Realkredit Danmark Group  

31 December  

31 December  

(DKK millions)  

2022  

2021  

Total capital and Total capital ratio  

Shareholders' equity  

49,477  

49,472  

Proposed dividends  

-3,600  

-3,600  

Deferred tax assets  

-

-

Prudent valuation  

-4  

-1  

Minimum Loss Coverage for Non-Performing Exposures  

-111  

-42  

Defined benefit pension fund assets  

-148  

-171  

Common equity tier 1 capital  

45,614  

45,658  

Difference between expected losses and impairment charges  

-

-

Tier 1 capital  

45,614  

45,658  

Reserves in series subject to a reimbursement obligation  

-

-

Difference between expected losses and impairment charges  

776  

742  

Total capital  

46,390  

46,400  

Risk exposure amount  

159,310  

183,447  

Common equity tier 1 capital ratio (%)  

28.6  

24.9  

Tier 1 capital ratio (%)  

28.6  

24.9  

Total capital ratio (%)  

29.1  

25.3  

At end-2022, the total capital and the total risk exposure amount is calculated in accordance with the Capital Requirements Regulation (CRR/CRD).  

The solvency need calculation is described in more detail on rd.dk.  

Realkredit Danmark Group  

(DKK millions)  

2022  

2021  

Cash flow from operating activities  

Profit before tax  

4,659

4,703

Adjustment for other non-cash operating items  

Amortisation, depreciation and impairment charges  

3

1

Loan impairment charges  

-59

122

Tax paid  

-952

-1,055

Cash flow from operations before changes in operating capital  

3,651

3,771

Cash flow from operating capital  

Bonds and shares  

-328

785

Mortgage loans  

5,598

-14,921

Issued mortgage bonds  

-15,893

7,584

Due to credit institutions  

-

-

Other assets/liabilities  

690

179

Cash flow from operating activities  

-6,282

-2,602

Cash flow from investing activities  

Acquisition of tangible assets  

-

-

Sale of tangible assets  

-

-

Cash flow from investing activities  

-

-

Cash flow from financing activities  

Dividends  

-3,600

-3,800

Cash flow from financing activities  

-3,600

-3,800

Cash and cash equivalents at 1 January  

18,643

25,045

Change in cash and cash equivalents  

-9,882

-6,402

Cash and cash equivalents at 31 December  

8,761

18,643

Cash and cash equivalents at 31 December  

Cash in hand and demand deposits with central banks  

5,612

3,674

Amounts due from credit institutions and central banks  

within 3 months  

3,149

14,969

Total  

8,761

18,643

The fair value of the credit risk on the borrower is based on the ex-  

pected credit loss impairment model in IFRS 9. The expected credit  

loss is calculated for all individual loans as a function of PD (proba-  

bility of default), EAD (exposure at default) and LGD (loss given  

default) and incorporates forward-looking information. The for-  

ward-looking information reflects management’s expectations and  

involves the creation of scenarios (base case, upside and downside),  

including an assessment of the probability for each scenario.  

The forward-looking information is based on a three-year forecast  

period converging to steady state in year seven. That is, after the  

forecast period, the macroeconomic scenarios revert slowly towards  

a steady state. The applied scenarios that drive the expected credit  

loss calculation in 2022 have been updated with the latest macroe-  

conomic data. Compared to the end of 2021, all three scenarios  

have been revised to reflect expectations of higher inflation and in-  

terest rate hikes fuelled by the war in Ukraine. The scenario  

weighting remained unchanged from the end of 2021.  

The base case is an extension of the Group’s official view of the  

Nordic economies (the Nordic Outlook report). At 31 December  

2022, the base case scenario reflects an expectation of high inflation  

and interest rates fuelled by the war in Ukraine. This results in a  

weaker GDP growth due to soaring energy costs, skills shortages  

and wage pressures that affect consumers and businesses in the  

Nordic economies. House price have been revised downwards to  

larger decrease, which is a consequence of the increasing interest  

rates.  

The upside scenario represents a slightly better outlook than the  

base case scenario across the macroeconomic parameters. In this  

scenario, the global inflation declines which allows the central  

banks to ease the tightening pace, which lowers bond yields and  

boosts equity markets. Consumer sentiment increases and consum-  

ers run down a large proportion of the savings accumulated during  

the crisis.  

The Group’s downside scenario is a stagflation scenario, calibrated  

to a level of severity resembling the recession in 2008-2009, how-  

ever with high interest rates and high inflation. A trigger of the eco-  

nomic setback could be continued macroeconomic worsening and  

challenges linked to high business costs while inflation remain ele-  

vated. This adversely impacts the labour market, results in higher  

and more persistent unemployment. This would lead to a severe  

slowdown in the economies in which the Group is represented.  

General  

Realkredit Danmark prepares its consolidated financial statements  

in accordance with the International Financial Reporting Standards  

(IFRSs) and applicable interpretations (IFRIC) issued by the Inter-  

national Accounting Standards Board (IASB), as adopted by the  

EU. Furthermore, the consolidated financial statements comply  

with the Danish FSA’s executive order No. 1306 dated 16 Decem-  

ber 2008 on the use of IFRSs by undertakings subject to the Danish  

Financial Business Act.  

Changes to significant accounting policies  

On 1 January 2022, the Group implemented the amendments to IAS  

16, IAS 37, IFRS 3 and Annual Improvements to IFRS Standards  

2018-2020.  

The implementations had no impact on the shareholders’ equity at 1  

January 2022.  

Apart from these changes, the accounting policies are unchanged  

from those applied in Annual Report 2021.  

For the purpose of clarity, the notes to the financial statements are  

prepared using the concepts of materiality and relevance. This  

means that information not considered material in terms of quanti-  

tative and qualitative measures or relevant to financial statement  

users is not presented in the notes.  

Significant accounting estimates and assessments  

Management’s estimates and assumptions of future events that will  

significantly affect the carrying amounts of assets and liabilities un-  

derlie the preparation of the Group’s consolidated financial state-  

ments. The amount most influenced by critical estimates and as-  

sessments is the fair value measurement of mortgage loans.  

The estimates and assessments are based on assumptions that man-  

agement finds reasonable but which are inherently uncertain and  

unpredictable. The premises may be incomplete, unexpected future  

events or situations may occur, and other parties may arrive at other  

estimated values.  

Fair value measurement of mortgage loans  

The fair value of mortgage loans is based on the fair value of the  

underlying issued mortgage bonds adjusted for changes in the fair  

value of the credit risk on borrowers. In addition to the expected  

credit losses, a collective assessment determines the need for adjust-  

ments to reflect other components in the fair value measurement,  

such as an assessment of an investor’s risk premium, compensation  

for administrative costs related to the loans and the possibility to in-  

crease the credit margin if the credit risk increases.  

At the end of 2022, the fair value adjustment of the credit risk on  

mortgage loans was calculated at DKK 2,862 million (2021:  

DKK 2,930 million), reducing the value of mortgage loans. The  

base case scenario enters with a probability of 70% (2021: 70%),  

the downside scenario with a probability of 20% (2021: 20%) and  

the upside scenario with a probability of 10% (2021: 10%). If the  

base case scenario was assigned a probability of 100%, the fair  

value adjustment at end-2022 would be DKK 2,600 million (2021:  

DKK 2,600 million). The fair value adjustment at the end of 2022  

would increase to DKK 4,000 million (2021: DKK 4,300 million) if  

the downside scenario was assigned a probability of 100%. If in-  

stead the upside scenario was assigned a probability of 100%, the  

fair value adjustment would decrease to DKK 2,500 million (2021:  

DKK 2,550 million). The applied macroeconomic scenarios in 2022  

differ from those used at 31 December 2021. In Q4 2022 the down-  

side scenario was changed to capture the severe recession scenario  

with high interest rates (reflecting a stagflation scenario) applied in  

the Group’s Internal Capital Adequacy Assessment Process 8  

(ICAAP) processes and is similar in nature to regulatory stress tests.  

The severe recession scenario reflects negative growth, increasing  

interest rates, and falling property prices for a longer period. The  

change of the downside scenario has been made to better capture the  

increasing risk and in order for the ECL calculation to include po-  

tential downside risks due to the elevated asset prices across the  

Nordics.  

According to the Group’s definition of a significant increase in  

credit risk, i.e. when a loan is transferred from stage 1 to stage 2,  

loans with an initial PD below 1% are transferred to stage 2 if the  

loan’s 12-month PD has increased by at least 0.5 of a percentage  

point and the loan’s lifetime PD has doubled since origination. The  

allowance account is relatively stable in terms of changes to the def-  

inition of significant increase in credit risk. At 31 December 2022,  

the allowance account would increase by DKK 25 million (2021:  

DKK 19 million), if instead an increase in the loan’s 12-month PD  

by at least 0.25 of a percentage point combined with a doubling of  

the lifetime PD was considered a significant increase in credit risk.  

Management applies judgement when determining the need for  

post-model adjustments. At the end of 2022, the post-model adjust-  

ments amounted to DKK 1,220 million (2021: DKK 1,334 million).  

The adjustments cover for instance specific macroeconomic risks  

that are not specifically captured by the expected credit loss model  

e.g. secondary effect from the war in Ukraine, which have given  

rise to a new set of challenges that affect economic and business ac-  

tivity, rising inflation and increasing interest rates.  

On the other hand, covid-related uncertainties have been reduced  

from the end of 2021, and the related post-model adjustments were  

fully released during 2022, as the new virus variants has not re-  

sulted in prolonged lockdown.  

Consolidation  

Group undertakings  

The financial statements consolidate the parent company and group  

undertakings in which the Group has control. Control exists if  

Realkredit Danmark A/S is exposed to variable returns from the en-  

tity and, directly or indirectly, holds more than half of the voting  

rights in an undertaking or otherwise has power to control manage-  

ment and operating policy decisions affecting the variable returns.  

The consolidated financial statements are prepared by consolidating  

items of the same nature and eliminating intra-group transactions,  

balances and trading profits and losses.  

Segment reporting  

Realkredit Danmark operates two primary business segments, mort-  

gage finance and a proprietary portfolio. The business segments are  

based on ongoing internal reporting of customer-facing activities  

(mortgage finance) and risk management (proprietary portfolio).  

The part of the bond portfolio that is not related to mortgage lend-  

ing operations is managed under the proprietary portfolio segment.  

Offsetting  

Assets and liabilities are offset when the Group and the counter-  

party have a legally enforceable right to set off a recognised amount  

and intend either to settle on a net basis or to realise the asset and  

settle the liability simultaneously.  

Holdings of own bonds do not constitute a claim on a counterparty,  

but reduce the Group’s liability under the issued bonds. Holdings of  

own mortgage bonds are therefore set off against Issued mortgage  

bonds at fair value.  

Translation of transactions in foreign currencies  

The presentation currency of the consolidated financial statements  

is Danish kroner, which is the functional currency of Realkredit  

Danmark.  

Transactions in foreign currencies are translated into Danish kroner  

using the exchange rates applicable on the transaction date. Gains  

and losses on exchange rate differences arising between the transac-  

tion date and the settlement date are recognised in the income state-  

ment.  

with the solely payments of principal and interest test (SPPI test) in  

IFRS 9, as changes in the fair value of the underlying bonds reflect  

other factors than interest rate developments. Consequently, regard-  

less of the fact that the business model is to receive the contractual  

cash flows, such loans are mandatorily recognised at fair value  

through profit or loss.  

If the issued mortgage bonds are valued at amortised cost, and the  

mortgage loans, which are funded by the issued mortgage bonds  

with matching terms, are valued at fair value through profit or loss,  

a timing difference will arise in the recognition of gains and losses  

in the financial statements.  

To eliminate this random timing difference in the recognition of  

gains and losses, both mortgage loans and issued mortgage bonds  

are valued at fair value through profit or loss (for the issued bonds  

by using the fair value option of IFRS 9).  

The fair value of the mortgage loans is based on the fair value of  

the underlying mortgage bonds adjusted for the credit risk on bor-  

rower/the Group’s customer. This entails that the fair value adjust-  

ment of the mortgage loans in all material respects balance out the  

fair value adjustment of the issued bonds. Consequently, the total  

fair value adjustment of the issued mortgage bonds, including the  

proportion relating to own credit risk, is recognised in the income  

statement, as recognition of the fair value adjustment of own credit  

risk in other comprehensive income would lead to an accounting  

mismatch in the income statement.  

The fair value adjustment of the mortgage loans and the issued  

mortgage bonds is recognised under Value adjustments, except for  

the part of the value adjustment that concerns the credit risk on  

mortgage loans: this part is recognised under Loan impairment  

charges.  

Monetary assets and liabilities in foreign currency are translated at  

the exchange rates at the balance sheet date. Exchange rate adjust-  

ments of monetary assets and liabilities arising as a result of differ-  

ences in the exchange rates at the transaction date and at the bal-  

ance sheet date are recognised in the income statement.  

Financial instruments – general  

Regular way purchases and sales of financial instruments are recog-  

nised and derecognised at the settlement date. Fair value adjust-  

ments of unsettled financial instruments are recognised from the  

trade date to the settlement date for financial instruments subse-  

quently recognised at fair value over profit or loss.  

Classification  

Financial assets are classified at initial recognition on the basis of  

the company’s business model adopted for managing the assets and  

on their contractual cash flow characteristics (including embedded  

derivatives, if any) into one of the following measurement catego-  

ries:  

•

Amortised cost if the assets are held exclusively for the  

purpose of collecting contractual cash flows and if the  

cash flows are payments of principal and interest on the  

principal amount outstanding solely.  

•

Fair value through other comprehensive income if the as-  

sets are held for the purpose of both collecting contractual  

cash flows and selling and if cash flows are payments of  

principal and interest on the principal amount outstanding  

solely. The Group has no financial assets in this category.  

•

Fair value through profit or loss for all other financial as-  

sets.  

At initial recognition, a financial liability is assigned to one of the  

following categories:  

•

Issued mortgage bonds are designated at fair value through  

profit or loss using the fair value option of IFRS 9 in order  

not to create an accounting mismatch that would otherwise  

arise. See below.  

•

Other financial liabilities, including “Senior debt” meas-  

ured at amortised cost.  

Mortgage loans and issued mortgage bonds at fair value through  

profit or loss (FVPL)  

Mortgage loans granted under Danish mortgage finance law are  

funded by issuing listed mortgage bonds with matching terms. Bor-  

rowers may repay such mortgage loans by delivering the underly-  

ing bonds. This represents an option to prepay at the fair value of  

the underlying bonds, which can be both above and below the prin-  

cipal amount plus accrued interest. Such an option is not consistent  

The table below shows the distribution of the Group’s financial instruments by valuation method:  

Fair value through profit or loss  

Managed on fair-  

Due to  

Amortised cost  

Trading portfolio  

value basis  

SPPI test  

Designated  

Total  

Assets  

Cash in hand and demand deposits with  

central banks  

5,612  

-

-

-

-

5,612  

Due from credit institutions and central  

banks  

3,149  

-

-

-

-

3,149  

Bonds  

33,448  

-

13,270  

-

-

46,718  

Loans  

204  

-

-

724,438  

-

724,642  

Shares  

-

-

4

-

-

4

Derivatives (Other assets)  

-

103  

-

-

-

103  

Total assets  

42,413  

103  

13,274  

724,438  

-

780,228  

Liabilities  

Due to credit institutions and central  

banks  

2,000  

-

-

-

-

2,000  

Issued bonds  

-

-

-

-

724,105  

724,105  

Derivatives (Other liabilities)  

-

9

-

-

-

9

Total liabilities  

2,000  

9

-

-

724,105  

726,114  

BALANCE SHEET  

Bonds at fair value  

At initial recognition, these bonds are measured at fair value, ex-  

cluding transaction costs. Subsequently, bonds are measured at fair  

value through profit or loss. The bonds form part of a portfolio,  

which is managed on a fair value basis.  

If an active market exists, fair value is based on the most recently  

observed market price at the balance sheet date.  

If a bond is quoted in a market that is not active, the Group bases its  

measurement on the most recent transaction price. Adjustment is  

made for subsequent changes in market conditions, for instance by  

including transactions in similar bonds that are motivated by normal  

business considerations.  

If no active market exists, fair value is estimated on the basis of  

generally accepted valuation techniques and market-based parame-  

ters.  

Bonds at amortised cost  

Realkredit Danmark has a bond portfolio held for the purpose of  

generating a known return until maturity. The bonds are measured  

at amortised cost. Interest rate risk is not hedged. Impairment  

charges are made for expected credit losses on the basis of a classi-  

fication of the bonds into stages 1, 2 and 3, and the impairment  

equals 12-month expected credit losses for bonds in stage 1 and the  

present value of lifetime expected credit losses for bonds in stages 2  

and 3, cf. the description below in the section ‘Mortgage loans and  

Issued mortgage bonds at fair value’. For calculating the present  

value of expected credit losses for discounting purposes, the origi-  

nal effective interest rate is used instead of the current interest rate.  

Mortgage loans and Issued mortgage bonds at fair value  

At initial recognition, mortgage loans and issued mortgage bonds  

are measured at fair value, excluding transaction costs. Subse-  

quently, these financial instruments are measured at fair value  

through profit or loss.  

The fair value of the issued mortgage bonds will usually equal the  

quoted market price. However, a small part of the issued bonds are  

illiquid, and the fair value of these bonds is calculated on the basis  

of a discounted cash flow valuation model.  

The Group implemented the new requirements related to the defini-  

tion of default in January 2022 in order to align the existing defini-  

tion of default to the new requirements outlined in the Guidelines  

and the RTS.  

The newly definition of default is used in the measurement of ex-  

pected credit losses and the assessment to determine movements be-  

tween stages. The definition of default is also used for internal credit  

risk management and capital adequacy purposes. According to the  

revised definition of default, exposures that are considered default  

are also considered Stage 3 exposures. This is applicable for expo-  

sures that are default due to either the 90 days past due default trig-  

ger or the unlikeliness to pay default triggers.  

The expected credit loss is calculated for all individual loans as a  

function of the probability of default (PD), the exposure at default  

(EaD) and the loss given default (LGD).  

The lifetime expected credit losses cover the expected remaining  

lifetime of the loan. For most loans, the expected lifetime is limited  

to the remaining contractual maturity and adjusted for expected pre-  

payment. For exposures with weak credit quality, the likelihood of  

prepayment is not included.  

The forward-looking elements of the calculation reflect the current  

unbiased expectations of the management. The process consists of  

the creation of macroeconomic scenarios (base case, upside and  

downside), including an assessment of the probability for each sce-  

nario, by the Danske Bank Group’s independent macroeconomic re-  

search unit, the review and sign-off of the scenarios (throughout the  

organisation) and a process for adjusting scenarios given new infor-  

mation during the quarter. Management’s approval of scenarios can  

include adjustments to the scenarios, probability weighting and man-  

agement overlays to cover the outlook for particular high-risk port-  

folios, which are not provided by the Group’s macroeconomists. The  

approved scenarios are used to calculate the impairment levels.  

Technically, the forward-looking information is used directly in the  

PDs through an estimate of general changes to the PDs and the  

LGDs in the expected credit loss calculation. However, for signifi-  

cant exposures in stage 3, an individual assessment of the scenarios,  

changes to expected credit losses and the related probabilities are  

performed by senior credit officers.  

In addition, a collective assessment determines the need for further  

adjustments to reflect other components in the fair value measure-  

ment, such as an assessment of an investor’s risk premium, compen-  

sation for administrative costs related to the loans and the possibility  

of increasing the credit margin if the credit risk increases. This as-  

sessment also takes into consideration the fact that initial recogni-  

tion of 12-month expected credit losses is not in accordance with  

fair value, and the fact that the expected credit losses during the life-  

time of the asset should be included in the assessment even if the  

credit risk has not increased significantly.  

The fair value of mortgage loans is based on the fair value of the un-  

derlying issued mortgage bonds adjusted for changes in the fair  

value of the credit risk on the borrowers. The IFRS 13 estimate of  

the fair value of the expected credit losses is calculated on the basis  

of the IFRS 9 model for calculating impairment of losses on loans at  

amortised cost: expected credit losses, including the classification of  

loans between stages 1, 2 and 3:  

Stage 1: If the credit risk has not increased significantly, the impair-  

ment equals the expected credit losses resulting from default events  

that are possible within the next 12 months, see however below on  

the collective assessment of the need for further adjustments.  

Stage 2: If the credit risk has increased significantly, the loan is  

transferred to stage 2 and an impairment charge equal to the lifetime  

expected credit losses is recognised. A significant credit risk in-  

crease is considered to occur when the following increase in the  

probability of default (PD) is observed:  

•

For loans originated below 1% in PD: An increase in the  

loan’s 12-month PD of at least 0.5 of a percentage point since  

origination and a doubling of the loan’s lifetime PD since  

origination  

•

For loans originated above 1% in PD: An increase in the  

loan’s 12-month PD of 2 percentage points since origination  

or a doubling of the loan’s lifetime PD since origination  

•

Further, loans that are more than 30 days past due are moved  

from stage 1 to stage 2. Finally, customers subject to forbear-  

ance measures are placed in stage 2, if the Group, in the most  

likely outcome, expects no loss or the customers are in the 2-  

year probation period for performing forborne exposures.  

Stage 3: If the loan is in default, it is transferred to stage 3. A facil-  

ity becomes credit-impaired when one or more events that have a  

detrimental impact on the estimated future cash flows have oc-  

curred. This includes observable data about (a) significant financial  

difficulty of the borrower; (b) a breach of contract, such as a default  

or past due event; (c) the borrower, for reasons relating to the bor-  

rower’s financial difficulty, is granted a concession; (d) it is proba-  

ble that the borrower will enter into bankruptcy. Credit-impaired fa-  

cilities are placed in Realkredit Danmark’s rating category 10 or 11.  

For customers in rating category 10, the stage 3 classification only  

applies to customers where a loss is expected in the most likely sce-  

nario. For rating category 11, all exposures are classified as stage 3.  

The Realkredit Danmark Group uses the option to continue to recog-  

nise interest income on mortgage loans measured at fair value on the  

basis of the contractual interest rates.  

To support a more harmonised approach regarding the application of  

the definition of default, the European Banking Authority (EBA) is-  

sued the following products that guide the application of the defini-  

tion of default: the Guidelines on the application of the definition of  

default, EBA/GL/2016/07 and the Regulatory Technical Standards  

(RTS) on the materiality threshold for credit obligations past due,  

EBA/RTS/2016/06.  

Tangible assets also include lease assets under lease contracts in  

which the Group acts as lessee, except for leases of low value assets  

and contracts with terms of 12 months or less. On initial recognition,  

the lease asset represents the present value of future lease payments  

(using the Group’s borrowing rate). Lease assets are depreciated on  

a straight-line basis over the lease term.  

Tangible assets are tested for impairment if evidence of impairment  

exists, and the asset is written down to its recoverable amount,  

which is the higher of its fair value less costs to sell and its value in  

use.  

Pension assets  

The Group’s pension obligations generally consist of defined contri-  

bution pension plans for its staff. Under the defined contribution  

plans, the Group pays regular contributions to insurance companies  

and other institutions. Such payments are expensed as they are  

earned by the staff, and the obligations under the plans are taken  

over by the insurance companies and other institutions.  

Furthermore, the Group operates a defined benefit plan maintained  

under Kreditforeningen Danmarks Pensionsafviklingskasse (pension  

fund). Realkredit Danmark A/S guarantees future payment of a de-  

fined benefit from the time of retirement.  

The pension fund and Realkredit Danmark’s defined benefit plan  

have not accepted new members since 1971, so no pension contribu-  

tions are made. Accordingly, there are no service costs.  

The amounts payable are recognised on the basis of an actuarial  

computation of the present value of expected benefits. The present  

value is calculated on the basis of expected future trends in salaries  

and interest rates, time of retirement, mortality rate and other fac-  

tors.  

The fair value of pension assets less the present value of pension  

benefits is carried as a pension asset under Other assets in the bal-  

ance sheet.  

Due to credit institutions and central banks  

Due to credit institutions and central banks include amounts re-  

ceived under repo transactions. These deposits are recognised as  

debt with collateral in the securities surrendered. Repo transactions  

are made on standard terms and conditions. Amounts due to credit  

institutions and central banks are measured at amortised cost.  

Loans considered uncollectible are written off. Write-offs are deb-  

ited to the allowance account. Loans are written off once the usual  

collection procedure has been completed and the loss on the individ-  

ual loan can be calculated.  

Due from credit institutions and central banks and Loans and  

other amounts due at amortised cost  

Amounts due from credit institutions and central banks comprise  

amounts due from other credit institutions and time deposits with  

central banks. Reverse transactions (purchases of securities from  

credit institutions and central banks that the Group agrees to resell  

at a later date) are recognised as Amounts due from credit institu-  

tions and central banks with collateral in the securities received. Re-  

verse transactions are made on standard terms and conditions.  

These financial assets are held for the purpose of achieving the con-  

tractual return until expiry and have contractual cash flows reflect-  

ing repayment of principal and interest thereon. Loans and other  

amounts due are therefore carried at amortised cost and consist of  

mortgage payments due and other outlays relating to mortgage loans  

as well as claims against individual borrowers and reserve fund  

mortgages, etc.  

Impairments are made for expected credit losses on the basis of a  

classification of the loans into stages 1, 2 and 3, and the impairment  

equals 12-month expected credit losses for loans in stage 1 and the  

present value of lifetime expected credit losses for loans in stages 2  

and 3, cf. the description above in the section ‘Mortgage loans and  

Issued mortgage bonds at fair value’. For calculating the present  

value of expected credit losses for discounting purposes, the original  

effective interest rate is used instead of the current interest rate.  

Assets temporarily taken over  

Assets temporarily taken over include tangible assets, which accord-  

ing to a publicly announced plan, the Group expects to sell within  

twelve months. Such assets are measured at the lower of their carry-  

ing amount at the time of classification and their fair value less ex-  

pected costs to sell and are no longer depreciated.  

Properties taken over in connection with non-performing loans and  

which are likely to be sold within 12 months are presented under  

Assets temporarily taken over. Subsequent fair value adjustments  

and gains or losses on disposal are recognised under Loan impair-  

ment charges.  

Other assets  

Other assets include derivatives, interest receivable, tangible assets,  

assets under sub-leases and pension assets. Derivatives are recog-  

nised at fair value through profit or loss.  

Tangible assets  

Equipment, vehicles, furniture, fixtures and property improvement  

expenditure are recognised at cost less depreciation and impairment  

charges. Assets are depreciated over their expected useful lives,  

which are usually three years, according to the straight-line method.  

Property improvement expenditure is depreciated over the term of  

the lease, with a maximum of ten years.  

INCOME STATEMENT  

Interest income and expense  

Interest income and expenses include interest and administration  

margins on financial instruments measured at fair value.  

Fees and commission income and expense  

Income, including origination fees, from mortgage loans carried at  

fair value is recognised when the transaction is completed.  

Income and expenses for services provided over a period of time are  

accrued over the period. Transaction fees are recognised on comple-  

tion of the individual transaction.  

Value adjustments  

Value adjustments comprise realised and unrealised capital gains  

and losses on bonds at fair value, mortgage loans, issued mortgage  

bonds and fixed-price agreements as well as exchange rate adjust-  

ments.  

Staff costs and administrative expenses  

Staff costs  

Salaries and other remuneration that the Group expects to pay for  

work carried out during the year are expensed under Staff costs and  

administrative expenses. This item comprises salaries, bonuses, ex-  

penses for share-based payments, holiday allowances, anniversary  

bonuses, pension costs and other remuneration. Performance-based  

pay is expensed as it is earned.  

Performance-based pay and share-based payments  

Performance-based pay is expensed as it is earned. Part of the per-  

formance-based pay for the year is paid in the form of conditional  

shares issued by Danske Bank. Rights to shares under the condi-  

tional share programme vest up to three years after being granted  

provided that the employee, with the exception of retirement, has  

not resigned from the Group. Retirement is not considered as resig-  

nation.  

The fair value of share-based payments at the grant date is expensed  

over the service period that unconditionally entitles the employee to  

the payment. The intrinsic value of the share-based payments is ex-  

pensed in the year in which the share-based payments are earned,  

whereas the time value (if any) is accrued over the remaining ser-  

vice period. Expenses are set off against shareholders’ equity. The  

increase in shareholders’ equity is eliminated by set-off against an  

interim account with Danske Bank A/S. Subsequent changes in the  

fair value are not recognised in the income statement.  

Pension obligations  

The Group’s contributions to defined contribution pension plans are  

recognised in the income statement as they are earned by the em-  

ployees. For the defined benefit pensions plans in Kreditforeningen  

Danmarks Pensionsafviklingskasse no contributions are made any  

longer, and therefore there are no service costs. Gains or losses as a  

result of the difference between expected trends and actual trends  

are recognised in Other comprehensive income.  

Deferred tax assets/Deferred tax liabilities  

Deferred tax on all temporary differences between the tax base of  

assets and liabilities and their carrying amounts is accounted for in  

accordance with the balance sheet liability method. Deferred tax is  

recognised under Deferred tax assets or Deferred tax liabilities.  

Deferred tax is measured on the basis of the tax regulations and  

rates that, according to the rules in force at the balance sheet date,  

will apply at the time the deferred tax is expected to crystallise as  

current tax. Changes in deferred tax as a result of adopted changes  

in tax rates are recognised in the income statement based on ex-  

pected cash flows.  

Current tax assets/Current tax liabilities  

Current tax assets and liabilities are recognised in the balance sheet  

as the estimated tax charge on the profit for the year adjusted for  

prepaid tax and prior-year tax payables and receivables.  

Tax assets and liabilities are offset if the Group has a legally en-  

forceable right to set off such assets and liabilities and intends either  

to settle the assets and liabilities on a net basis or to realise the as-  

sets and settle the liabilities simultaneously.  

Other liabilities  

Other liabilities includes derivatives, interest payable, accrued fee  

and lease liabilities. Further, other liabilities also includes Reserves  

in early series subject to a reimbursement obligation and other provi-  

sions.  

Other liabilities includes lease liabilities under leases contracts in  

which the Group acts as lessee, except for leases of low value assets  

and contracts with terms of 12 months or less. On initial recognition,  

the lease liability represents the present value of future lease pay-  

ments (using the Group’s borrowing rate). Subsequently, the lease  

liability is adjusted to reflect accrued interest, instalments and cor-  

rection due to modification or reassessment.  

Shareholders’ equity  

Reserves in series  

Reserves in series comprise series established before 1972 with  

joint and several liability, series established after 1972 without joint  

and several liability, other series, including Danske Kredit and  

mortgage-covered bonds.  

Other reserves  

Other reserves comprise the mortgage credit business that is not in-  

cluded in reserves in series.  

Proposed dividends  

The Board of Directors’ proposal for dividends for the year submit-  

ted to the general meeting is included as a separate reserve in share-  

holders’ equity. The dividends are recognised as a liability when the  

general meeting has adopted the proposal.  

extensions are – except subtotals – embedded in the elements in the  

ESEF Taxonomy.  

The annual report comprises – in accordance with the requirements  

of the ESEF Regulation – of a zip-file rd-2022-12-31-en.zip, that in-  

cludes an XHTML-file, that can be opened with standard web  

browsers and a number of technical XBRL files that make auto-  

mated extracts of the incorporated XBRL data possible.  

Standards and interpretations not yet in force  

The International Accounting Standards Board (IASB) has issued  

one new accounting standard (IFRS 17) and amendments to existing  

international accounting standards (IFRS 1, IFRS 9, IFRS 16, IAS 1,  

IAS 8 and IAS 12) that have not yet come into force. The changes  

are not expected to have any material impact on the Group’s finan-  

cial statements.  

Accounting policies for the parent company  

The financial statements of the parent company are prepared in ac-  

cordance with the Danish Financial Business Act and the Danish  

FSA’s Executive Order No. 281 of 26 March 2014 on Financial Re-  

ports for Credit Institutions and Investment Companies, etc. as  

amended by Executive Order no. 707 of 1 June 2016, Executive Or-  

der No. 1043 of 5 September 2017, Executive Order No. 1441 of 3  

December 2018 and Executive Order No. 1593 of 9 November 2020.  

The amendments of 9 November 2020 incorporate a requirement to  

provide a description of policies for data ethics applicable for annual  

reporting periods beginning on or after 1 January 2021. The rules  

are consistent with the Group’s measurement principles under IFRS.  

Holdings in subsidiary undertakings are measured using the equity  

method.  

Loan impairment charges  

Loan impairment charges include the fair value adjustment of the  

credit risk on mortgage loans as well as losses on and impairment  

charges for other loans and amounts due.  

The item also includes impairment charges and realised gains and  

losses on acquired assets if the assets qualify as assets temporarily  

taken over. Similarly, subsequent value adjustments of assets that  

the Group has taken over and does not expect to sell within 12  

months are recognised under loan impairment charges, provided that  

the Group has a right of recourse against the borrower.  

Tax  

Calculated current and deferred tax on the profit for the year and ad-  

justments of tax charges for previous years are recognised in the in-  

come statement. Tax on items recognised in Other comprehensive  

income is recognised in Other comprehensive income. Similarly, tax  

on items recognised in shareholders’ equity is recognised in Share-  

holders’ equity.  

Comprehensive income  

Total comprehensive income includes the net profit for the year and  

other comprehensive income.  

Cash flow statement  

The cash flow statement is prepared according to the indirect  

method. The statement is based on profit for the year before tax and  

shows the consolidated cash flows from operating, investing and fi-  

nancing activities and the increase or decrease in cash and cash  

equivalents during the year.  

Cash and cash equivalents consists of Cash in hand and demand de-  

posits with central banks and amounts due from credit institutions  

and central banks with an original maturity shorter than three  

months.  

Reporting on the ESEF Regulation  

The Commission’s Delegated Regulation (EU) 2019/815 on the Eu-  

ropean Single Electronic Format (ESEF Regulation) requires a spe-  

cial digital reporting format for annual report for publicly listed en-  

tities. The ESEF Regulation includes requirements related to the  

preparation of the annual report in XHTML format and iXBRL tag-  

ging of the consolidated financial statements key elements including  

income statement, statement of comprehensive income, balance  

sheet, statement of capital, cash flow statement and notes.  

Realkredit Danmark A/S’ iXBRL tagging is prepared in accordance  

to the ESEF taxonomy which is included in the appendices of the  

ESEF Regulation and is developed based on the IFRS taxonomy  

that is published by IFRS Foundation. For the annual report for  

2022 the ESEF Taxonomy for 2021 has been applied.  

The account balances in the consolidated financial statement is  

XBRL tagged to the elements in the ESEF Regulation that is as-  

sessed to correspond to the content of the account balances. For ac-  

count balances that are assessed not to be covered by the account  

balances defined in the ESEF taxonomy, Realkredit Danmark A/S  

have incorporated entity specific extensions to the taxonomy. These  

Profit broken down by activity  

Realkredit Danmark Group  

Mortgage  

Own  

Reclassi-  

2022  

finance  

holdings  

Highlights  

fication  

IFRS  

Administration margin  

5,733  

-

5,733  

-

5,733  

Net interest income  

92  

1

93  

284  

377  

Net fee income  

18  

-

18  

-

18  

Income from investment portfolios  

16  

32  

48  

-48  

-

Value adjustments  

-

-

-

-236  

-236  

Other income  

84  

-

84  

-

84  

Total income  

5,943  

33  

5,976  

-

5,976  

Expenses  

1,101  

4

1,105  

-

1,105  

Profit before loan impairment charges  

4,842  

29  

4,871  

-

4,871  

Loan impairment charges  

212  

-

212  

-

212  

Profit before tax  

4,630  

29  

4,659  

-

4,659  

Tax  

1,033  

-

1,033  

Net profit for the year  

3,626  

-

3,626  

Total assets  

735,454  

46,774  

782,228  

-

782,228  

Mortgage  

Own  

Reclassi-  

2021  

finance  

holdings  

Highlights  

fication  

IFRS  

Administration margin  

5,857  

-

5,857  

-

5,857  

Net interest income  

-154  

200  

46  

382  

428  

Net fee income  

-127  

-

-127  

-

-127  

Income from investment portfolios  

10  

45  

55  

-55  

-

Value adjustments  

-

-

-

-327  

-327  

Other income  

136  

-

136  

-

136  

Total income  

5,722  

245  

5,967  

-

5,967  

Expenses  

990  

5

995  

-

995  

Profit before loan impairment charges  

4,732  

240  

4,972  

-

4,972  

Loan impairment charges  

269  

-

269  

-

269  

Profit before tax  

4,463  

240  

4,703  

-

4,703  

Tax  

1,034  

-

1,034  

Net profit for the year  

3,669  

-

3,669  

Total assets  

830,055  

46,944  

876,999  

-

876,999  

Mortgage finance encompasses property financing services provided in Denmark, Sweden and Norway to personal and business customers. The  

mediation of property financing services is made through Danske Bank’s branch network and finance centres and through Corporate & Institu-  

tional Mortgage Finance at Realkredit Danmark. The segment also includes mediation of real estate transactions in Denmark offered through the  

“home” real-estate agency chain. Own holdings comprise the net return on the part of the securities portfolio not relating to the mortgage finance  

business. Under the Danish Financial Business Act, at least 60% of the total capital of a mortgage credit institution must be invested in bonds, etc.  

Realkredit Danmark has no branch offices or subsidiaries outside Denmark.  

IFRSs require disclosure if 10% or more of the income derives from a single customer. The Realkredit Danmark Group has no such customers.