nominal value


302,265


298,239


280,968








Adjustment for interest-rate risk, etc.


8,162


9,189


6,933








Adjustment for credit risk¹


-1,523


-1,139


-1,094








Mortgage loans at fair value, total


308,904


306,289


286,807






























Arrears and outlays, total


134


101


96






























Other loans and advances


11,840


10,608


12,425






























Loans and advances at fair value, total


320,878


316,998


299,328






























¹Adjustment for credit risk is calculate so it allows for objective evidence whether loans and advances are impaired compared to the time of the establishment of the loans and advances.




























































16


Loans and advances at fair value broken down by property category




















Owner-occupied homes


168,139


167,351


157,982








Vacation homes


7,751


7,699


7,300








Subsidised housing (rental housing)


50,777


50,167


48,972








Cooperative housing


15,780


15,893


15,653








Private rental properties (rental housing)


38,808


37,225


32,526








Industrial properties


1,186


1,156


1,212








Office and business properties


34,046


33,356


32,039








Agricultural properties


84


56


48








Properties for social, cultural and educational purposes


4,212


4,041


3,505








Other properties


95


54


91








Total


320,878


316,998


299,328
















































17


Loans and advances at amortised cost and guarantees broken down by sector




















Public authorities


8,143


9,275


6,773






























Agriculture, hunting, forestry, fishing


7,222


7,203


6,567








Manufacturing, mining, etc.


7,961


7,649


8,167








Energy supply


4,717


4,980


4,407








Building and construction


3,226


3,494


3,817








Commerce


12,018


11,984


11,035








Transport, hotels and restaurants


4,181


3,832


3,759








Information and communication


1,074


1,114


875








Finance and insurance


29,834


35,714


35,475








Real property


15,615


14,244


12,874








Other sectors


7,305


7,464


6,471








Corporates, total


93,153


97,678


93,447






























Personal clients, total


43,660


42,451


42,392








Total


144,956


149,404


142,612
























































 




 






























DKKm



31 March
2018




31 Dec.
2017




31 March
2017














 




 




 





18


Other assets




















Positive fair value of derivatives


25,184


25,632


30,915








Assets in pooled deposits


3,983


4,208


4,432








Interest and commission receivable


431


464


556








Investments in associates


418


417


418








Prepayments


345


328


299








Investment properties


28


29


32








Other assets


1,370


1,282


1,158








Total


31,759


32,360


37,810






























Netting




















Positive fair value of derivatives, etc., gross


31,407


31,941


37,214








Netting of positive and negative fair value


6,223


6,309


6,299








Total


25,184


25,632


30,915






























Netting of fair value can be attributed to clearing of derivatives through a central clearing house (CCP clearing).






































19


Deposits




















Demand deposits


106,226


109,334


98,294








Term deposits


2,967


2,950


4,228








Time deposits


34,607


36,333


41,120








Special deposits


6,957


7,038


7,358








Pooled deposits


4,304


4,368


4,461








Total


155,061


160,023


155,461
















































20


Issued bonds at fair value




















Issued bonds at fair value, nominal value


336,527


332,462


309,187








Adjustment to fair value


8,371


9,300


7,109








Own mortgage bonds offset, fair value


-37,044


-39,161


-39,794








Total


307,854


302,601


276,502
















































21


Other liabilities




















Set-off entry of negative bond holdings in connection with repos/reverse repos


3,212


3,695


3,776








Negative fair value of derivatives, etc.


24,349


25,776


29,641








Interest and commission payable


1,894


2,221


2,113








Deferred income


143


135


144








Other liabilities


4,844


5,411


4,843








Total


34,442


37,238


40,517






























Netting




















Negative fair value of derivatives, etc., gross


30,572


32,085


35,940








Netting of positive and negative fair value


6,223


6,309


6,299








Total


24,349


25,776


29,641






























Netting of fair value can be attributed to clearing of derivatives through a central clearing house (CCP clearing).




























































22


Provisions




















Provisions for pensions and similar liabilities


606


602


565








Provisions for deferred tax


581


576


525








Provisions for guarantees


220


342


416








Other provisions


373


252


197








Total


1,780


1,772


1,703






























 
DKKm



31 March

2018



31 Dec.

2017



31 March

2017


























23


Subordinated debt




















Supplementary capital:




















Var. % bond loan EUR 300m  05.04.2029


2,235


2,234


0








Var. % bond loan SEK 600m  19.05.2026


435


454


468








3.25% bond loan SEK 400m  19.05.2026


290


303


312








6.73% bond loan      EUR  13.5m  2018-2026


100


101


112








Var. % bond loan       EUR  10m   13.02.2023


75


74


75








5.65% bond loan       EUR  10 m  27.03.2023


75


74


74








5.67% bond loan       EUR  10 m  31.07.2023


75


74


74












3,285


3,314


1,115








Hybrid core capital:




















Var. % bond loan       EUR 72.8m   Perpetual


542


542


541








Var. % bond loan       EUR 60.7m   Perpetual


452


452


451












994


994


992






























Subordinated debt, nominal


4,279


4,308


2,107








Hedging of interest-rate risk, fair value


10


15


26








Total


4,289


4,323


2,133






























Subordinated debt included in the capital base


4,245


4,278


2,075






























The above-mentioned issues of hybrid core capital do not meet the conditions for Additional Tier 1 Capital (AT1) in the Capital Requirements Regulation, CRR. The issues are recognised under liability other than provision according to IAS 32. 


























24


Contingent liabilities




















Guarantees




















Financial guarantees


13,768


14,169


12,299








Guarantee for losses on mortgage credits


1,662


1,712


1,833








Registration and refinancing guarantees


987


926


897








Other contingent liabilities


1,672


1,922


1,997








Total


18,089


18,729


17,026






























Other contingent liabilities




















Irrevocable credit commitments


21,967


22,151


21,819








Other


97


105


95








Total


22,064


22,256


21,914






























Financial guarantees are primarily payment guarantees, and the risk equals that involved in credit facilities.
 
Guarantees for losses on mortgage loans are typically provided as security for the most risky part of mortgage loans granted to personal clients and to a limited extent for loans secured on commercial real property. Guarantees for residential real property are within 80% and for commercial real property within 60%-80%, of the property value as assessed by a professional expert.
 
Registration and refinancing guarantees are provided in connection with the registration of new and refinanced mortgages. Such guarantees involve insignificant risk.
 
Other contingent liabilities include other forms of guarantees at varying degrees of risk, including performance guarantees. The risk involved is deemed to be less than the risk involved in, e.g., credit facilities subject to flexible drawdown.
 














 




 





































24


Contingent liabilities, cont.




















Jyske Bank is also a party to a number of legal disputes arising from its business activities. Jyske Bank estimates the risk involved in each individual case and makes any necessary provisions which are recognised under contingent liabilities. Jyske Bank does not expect such liabilities to have material influence on Jyske Bank's financial position.
 
Because of its statutory participation in the deposit guarantee scheme, the sector has paid an annual contribution of 2.5‰ of the covered net deposits until the assets of Pengeinstitutafdelingen (the financial institution fund) exceed 1% of the total net deposits covered, which level has been reached. According to Bank Package 3 and Bank Package 4, Pengeinstitutafdelingen bears the immediate losses attributable to covered net deposits and relating to the winding up of financial institutions in distress. Any losses in connection with the final winding up are covered by the Guarantee Fund's Afviklings- og Restruktureringsafdeling (settlement and restructuring fund), where Jyske Bank currently guarantees 9.93% of any losses.
 
The statutory participation in the resolution financing arrangements (Resolution Fund) as of June 2015 entailed that credit institutions pay an annual contribution over a 10-year period to a Danish national fund with a target size totalling 1% of the covered deposits. Credit institutions are to contribute according to their relative sizes and risk in Denmark, and the first contributions to the Resolution Fund were paid at the end of 2015. The Jyske Bank Group expects having to pay a total of about DKK 500m over a 10-year period.
 
Jyske Bank is a management company under Danish joint taxation. Therefore, according to the provisions of the Danish Company Taxation, Jyske Bank is liable as of the accounting year 2013 for corporation tax, etc. for the jointly taxed companies and as of 1 July 2012 for any liabilities to withhold tax on interest and dividends for the jointly taxed companies.
























25


Shareholders








On 6 September 2017, BRFholding a/s, Kgs. Lyngby, Danmark informed Jyske Bank that it owns 20.25% of the share capital. On 19 October 2012, MFS Investment Management, USA reported that it owns 5.14% of the share capital. According to Jyske Bank's Articles of Association, BRFholding a/s and MFS Investment Management have 4,000 votes each.
























26


Related parties








Jyske Bank is the banker of a number of related parties. Transactions between related parties are characterised as ordinary financial transactions and services of an operational nature. Transactions with related parties were executed on an arm's length basis or at cost.


















Over the period, there were no unusual transactions with related parties. Please see Jyske Bank's Annual Report 2017 for a detailed description of transactions with related parties.
 
 
 




27


Bonds provided as security








The Jyske Bank Group has deposited bonds with central banks and clearing houses, etc. in connection with clearing and settlement of securities and currency transactions as well as tri-party repo transactions totalling a market value of DKK 20,117m (end of 2017: DKK 17,012m).
 
In addition, the Jyske Bank Group has provided cash collateral in connection with CSA agreements in the amount of DKK 4,943m (at the end of 2017: DKK 5,224m) as well as bonds in the amount of DKK 1,396m (at the end of 2017: 1,470m).
 
Repo transactions involve an arrangement where bonds are provided as collateral for the amount borrowed. Repo transactions amounted to DKK 10,951m (end of 2017: DKK 11,725m).














 
               








































28


Notes on fair value




















 
Methods for measuring fair value
Fair value is the price that, at the time of measurement, would be obtained by selling an asset or paid for by transferring a liability in an ordinary transaction between independent market participants. The fair value may equal the book value where book value is recognised on the basis of underlying assets and liabilities measured at fair value.
 
For all assets listed on active markets, fair values are measured at official prices (the category "Quoted prices". Where no price is quoted, a different official price is used which is taken to reflect most closely the fair value (category: "Observable prices". Financial assets and liabilities of which quoted prices or other official prices are not available or are not taken to reflect the fair value are measured at fair value according to other evaluation techniques and other observable market information. In those cases where observable prices based on market information are not available or are not taken to be useful for measuring fair value, the fair value is measured by recognised techniques, including discounted future cash flows, and own expertise (category "non-observable prices").. The basis of the measurement may be recent transactions involving comparable assets or liabilities, interest rates, exchange rates, volatility, credit spreads, etc. Generally, the Group's unlisted shares are placed in this category.
 
Generally, quoted prices and observable input are obtained in the form of interest rates and equity and bond prices, exchange rates, forward premiums, volatilities, etc. from recognised stock exchanges and providers.
 
Specific details on methods for measuring fair value
Bonds at fair value, shares, assets linked to pooled deposits, and derivatives are measured at fair value in the accounts to the effect that the carrying amounts equal fair values.
 
Generally bonds are measured at prices quoted on a recognised stock exchange. Alternatively, prices are applied that are calculated on the basis of Jyske Bank's own measurement models based on a yield curve with a credit spread. Essentially, the calculated prices are based on observable input.
 
Generally equities, etc. are measured at prices quoted on a recognised stock exchange. Alternatively, prices are applied that are calculated on the basis of Jyske Bank's own measurement models based on observable input, shareholders' agreements, executed transactions, etc.  Unlisted equities are measured on the basis of discounted cash flow models (DCF).
 
Derivatives are measured on the basis of the following measurement techniques.
·      Forward exchange transactions are measured on the basis of forward premiums as well as exchange rates obtained.
·      Interest-rate and currency swaps are measured on the basis of exchange rates, interest points, interpolation between these, exchange rates as well as correction of credit risk (CVA and DVA). Client margins are amortised over the remaining time to maturity. Present value calculations with discounting is applied.
·      Futures are measured on the basis of prices obtained in the market for stock-exchange traded futures.
·      Options are measured on the basis of volatilities, correlation matrices, prices of underlying assets and exercise prices. For this purpose, option models, such as Black-Scholes, are applied.
Assets related to pooled deposits are measured according to the above principles.
 
Information about differences between recognised value and measurement of fair value








Loans and advances exclusive of mortgage loans and certain other home loans are recognised at amortised cost. The difference to fair value is assumed to be fees and commission received, costs defrayed in connection with lending, plus interest-rate-dependent value adjustment calculated by comparing current market rates with market rates at the time when the loans and advances were established. Changes in credit quality are assumed to be included under impairment charges both for carrying amounts and fair values.


















Subordinated debt and issued bonds exclusive of issues of mortgage bonds are recognised at amortised cost supplemented with the fair value of the hedged interest-rate risk. The difference to fair value was calculated on the basis of own-issue prices obtained externally.


















Deposits are recognised at amortised cost. The difference to fair value is assumed to be the interest-rate dependent value adjustment calculated by comparing current market rates with market rates at the time when the deposits were made.


















Balances with credit institutions are recognised at amortised cost. The difference to fair value is assumed to be the interest-rate dependent value adjustment calculated by comparing current market rates with market rates at the time when the transactions were established. Changes in the credit quality of balances with credit institutions are assumed to be included under impairment charges for loans, advances, and receivables. Changes in the fair values of balances due to credit institutions because of changes in Jyske Bank's own credit rating are not taken into account.
 








The calculated fair values of financial assets and liabilities recognised at amortised cost are materially non-observable prices (level 3) in the fair value hierarchy.
 






























DKKm














































28


Notes on fair value, cont.




























 
Information about changes in credit risk on derivatives with positive fair value.
In order to allow for the credit risk on derivatives for clients without objective evidence of impairment (OEI), the fair value is adjusted (CVA). Adjustments will also be made for clients with OEI, but on an individual basis.
 
For any given counterparty's total portfolio of derivatives, CVA is a function of the probability of the counterparty's probability of default  (PD), the expected positive exposure (EPE) as well as the loss given default (LGD). Credit default swaps (CDS) spreads should be used as the primary source for the probability of default in the CVA calculation. However, the Jyske Bank Group enters primarily to derivatives transactions with unlisted Danish counterparties, for which there only to a most limited extent exist CDS or CDS proxy spreads. As CDS spreads are not available for the majority of the portfolio of derivatives counterparties, risk-neutral PDs are used instead. The risk-neutral PDs are calculated on the basis of IRB PDs that are adjusted for the observable price of risk in the market (Sharpe Ratio measured on the basis of the OMX C20 index). By using risk-neutral PDs, it is achieved that the CVA  gets closer to the value it would have had if it had been calculated on the basis of market observable PDs. The calculation of CVA also allows for the expected development of the rating over time. This takes place on the basis of historical rating migrations. When determining the EPE, a model is used to establish the expected positive exposure to the counterparty's portfolio over the maturity of the derivatives. For LGD, internal estimates are used for the individual counterparty, adjusted for any collateral received as well as CSA  agreements concluded.
 
In addition to CVA, also an adjustment is made of the fair value of derivatives that have an expected future negative fair value. This takes place to allow for changes in the counterparties' credit risk against the Jyske Bank Group (debt valuation adjustment - DVA). The DVA takes place according to the same principles that apply to the CVA, yet PD for Jyske Bank is determined on the basis of Jyske Bank's external rating by Standard & Poor's. At the end of the first quarter of 2018, CVA and DVA amounted, on an accumulated basis, to net DKK 58m, which accumulated amount was recognised as an expense under value adjustment against an accumulated amount of DKK 70m at the end of 2017.
























29


Fair value of financial assets and liabilities
























The recognised value and fair value of assets classified as held-for-trading amounted to DKK 127.3 bn at the end of the first quarter of 2018 against DKK 134.1 bn at the end of 2017. The recognised value and fair value of liabilities classified as trading portfolio amounted to DKK 35.3 bn at the end of the first quarter of 2018 against DKK 38.6 bn at the end of 2017. The recognised value and fair value of assets classified as held-to-maturity amounted to DKK 2.9 bn and DKK 3.0 bn, respectively, at the end of the first quarter of 2018 against DKK 4.3 bn and 4.3 bn, respectively, at the end of 2017. The Group does not hold any assets classified as available-for-sale. The table shows the fair value of financial assets and liabilities and the carrying amounts. The re-statement at fair value of financial assets and liabilities shows a total unrecognised unrealised loss of DKK 265m at the end of the first quarter of 2018 against a loss of DKK 319m at the end of 2017.












31 March 2018


31 December 2017












Recognised value


Fair
Value


Recognised value


Fair
value








FINANCIAL ASSETS
























Cash balance and demand deposits with central banks


18,975


18,975


19,347


19,347








Due from credit institutions and central banks


12,922


12,921


13,046


13,045








Loans and advances at fair value


320,878


320,878


316,998


316,998








Loans and advances at amortised cost


126,867


127,033


130,675


130,831








Bonds at fair value


67,022


67,022


69,846


69,846








Bonds at amortised cost


2,905


2,960


4,280


4,336








Shares, etc.


5,172


5,172


4,972


4,972








Assets in pooled deposits


3,983


3,983


4,208


4,208








Derivatives


25,184


25,184


25,632


25,632








Total


583,908


584,128


589,004


589,215


































FINANCIAL LIABILITIES
























Due to credit institutions and central banks


25,647


25,650


17,959


17,963








Deposits


150,757


150,768


155,655


155,674








Pooled deposits


4,304


4,304


4,368


4,368








Issued bonds at fair value


307,854


307,854


302,601


302,601








Issued bonds at amortised cost


30,141


30,536


38,920


39,376








Subordinated debt


4,289


4,365


4,323


4,374








Derivatives


24,349


24,349


25,776


25,776








Total


547,341


547,826


549,602


550,132

















 















 














DKKm














































30


The fair value hierarchy


























































31 March 2018
Financial assets


Quoted prices


Observable prices


Non-observable
prices


Fair value
total


Recognised amount








Loans and advances at fair value


0


320,878


0


320,878


320,878








Bonds at fair value


12,586


54,436


0


67,022


67,022








Shares, etc.


2,069


910


2,193


5,172


5,172








Assets in pooled deposits


2,418


1,565


0


3,983


3,983








Derivatives


563


24,621


0


25,184


25,184








Total


17,636


402,410


2,193


422,239


422,239






































Financial liabilities




























Pooled deposits


0


4,304


0


4,304


4,304








Issued bonds at fair value


42,010


265,844


0


307,854


307,854








Derivatives


402


23,947


0


24,349


24,349








Total


42,412


294,095


0


336,507


336,507






































31 December 2017
Financial assets




























Loans and advances at fair value


0


316,998


0


316,998


316,998








Bonds at fair value


55,412


14,434


0


69,846


69,846








Shares, etc.


1,978


739


2,255


4,972


4,972








Assets in pooled deposits


2,398


1,810


0


4,208


4,208








Derivatives


367


25,265


0


25,632


25,632








Total


60,155


359,246


2,255


421,656


421,656






































Financial liabilities




























Pooled deposits


0


4,368


0


4,368


4,368








Issued bonds at fair value


283,416


19,185


0


302,601


302,601








Derivatives


303


25,473


0


25,776


25,776








Total


283,719


49,026


0


332,745


332,745






































The above table shows the fair value hierarchy for financial assets and liabilities recognised at fair value. It is the practice of the Group that if prices are not updated for two days, transfers will take place between the categories quoted prices and observable prices.






































NON-OBSERVABLE PRICES














Q1 2018


2017








Fair value, beginning of period


2,255


2,024








Transfers for the period


0


-73








Capital gain and loss for the period reflected in the income statement under value adjustments


66


149








Sales or redemptions


128


30








Purchases


0


185








Fair value, end of year


2,193


2,255






































Non-observable prices
Non-observable prices at the end of the first quarter of 2018 referred to unlisted shares recognised at DKK 2,193m against unlisted shares recognised at DKK 2,255m at the end of 2017. These are primarily sector shares. The measurements, which are associated with some uncertainty, are made on the basis of the shares' book value, market trades, shareholders' agreements as well as own assumptions and extrapolations, etc. In the cases where Jyske Bank calculates the fair value on the basis of the company's expected future earnings, a required rate of return of 15% p.a. before tax is applied. A change in the required rate of return of 1% will result in a change of the fair value of about DKK 35m. Capital gain and loss for the period on illiquid bonds and unlisted shares referred to assets held at the end of the first quarter of 2018. Jyske Bank finds it of little probability that the application of alternative prices in the measurement of fair value would result in a material deviation from the recognised fair value.
 
 
 
 


















 




 















 






























































30


Fair value hierarchy, cont.






































Non-financial assets recognised at fair value
Investment properties were recognised at a fair value of DKK 28m (end of 2017: DKK 29m). Fair value belongs to the category of non-observable prices calculated on the basis of a required rate of return of 7% (end of 2017: 7%)
 
Assets held temporarily comprise repossessed properties, equity investments and cars, etc. and similar assets held for sale. Assets held temporarily are recognised at the lower of cost and fair value less costs of sale. Assets held temporarily were recognised at DKK 1,580m (end of 2017: DKK 577m). Fair value belongs to the category of non-observable prices.    
 
Owner-occupied properties are recognised at the restated value corresponding to the fair value on the date of the revaluation less subsequent amortization, depreciation and impairment. The valuation of selected land and buildings is carried out with the assistance of external experts. Based on the returns method, the measurement takes place in accordance with generally accepted standards and with a weighted average required rate of return of 5.96% at the end of 2017. Owner-occupied properties were recognised at DKK 1,896m (2017: DKK 2,657m). The revalued amount belongs to the category of non-observable prices.





























































 




 















 






























































31


The Jyske Bank Group - overview
























31 March 2018


*


Currency


Share capital 1.000 units


Owner-ship
share (%)


Voting share
%


Assets, DKKm
end of 2017


Liabili-ties
 DKKm at the end of 2017


Equity DKKm, at the end of 2017


Ear-nings, DKKm
2017


Profit, DKKm
2017


















































 
Jyske Bank A/S


a


DKK


891,590










295,738


261,134


34,604


6,604


3,143


















































Subsidiaries












































BRFkredit a/s, Kgs. Lyngby


b


DKK


3,306,480


100


100


337,754


322,023


15,731


2,186


886




Ejendomsselskabet Nørreport 26, 8000 Århus C. A/S, Silkeborg


e


DKK


4,600


100


100


146


14


132


49


38




Jyske Bank (Gibraltar) Ltd.


a


GBP


26,500


100


100


6,501


5,987


514


149


-81




Jyske Bank (Gibraltar) Nominees Ltd.


d


GBP


0


100


100


0


0


0


0


0




Jyske Bank (Gibraltar) Management Ltd.


d


GBP


0


100


100


0


0


0


0


0




Jyske Bank (Gibraltar) Secretaries Ltd.


d


GBP


0


100


100


0


0


0


0


0




Trendsetter, S.L., Spain


e


EUR


706


100


100


16


0


16


0


0




Jyske Bank Nominees Ltd., London


d


GBP


0


100


100


0


0


0


0


0




Inmobiliaria Saroesma S.L., Spain


e


EUR


803


100


100


77


74


3


0


-4




Jyske Finans A/S, Silkeborg


c


DKK


100,000


100


100


19,167


18,017


1,150


983


145




Ejendomsselskabet af 01.11.2017 A/S, Silkeborg


e


DKK


500


100


100


10


9


1


0


0




Gl. Skovridergaard A/S, Silkeborg


e


DKK


500


100


100


31


26


5


18


-2




Sundbyvesterhus A/S, Silkeborg


e


DKK


518


100


100


113


17


96


6


2




Ejendomsselskabet af 1.10.2015 ApS, Silkeborg


c


DKK


500


100


100


125


123


2


1


1




Jyske Invest Fund Management A/S, Silkeborg


d  


DKK


76,000


100


100


357


72


285


362


5




Bytorv Horsens ApS, Gentofte (temporarily acquired)


e


DKK


1,080


100


100


286


423


-137


19


-62




 
All banks and mortgage credit institutions supervised by national financial supervisory authorities are subject to statutory capital requirements. Such capital requirements may limit intra-group facilities and dividend payments.
 
 










* Activity:












































a: Bank












































b: Mortgage credit












































c: Leasing, financing and factoring




































d: Investment and financing












































e: Properties and course activities






















































































The registered offices of the companies are in Silkeborg, unless otherwise stated.


























































 




 


































DKKm



Q1
2018




Q1
2017



























Income statement






























3


Interest income


874


981




4


Interest expenses


151


144








Net interest income


723


837


























Dividends, etc.


85


54




5


Fees and commission income


536


482








Fees and commission expenses


28


28








Net interest and fee income


1,316


1,345






















6


Value adjustments


288


545








Other operating income


173


54








Employee and administrative expenses


1,136


1,060








Amortisation, depreciation and impairment charges


20


50








Other operating expenses


5


5




7


Loan impairment charges


-153


-89








Profit on investments in associates and group enterprises


-3


256








Pre-tax profit


766


1,174


























Tax


156


198








Net profit or loss for the period


610


976


























Distributed to:
















Jyske Bank A/S shareholders


579


957








Holders of additional tier 1 capital


31


19








Total


610


976












































Statement of Comprehensive Income


































Net profit or loss for the period


610


976








Other comprehensive income:
















Items that cannot be recycled to the income statement:
















Revaluation of real property


145


0








Tax on property revaluations


-29


0








Items that can be recycled to the income statement:
















Foreign currency translation adjustment of international units


7


1








Hedge accounting of international units


-7


-1








Tax on hedge accounting


2


0








Other comprehensive income after tax


118


0


























Comprehensive income for the period


728


976


























































 




 






























DKKm



31 March

2018



31 Dec.

2017



31 March

2017






























BALANCE SHEET










































ASSETS




















Cash balance and demand deposits with central banks


18,880


19,244


3,657








Due from credit institutions and central banks


13,167


9,532


13,100




10


Loans and advances at fair value


11,417


10,154


11,947




8,9,10


Loans and advances at amortised cost


127,648


132,585


127,423








Bonds at fair value


57,818


62,030


71,838








Bonds at amortised cost


4,295


5,672


5,438








Shares, etc.


4,874


4,674


4,288








Investments in associates


408


407


407








Equity investments in group enterprises


17,681


17,731


15,073








Assets in pooled deposits


3,983


4,208


4,431








Intangible assets


0


1


8








Owner-occupied properties


1,769


2,020


2,126








Other property, plant and equipment


126


126


145








Current tax assets


1,075


436


1,071








Assets held temporarily


365


48


48








Other assets


26,370


26,782


31,893








Prepayments


96


88


79








Total assets


289,972


295,738


292,972






























EQUITY AND LIABILITIES




















Debt and payables




















Due to credit institutions and central banks


39,294


31,379


26,404




11


Deposits


144,970


149,935


145,825








Pooled deposits


4,303


4,368


4,461








Issued bonds at amortised cost


30,142


35,776


42,317








Other liabilities


31,817


34,251


37,803








Deferred income


29


18


26








Total debt


250,555


255,727


256,836






























Provisions




















Provisions for pensions and similar liabilities


572


568


530








Provisions for deferred tax


48


25


31








Provisions for guarantees


217


338


411








Other provisions


268


153


147








Provisions, total


1,105


1,084


1,119






























Subordinated debt


4,289


4,323


2,133






























Equity




















Share capital


892


892


950








Revaluation reserve


421


339


400








Currency translation reserve


0


0


0








Reserve according to the equity method


4,348


4,406


2,964








Retained profit


25,834


25,864


26,592








Proposed dividend


0


522


499








Jyske Bank A/S shareholders


31,495


32,023


31,405








Holders of additional tier 1 capital


2,528


2,581


1,479








Total equity


34,023


34,604


32,884








Total equity and liabilities


289,972


295,738


292,972






























OFF-BALANCE SHEET ITEMS




















Guarantees, etc.


18,490


19,226


17,114








Other contingent liabilities


2,493


3,103


2,848








Total guarantees and other contingent liabilities


20,983


22,329


19,962


























 




 












































DKKm


















































































Statement of changes in equity


Share
capital


Revaluation reserve


Currency translation
reserve


Reserve accor-ding to
the equity method


Retained profit


Proposed dividend


Shareholders of Jyske Bank A/S


 
 
 
Addi-tional tier 1 capital*


 
 
 
 
Total equity




Equity at 1 January 2018


892


339


0


4,406


25,864


522


32,023


2,581


34,604




Changed accounting policies, IFRS 9


0


0


0


-117


-511


0


-628


0


-628




Tax effect, IFRS 9


0


0


0


25


112


0


137


0


137




Adjusted equity, 1 January 2018


892


339


0


4,314


25,465


522


31,532


2,581


34,113




Net profit or loss for the period


0


0


0


0


579


0


579


31


610




Other comprehensive income


0


82


0


34


2


0


118


0


118




Comprehensive income for the period


0


82


0


34


581


0


697


31


728














































Interest paid on AT1 capital


0


0


0


0


0


0


0


 
-45


 
-45




Currency translation adjustment


0


0


0


0


39


0


39


-39


0




Tax


0


0


0


0


-2


0


-2


0


-2














































Dividends paid


0


0


0


0


0


-522


-522


0


-522




Dividends, own shares


0


0


0


0


24


0


24


0


24




Acquisition of own shares


0


0


0


0


-749


0


-749


0


-749




Sale of own shares


0


0


0


0


476


0


476


0


476




Transactions with owners


0


0


0


0


-212


-522


-734


-84


-818














































Equity 31 March 2018


892


421


0


4,348


25,834


0


31,495


2,528


34,023
























































































Equity at 1 January 2017


950


400


-2


2,964


26,227


499


31,038


1,476


32,514














































Net profit or loss for the period


0


0


2


0


955


0


957


19


976




Other comprehensive income


0


0


0


0


0


0


0


0


0




Comprehensive income for the period


0


0


2


0


955


0


957


19


976














































Interest paid on AT1 capital


0


0


0


0


0


0


0


-19


-19




Currency translation adjustment


0


0


0


0


-3


0


-3


3


0




Tax


0


0


0


0


5


0


5


0


5




 
Dividends paid


0


0


0


0


0


-499


-499


0


-499




Dividends, own shares


0


0


0


0


32


0


32


0


32




Proposed dividend


0


0


0


0


-499


499


0


0


0




Acquisition of own shares


0


0


0


0


-633


0


-633


0


-633




Sale of own shares


0


0


0


0


508


0


508


0


508




Transactions with shareholders


0


0


0


0


-590


0


-590


-16


-606














































Equity 31 March 2017


950


400


0


2,964


26,592


499


31,405


1,479


32,884














































*Additional tier 1 capital (AT1) has no maturity. Payment of interest and repayment of principal are voluntary. Therefore AT1 capital is recognised as equity. In September 2016, Jyske Bank issued AT1 amounting to SEK 1.25bn and DKK 500m. The AT1 issue with the possibility of early redemption in September 2021 at the earliest. The interest rates applicable to the issue until September 2021 are STIBOR+5.80% and CIBOR+5.30%, respectively. In September 2017, Jyske Bank made an issue amounting to EUR 150bn, AT1, with the possibility of early redemption in September 2027 at the earliest. The issue has a coupon of 4.75% until September 2027. It applies to all AT1 issues, that if the Common Equity Tier 1 capital of Jyske Bank A/S or the Jyske Bank Group falls below 7%, the loans will be written down.


























DKKm







31 March

2018



31 Dec.

2017



31 March

2017


























Capital statement










































Shareholders' equity






31,495


32,023


31,405




Net profit for the period not recognised in the capital base 






0


0


-957




Share buy-back programme, non-utilised limit






0


-281


-386




Expected/proposed dividend






-195


-522


-499




Intangible assets






0


-1


-8




Deferred tax liabilities relating to intangible assets






0


0


2




Prudent valuation






-247


-251


-234




Other deductions






-117


-14


-119




Common Equity Tier 1 capital






30,936


30,954


29,204


























Additional Tier 1 capital after reduction






3,042


3,209


2,123




Other deductions






0


-27


-28




Core capital






33,978


34,136


31,299


























Subordinated loan capital after reduction






3,726


3,631


1,428




Difference between expected loss and the carrying amount of impairment charges






0


77


124




Other deductions






-275


-248


-247




Capital base






37,429


37,596


32,604


























Weighted risk exposure involving credit risk etc.






102,841


99,523


96,801




Weighted risk exposure involving market risk






16,127


20,553


23,376




Weighted risk exposure involving operational risk






11,936


11,400


11,400




Total weighted risk exposure






130,904


131,476


131,577


























Capital requirement, Pillar I






10,472


10,518


10,526




Capital requirement, transitional provisions






0


276


102




Capital requirement, total






10,472


10,794


10,628


























Capital ratio






28.6


28.6


24.8




Core Tier 1 Capital ratio (%)






26.0


26.0


23.8




Common Equity Tier 1 capital ratio (%)






23.6


23.5


22.2








































 
Transitional rules for capital requirements according to Basel I ended at the end of 2017.
 
For the determination of individual solvency requirement, please see www.jyskebank.info.




 






























DKKm



Q1
2018




Q1
2017



























Notes






























1


Accounting Policies
















The Interim Financial Report of the parent company Jyske Bank A/S for the period 1 January to 31 March 2018
was prepared in accordance with the Danish Financial Business Act, including the Executive Order on
Financial Reports for Credit Institutions and Stockbrokers, etc.
 
The rules applying to recognition and measurement at Jyske Bank A/S are consistent with IFRS. 
With respect to classification and extent, the preparation for Jyske Bank A/S differs from the preparation for the Group. Please thee the full description of accounting policies in note 71 of the annual report 2017.
 
Figures in the financial statements are in Danish kroner, rounded to the nearest million in Danish kroner.
 
Changes to accounting policies
Reference is made to changes to the accounting policies of the Group, note 1, page 29.
 
Financial situation and risk information
Jyske Bank A/S is affected by the financial situation and the risk factors that are described in the management's review for the Group and reference is made to this.
















































2


Financial ratios and key figures
















Pre-tax profit p.a. as a percentage of average equity*


9.3


14.8








Profit for the period as a pct. of av. equity*


1.8


3.1








Income/cost ratio (%)


1.8


2.1








Capital ratio


28.6


24.8








Common Equity Tier 1 capital ratio (CET1 %)


23.6


22.2








Individual solvency requirement (%)


11.2


10.8








Capital base (DKKm)


37,429


32,604








Total risk exposure (DKKm)


130,904


131,581








Interest-rate risk (%)


0.8


0.5








Currency risk (%)


0.1


0.1








Accumulated impairment ratio (%)


2.6


3.0








Impairment ratio for the period (%)


-0.1


-0.1








No. of full-time employees at end-period


3,539


2,999








Average number of full-time employees in the period


3,483


2,991


























*Financial ratios are calculated as if additional tier 1 capital is recognised as a liability.






























3


Interest income
















Due from credit institutions and central banks


2


3








Loans and advances


574


682








Bonds


147


201








Derivatives, total


62


26








    Of which currency contracts


54


16








    Of which interest-rate contracts


8


10








Other


0


0








Total after offsetting of negative interest


785


912








Negative interest income set off against interest income


48


33








Negative interest expenses set off against interest expenses


41


36








Total before offsetting of negative interest income


874


981


























Of which interest income on reverse repos carried under:
















Due from credit institutions and central banks


-6


-5








Loans and advances


-23


-21





























 





























DKKm



Q1

2018



Q1

2017


























Notes






























4


Interest expenses
















Due to credit institutions and central banks


38


18








Deposits


-33


2








Issued bonds


32


43








Subordinated debt


25


12








Total after offsetting of negative interest


62


75








Negative interest expenses set off against interest expenses


48


33








Negative interest income set off against interest income


41


36








Total before offsetting of negative interest income


151


144


























Of which interest expenses on reverse repos carried under:
















Due to credit institutions and central banks


-13


-16








Deposits


-6


0








































5


Fees and commission income
















Securities trading and custody services


247


263








Money transfers and card payments


49


40








Loan application fees


42


32








Guarantee commission


27


18








Other fees and commissions


171


129








Total


536


482








































6


Value adjustments
















Loans and advances at fair value


8


20








Bonds


-140


79








Shares, etc.


333


181








Currency


-7


71








Currency, interest-rate, share, commodity and other contracts as well as other derivatives


72


163








Assets in pooled deposits


-160


128








Pooled deposits


160


-128








Other assets


1


0








Issued bonds


16


28








Other liabilities


5


3








Total


288


545






















 




 




































DKKm











Q1 2018




Q1 2017































7


Loan impairment charges and provisions for guarantees recognised in the income statement


















































Loan impairment charges/provisions for the period










-73


-13








Impairment charges on balances due from credit institutions in the period










2


0








Provisions for commitments and unutilised credit lines in the period










-32


-








Recognised as a loss, not covered by loan impairment charges/provisions










21


29








Recoveries










-54


-105








Loan impairment charges and provisions for guarantees recognised in the income statement










-136


-89








Recognised discount for acquired loans










-17


-55








Net effect on income statement










-153


-144
























































8


Balance of loan impairment charges and provisions for guarantees incl. balance of discounts 


















































Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, beginning of period










4,286


5,514








Implementation of IFRS 9 and adjustments to the standard










507


-








Loan impairment charges/provisions for the period










-106


-13








Recognised as a loss, covered by impairment charges/provisions










-290


-190








Recognised losses covered by discounts for acquired loans










-1


-13








Recognised discount for acquired loans










-17


-55








Other movements










19


24








Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, end of period










4,398


5,267


































Loan impairment charges










3,891


4,473








Provisions for guarantees










217


411








Provisions for commitments and unutilised credit lines










120


-








Balance of loan impairment charges and provisions, end of period










4,228


4,884








Balance of discounts for acquired loans










170


383








Balance of loan impairment charges and provisions for guarantees incl. balance of discounts, end of period










4,398


5,267


































The regulatory balance of loan impairment charges and provisions for guarantees does not include the discount balance for acquired loans and advances.








































































9


The balance of loan impairment charges and provisions for guarantees broken down by stages


Stage 1


Stage 2


Stage 3


Total


































Balance according to IAS 39, beginning of period














4,096








Transitional effect, IFRS 9


325


637


3,641


507








Movements over the period, net


-22


-34


-319


-375








Balance of loan impairment charges and provisions, end of period


303


603


3,322


4,228



























































































 




 


































































 
DKKm














































































10


Loans, advances and guarantees as well as loan impairment charges and provisions for guarantees by sector


















































Sector


Loans, advances and guarantees


Balance of loan impairment charges and provisions for guarantees


Loan impairment charges and provisions for guarantees for the period


 
 
 
Loss for
the period












%
31 March
2018


%
End of
2017


31 March
2018


End of
2017


31 March
2018


End of
2017


Q1
2018


Q1
2017


Q1
2018


Q1
2017


























































Public authorities


5


6


8,127


9,265


0


0


0


0


0


0


























































Agriculture, hunting, forestry, fishing


4


4


6,178


6,248


 
992


1,085


 
-75


-6


 
127


85








    Fishing


1


1


1,661


1,663


2


1


0


-1


0


0








    Dairy farmers


0


0


720


838


499


528


-44


6


49


50








    Plant farming


1


1


1,620


1,498


82


122


-8


-7


13


3








    Pig farming


1


1


1,063


1,069


293


329


-17


-1


46


20








    Other agriculture


1


1


1,114


1,180


116


105


-6


-3


19


12








Manufacturing, mining, etc.


4


4


6,580


6,091


240


197


6


-14


9


11








Energy supply


3


3


4,503


4,776


52


36


4


0


0


0








Building and construction


1


1


2,032


2,262


82


93


0


-9


6


19








Commerce


6


6


10,079


9,987


208


160


-5


0


5


15








Transport, hotels and restaurants


2


1


2,422


2,065


 
87


82


 
1


12


0


12








Information and communication


1


1


984


1,018


 
43


29


 
9


-30


3


0








Finance and insurance


31


33


48,571


52,748


661


716


-43


-47


42


2








Real property


10


9


15,483


14,399


549


555


1


7


60


28








    Lease of real property


6


5


9,019


8,469


463


484


4


23


57


28








    Buying and selling of real property


2


2


2,585


2,438


53


44


6


-7


3


0








    Other real property


2


2


3,879


3,492


33


27


-9


-9


0


0








Other sectors


3


3


5,292


5,884


132


153


-17


-6


29


1








Corporate clients


65


65


102,124


105,478


3,046


3,106


-119


-93


281


173


























































Personal clients


30


29


47,304


47,222


1,062


990


-4


4


30


46








Unutilised max and commitments, etc.


-


-


-


-


120


-


-30


-


0


-








 Total


100


100


 
157,555


161,965


4,228


4,096


-153


-89


311


219



























































































 



































31 March

2018



31 Dec.

2017



31 March

2017


























11


Deposits




















Demand deposits


101,288


104,521


93,436








Term deposits


2,966


2,950


4,228








Time deposits


33,759


35,427


40,803








Special deposits


6,957


7,037


7,358








Total


144,970


149,935


145,825




 




 
Statement by the Executive and Supervisory Boards
 




We have today discussed and approved the Interim Financial Report of Jyske Bank A/S for the period 1 January to 31 March 2018.
 
The consolidated Interim Financial Statements were prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU, and the Parent's Interim Financial Statements in accordance with the Danish Financial Business Act. Further, the Interim Financial Report was prepared in accordance with the additional Danish disclosure requirements for interim financial reports of listed financial companies.
 
The Interim Financial Report is unaudited and has not been reviewed, but the external auditor verified the profit, and this verification included audit procedures in line with the requirements relating to a review, and hence it was ascertained that the conditions for on-going recognition of the profit for the period in the capital base were met.
 
In our opinion, the Interim Financial Statements give a true and fair view of the Group's and the Parent's financial position at 31 March 2018 and also of their financial performance as well as the cash flows of the Group for the period 1 January to 31 March 2018.
 
In our opinion, the Management's Review gives a fair presentation of the development in the Group's and the Parent's performance and financial position, the profit for the period and the Group's and the Parent's financial position as a whole as well as a description of the most material risks and elements of uncertainty that may affect the Group and the Parent.
 
Silkeborg, 09 May 2018
 




 
 
EXECUTIVE BOARD
 
 
 




ANDERS DAM
Managing Director and CEO
 
 
 




NIELS ERIK JAKOBSEN
 


PETER SCHLEIDT
 
 
 


PER SKOVHUS
 
 




















/JENS BORUM
Director, Finance













 
 
 
SUPERVISORY BOARD
 
 




SVEN BUHRKALL
Chairman
 
 
 


KURT BLIGAARD PEDERSEN
Deputy Chairman
 




 


RINA ASMUSSEN
 
 
 


PHILIP BARUCH
 
 


JENS A. BORUP


KELD NORUP


 




JOHNNY CHRISTENSEN
Employee Representative


MARIANNE LILLEVANG
Employee Representative


CHRISTINA LYKKE MUNK
Employee Representative














 



This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
QRFSSDSMUFASEEI

 50%                                                     175%     228%     212%     223%     227%     228%
 
Jyske Bank A/S meets all the benchmarks of the supervisory diamond.
 
The supervisory diamond BRFkredit a/s
The supervisory diamond defines a number of special risk areas including
specified limits that financial institutions should generally not exceed. The
supervisory diamond takes effect in 2018 and 2020, respectively.
 
                                                                   Q1 2018  Q4 2017  Q3 2017  Q2 2017  Q1 2017  End of
                                                                                                                2017
 Concentration risk < 100%                                         49.4%    47.5%    57.0%    60.5%    63.2%    47.5%
 Increase in loans and advances < 15% annually in the segment:
 Owner-occupied homes and vacation homes                           7.0%     11.7%    12.1%    14.4%    15.8%    11.7%
 Residential rental property                                       7.9%     6.6%     6.6%     9.9%     6.7%     6.6%
 Agriculture                                                       -        -        -        -        -        -
 Other sectors                                                     6.5%     5.2%     4.5%     3.6%     6.7%     5.2%
 Borrower's interest-rate risk < 25%
 Residential property                                              20.1%    20.8%    20.8%    22.0%    23.3%    20.8%
 Interest-only schemes < 10%
 Owner-occupied homes and vacation homes                           7.5%     7.9%     7.9%     8.3%     8.4%     7.9%
 Loans with frequent interest-rate fixing:
 Refinancing (annually) < 25%                                      20.8%    19.9%    24.9%    20.7%    17.2%    19.9%
 Refinancing (quarterly) < 12.5%                                   5.5%     4.7%     7.0%     4.0%     4.7%     4.7%
 
BRFkredit a/s meets all the benchmarks of the supervisory diamond.
 
Additional information
For further information, please see www.jyskebank.info. Here you will find an
interview with Anders Dam, CEO and Managing Director, detailed financial
information as well as Jyske Bank's Annual Report 2017 and Risk and Capital
Management 2017, which give further information about Jyske Bank's internal
risk and capital management as well as regulatory issues, including a
description of the most important risks and elements of uncertainty that may
affect Jyske Bank.
 
Also, please see www.brf.dk. BRFkredit's interim financial report for the
first quarter of 2018, the Annual Report for 2017 and detailed financial
information about BRFkredit are available on that website.
 
Contact persons:
Anders Dam (+45 89 89 89 89)
Birger Krøgh Nielsen (+45 89 89 64 44)
 
 
 
 
 
 
 
 
Business segments
 
The business segments reflect all activities with respect to banking, mortgage
and leasing, inclusive of investing activities relating to clients' regular
transactions. The investment portfolio earnings of the legal entities related
to the activities of the relevant entities.
 
Banking activities
 
                                                       Q1                  Q1              Index 18/17              Q1              Q4              Q3              Q2          Q1             Year
                                                       2018                 2017                                    2018             2017           2017            2017         2017          2017
 Net interest income                                   789                 804             98                       789             938             815             800         804            3,357
 Net fee and commission income                         468                 412             114                      468             572             391             393         412            1,768
 Value adjustments                                     -41                 342             -                        -41             13              97              82          342            534
 Other income                                          57                  47              121                      57              -34             21              136         47             170
 Core income                                           1,273               1,605           79                       1,273           1,489           1,324           1,411       1,605          5,829
 Core expenses                                         1,044               1,136           92                       1,044           1,083           1,014           1,117       1,136          4,350
 Core profit before loan impairment charges            229                 469             49                       229             406             310             294         469            1,479
 Loan impairment charges                               -154                -143            108                      -154            -239            -201            -113        -143           -696
 Core profit                                           383                 612             63                       383             645             511             407         612            2,175
 Investment portfolio earnings                         407                 305             133                      407             -16             136             88          305            513
 Pre-tax profit                                        790                 917             86                       790             629             647             495         917            2,688
 Loans and advances                                    121.5           122.2           99                      121.5            124.6           122.0           123.5           122.2          124.6
 - of which traditional loans and advances             85.7            81.0            106                     85.7             85.0            83.1            82.9            81.0           85.0
 - of which new home loans                             13.3            14.2            94                      13.3             12.2            11.0            11.7            14.2           12.2
 - of which repo loans                                 22.5            27.0            83                      22.5             27.4            27.9            28.9            27.0           27.4
 Total assets                                          238.1           244.6           97                      238.1            240.4           238.5           242.9           244.6          240.4
 Deposits                                              154.8           155.3           100                     154.8            159.8           154.6           157.0           155.3          159.8
 - of which bank deposits                              136.1           132.3           103                     136.1            139.7           133.7           133.9           132.3          139.7
 - of which repo deposits and tri-party deposits       18.7            23.0            81                      18.7             20.1            20.9            23.1            23.0           20.1
 Issued bonds                                          30.1            42.0            72                      30.1             37.0            35.9            38.3            42.0           37.0
 
Profit
Core profit from banking activities amounted to DKK 383m against DKK 612m for
the corresponding period in 2017. The decline in core profit can primarily be
attributed to value adjustments.
 
Net interest income amounted to DKK 789m and was 2% below the level in the
first quarter of 2017. The primary reasons for the reduction were falling
interest rate margins on bank loans and advances for corporate clients and
lower as well as negative reinvestment rates on the liquidity portfolio, which
is mainly invested in Danish mortgage bonds with a short duration.
 
Net fee and commission income increased by 14% relative to the first quarter
of 2017. Loan application fees still increased and amounted to DKK 42m against
DKK 32m for the corresponding period in 2017. Fees from payment services as
well as other fees and commission also increased decently relative to the
first quarter of 2017.
 
Value adjustments amounted to DKK -41m against DKK 342m in the first quarter
of 2017. To a considerable extent, widening of credit spreads on Danish
mortgage bonds had a negative effect on value adjustments of bond holdings,
including the liquidity portfolio.
 
Other income amounted to DKK 57m against DKK 47m in the first quarter of 2017.
 
For the first quarter of 2018, core expenses amounted to DKK 1,044m against
DKK 1,136m for the corresponding period in 2017, i.e. a decline by 8%.
Disregarding one-off expenses of DKK 110m in 2017, core expenses increased by
1%.
 
Business volume
Traditional loans and advances amounted to DKK 85.7bn against DKK 85.0bn at
the end of 2017. Hence, this was the fourth quarter in a row where an increase
in traditional bank loans and advances was recorded.
 
Bank deposits and issued bonds amounted to DKK 136.1bn and DKK 30.1bn, and
both items fell relative to the level at the end of 2017, at which time they
amounted to DKK 139.7bn and DKK 37.0bn, respectively.
 
 
Mortgage activities
 
                                                    Q1             Q1     Index 18/17     Q1             Q4 2017  Q3 2017        Q2 2017         Q1 2017             Year
                                                     2018          2017                    2018                                                                      2017
 Administration margin income, etc.(1)              465            458    102             465            481      468            474             458                 1,881
 Other net interest income                          19             -15    -               19             4        -31            -19             -15                 -61
 Net fee and commission income                      66             63     105             66             77       69             53              63                  262
 Value adjustments                                  -27            3      -               -27            24       0              2               3                   29
 Other income                                       4              9      44              4              4        5              8               9                   26
 Core income                                        527            518    102             527            590      511            518             518                 2,137
 Core expenses                                      182            212    86              182            199      212            225             212                 848
 Core profit before loan impairment charges         345            306    113             345            391      299            293             306                 1,289
 Loan impairment charges                            428            92     465             428            102      -20            28              92                  202
 Core profit                                        -83            214    -               -83            289      319            265             214                 1,087
 Investment portfolio earnings                      0              44     -               0              -14      -1             20              44                  49
 Pre-tax profit                                     -83            258    -               -83            275      318            285             258                 1,136
 (1) Administration margin income, etc. covers administration margin income as
 well as interest rate margin on jointly funded loans.
 ( )
 Mortgage loans                                     309.5          287.4  108             309.5          306.8    303.0          295.8           287.4               306.8
 Total assets                                       335.6          307.5  109             335.6          337.8    327.1          318.1           307.5               337.8
 Issued bonds                                       307.9          280.2  110             307.9          304.5    298.1          289.2           280.2               304.5
 
The return on BRFkredit's portfolio of securities (investment portfolio
earnings) was at the beginning of 2018 moved to core income under 'Other net
interest income' and 'Value adjustments, etc.', respectively.
 
Previously the purpose of the portfolio of securities was to maximise the
return within a certain exposure limit. Following the introduction of the new
rules, especially the LCR and the SDO rules, etc., BRFkredit's portfolio of
securities is typically and generally invested with a view to supporting
mortgage loan operations. Therefore the portfolio of securities is generally
invested in bonds, etc. with a short time to maturity and low interest-rate
risk, which meet the LCR rules on liquid assets, etc., while the return on the
portfolio is of secondary importance.
 
Profit/loss
The pre-tax profit on mortgage activities amounted to DKK -83m against DKK
258m for the same period in 2017. The profit was affected by the
implementation of the new new impairment models and adjustments to IFRS 9,
which resulted in a one-off adjustment of impairment charges by DKK 407m.
Without this effect, the pre-tax profit came to DKK 324m.
 
Administration margin income, etc. amounted to DKK 465m against DKK 458m in
the first quarter of 2017. Administration margin income was positively
affected by the increasing portfolio, yet negatively affected by falling
administration margin rates. With respect to corporate clients, the falling
administration margin rates can mainly be attributed to the improving credit
quality of the portfolio. Likewise, in the Personal client area, a minor
decline of the average administration margin rate was recorded, which could be
attributed to a shift to products, for which administration margins are lower.
 
Other net interest income consists, among other things, of interest on the
portfolio of securities, interest expenses for senior debt incurred in order
to comply with SDO and rating requirements, as well as various interest
income. The item amounted to an income of DKK 19m against an expense of DKK
15m in the first quarter of 2017. To some extent, the increase can be
attributed to reclassification of the portfolio of securities and also to the
fact that BRFkredit redeemed senior debt in January 2018.
 
Net fee and commission income amounted to DKK 66m against DKK 63m in the first
quarter of 2017. The reason for the unchanged level is that BRFkredit
distributed the refinancing dates for adjustable-rate loans evenly over the
year, and this resulted, among other things, in an increasingly even
distribution of fee and commission income over the quarters of the year. In
addition, the lending activity in the first quarter of 2018 was at practically
the same level as in the corresponding period of 2017.
 
Value adjustments, etc. amounted to an expense of DKK 27m against an income of
DKK 3m in the first quarter of 2017. The difference can, among other things,
be attributed to investment losses on the portfolio of securities as well as a
fair value adjustment of mortgage loans.
 
Core expenses amounted to DKK 182m against DKK 212m in the first quarter of
2017. The decline by DKK 30m can be attributed to the on-going adjustment of
the staff as well as the fact that a number of work functions and areas have
been outsourced to Jyske Bank. Based on group-internal service agreements,
BRFkredit pays Jyske Bank to perform these tasks.
 
Core profit before loan impairment charges and provisions for guarantees then
amounted to DKK 345m against DKK 306m for the first quarter of 2017.
 
Total loan impairment charges and provisions for guarantees for the first
quarter of 2018 came to an expense of DKK 428m. The impairment charges for the
period were affected by the implementation of the new impairment models and
adjustments to IFRS 9, which resulted in a one-off adjustment of impairment
charges by DKK 407m.
 
Loan impairment charges and provisions for guarantees exclusive of adjustments
then amounted to DKK 21m against an expense of DKK 92m in the first quarter of
2017. Relative to total loans, the effect from the impairment charges on the
income statement, exclusive of adjustments, amounted to 0.01% (0.14% inclusive
of adjustments) against 0.03% in the first quarter of 2017.
 
Rising property prices in the major urban areas have a positive effect on
BRFkredit's collateral. The number of credit events observed are still
falling, both in the personal client as well as the commercial segment.
 
Business volume
The positive trend in the business volume of mortgage activities continued in
the first quarter of 2018, yet at a slower pace, as the volume grew from DKK
306.8bn at the end of 2017 to DKK 309.5bn, corresponding to a growth of 0.9%.
 
The development in the first quarter of 2018 can chiefly be attributed to the
corporate client segment.
 
 
Leasing activities
 
                                             Q1              Q1        Index 18/17     Q1          Q4        Q3          Q2          Q1     Year
                                             2018            2017                       2018       2017       2017        2017       2017   2017
 Net interest income                         134             123       109             134         114       129         131         123    497
 Net fee and commission income               -28             -28       100             -28         5         -24         -26         -28    -73
 Value adjustments                           0               1         -               0           1         -1          13          1      14
 Other income                                4               4         100             4           1         3           3           4      11
 Income from operating lease (net)           26              16        163             26          -6        -43         -21         16     -54
 Core income                                 136             116       117             136         115       64          100         116    395
 Core expenses                               46              42        110             46          44        44          46          42     176
 Core profit before loan impairment charges  90              74        122             90          71        20          54          74     219
 Loan impairment charges                     34              6         567             34          -2        27          10          6      41
 Pre-tax profit                              56              68        82              56          73        -7          44          68     178
 Loans and advances                          16.8            15.3      110             16.8        16.2      16.0        15.7        15.3   16.2
 Total assets                                19.5            18.1      108             19.5        19.3      19.1        18.8        18.1   19.3
 Deposits                                    0.2             0.2       100             0.2         0.2       0.2         0.2         0.2    0.2
 
Profit
In the first quarter of 2018, the segment Leasing developed in line with
expectations. The positive development of net interest income was driven by a
continued positive development for the volume of loans and advances. Income
from operating lease increased compared to the previous quarters, which can be
attributed, among other things, to the fact that in the first quarter of 2018
there was no need for further write-downs on the portfolio of cars as compared
to the previous quarters.
 
Core income grew by 17% relative to the same period last year and was at a
satisfactory level.
 
Compared to the same period last year, core expenses increased by 10%. The
increase can primarily be attributed to increasing support costs in the Group
and severance costs.
 
In the first quarter of 2018, the level of impairment charges was adversely
affected by further impairment charges on one single exposure.
 
Business volume
Loans and advances grew by 10% relative to the same period last year, and this
increase was achieved due to a large volume of new sales. A positive
development of the volume of loans and advances is still expected for the
coming period.
     DKKm                                                                  Q1     Q1
                                                                           2018   2017
     Income statement
 5   Interest income                                                       2,634  2,773
 6   Interest expenses                                                     1,209  1,243
     Net interest income                                                   1,425  1,530
 7   Fees and commission income                                            623    550
     Fees and commission expenses                                          117    103
     Net interest and fee income                                           1,931  1,977
 8   Value adjustments                                                     278    578
 9   Other income                                                          255    230
 10  Employee and administrative expenses                                  1,262  1,324
     Amortisation, depreciation and impairment charges                     131    191
 12  Loan impairment charges                                               308    27
     Pre-tax profit                                                        763    1,243
 11  Tax                                                                   153    267
     Net profit or loss for the period                                     610    976
     Distributed to:
     Jyske Bank A/S shareholders                                           579    957
     Holders of additional tier capital                                    31     19
     Total                                                                 610    976
     Earnings per share  for the period
     Earnings per share  for the period, DKK                               6.79   10.73
     Earnings per share  for the period, DKK, diluted                      6.79   10.73
     Statement of Comprehensive Income
     Net profit or loss for the period                                     610    976
     Other comprehensive income:
     Items that cannot be recycled to the income statement:
     Revaluation of real property                                          145    0
     Tax on property revaluations                                          -29    0
     Items that can be recycled to the income statement:
     Foreign currency translation adjustment of international units        7      1
     Hedge accounting of international units                               -7     -1
     Tax on hedge accounting                                               2      0
     Other comprehensive income after tax                                  118    0
     Comprehensive income for the period                                   728    976
     Distributed to:
     Jyske Bank A/S shareholders                                           697    957
     Holders of additional tier 1 capital                                  31     19
     Total                                                                 728    976
 
         DKKm                                                 31 March  31 Dec.  31 March
                                                              2018      2017     2017
         BALANCE SHEET
         ASSETS
         Cash balance and demand deposits with central banks  18,975    19,347   3,706
         Due from credit institutions and central banks       12,922    13,046   12,782
 15, 16  Loans and advances at fair value                     320,878   316,998  299,328
 17      Loans and advances at amortised cost                 126,867   130,675  125,586
         Bonds at fair value                                  67,022    69,846   75,746
         Bonds at amortised cost                              2,905     4,280    4,039
         Shares, etc.                                         5,172     4,972    4,574
         Intangible assets                                    10        13       25
         Property, plant and equipment                        4,288     5,114    5,297
         Tax assets                                           859       212      714
         Assets held temporarily                              1,580     577      591
 18      Other assets                                         31,759    32,360   37,810
         Total assets                                         593,237   597,440  570,198
         EQUITY AND LIABILITIES
         Liabilities
         Due to credit institutions and central banks         25,647    17,959   15,260
 19      Deposits                                             155,061   160,023  155,461
 20      Issued bonds at fair value                           307,854   302,601  276,502
         Issued bonds at amortised cost                       30,141    38,920   45,738
 21      Other liabilities                                    34,442    37,238   40,517
 22      Provisions                                           1,780     1,772    1,703
 23      Subordinated debt                                    4,289     4,323    2,133
         Liabilities, total                                   559,214   562,836  537,314
         Equity
         Share capital                                        892       892      950
         Revaluation reserve                                  632       516      538
         Currency translation reserve                         0         0        0
         Retained profit                                      29,971    30,093   29,418
         Proposed dividend                                    0         522      499
         Jyske Bank A/S shareholders                          31,495    32,023   31,405
         Holders of additional tier 1 capital                 2,528     2,581    1,479
         Total equity                                         34,023    34,604   32,884
         Total equity and liabilities                         593,237   597,440  570,198
         OFF-BALANCE SHEET ITEMS
 17, 24  Guarantees, etc.                                     18,089    18,729   17,026
 24      Other contingent liabilities, etc.                   22,064    22,256   21,914
         Total guarantees and other contingent liabilities    40,153    40,985   38,940
 DKKm
                                                          Share               Revalua-tion reserve      Cur-rency trans-lation reserve  Re-tained profit        Pro-posed     Jyske Bank A/S share-holders      Addi-tional tier 1 capital*     Total equity
                                                          capital                                                                                               dividend
 Equity at 1 January 2018                                 892                 516                       0                               30,093                  522           32,023                            2,581                           34,604
 Changes to accounting policies, IFRS 9                   0                   0                         0                               -628                    0             -628                              0                               -628
 Tax effect, IFRS 9                                       0                   0                         0                               137                     0             137                               0                               137
 Adjusted equity, 1 January 2018                          892                 516                       0                               29,602                  522           31,532                            2,581                           34,113
 Net profit or loss for the period                        0                   0                         0                               579                     0             579                               31                              610
 Other comprehensive income:
 Revaluation of real property                             0                   145                       0                               0                       0             145                               0                               145
 Foreign currency translation for international units     0                   0                         7                               0                       0             7                                 0                               7
 Hedge of international units                             0                   0                         -7                              0                       0             -7                                0                               -7
 Tax on other comprehensive income                        0                   -29                       0                               2                       0             -27                               0                               -27
 Other comprehensive income after tax                     0                   116                       0                               2                       0             118                               0                               118
 Comprehensive income for the period                      0                   116                       0                               581                     0             697                               31                              728
 Interest paid on AT1 capital                             0                   0                         0                               0                       0             0                                 -45                             -45
 Currency translation adjustment                          0                   0                         0                               39                      0             39                                -39                             0
 Tax                                                      0                   0                         0                               -2                      0             -2                                0                               -2
 Dividends paid                                           0                   0                         0                               0                       -522          -522                              0                               -522
 Dividends, own shares                                    0                   0                         0                               24                      0             24                                0                               24
 Acquisition of own shares                                0                   0                         0                               -749                    0             -749                              0                               -749
 Sale of own shares                                       0                   0                         0                               476                     0             476                               0                               476
 Transactions with owners                                 0                   0                         0                               -212                    -522          -734                              -84                             -818
 Equity at 31 March 2018                                  892                 632                       0                               29,971                  0             31,495                            2,528                           34,023
 Equity at 1 January 2017                                 950                 538                       -2                              29,053                  499           31,038                            1,476                           32,514
 Net profit or loss for the period                        0                   0                         2                               955                     0             957                               19                              976
 Other comprehensive income:
 Foreign currency translation for international units     0                   0                         1                               0                       0             1                                 0                               1
 Hedge of international units                             0                   0                         -1                              0                       0             -1                                0                               -1
 Tax on other comprehensive income                        0                   0                         0                               0                       0             0                                 0                               0
 Other comprehensive income after tax                     0                   0                         0                               0                       0             0                                 0                               0
 Comprehensive income for the period                      0                   0                         2                               955                     0             957                               19                              976
 Interest paid on AT1 capital                             0                   0                         0                               0                       0             0                                 -19                             -19
 Currency translation adjustment                          0                   0                         0                               -3                      0             -3                                3                               0
 Tax                                                      0                   0                         0                               5                       0             5                                 0                               5
 Dividends paid                                           0                   0                         0                               0                       -499          -499                              0                               -499
 Dividends, own shares                                    0                   0                         0                               32                      0             32                                0                               32
 Proposed dividend                                        0                   0                         0                               -499                    499           0                                 0                               0
 Acquisition of own shares                                0                   0                         0                               -633                    0             -633                              0                               -633
 Sale of own shares                                       0                   0                         0                               508                     0             508                               0                               508
 Transactions with owners                                 0                   0                         0                               -590                    0             -590                              -16                             -606
 Equity at 31 March 2017                                  950                 538                       0                               29,418                  499           31,405                            1,479                           32,884
 *Additional tier 1capital (AT1) has no maturity. Payment of interest and
 repayment of principal are voluntary. Therefore AT1 capital is recognised as
 equity. In September 2016, Jyske Bank issued AT1 amounting to SEK 1.25bn and
 DKK 500m. The AT1 issue with the possibility of early redemption in September
 2021 at the earliest. The interest rates applicable to the issue until
 September 2021 are STIBOR+5.80% and CIBOR+5.30%, respectively. In September
 2017, Jyske Bank made an issue amounting to EUR 150bn, AT1, with the
 possibility of early redemption in September 2027 at the earliest. The issue
 has a coupon of 4.75% until September 2027. It applies to all AT1 issues, that
 if the Common Equity Tier 1 capital of Jyske Bank A/S or the Jyske Bank Group
 falls below 7%, the loans will be written down.
 DKKm                                                                            31 March  31 Dec.  31 March
2018
2017
2017
 Shareholders' equity                                                            31,495    32,023   31,405
 Net profit for the period not recognised in the capital base                    0         0        -957
 Share buy-back programme, non-utilised limit                                    0         -281     -386
 Expected/proposed dividend                                                      -195      -522     -499
 Intangible assets                                                               -10       -13      -25
 Deferred tax liabilities relating to intangible assets                          2         3        6
 Deferred tax assets                                                             -10       -10      0
 Prudent valuation                                                               -277      -271     -256
 Difference between expected loss and the carrying amount of impairment charges  0         -174     -160
 Other deductions                                                                -117      -14      -120
 Common Equity Tier 1 capital                                                    30,888    30,741   29,008
 Additional Tier 1 capital after reduction                                       3,042     3,209    2,123
 Other deductions                                                                0         -27      -28
 Core capital                                                                    33,930    33,923   31,103
 Subordinated loan capital after reduction                                       3,726     3,631    1,428
 Other deductions                                                                -275      -248     -247
 Capital base                                                                    37,381    37,306   32,284
 Weighted risk exposure involving credit risk etc.                               154,634   149,906  143,538
 Weighted risk exposure involving market risk                                    15,313    21,355   23,003
 Weighted risk exposure involving operational risk                               16,887    16,737   16,737
 Total weighted risk exposure                                                    186,834   187,998  183,278
 Capital requirement, Pillar I                                                   14,947    15,040   14,662
 Capital requirement, transitional provisions                                    0         4,204    3,921
 Capital requirement, total                                                      14,947    19,244   18,583
 Capital ratio                                                                   20.0      19.8     17.6
 Core Tier 1 Capital ratio (%)                                                   18.2      18.0     17.0
 Common Equity Tier 1 capital ratio (%)                                          16.5      16.4     15.8
 
 
Transitional rules for capital requirements according to Basel I ended at the
end of 2017.
 
For a statement of the individual solvency requirement, please see Risk and
Capital Management 2017 or
 investor.jyskebank.com/investorrelations/capitalstructure.
 DKKm                                                                   Q1 2018  Q1 2017
 Net profit or loss for the period                                      610      976
 Adjustment for non-cash operating items and change in working capital  -143     -3,627
 Cash flows from operating activities                                   467      -2,651
 Acquisition and sale of property, plant and equipment                  -51      -250
 Acquisition of intangible assets                                       -3       -7
 Cash flows from investment activities                                  -54      -257
 Dividends paid                                                         -522     -499
 Dividends, own shares                                                  24       32
 Acquisition of own shares                                              -749     -633
 Sale of own shares                                                     476      508
 Cash flows from financing activities                                   -771     -592
 Cash flow for the period                                               -358     -3,500
 Cash and cash equivalents, beginning of period                         32,255   19,988
 Cash and cash equivalents, end of period                               31,897   16,488
 Cash and cash equivalents, end of period, comprise:
 Cash balance and demand deposits with central banks                    18,975   3,706
 Due from credit institutions and central banks                         12,922   12,782
 Cash and cash equivalents, end of period                               31,897   16,488
 1  Accounting Policies
    The Interim Financial Report for the period 1 January to 31 March 2018 was
    prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
    the EU. Furthermore, the Interim Financial Report was prepared in accordance
    with the additional Danish disclosure requirements for the interim reports of
    listed financial undertakings.
    Except for the implementation of the below new standards, IFRS 9 and IFRS 15,
    the accounting policies are unchanged compared to those applied to and
    described in detail in the Annual Report 2017.
    IFRS 9 Financial Instruments.
    IFRS 9 on Financial Instruments covers new provisions on classification and
    measurement of financial assets and liabilities, impairment of financial
    assets as well as hedge accounting. IFRS 9 replaced IAS 39 and took effect on
    1 January 2018.
    In accordance with the transitional provisions of IFRS 9, no adjustment of
    comparative figures was made, as it is not possible to apply the impairment
    provisions to previous financial years without any subsequent rationalisation.
    Classification and measurement
    According to IFRS 9, classification and measurement of financial assets are
    based on the business model for the financial assets and related contractual
    cash flows. In consequence of this, financial assets must be classified as one
    of the following categories:
    ·      Financial assets that are held to generate the contractual cash
    flows and where the contractual cash flows solely consist of interest and
    instalments on the outstanding amounts are measured after the time of the
    first recognition at amortised cost. As a typical example, this measurement
    category comprises loans, advances and bonds included in an investment
    portfolio that is, in general, held to maturity.
    ·      Financial assets held in a mixed business model where financial
    assets are held both with a view to generating the contractual cash flows and
    returns on sales and where the contractual cash flows on the financial assets
    in the mixed business model solely consist of interest and instalments on the
    outstanding amount are measured after the time of the first recognition at
    fair value through other comprehensive income. In connection with a subsequent
    sale, recirculation of the change in fair value will take place to the income
    statement. As a typical example, this measurement category comprises bonds
    included in the day-to-day liquidity management, unless they are used by a
    risk management system or an investment strategy based on fair values, cf.
    below.
    ·      Financial assets that do not belong under one of the
    above-mentioned business models or where the contractual cash flows do not
    solely consist of interest and instalments on the outstanding amounts are
    measured after the time of the first recognition at fair value through the
    income statement. As a typical example, this measurement category comprises
    shares, derivatives and financial assets, which are otherwise included in the
    trading portfolio or in a risk management system or an investment strategy
    based on fair values and, on this basis, are included in the bank's internal
    management reporting. Moreover, financial assets can be measured at fair value
    through the income statement, if the measurement according to the two
    above-mentioned business models results in a recognition or accounting
    mismatch.
    Based on Jyske Bank's assessment of the business models in IFRS 9, no material
    changes to classification and measuring will take place. Mortgage loans and
    certain other home loans are still measured at fair value though the income
    statement, and other loans and advances will still be measured at amortised
    cost. Jyske Bank has no financial assets that fall under the new measurement
    category with recognition of financial assets at fair value through Other
    comprehensive income. Instead, Jyske Bank's bond portfolio will be measured at
    fair value through the income statement either because they are included in a
    trading portfolio or because they are used by a risk management system or an
    investment strategy based on fair values and, on this basis, are included in
    the bank's internal management reporting, except for a minor holding of bonds
    that is kept under a business model where the bonds will be measured at
    amortised cost.
    Impairment charges
    IFRS 9 implies earlier recognition of impairment charges on financial assets
    at amortised cost, provisions for losses on guarantees and unutilised credit
    facilities, as the previous impairment model, which was based on objective
    evidence of impairment, will be replaced by an impairment model based on
    expected losses.  Therefore, already at the first recognition, impairment
    charges corresponding to a 12-month expected credit loss must be recognised.
    If, subsequently, the credit risk on the asset increases materially, the
    expected credit loss over the remaining life of the loan will be recognised.
    According to the new rules, financial assets must be divided into three stages
    depending on any deterioration of the debtor's credit rating relative to the
    first recognition. Stage 1 covers exposures without material deterioration in
    credit quality, while stage 2 covers assets with significant deterioration in
    credit quality, and stage 3 covers exposures in default. The ranking in the
    various stages will affect the calculation method applied, and it is
    determined, among other things, on the basis of the change in the probability
    of default (PD) over the expected remaining life of the exposure. The
    definition of default applied is the same as the one applied in the Group's
    advanced IRB set-up.
 1  Accounting Policies, cont.
    One characteristic of this is that it is assessed to be most probable that
    liabilities relating to assets cannot be honoured on the agreed terms and
    conditions.   Assessment of whether any material increase in credit risk has
    taken place will be based on the following circumstances:
    a)    An increase in the PD for the expected remaining life of the
    financial asset by 100% and an increase in the 12-month PD of 0.5 percentage
    point when, at the first recognition, the 12-month PD was below 1.0%.
    b)    An increase in the PD for the expected remaining life of the
    financial asset by 100% or an increase in the 12-month PD of 2.0 percentage
    points when, at the first recognition, the 12-month PD was 1.0% or above.
    c)    The account manager's risk assessment, which among other things is
    based on an assessment of the client's ability and will to honour his payment
    obligations, possibly arrears and/or changes to the initial assumptions on
    which the client relationship rests.
    The expected future loss is calculated on the basis of the probability of
    default (PD), the exposure at default (EaD) and the loss given default (LGD).
    These parameters are based on the Group's advanced IRB set-up, which is based
    on the bank's experience of loss history and early repayments, among other
    things.
    For exposures in stage 1, impairment charges corresponding to
    probability-weighted losses expected over the following 12 months are
    recognised, while for exposures in stages 2 and 3 impairment charges
    corresponding to losses expected over the remaining life of the exposures are
    recognised.
    The assessment of the indication of impairment for stage 3 exposures is based
    on individual expert assessments of the probability-weighted expected loss.
    The new rules have not resulted in any material changes in the extent of
    impairment of these exposures.
    For financial assets measured at fair value, the expected element of credit
    exposure in the determination of fair value follows to a high degree the
    principles of the impairment model as described above for financial assets
    recognised at amortised cost.
    Implementation by and effect on Jyske Bank
    Due to the implementation of the new impairment models, the Jyske Bank Group's
    balance of impairment charges increased by DKK 1,035m.  The amount includes
    both loans and advances at amortised cost and loans and advances at fair
    value.
    The amount from loans and advances at amortised cost, guarantees and
    unutilised credit lines is DKK 628m.  The amount is accounted for as a change
    in practice, and after a tax effect of DKK 137m it was recognised at net DKK
    491m in equity on 1 January 2018.
    The amount from loans and advances at fair value was DKK 407m. The amount is
    accounted for as a changed estimate, and with the ensuing tax effect it is
    recognised in the income statement for the first quarter of 2018.
    A negative accounting outcome from the new expectations-based IFRS 9
    impairment rules will basically have a corresponding effect on the capital
    position. To soften the potential, negative effect on and hence credit
    institutions' possibility of supporting the granting of credit, the European
    Commission has proposed a 5-year transitional arrangement so that any negative
    effect from the new IFRS 9 impairment rules will only take full effect after
    five years.  Jyske Bank has chosen not to make use of the possibility of a
    5-year transition period.
    Hedge accounting
    The new rules on hedge accounting will ensure application of the hedging rules
    and then to a higher degree bring the companies' financial reporting in line
    with the companies' actual risk management.
    The changed rules on hedge accounting are not expected to affect Jyske Bank as
    the existing hedging relationship also qualify as effective hedging
    relationship according to the new rules.
    IFRS 15, Revenue from Contracts with Customers
    IFRS 15 is a new standard that has been approved for use in the EU and took
    effect on 1 January 2018. The standard prescribes a five-step model, which is
    a process to ensure a systematic assess of all elements in contracts with
    clients. The standard did not have any impact on Jyske Bank's financial
    statements.
    IFRS 16, Leases
    IFRS 16 is a new standard that has been approved for use in the EU and will
    take effect on 1 January 2019. In consequence of the standard, practically all
    lease agreements must be recognised in the balance sheet of the lessee's
    financial statements in the form of a lease liability and an asset
    representing the lessee's right of use of the underlying asset. A distinction
    will no longer be made between operating and financial leases. The accounting
    treatment of leasing in the lessor's financial statements is practically
    unchanged. It is not expected that the standard will have any material impact
    on Jyske Bank's financial statements.
 2  Material accounting estimates
    Measurement of the carrying value of certain assets and liabilities requires
    the management's estimate of the influence of future events on the value of
    such assets and liabilities. Estimates of material importance to the financial
    reporting are, among other things, based on the impairment of loans and
    advances, the fair value of unlisted financial instruments and provisions
    already made, cf. the detailed statement in the Annual Report 2017. The
    estimates are based on assumptions which management finds reasonable, but
    which are inherently uncertain. Besides, the Group is subject to risks and
    uncertainties which may cause results to differ from those estimates.
 
 
    DKKm                                                  Q1            Q4            Q3            Q2            Q1
                                                          2018           2017          2017          2017          2017
 3  Key figures and ratios, five quarters
    Summary of Income Statement
    Net interest income                                   1,425         1,670         1,569         1,519         1,530
    Net fee and commission income                         506           653           434           420           447
    Value adjustments                                     278           -71           174           105           578
    Other income                                          255           140           165           287           230
    Income                                                2,464         2,392         2,342         2,331         2,785
    Expenses                                              1,393         1,507         1,454         1,551         1,515
    Profit or loss before loan impairment charges         1,071         885           888           780           1,270
    Loan impairment charges                               308           -92           -70           -44           27
    Pre-tax profit                                        763           977           958           824           1,243
    Tax                                                   153           197           210           185           267
    Net profit or loss for the period                     610           780           748           639           976
    Financial ratios and key figures
    Pre-tax profit, per share (DKK)*                      8.6           10.9          10.7          9.1           13.7
    Earnings per share  for the period (DKK)*             6.8           8.6           8.3           7.0           10.7
    Earnings per share for the period (diluted)  (DKK)*   6.8           8.6           8.3           7.0           10.7
    Core profit per share (DKK)*                          3.8           11.2          9.1           7.9           9.8
    Share price at end of period (DKK)                    358           353           363           377           353
    Book value per share (DKK)*                           371           374           363           355           353
    Price/book value per share (DKK)*                     1.0           0.9           1.0           1.1           1.0
    Outstanding shares in circulation ('000)              84,934        85,705        87,389        88,198        88,854
    Average number of shares in circulation ('000)        85,312        86,476        87,967        88,496        89,102
    Capital ratio                                         20.0          19.8          19.8          19.4          17.6
    Core Tier 1 Capital ratio (%)                         18.2          18.0          18.0          17.6          17.0
    Common Equity Tier 1 capital ratio (%)                16.5          16.4          16.2          16.5          15.8
    Pre-tax profit as a pct. of average equity            2.3           3.0           3.0           2.6           3.9
    Profit for the period as a pct. of av. equity*        1.8           2.3           2.3           2.0           3.1
    Income/cost ratio (%)                                 1.4           1.7           1.7           1.5           1.8
    Interest-rate risk (%)                                0.9           0.8           0.9           0.7           0.8
    Currency risk (%)                                     0.1           0.1           0.1           0.1           0.1
    Accumulated impairment ratio (%)                      1.2           1.1           1.2           1.2           1.3
    Impairment ratio for the period (%)                   0.1           0.0           0.0           0.0           0.0
    No. of full-time employees at end-period              3,899         3,971         4,003         3,988         4,024
    Average number of full-time employees in the period   3,935         3,987         3,996         4,006         4,003
    *Financial ratios are calculated as if AT1 capital is recognised as a
    liability.
 
 
 
                DKKm
 4              Segmental financial statements                               Banking activities            Mortgage activities                                    Leasing activities              The Jyske Bank
                                                                                                                                                                                                  Group *
                Q1 2018
                Net interest income                                          789                           484                                                    134                             1,407
                Net fee and commission income                                468                           66                                                     -28                             506
                Value adjustments                                            -41                           -27                                                    0                               -68
                Other income                                                 57                            4                                                      4                               65
                Income from operating lease (net)                            0                             0                                                      26                              26
                Core income                                                  1,273                         527                                                    136                             1,936
                Core expenses                                                1,044                         182                                                    46                              1,272
                Core profit before loan impairment charges                   229                           345                                                    90                              664
                Loan impairment charges                                      -154                          428                                                    34                              308
                Core profit                                                  383                           -83                                                    56                              356
                Investment portfolio earnings                                407                           0                                                      0                               407
                Pre-tax profit                                               790                           -83                                                    56                              763
                Loans and advances                                           121,526                       309,461                                                16,758                          447,745
                - of which mortgage loans                                    0                             309,461                                                0                               309,461
                - of which bank loans                                        99,002                        0                                                      16,758                          115,760
                - of which repo loans                                        22,524                        0                                                      0                               22,524
                Total assets                                                 238,126                       335,613                                                19,498                          593,237
                Deposits                                                     154,845                       0                                                      216                             155,061
                - of which bank deposits                                     136,156                       0                                                      216                             136,372
                - of which repo deposits and tri-party deposits              18,689                        0                                                      0                               18,689
                Issued bonds                                                 30,141                        307,854                                                0                               337,995
                Q1 2017
                Net interest income                                          804                           443                                                    123                             1,370
                Net fee and commission income                                412                           63                                                     -28                             447
                Value adjustments                                            342                           3                                                      1                               346
                Other income                                                 47                            9                                                      4                               60
                Income from operating lease (net)                            0                             0                                                      16                              16
                Core income                                                  1,605                         518                                                    116                             2,239
                Core expenses                                                1,136                         212                                                    42                              1,390
                Core profit before loan impairment charges                   469                           306                                                    74                              849
                Loan impairment charges                                      -143                          92                                                     6                               -45
                Core profit                                                  612                           214                                                    68                              894
                Investment portfolio earnings                                305                           44                                                     0                               349
                Pre-tax profit                                               917                           258                                                    68                              1,243
                Loans and advances                                           122,224                       287,380                                                15,310                          424,914
                - of which mortgage loans                                    0                             287,380                                                0                               287,380
                - of which bank loans                                        95,215                        0                                                      15,310                          110,525
                - of which repo loans                                        27,009                        0                                                      0                               27,009
                Total assets                                                 244,613                       307,496                                                18,089                          570,198
                Deposits                                                     155,252                       0                                                      209                             155,461
                - of which bank deposits                                     132,259                       0                                                      209                             132,468
                - of which repo deposits and tri-party deposits              22,993                        0                                                      0                               22,993
                Issued bonds                                                 42,024                        280,216                                                0                               322,240
                * Relationships between income statement items under 'The Jyske Bank Group'
                (key financial data) and the income statement page 24 appear from page 9 in
                the Management's review.
    DKKm
 4  Segmental financial statements, cont.                                                                                Q1 2018                                                      Q1 2017
    Revenue by country                                                                                                   Revenue              Full-time employees, end of period      Revenue            Full-time employees, end of period
    Denmark                                                                                                              3,390                3,750                                   3,458              3,917
    Gibraltar                                                                                                            35                   97                                      35                 98
    Germany                                                                                                              1                    9                                       4                  9
    Spain                                                                                                                0                    0                                       0                  0
    Total                                                                                                                3,426                3,856                                   3,497              4,024
    Revenue is defined as interest income, fee and commission income and also
    other operating income.
    Jyske Bank has activities in the countries stated below in the form of
    subsidiaries or branches. The names of the subsidiaries appear from the group
    chart.
    Activities in individual countries:
    Denmark: The Jyske Bank Group has activities within banking and mortgage
    banking, trading and wealth management advice as well as leasing.
    Gibraltar: The Jyske Bank Group has activities within banking as well as
    trading and wealth management advice.
    Germany: The Jyske Bank Group has activities within banking.
    Spain: The Jyske Bank Group has activities within properties.
 
 
    DKKm                                                                                Q1 2018  Q1 2017
 5  Interest income
    Due from credit institutions and central banks                                      0        -1
    Loans and advances                                                                  1,903    2,071
    Contribution                                                                        407      410
    Bonds                                                                               214      276
    Derivatives, total                                                                  102      49
    Of which:
        Currency contracts                                                              94       16
        Interest-rate contracts                                                         8        33
    Other                                                                               0        0
    Total                                                                               2,626    2,805
    Interest on own mortgage bonds, set off against interest on issued bonds            81       101
    Total after offsetting of negative interest                                         2,545    2,704
    Negative interest income set off against interest income                            48       33
    Negative interest expenses set off against interest expenses                        41       36
    Total before offsetting of negative interest income                                 2,634    2,773
    Negative interest income amounted to DKK 89m (2017: DKK 69m) and related
    primarily to repo transactions. In the above table, negative interest income
    is set off against interest income. In the income statement, negative interest
    income is listed as interest expenses, and negative interest expenses are
    listed as interest income.
 6  Interest expenses
    Due to credit institutions and central banks                                        32       7
    Deposits                                                                            -28      5
    Issued bonds                                                                        1,137    1,232
    Subordinated debt                                                                   25       12
    Other                                                                               35       19
    Total                                                                               1,201    1,275
    Interest on own mortgage bonds, set off against interest on issued bonds            81       101
    Total after offsetting of negative interest                                         1,120    1,174
    Negative interest expenses set off against interest expenses                        48       33
    Negative interest income set off against interest income                            41       36
    Total before offsetting of negative interest income                                 1,209    1,243
    Negative interest expenses amounted to DKK 89m (2017: DKK 69m) and related
    primarily to repo transactions. In the above table, negative interest expenses
    are set off against interest expenses. In the income statement, negative
    interest expenses are listed as interest income, and negative interest income
    is listed as interest expenses.
 
 
    DKKm                                                                                                 Q1 2018              Q1 2017
 7  Fees and commission income
    Securities trading and custody services                                                              312                  325
    Money transfers and card payments                                                                    52                   46
    Loan application fees                                                                                101                  81
    Guarantee commission                                                                                 28                   19
    Other fees and commissions                                                                           130                  79
    Total                                                                                                623                  550
 8  Value adjustments
    Loans and advances at fair value                                                                     -1,015               779
    Bonds                                                                                                -111                 116
    Other investment securities                                                                          333                  182
    Currency                                                                                             -4                   78
    Currency, interest-rate, share, commodity and other contracts as well as other                       31                   77
    derivatives
    Issued bonds                                                                                         1,037                -657
    Other assets and liabilities                                                                         7                    3
    Total                                                                                                278                  578
 9  Other income
    Income on real property                                                                              16                   17
    Profit on the sale of property, plant and equipment                                                  0                    1
    Income from operating lease¹                                                                         132                  133
    Dividends, etc.                                                                                      86                   54
    Profit on investments in associates and group enterprises                                            0                    1
    Other income                                                                                         21                   24
    Total                                                                                                255                  230
    ¹) Expenses relating to operating lease affected the item Amortisation,
    depreciation and impairment charges in the amount of DKK 106m in the first
    quarter of 2018 against DKK 117m in the same period of 2017.
 
 
     DKKm                                                                              Q1 2018  Q1 2017
 10  Employee and administrative expenses
     Employee expenses
     Wages and salaries, etc.                                                          605      599
     Pensions                                                                          88       82
     Social security                                                                   78       81
     Total                                                                             771      762
     Salaries and remuneration to management bodies
     Executive Board¹                                                                  10       7
     Supervisory Board                                                                 1        1
     Shareholders' Representatives                                                     0        0
     Total                                                                             11       8
     ¹I The Executive Board had an average of 5.0 members in the first quarter of
     2018 in line with the same period of 2017.
     Other administrative expenses
     IT                                                                                315      289
     Other operating expenses                                                          50       55
     Other administrative expenses                                                     115      210
     Total                                                                             480      554
     Employee and administrative expenses, total                                       1,262    1,324
 11  Effective tax rate
     Corporation tax rate in Denmark                                                   22.0     22.0
     Non-taxable income and non-deductible expenses, etc.                              -2.0     -0.5
     Total                                                                             20.0     21.5
 
 
     DKKm                                                                                              Q1 2018  Q1 2017
 12  Loan impairment charges and provisions for guarantees recognised in the income
     statement
     Loan impairment charges/provisions for the period                                                 395      74
     Impairment charges on balances due from credit institutions in the period                         3        0
     Provisions for commitments and unutilised credit lines in the period                              -32      -
     Recognised as a loss, not covered by loan impairment charges/provisions                           82       78
     Recoveries                                                                                        -99      -125
     Loan impairment charges and provisions for guarantees recognised in the income                    349      27
     statement
     Recognised discount for acquired loans                                                            41       72
     Net effect on income statement                                                                    308      -45
 13  Balance of loan impairment charges and provisions for guarantees incl. balance
     of discounts
     Balance of loan impairment charges and provisions for guarantees incl. balance                    5,656    6,816
     of discounts, beginning of period
     Implementation of IFRS 9 and adjustments to the standard                                          623      -
     Loan impairment charges/provisions for the period                                                 363      74
     Recognised as a loss, covered by impairment charges/provisions                                    -347     -243
     Recognised losses covered by discounts for acquired loans                                         -1       -25
     Recognised discount for acquired loans                                                            -41      -72
     Other movements                                                                                   29       22
     Balance of loan impairment charges and provisions for guarantees incl. balance                    6,282    6,572
     of discounts, end of period
     Loan impairment charges                                                                           5,482    5,374
     Provisions for guarantees                                                                         220      416
     Provisions for commitments and unutilised credit lines                                            126      -
     Balance of loan impairment charges and provisions, end of period                                  5,828    5,790
     Balance of discounts for acquired loans                                                           454      782
     Balance of loan impairment charges and provisions for guarantees incl. balance                    6,282    6,572
     of discounts, end of period
     The regulatory balance of loan impairment charges and provisions for
     guarantees does not include the discount balance for acquired loans and
     advances.
 14  The balance of loan impairment charges and provisions for guarantees broken     Stage 1  Stage 2  Stage 3  Total
     down by stages
     Balance according to IAS 39, beginning of period                                                           5,157
     Transitional effect, IFRS 9, incl. effect on loans at fair value                645      1,352    4,195    1,035
     Movements over the period, net                                                  -17      -1       -346     -364
     Balance of loan impairment charges and provisions, end of period                628      1,351    3,849    5,828
     of which bank loans at fair value                                               256      748      576      1,580
 
 
                                              DKKm                                     31 March  31 Dec.  31 March
2018
2017
2017
 15  Loans and advances at fair value
     Mortgage loans, nominal value                                                     302,265   298,239  280,968
     Adjustment for interest-rate risk, etc.                                           8,162     9,189    6,933
     Adjustment for credit risk¹                                                       -1,523    -1,139   -1,094
     Mortgage loans at fair value, total                                               308,904   306,289  286,807
     Arrears and outlays, total                                                        134       101      96
     Other loans and advances                                                          11,840    10,608   12,425
     Loans and advances at fair value, total                                           320,878   316,998  299,328
     ¹Adjustment for credit risk is calculate so it allows for objective evidence
     whether loans and advances are impaired compared to the time of the
     establishment of the loans and advances.
 16  Loans and advances at fair value broken down by property category
     Owner-occupied homes                                                              168,139   167,351  157,982
     Vacation homes                                                                    7,751     7,699    7,300
     Subsidised housing (rental housing)                                               50,777    50,167   48,972
     Cooperative housing                                                               15,780    15,893   15,653
     Private rental properties (rental housing)                                        38,808    37,225   32,526
     Industrial properties                                                             1,186     1,156    1,212
     Office and business properties                                                    34,046    33,356   32,039
     Agricultural properties                                                           84        56       48
     Properties for social, cultural and educational purposes                          4,212     4,041    3,505
     Other properties                                                                  95        54       91
     Total                                                                             320,878   316,998  299,328
 17  Loans and advances at amortised cost and guarantees broken down by sector
     Public authorities                                                                8,143     9,275    6,773
     Agriculture, hunting, forestry, fishing                                           7,222     7,203    6,567
     Manufacturing, mining, etc.                                                       7,961     7,649    8,167
     Energy supply                                                                     4,717     4,980    4,407
     Building and construction                                                         3,226     3,494    3,817
     Commerce                                                                          12,018    11,984   11,035
     Transport, hotels and restaurants                                                 4,181     3,832    3,759
     Information and communication                                                     1,074     1,114    875
     Finance and insurance                                                             29,834    35,714   35,475
     Real property                                                                     15,615    14,244   12,874
     Other sectors                                                                     7,305     7,464    6,471
     Corporates, total                                                                 93,153    97,678   93,447
     Personal clients, total                                                           43,660    42,451   42,392
     Total                                                                             144,956   149,404  142,612
 
 
     DKKm                                                                            31 March                    31 Dec.                                                                       31 March
                                                                                     2018                        2017                                                                          2017
 18  Other assets
     Positive fair value of derivatives                                              25,184                      25,632                                                                        30,915
     Assets in pooled deposits                                                       3,983                       4,208                                                                         4,432
     Interest and commission receivable                                              431                         464                                                                           556
     Investments in associates                                                       418                         417                                                                           418
     Prepayments                                                                     345                         328                                                                           299
     Investment properties                                                           28                          29                                                                            32
     Other assets                                                                    1,370                       1,282                                                                         1,158
     Total                                                                           31,759                      32,360                                                                        37,810
     Netting
     Positive fair value of derivatives, etc., gross                                 31,407                      31,941                                                                        37,214
     Netting of positive and negative fair value                                     6,223                       6,309                                                                         6,299
     Total                                                                           25,184                      25,632                                                                        30,915
     Netting of fair value can be attributed to clearing of derivatives through a
     central clearing house (CCP clearing).
 19  Deposits
     Demand deposits                                                                 106,226                     109,334                                                                       98,294
     Term deposits                                                                   2,967                       2,950                                                                         4,228
     Time deposits                                                                   34,607                      36,333                                                                        41,120
     Special deposits                                                                6,957                       7,038                                                                         7,358
     Pooled deposits                                                                 4,304                       4,368                                                                         4,461
     Total                                                                           155,061                     160,023                                                                       155,461
 20  Issued bonds at fair value
     Issued bonds at fair value, nominal value                                       336,527                     332,462                                                                       309,187
     Adjustment to fair value                                                        8,371                       9,300                                                                         7,109
     Own mortgage bonds offset, fair value                                           -37,044                     -39,161                                                                       -39,794
     Total                                                                           307,854                     302,601                                                                       276,502
 21  Other liabilities
     Set-off entry of negative bond holdings in connection with repos/reverse repos  3,212                       3,695                                                                         3,776
     Negative fair value of derivatives, etc.                                        24,349                      25,776                                                                        29,641
     Interest and commission payable                                                 1,894                       2,221                                                                         2,113
     Deferred income                                                                 143                         135                                                                           144
     Other liabilities                                                               4,844                       5,411                                                                         4,843
     Total                                                                           34,442                      37,238                                                                        40,517
     Netting
     Negative fair value of derivatives, etc., gross                                 30,572                      32,085                                                                        35,940
     Netting of positive and negative fair value                                     6,223                       6,309                                                                         6,299
     Total                                                                           24,349                      25,776                                                                        29,641
     Netting of fair value can be attributed to clearing of derivatives through a
     central clearing house (CCP clearing).
 22  Provisions
     Provisions for pensions and similar liabilities                                 606                         602                                                                           565
     Provisions for deferred tax                                                     581                         576                                                                           525
     Provisions for guarantees                                                       220                         342                                                                           416
     Other provisions                                                                373                         252                                                                           197
     Total                                                                           1,780                       1,772                                                                         1,703
                                                                                     31 March                    31 Dec.                                                                       31 March
     DKKm
2018
2017
2017
 23  Subordinated debt
     Supplementary capital:
     Var. % bond loan EUR 300m  05.04.2029                                           2,235                       2,234                                                                         0
     Var. % bond loan SEK 600m  19.05.2026                                           435                         454                                                                           468
     3.25% bond loan SEK 400m  19.05.2026                                            290                         303                                                                           312
     6.73% bond loan      EUR  13.5m  2018-2026                                      100                         101                                                                           112
     Var. % bond loan       EUR  10m   13.02.2023                                    75                          74                                                                            75
     5.65% bond loan       EUR  10 m  27.03.2023                                     75                          74                                                                            74
     5.67% bond loan       EUR  10 m  31.07.2023                                     75                          74                                                                            74
                                                                                     3,285                       3,314                                                                         1,115
     Hybrid core capital:
     Var. % bond loan       EUR 72.8m   Perpetual                                    542                         542                                                                           541
     Var. % bond loan       EUR 60.7m   Perpetual                                    452                         452                                                                           451
                                                                                     994                         994                                                                           992
     Subordinated debt, nominal                                                      4,279                       4,308                                                                         2,107
     Hedging of interest-rate risk, fair value                                       10                          15                                                                            26
     Total                                                                           4,289                       4,323                                                                         2,133
     Subordinated debt included in the capital base                                  4,245                       4,278                                                                         2,075
     The above-mentioned issues of hybrid core capital do not meet the conditions
     for Additional Tier 1 Capital (AT1) in the Capital Requirements Regulation,
     CRR. The issues are recognised under liability other than provision according
     to IAS 32.
 24  Contingent liabilities
     Guarantees
     Financial guarantees                                                            13,768                      14,169                                                                        12,299
     Guarantee for losses on mortgage credits                                        1,662                       1,712                                                                         1,833
     Registration and refinancing guarantees                                         987                         926                                                                           897
     Other contingent liabilities                                                    1,672                       1,922                                                                         1,997
     Total                                                                           18,089                      18,729                                                                        17,026
     Other contingent liabilities
     Irrevocable credit commitments                                                  21,967                      22,151                                                                        21,819
     Other                                                                           97                          105                                                                           95
     Total                                                                           22,064                      22,256                                                                        21,914
     Financial guarantees are primarily payment guarantees, and the risk equals
     that involved in credit facilities.
     Guarantees for losses on mortgage loans are typically provided as security for
     the most risky part of mortgage loans granted to personal clients and to a
     limited extent for loans secured on commercial real property. Guarantees for
     residential real property are within 80% and for commercial real property
     within 60%-80%, of the property value as assessed by a professional expert.
     Registration and refinancing guarantees are provided in connection with the
     registration of new and refinanced mortgages. Such guarantees involve
     insignificant risk.
     Other contingent liabilities include other forms of guarantees at varying
     degrees of risk, including performance guarantees. The risk involved is deemed
     to be less than the risk involved in, e.g., credit facilities subject to
     flexible drawdown.
 
 
 24  Contingent liabilities, cont.
     Jyske Bank is also a party to a number of legal disputes arising from its
     business activities. Jyske Bank estimates the risk involved in each individual
     case and makes any necessary provisions which are recognised under contingent
     liabilities. Jyske Bank does not expect such liabilities to have material
     influence on Jyske Bank's financial position.
     Because of its statutory participation in the deposit guarantee scheme, the
     sector has paid an annual contribution of 2.5‰ of the covered net deposits
     until the assets of Pengeinstitutafdelingen (the financial institution fund)
     exceed 1% of the total net deposits covered, which level has been reached.
     According to Bank Package 3 and Bank Package 4, Pengeinstitutafdelingen bears
     the immediate losses attributable to covered net deposits and relating to the
     winding up of financial institutions in distress. Any losses in connection
     with the final winding up are covered by the Guarantee Fund's Afviklings- og
     Restruktureringsafdeling (settlement and restructuring fund), where Jyske Bank
     currently guarantees 9.93% of any losses.
     The statutory participation in the resolution financing arrangements
     (Resolution Fund) as of June 2015 entailed that credit institutions pay an
     annual contribution over a 10-year period to a Danish national fund with a
     target size totalling 1% of the covered deposits. Credit institutions are to
     contribute according to their relative sizes and risk in Denmark, and the
     first contributions to the Resolution Fund were paid at the end of 2015. The
     Jyske Bank Group expects having to pay a total of about DKK 500m over a
     10-year period.
     Jyske Bank is a management company under Danish joint taxation. Therefore,
     according to the provisions of the Danish Company Taxation, Jyske Bank is
     liable as of the accounting year 2013 for corporation tax, etc. for the
     jointly taxed companies and as of 1 July 2012 for any liabilities to withhold
     tax on interest and dividends for the jointly taxed companies.
 25  Shareholders
     On 6 September 2017, BRFholding a/s, Kgs. Lyngby, Danmark informed Jyske Bank
     that it owns 20.25% of the share capital. On 19 October 2012, MFS Investment
     Management, USA reported that it owns 5.14% of the share capital. According to
     Jyske Bank's Articles of Association, BRFholding a/s and MFS Investment
     Management have 4,000 votes each.
 26  Related parties
     Jyske Bank is the banker of a number of related parties. Transactions between
     related parties are characterised as ordinary financial transactions and
     services of an operational nature. Transactions with related parties were
     executed on an arm's length basis or at cost.
     Over the period, there were no unusual transactions with related parties.
     Please see Jyske Bank's Annual Report 2017 for a detailed description of
     transactions with related parties.
 27  Bonds provided as security
     The Jyske Bank Group has deposited bonds with central banks and clearing
     houses, etc. in connection with clearing and settlement of securities and
     currency transactions as well as tri-party repo transactions totalling a
     market value of DKK 20,117m (end of 2017: DKK 17,012m).
     In addition, the Jyske Bank Group has provided cash collateral in connection
     with CSA agreements in the amount of DKK 4,943m (at the end of 2017: DKK
     5,224m) as well as bonds in the amount of DKK 1,396m (at the end of 2017:
     1,470m).
     Repo transactions involve an arrangement where bonds are provided as
     collateral for the amount borrowed. Repo transactions amounted to DKK 10,951m
     (end of 2017: DKK 11,725m).
 
 
 28  Notes on fair value
     Methods for measuring fair value
     Fair value is the price that, at the time of measurement, would be obtained by
     selling an asset or paid for by transferring a liability in an ordinary
     transaction between independent market participants. The fair value may equal
     the book value where book value is recognised on the basis of underlying
     assets and liabilities measured at fair value.
     For all assets listed on active markets, fair values are measured at official
     prices (the category "Quoted prices". Where no price is quoted, a different
     official price is used which is taken to reflect most closely the fair value
     (category: "Observable prices". Financial assets and liabilities of which
     quoted prices or other official prices are not available or are not taken to
     reflect the fair value are measured at fair value according to other
     evaluation techniques and other observable market information. In those cases
     where observable prices based on market information are not available or are
     not taken to be useful for measuring fair value, the fair value is measured by
     recognised techniques, including discounted future cash flows, and own
     expertise (category "non-observable prices").. The basis of the measurement
     may be recent transactions involving comparable assets or liabilities,
     interest rates, exchange rates, volatility, credit spreads, etc. Generally,
     the Group's unlisted shares are placed in this category.
     Generally, quoted prices and observable input are obtained in the form of
     interest rates and equity and bond prices, exchange rates, forward premiums,
     volatilities, etc. from recognised stock exchanges and providers.
     Specific details on methods for measuring fair value
     Bonds at fair value, shares, assets linked to pooled deposits, and derivatives
     are measured at fair value in the accounts to the effect that the carrying
     amounts equal fair values.
     Generally bonds are measured at prices quoted on a recognised stock exchange.
     Alternatively, prices are applied that are calculated on the basis of Jyske
     Bank's own measurement models based on a yield curve with a credit spread.
     Essentially, the calculated prices are based on observable input.
     Generally equities, etc. are measured at prices quoted on a recognised stock
     exchange. Alternatively, prices are applied that are calculated on the basis
     of Jyske Bank's own measurement models based on observable input,
     shareholders' agreements, executed transactions, etc.  Unlisted equities are
     measured on the basis of discounted cash flow models (DCF).
     Derivatives are measured on the basis of the following measurement techniques.
     ·      Forward exchange transactions are measured on the basis of
     forward premiums as well as exchange rates obtained.
     ·      Interest-rate and currency swaps are measured on the basis of
     exchange rates, interest points, interpolation between these, exchange rates
     as well as correction of credit risk (CVA and DVA). Client margins are
     amortised over the remaining time to maturity. Present value calculations with
     discounting is applied.
     ·      Futures are measured on the basis of prices obtained in the
     market for stock-exchange traded futures.
     ·      Options are measured on the basis of volatilities, correlation
     matrices, prices of underlying assets and exercise prices. For this purpose,
     option models, such as Black-Scholes, are applied.
     Assets related to pooled deposits are measured according to the above
     principles.
     Information about differences between recognised value and measurement of fair
     value
     Loans and advances exclusive of mortgage loans and certain other home loans
     are recognised at amortised cost. The difference to fair value is assumed to
     be fees and commission received, costs defrayed in connection with lending,
     plus interest-rate-dependent value adjustment calculated by comparing current
     market rates with market rates at the time when the loans and advances were
     established. Changes in credit quality are assumed to be included under
     impairment charges both for carrying amounts and fair values.
     Subordinated debt and issued bonds exclusive of issues of mortgage bonds are
     recognised at amortised cost supplemented with the fair value of the hedged
     interest-rate risk. The difference to fair value was calculated on the basis
     of own-issue prices obtained externally.
     Deposits are recognised at amortised cost. The difference to fair value is
     assumed to be the interest-rate dependent value adjustment calculated by
     comparing current market rates with market rates at the time when the deposits
     were made.
     Balances with credit institutions are recognised at amortised cost. The
     difference to fair value is assumed to be the interest-rate dependent value
     adjustment calculated by comparing current market rates with market rates at
     the time when the transactions were established. Changes in the credit quality
     of balances with credit institutions are assumed to be included under
     impairment charges for loans, advances, and receivables. Changes in the fair
     values of balances due to credit institutions because of changes in Jyske
     Bank's own credit rating are not taken into account.
     The calculated fair values of financial assets and liabilities recognised at
     amortised cost are materially non-observable prices (level 3) in the fair
     value hierarchy.
     DKKm
 28  Notes on fair value, cont.
     Information about changes in credit risk on derivatives with positive fair
     value.
     In order to allow for the credit risk on derivatives for clients without
     objective evidence of impairment (OEI), the fair value is adjusted (CVA).
     Adjustments will also be made for clients with OEI, but on an individual
     basis.
     For any given counterparty's total portfolio of derivatives, CVA is a function
     of the probability of the counterparty's probability of default  (PD), the
     expected positive exposure (EPE) as well as the loss given default (LGD).
     Credit default swaps (CDS) spreads should be used as the primary source for
     the probability of default in the CVA calculation. However, the Jyske Bank
     Group enters primarily to derivatives transactions with unlisted Danish
     counterparties, for which there only to a most limited extent exist CDS or CDS
     proxy spreads. As CDS spreads are not available for the majority of the
     portfolio of derivatives counterparties, risk-neutral PDs are used instead.
     The risk-neutral PDs are calculated on the basis of IRB PDs that are adjusted
     for the observable price of risk in the market (Sharpe Ratio measured on the
     basis of the OMX C20 index). By using risk-neutral PDs, it is achieved that
     the CVA  gets closer to the value it would have had if it had been calculated
     on the basis of market observable PDs. The calculation of CVA also allows for
     the expected development of the rating over time. This takes place on the
     basis of historical rating migrations. When determining the EPE, a model is
     used to establish the expected positive exposure to the counterparty's
     portfolio over the maturity of the derivatives. For LGD, internal estimates
     are used for the individual counterparty, adjusted for any collateral received
     as well as CSA  agreements concluded.
     In addition to CVA, also an adjustment is made of the fair value of
     derivatives that have an expected future negative fair value. This takes place
     to allow for changes in the counterparties' credit risk against the Jyske Bank
     Group (debt valuation adjustment - DVA). The DVA takes place according to the
     same principles that apply to the CVA, yet PD for Jyske Bank is determined on
     the basis of Jyske Bank's external rating by Standard & Poor's. At the end
     of the first quarter of 2018, CVA and DVA amounted, on an accumulated basis,
     to net DKK 58m, which accumulated amount was recognised as an expense under
     value adjustment against an accumulated amount of DKK 70m at the end of 2017.
 29  Fair value of financial assets and liabilities
     The recognised value and fair value of assets classified as held-for-trading
     amounted to DKK 127.3 bn at the end of the first quarter of 2018 against DKK
     134.1 bn at the end of 2017. The recognised value and fair value of
     liabilities classified as trading portfolio amounted to DKK 35.3 bn at the end
     of the first quarter of 2018 against DKK 38.6 bn at the end of 2017. The
     recognised value and fair value of assets classified as held-to-maturity
     amounted to DKK 2.9 bn and DKK 3.0 bn, respectively, at the end of the first
     quarter of 2018 against DKK 4.3 bn and 4.3 bn, respectively, at the end of
     2017. The Group does not hold any assets classified as available-for-sale. The
     table shows the fair value of financial assets and liabilities and the
     carrying amounts. The re-statement at fair value of financial assets and
     liabilities shows a total unrecognised unrealised loss of DKK 265m at the end
     of the first quarter of 2018 against a loss of DKK 319m at the end of 2017.
                                                             31 March 2018                                   31 December 2017
                                                             Recognised value  Fair                          Recognised value      Fair
                                                                               Value                                               value
     FINANCIAL ASSETS
     Cash balance and demand deposits with central banks     18,975            18,975                        19,347                19,347
     Due from credit institutions and central banks          12,922            12,921                        13,046                13,045
     Loans and advances at fair value                        320,878           320,878                       316,998               316,998
     Loans and advances at amortised cost                    126,867           127,033                       130,675               130,831
     Bonds at fair value                                     67,022            67,022                        69,846                69,846
     Bonds at amortised cost                                 2,905             2,960                         4,280                 4,336
     Shares, etc.                                            5,172             5,172                         4,972                 4,972
     Assets in pooled deposits                               3,983             3,983                         4,208                 4,208
     Derivatives                                             25,184            25,184                        25,632                25,632
     Total                                                   583,908           584,128                       589,004               589,215
     FINANCIAL LIABILITIES
     Due to credit institutions and central banks            25,647            25,650                        17,959                17,963
     Deposits                                                150,757           150,768                       155,655               155,674
     Pooled deposits                                         4,304             4,304                         4,368                 4,368
     Issued bonds at fair value                              307,854           307,854                       302,601               302,601
     Issued bonds at amortised cost                          30,141            30,536                        38,920                39,376
     Subordinated debt                                       4,289             4,365                         4,323                 4,374
     Derivatives                                             24,349            24,349                        25,776                25,776
     Total                                                   547,341           547,826                       549,602               550,132
 
     DKKm
 30  The fair value hierarchy
     31 March 2018                     Quoted prices  Observable prices             Non-observable                          Fair value          Recognised amount
     Financial assets                                                               prices                                  total
     Loans and advances at fair value  0              320,878                       0                                       320,878             320,878
     Bonds at fair value               12,586         54,436                        0                                       67,022              67,022
     Shares, etc.                      2,069          910                           2,193                                   5,172               5,172
     Assets in pooled deposits         2,418          1,565                         0                                       3,983               3,983
     Derivatives                       563            24,621                        0                                       25,184              25,184
     Total                             17,636         402,410                       2,193                                   422,239             422,239
     Financial liabilities
     Pooled deposits                   0              4,304                         0                                       4,304               4,304
     Issued bonds at fair value        42,010         265,844                       0                                       307,854             307,854
     Derivatives                       402            23,947                        0                                       24,349              24,349
     Total                             42,412         294,095                       0                                       336,507             336,507
     31 December 2017
     Financial assets
     Loans and advances at fair value  0              316,998                       0                                       316,998             316,998
     Bonds at fair value               55,412         14,434                        0                                       69,846              69,846
     Shares, etc.                      1,978          739                           2,255                                   4,972               4,972
     Assets in pooled deposits         2,398          1,810                         0                                       4,208               4,208
     Derivatives                       367            25,265                        0                                       25,632              25,632
     Total                             60,155         359,246                       2,255                                   421,656             421,656
     Financial liabilities
     Pooled deposits                   0              4,368                         0                                       4,368               4,368
     Issued bonds at fair value        283,416        19,185                        0                                       302,601             302,601
     Derivatives                       303            25,473                        0                                       25,776              25,776
     Total                             283,719        49,026                        0                                       332,745             332,745
     The above table shows the fair value hierarchy for financial assets and
     liabilities recognised at fair value. It is the practice of the Group that if
     prices are not updated for two days, transfers will take place between the
     categories quoted prices and observable prices.
     NON-OBSERVABLE PRICES                                                                                        Q1 2018             2017
     Fair value, beginning of period                                                                              2,255               2,024
     Transfers for the period                                                                                     0                   -73
     Capital gain and loss for the period reflected in the income statement under                                 66                  149
     value adjustments
     Sales or redemptions                                                                                         128                 30
     Purchases                                                                                                    0                   185
     Fair value, end of year                                                                                      2,193               2,255
     Non-observable prices
     Non-observable prices at the end of the first quarter of 2018 referred to
     unlisted shares recognised at DKK 2,193m against unlisted shares recognised at
     DKK 2,255m at the end of 2017. These are primarily sector shares. The
     measurements, which are associated with some uncertainty, are made on the
     basis of the shares' book value, market trades, shareholders' agreements as
     well as own assumptions and extrapolations, etc. In the cases where Jyske Bank
     calculates the fair value on the basis of the company's expected future
     earnings, a required rate of return of 15% p.a. before tax is applied. A
     change in the required rate of return of 1% will result in a change of the
     fair value of about DKK 35m. Capital gain and loss for the period on illiquid
     bonds and unlisted shares referred to assets held at the end of the first
     quarter of 2018. Jyske Bank finds it of little probability that the
     application of alternative prices in the measurement of fair value would
     result in a material deviation from the recognised fair value.
 
 
 30  Fair value hierarchy, cont.
     Non-financial assets recognised at fair value
     Investment properties were recognised at a fair value of DKK 28m (end of 2017:
     DKK 29m). Fair value belongs to the category of non-observable prices
     calculated on the basis of a required rate of return of 7% (end of 2017: 7%)
     Assets held temporarily comprise repossessed properties, equity investments
     and cars, etc. and similar assets held for sale. Assets held temporarily are
     recognised at the lower of cost and fair value less costs of sale. Assets held
     temporarily were recognised at DKK 1,580m (end of 2017: DKK 577m). Fair value
     belongs to the category of non-observable prices.
     Owner-occupied properties are recognised at the restated value corresponding
     to the fair value on the date of the revaluation less subsequent amortization,
     depreciation and impairment. The valuation of selected land and buildings is
     carried out with the assistance of external experts. Based on the returns
     method, the measurement takes place in accordance with generally accepted
     standards and with a weighted average required rate of return of 5.96% at the
     end of 2017. Owner-occupied properties were recognised at DKK 1,896m (2017:
     DKK 2,657m). The revalued amount belongs to the category of non-observable
     prices.
 
 
 31                     The Jyske Bank Group - overview
 31 March 2018                                                        *                  Currency  Share capital 1.000 units     Owner-ship                  Voting share                Assets, DKKm            Liabili-ties                            Equity DKKm, at the end of 2017        Ear-nings, DKKm                    Profit, DKKm
                                                                                                                                 share (%)                   %                           end of 2017              DKKm at the end of 2017                                                       2017                               2017
                                                                      a                  DKK       891,590                                                                               295,738                 261,134                                 34,604                                 6,604                              3,143
 Jyske Bank A/S
 Subsidiaries
 BRFkredit a/s, Kgs. Lyngby                                           b                  DKK       3,306,480                     100                         100                         337,754                 322,023                                 15,731                                 2,186                              886
 Ejendomsselskabet Nørreport 26, 8000 Århus C. A/S, Silkeborg         e                  DKK       4,600                         100                         100                         146                     14                                      132                                    49                                 38
 Jyske Bank (Gibraltar) Ltd.                                          a                  GBP       26,500                        100                         100                         6,501                   5,987                                   514                                    149                                -81
 Jyske Bank (Gibraltar) Nominees Ltd.                                 d                  GBP       0                             100                         100                         0                       0                                       0                                      0                                  0
 Jyske Bank (Gibraltar) Management Ltd.                               d                  GBP       0                             100                         100                         0                       0                                       0                                      0                                  0
 Jyske Bank (Gibraltar) Secretaries Ltd.                              d                  GBP       0                             100                         100                         0                       0                                       0                                      0                                  0
 Trendsetter, S.L., Spain                                             e                  EUR       706                           100                         100                         16                      0                                       16                                     0                                  0
 Jyske Bank Nominees Ltd., London                                     d                  GBP       0                             100                         100                         0                       0                                       0                                      0                                  0
 Inmobiliaria Saroesma S.L., Spain                                    e                  EUR       803                           100                         100                         77                      74                                      3                                      0                                  -4
 Jyske Finans A/S, Silkeborg                                          c                  DKK       100,000                       100                         100                         19,167                  18,017                                  1,150                                  983                                145
 Ejendomsselskabet af 01.11.2017 A/S, Silkeborg                       e                  DKK       500                           100                         100                         10                      9                                       1                                      0                                  0
 Gl. Skovridergaard A/S, Silkeborg                                    e                  DKK       500                           100                         100                         31                      26                                      5                                      18                                 -2
 Sundbyvesterhus A/S, Silkeborg                                       e                  DKK       518                           100                         100                         113                     17                                      96                                     6                                  2
 Ejendomsselskabet af 1.10.2015 ApS, Silkeborg                        c                  DKK       500                           100                         100                         125                     123                                     2                                      1                                  1
 Jyske Invest Fund Management A/S, Silkeborg                          d                  DKK       76,000                        100                         100                         357                     72                                      285                                    362                                5
 Bytorv Horsens ApS, Gentofte (temporarily acquired)                  e                  DKK       1,080                         100                         100                         286                     423                                     -137                                   19                                 -62
 All banks and mortgage credit institutions supervised by national financial
 supervisory authorities are subject to statutory capital requirements. Such
 capital requirements may limit intra-group facilities and dividend payments.
 * Activity:
 a: Bank
 b: Mortgage credit
 c: Leasing, financing and factoring
 d: Investment and financing
 e: Properties and course activities
 The registered offices of the companies are in Silkeborg, unless otherwise
 stated.
 
 
    DKKm                                                            Q1     Q1
                                                                    2018   2017
    Income statement
 3  Interest income                                                 874    981
 4  Interest expenses                                               151    144
    Net interest income                                             723    837
    Dividends, etc.                                                 85     54
 5  Fees and commission income                                      536    482
    Fees and commission expenses                                    28     28
    Net interest and fee income                                     1,316  1,345
 6  Value adjustments                                               288    545
    Other operating income                                          173    54
    Employee and administrative expenses                            1,136  1,060
    Amortisation, depreciation and impairment charges               20     50
    Other operating expenses                                        5      5
 7  Loan impairment charges                                         -153   -89
    Profit on investments in associates and group enterprises       -3     256
    Pre-tax profit                                                  766    1,174
    Tax                                                             156    198
    Net profit or loss for the period                               610    976
    Distributed to:
    Jyske Bank A/S shareholders                                     579    957
    Holders of additional tier 1 capital                            31     19
    Total                                                           610    976
    Statement of Comprehensive Income
    Net profit or loss for the period                               610    976
    Other comprehensive income:
    Items that cannot be recycled to the income statement:
    Revaluation of real property                                    145    0
    Tax on property revaluations                                    -29    0
    Items that can be recycled to the income statement:
    Foreign currency translation adjustment of international units  7      1
    Hedge accounting of international units                         -7     -1
    Tax on hedge accounting                                         2      0
    Other comprehensive income after tax                            118    0
    Comprehensive income for the period                             728    976
 
 
         DKKm                                                 31 March  31 Dec.  31 March
2018
2017
2017
         BALANCE SHEET
         ASSETS
         Cash balance and demand deposits with central banks  18,880    19,244   3,657
         Due from credit institutions and central banks       13,167    9,532    13,100
 10      Loans and advances at fair value                     11,417    10,154   11,947
 8,9,10  Loans and advances at amortised cost                 127,648   132,585  127,423
         Bonds at fair value                                  57,818    62,030   71,838
         Bonds at amortised cost                              4,295     5,672    5,438
         Shares, etc.                                         4,874     4,674    4,288
         Investments in associates                            408       407      407
         Equity investments in group enterprises              17,681    17,731   15,073
         Assets in pooled deposits                            3,983     4,208    4,431
         Intangible assets                                    0         1        8
         Owner-occupied properties                            1,769     2,020    2,126
         Other property, plant and equipment                  126       126      145
         Current tax assets                                   1,075     436      1,071
         Assets held temporarily                              365       48       48
         Other assets                                         26,370    26,782   31,893
         Prepayments                                          96        88       79
         Total assets                                         289,972   295,738  292,972
         EQUITY AND LIABILITIES
         Debt and payables
         Due to credit institutions and central banks         39,294    31,379   26,404
 11      Deposits                                             144,970   149,935  145,825
         Pooled deposits                                      4,303     4,368    4,461
         Issued bonds at amortised cost                       30,142    35,776   42,317
         Other liabilities                                    31,817    34,251   37,803
         Deferred income                                      29        18       26
         Total debt                                           250,555   255,727  256,836
         Provisions
         Provisions for pensions and similar liabilities      572       568      530
         Provisions for deferred tax                          48        25       31
         Provisions for guarantees                            217       338      411
         Other provisions                                     268       153      147
         Provisions, total                                    1,105     1,084    1,119
         Subordinated debt                                    4,289     4,323    2,133
         Equity
         Share capital                                        892       892      950
         Revaluation reserve                                  421       339      400
         Currency translation reserve                         0         0        0
         Reserve according to the equity method               4,348     4,406    2,964
         Retained profit                                      25,834    25,864   26,592
         Proposed dividend                                    0         522      499
         Jyske Bank A/S shareholders                          31,495    32,023   31,405
         Holders of additional tier 1 capital                 2,528     2,581    1,479
         Total equity                                         34,023    34,604   32,884
         Total equity and liabilities                         289,972   295,738  292,972
         OFF-BALANCE SHEET ITEMS
         Guarantees, etc.                                     18,490    19,226   17,114
         Other contingent liabilities                         2,493     3,103    2,848
         Total guarantees and other contingent liabilities    20,983    22,329   19,962
 
 
 DKKm
 Statement of changes in equity                           Share     Revaluation reserve        Currency translation            Reserve accor-ding to         Retained profit             Proposed dividend             Shareholders of Jyske Bank A/S
                                                          capital                              reserve                         the equity method
                                                                                                                                                                                                                                                                       Addi-tional tier 1 capital*
                                                                                                                                                                                                                                                                                                               Total equity
 Equity at 1 January 2018                                 892       339                        0                               4,406                         25,864                      522                           32,023                                          2,581                                   34,604
 Changed accounting policies, IFRS 9                      0         0                          0                               -117                          -511                        0                             -628                                            0                                       -628
 Tax effect, IFRS 9                                       0         0                          0                               25                            112                         0                             137                                             0                                       137
 Adjusted equity, 1 January 2018                          892       339                        0                               4,314                         25,465                      522                           31,532                                          2,581                                   34,113
 Net profit or loss for the period                        0         0                          0                               0                             579                         0                             579                                             31                                      610
 Other comprehensive income                               0         82                         0                               34                            2                           0                             118                                             0                                       118
 Comprehensive income for the period                      0         82                         0                               34                            581                         0                             697                                             31                                      728
 Interest paid on AT1 capital                             0         0                          0                               0                             0                           0                             0
                                                                                                                                                                                                                                                                       -45                                     -45
 Currency translation adjustment                          0         0                          0                               0                             39                          0                             39                                              -39                                     0
 Tax                                                      0         0                          0                               0                             -2                          0                             -2                                              0                                       -2
 Dividends paid                                           0         0                          0                               0                             0                           -522                          -522                                            0                                       -522
 Dividends, own shares                                    0         0                          0                               0                             24                          0                             24                                              0                                       24
 Acquisition of own shares                                0         0                          0                               0                             -749                        0                             -749                                            0                                       -749
 Sale of own shares                                       0         0                          0                               0                             476                         0                             476                                             0                                       476
 Transactions with owners                                 0         0                          0                               0                             -212                        -522                          -734                                            -84                                     -818
 Equity 31 March 2018                                     892       421                        0                               4,348                         25,834                      0                             31,495                                          2,528                                   34,023
 Equity at 1 January 2017             950                           400               -2                               2,964                       26,227                          499                           31,038                                1,476                                         32,514
 Net profit or loss for the period    0                             0                 2                                0                           955                             0                             957                                   19                                            976
 Other comprehensive income           0                             0                 0                                0                           0                               0                             0                                     0                                             0
 Comprehensive income for the period  0                             0                 2                                0                           955                             0                             957                                   19                                            976
 Interest paid on AT1 capital         0                             0                 0                                0                           0                               0                             0                                     -19                                           -19
 Currency translation adjustment      0                             0                 0                                0                           -3                              0                             -3                                    3                                             0
 Tax                                  0                             0                 0                                0                           5                               0                             5                                     0                                             5
                                      0                             0                 0                                0                           0                               -499                          -499                                  0                                             -499
 Dividends paid
 Dividends, own shares                0                             0                 0                                0                           32                              0                             32                                    0                                             32
 Proposed dividend                    0                             0                 0                                0                           -499                            499                           0                                     0                                             0
 Acquisition of own shares            0                             0                 0                                0                           -633                            0                             -633                                  0                                             -633
 Sale of own shares                   0                             0                 0                                0                           508                             0                             508                                   0                                             508
 Transactions with shareholders       0                             0                 0                                0                           -590                            0                             -590                                  -16                                           -606
 Equity 31 March 2017                                     950       400                        0                               2,964                         26,592                      499                           31,405                                          1,479                                   32,884
 *Additional tier 1 capital (AT1) has no maturity. Payment of interest and
 repayment of principal are voluntary. Therefore AT1 capital is recognised as
 equity. In September 2016, Jyske Bank issued AT1 amounting to SEK 1.25bn and
 DKK 500m. The AT1 issue with the possibility of early redemption in September
 2021 at the earliest. The interest rates applicable to the issue until
 September 2021 are STIBOR+5.80% and CIBOR+5.30%, respectively. In September
 2017, Jyske Bank made an issue amounting to EUR 150bn, AT1, with the
 possibility of early redemption in September 2027 at the earliest. The issue
 has a coupon of 4.75% until September 2027. It applies to all AT1 issues, that
 if the Common Equity Tier 1 capital of Jyske Bank A/S or the Jyske Bank Group
 falls below 7%, the loans will be written down.
 DKKm                                                                                                                                                                                          31 March                                        31 Dec.                                     31 March
2018
2017
2017
 Capital statement
 Shareholders' equity                                                                                                                                                                          31,495                                          32,023                                      31,405
 Net profit for the period not recognised in the capital base                                                                                                                                  0                                               0                                           -957
 Share buy-back programme, non-utilised limit                                                                                                                                                  0                                               -281                                        -386
 Expected/proposed dividend                                                                                                                                                                    -195                                            -522                                        -499
 Intangible assets                                                                                                                                                                             0                                               -1                                          -8
 Deferred tax liabilities relating to intangible assets                                                                                                                                        0                                               0                                           2
 Prudent valuation                                                                                                                                                                             -247                                            -251                                        -234
 Other deductions                                                                                                                                                                              -117                                            -14                                         -119
 Common Equity Tier 1 capital                                                                                                                                                                  30,936                                          30,954                                      29,204
 Additional Tier 1 capital after reduction                                                                                                                                                     3,042                                           3,209                                       2,123
 Other deductions                                                                                                                                                                              0                                               -27                                         -28
 Core capital                                                                                                                                                                                  33,978                                          34,136                                      31,299
 Subordinated loan capital after reduction                                                                                                                                                     3,726                                           3,631                                       1,428
 Difference between expected loss and the carrying amount of impairment charges                                                                                                                0                                               77                                          124
 Other deductions                                                                                                                                                                              -275                                            -248                                        -247
 Capital base                                                                                                                                                                                  37,429                                          37,596                                      32,604
 Weighted risk exposure involving credit risk etc.                                                                                                                                             102,841                                         99,523                                      96,801
 Weighted risk exposure involving market risk                                                                                                                                                  16,127                                          20,553                                      23,376
 Weighted risk exposure involving operational risk                                                                                                                                             11,936                                          11,400                                      11,400
 Total weighted risk exposure                                                                                                                                                                  130,904                                         131,476                                     131,577
 Capital requirement, Pillar I                                                                                                                                                                 10,472                                          10,518                                      10,526
 Capital requirement, transitional provisions                                                                                                                                                  0                                               276                                         102
 Capital requirement, total                                                                                                                                                                    10,472                                          10,794                                      10,628
 Capital ratio                                                                                                                                                                                 28.6                                            28.6                                        24.8
 Core Tier 1 Capital ratio (%)                                                                                                                                                                 26.0                                            26.0                                        23.8
 Common Equity Tier 1 capital ratio (%)                                                                                                                                                        23.6                                            23.5                                        22.2
 
Transitional rules for capital requirements according to Basel I ended at the
end of 2017.
 
For the determination of individual solvency requirement, please see
www.jyskebank.info.
 
    DKKm                                                                            Q1          Q1
                                                                                    2018        2017
    Notes
 1  Accounting Policies
    The Interim Financial Report of the parent company Jyske Bank A/S for the
    period 1 January to 31 March 2018
    was prepared in accordance with the Danish Financial Business Act, including
    the Executive Order on
    Financial Reports for Credit Institutions and Stockbrokers, etc.
    The rules applying to recognition and measurement at Jyske Bank A/S are
    consistent with IFRS.
    With respect to classification and extent, the preparation for Jyske Bank A/S
    differs from the preparation for the Group. Please thee the full description
    of accounting policies in note 71 of the annual report 2017.
    Figures in the financial statements are in Danish kroner, rounded to the
    nearest million in Danish kroner.
    Changes to accounting policies
    Reference is made to changes to the accounting policies of the Group, note 1,
    page 29.
    Financial situation and risk information
    Jyske Bank A/S is affected by the financial situation and the risk factors
    that are described in the management's review for the Group and reference is
    made to this.
 2  Financial ratios and key figures
    Pre-tax profit p.a. as a percentage of average equity*                          9.3         14.8
    Profit for the period as a pct. of av. equity*                                  1.8         3.1
    Income/cost ratio (%)                                                           1.8         2.1
    Capital ratio                                                                   28.6        24.8
    Common Equity Tier 1 capital ratio (CET1 %)                                     23.6        22.2
    Individual solvency requirement (%)                                             11.2        10.8
    Capital base (DKKm)                                                             37,429      32,604
    Total risk exposure (DKKm)                                                      130,904     131,581
    Interest-rate risk (%)                                                          0.8         0.5
    Currency risk (%)                                                               0.1         0.1
    Accumulated impairment ratio (%)                                                2.6         3.0
    Impairment ratio for the period (%)                                             -0.1        -0.1
    No. of full-time employees at end-period                                        3,539       2,999
    Average number of full-time employees in the period                             3,483       2,991
    *Financial ratios are calculated as if additional tier 1 capital is recognised
    as a liability.
 3  Interest income
    Due from credit institutions and central banks                                  2           3
    Loans and advances                                                              574         682
    Bonds                                                                           147         201
    Derivatives, total                                                              62          26
        Of which currency contracts                                                 54          16
        Of which interest-rate contracts                                            8           10
    Other                                                                           0           0
    Total after offsetting of negative interest                                     785         912
    Negative interest income set off against interest income                        48          33
    Negative interest expenses set off against interest expenses                    41          36
    Total before offsetting of negative interest income                             874         981
    Of which interest income on reverse repos carried under:
    Due from credit institutions and central banks                                  -6          -5
    Loans and advances                                                              -23         -21
 
    DKKm                                                                            Q1     Q1
2018
2017
    Notes
 4  Interest expenses
    Due to credit institutions and central banks                                    38     18
    Deposits                                                                        -33    2
    Issued bonds                                                                    32     43
    Subordinated debt                                                               25     12
    Total after offsetting of negative interest                                     62     75
    Negative interest expenses set off against interest expenses                    48     33
    Negative interest income set off against interest income                        41     36
    Total before offsetting of negative interest income                             151    144
    Of which interest expenses on reverse repos carried under:
    Due to credit institutions and central banks                                    -13    -16
    Deposits                                                                        -6     0
 5  Fees and commission income
    Securities trading and custody services                                         247    263
    Money transfers and card payments                                               49     40
    Loan application fees                                                           42     32
    Guarantee commission                                                            27     18
    Other fees and commissions                                                      171    129
    Total                                                                           536    482
 6  Value adjustments
    Loans and advances at fair value                                                8      20
    Bonds                                                                           -140   79
    Shares, etc.                                                                    333    181
    Currency                                                                        -7     71
    Currency, interest-rate, share, commodity and other contracts as well as other  72     163
    derivatives
    Assets in pooled deposits                                                       -160   128
    Pooled deposits                                                                 160    -128
    Other assets                                                                    1      0
    Issued bonds                                                                    16     28
    Other liabilities                                                               5      3
    Total                                                                           288    545
 
 
    DKKm                                                                                                 Q1 2018  Q1 2017
 7  Loan impairment charges and provisions for guarantees recognised in the income
    statement
    Loan impairment charges/provisions for the period                                                    -73      -13
    Impairment charges on balances due from credit institutions in the period                            2        0
    Provisions for commitments and unutilised credit lines in the period                                 -32      -
    Recognised as a loss, not covered by loan impairment charges/provisions                              21       29
    Recoveries                                                                                           -54      -105
    Loan impairment charges and provisions for guarantees recognised in the income                       -136     -89
    statement
    Recognised discount for acquired loans                                                               -17      -55
    Net effect on income statement                                                                       -153     -144
 8  Balance of loan impairment charges and provisions for guarantees incl. balance
    of discounts
    Balance of loan impairment charges and provisions for guarantees incl. balance                       4,286    5,514
    of discounts, beginning of period
    Implementation of IFRS 9 and adjustments to the standard                                             507      -
    Loan impairment charges/provisions for the period                                                    -106     -13
    Recognised as a loss, covered by impairment charges/provisions                                       -290     -190
    Recognised losses covered by discounts for acquired loans                                            -1       -13
    Recognised discount for acquired loans                                                               -17      -55
    Other movements                                                                                      19       24
    Balance of loan impairment charges and provisions for guarantees incl. balance                       4,398    5,267
    of discounts, end of period
    Loan impairment charges                                                                              3,891    4,473
    Provisions for guarantees                                                                            217      411
    Provisions for commitments and unutilised credit lines                                               120      -
    Balance of loan impairment charges and provisions, end of period                                     4,228    4,884
    Balance of discounts for acquired loans                                                              170      383
    Balance of loan impairment charges and provisions for guarantees incl. balance                       4,398    5,267
    of discounts, end of period
    The regulatory balance of loan impairment charges and provisions for
    guarantees does not include the discount balance for acquired loans and
    advances.
 9  The balance of loan impairment charges and provisions for guarantees broken     Stage 1  Stage 2     Stage 3  Total
    down by stages
    Balance according to IAS 39, beginning of period                                                              4,096
    Transitional effect, IFRS 9                                                     325      637         3,641    507
    Movements over the period, net                                                  -22      -34         -319     -375
    Balance of loan impairment charges and provisions, end of period                303      603         3,322    4,228
 
 
     DKKm
 10      Loans, advances and guarantees as well as loan impairment charges and
         provisions for guarantees by sector
         Sector                                          Loans, advances and guarantees                              Balance of loan impairment charges and provisions for guarantees        Loan impairment charges and provisions for guarantees for the period
                                                                                                                                                                                                                                                                             Loss for
                                                                                                                                                                                                                                                                             the period
                                                         %                 %             31 March      End of        31 March                                        End of                  Q1                                      Q1                                      Q1        Q1
                                                         31 March          End of        2018          2017          2018                                            2017                    2018                                    2017                                    2018      2017
                                                         2018              2017
         Public authorities                                         5      6             8,127         9,265         0                                               0                       0                                       0                                       0         0
         Agriculture, hunting, forestry, fishing                    4      4             6,178         6,248                                                         1,085                                                           -6                                                85
                                                                                                                     992                                                                     -75                                                                             127
             Fishing                                                1      1             1,661         1,663         2                                               1                       0                                       -1                                      0         0
             Dairy farmers                                          0      0             720           838           499                                             528                     -44                                     6                                       49        50
             Plant farming                                          1      1             1,620         1,498         82                                              122                     -8                                      -7                                      13        3
             Pig farming                                            1      1             1,063         1,069         293                                             329                     -17                                     -1                                      46        20
             Other agriculture                                      1      1             1,114         1,180         116                                             105                     -6                                      -3                                      19        12
         Manufacturing, mining, etc.                                4      4             6,580         6,091         240                                             197                     6                                       -14                                     9         11
         Energy supply                                              3      3             4,503         4,776         52                                              36                      4                                       0                                       0         0
         Building and construction                                  1      1             2,032         2,262         82                                              93                      0                                       -9                                      6         19
         Commerce                                                   6      6             10,079        9,987         208                                             160                     -5                                      0                                       5         15
         Transport, hotels and restaurants                          2      1             2,422         2,065                                                         82                                                              12                                      0         12
                                                                                                                     87                                                                      1
         Information and communication                              1      1             984           1,018                                                         29                                                              -30                                     3         0
                                                                                                                     43                                                                      9
         Finance and insurance                                      31     33            48,571        52,748        661                                             716                     -43                                     -47                                     42        2
         Real property                                              10     9             15,483        14,399        549                                             555                     1                                       7                                       60        28
             Lease of real property                                 6      5             9,019         8,469         463                                             484                     4                                       23                                      57        28
             Buying and selling of real property                    2      2             2,585         2,438         53                                              44                      6                                       -7                                      3         0
             Other real property                                    2      2             3,879         3,492         33                                              27                      -9                                      -9                                      0         0
         Other sectors                                              3      3             5,292         5,884         132                                             153                     -17                                     -6                                      29        1
         Corporate clients                               65                65            102,124       105,478       3,046                                           3,106                   -119                                    -93                                     281       173
         Personal clients                                30                29            47,304        47,222        1,062                                           990                     -4                                      4                                       30        46
         Unutilised max and commitments, etc.            -                 -             -             -             120                                             -                       -30                                     -                                       0         -
          Total                                          100               100                         161,965       4,228                                           4,096                   -153                                    -89                                     311       219
                                                                                         157,555
 
                       31 March  31 Dec.  31 March
2018
2017
2017
 11  Deposits
     Demand deposits   101,288   104,521  93,436
     Term deposits     2,966     2,950    4,228
     Time deposits     33,759    35,427   40,803
     Special deposits  6,957     7,037    7,358
     Total             144,970   149,935  145,825
 
 
Statement by the Executive and Supervisory Boards
 
 We have today discussed and approved the Interim Financial Report of Jyske
 Bank A/S for the period 1 January to 31 March 2018.
 The consolidated Interim Financial Statements were prepared in accordance with
 IAS 34 Interim Financial Reporting as adopted by the EU, and the Parent's
 Interim Financial Statements in accordance with the Danish Financial Business
 Act. Further, the Interim Financial Report was prepared in accordance with the
 additional Danish disclosure requirements for interim financial reports of
 listed financial companies.
 The Interim Financial Report is unaudited and has not been reviewed, but the
 external auditor verified the profit, and this verification included audit
 procedures in line with the requirements relating to a review, and hence it
 was ascertained that the conditions for on-going recognition of the profit for
 the period in the capital base were met.
 In our opinion, the Interim Financial Statements give a true and fair view of
 the Group's and the Parent's financial position at 31 March 2018 and also of
 their financial performance as well as the cash flows of the Group for the
 period 1 January to 31 March 2018.
 In our opinion, the Management's Review gives a fair presentation of the
 development in the Group's and the Parent's performance and financial
 position, the profit for the period and the Group's and the Parent's financial
 position as a whole as well as a description of the most material risks and
 elements of uncertainty that may affect the Group and the Parent.
 Silkeborg, 09 May 2018
 
 
EXECUTIVE BOARD
 
 
 
 ANDERS DAM
 Managing Director and CEO
 NIELS ERIK JAKOBSEN     PETER SCHLEIDT       PER SKOVHUS
                                                      /JENS BORUM
                                                      Director, Finance
 
 
 
SUPERVISORY BOARD
 
 
 SVEN BUHRKALL                                       KURT BLIGAARD PEDERSEN
 Chairman                                            Deputy Chairman
            RINA ASMUSSEN  PHILIP BARUCH             JENS A. BORUP             KELD NORUP
 JOHNNY CHRISTENSEN                   MARIANNE LILLEVANG            CHRISTINA LYKKE MUNK
 Employee Representative              Employee Representative       Employee Representative
 
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