Realkredit Danmark Group  

31 December  

31 December  

(DKK millions)  

2023  

2022  

Total capital and Total capital ratio  

Shareholders´ equity  

50,223  

49,477  

Proposed dividends  

-

-3,600  

Deferred tax assets  

-

-

Prudent valuation  

-8  

-4  

Minimum Loss Coverage for Non-Performing Exposures  

-223  

-111  

Defined benefit pension fund assets  

-90  

-148  

Common equity tier 1 capital  

49,902  

45,614  

Difference between expected losses and impairment charges  

-

-

Tier 1 capital  

49,902  

45,614  

Reserves in series subject to a reimbursement obligation  

-

-

Difference between expected losses and impairment charges  

654  

776  

Total capital  

50,556  

46,390  

Risk exposure amount  

160,244  

159,310  

Common equity tier 1 capital ratio (%)  

31.1  

28.6  

Tier 1 capital ratio (%)  

31.1  

28.6  

Total capital ratio (%)  

31.5  

29.1  

At end-2023, 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)  

2023  

2022  

Cash flow from operating activities  

Profit before tax  

5,963

4,659

Adjustment for other non-cash operating items  

Amortisation, depreciation and impairment charges  

1

3

Loan impairment charges  

-174

-59

Tax paid  

-1,011

-952

Cash flow from operations before changes in operating capital  

4,779

3,651

Cash flow from operating capital  

Bonds and shares  

-2,362

-328

Mortgage loans  

-4,131

5,598

Issued mortgage bonds  

7,211

-15,893

Due to credit institutions  

-

-

Other assets/liabilities  

960

690

Cash flow from operating activities  

6,457

-6,282

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

-3,600

Cash flow from financing activities  

-3,600

-3,600

Cash and cash equivalents at 1 January  

8,761

18,643

Change in cash and cash equivalents  

2,857

-9,882

Cash and cash equivalents at 31 December  

11,618

8,761

Cash and cash equivalents at 31 December  

Cash in hand and demand deposits with central banks  

8,075

5,612

Amounts due from credit institutions and central banks  

within 3 months  

3,543

3,149

Total  

11,618

8,761

SIGNIFICANT ACCOUNTING POLICIES  

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  

A new standard, IFRS 17, Insurance contracts became effective on  

1 January 2023. In addition, amendments to IAS 1 (disclosure of  

accounting policies), IAS 8 (definition of accounting estimates) and  

IAS 12 (deferred tax; Pillar Two income taxes) became effective  

for the period beginning 1 January 2023. IFRS 17 and the afore-  

mentioned amendments to other standards had no significant im-  

pact on the financial statements.  

The accounting policies are unchanged from those applied in An-  

nual Report 2022.  

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 judgements  

The preparation of financial information requires, in some cases,  

the use of judgements and estimates by management. This includes  

judgements made when applying accounting policies. The most sig-  

nificant judgements made when applying accounting policies relate  

to the fair value measurement of mortgage loans.  

Further, the carrying amounts of some assets and liabilities requires  

the estimation of the effects of uncertain future events on those as-  

sets and liabilities. The estimates are based on premises 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. In view of the inherent uncertainties and the high  

level of subjectivity and judgement involved in the recognition and  

measurement of the following items, it is possible that the out-  

comes in the next financial year could differ from those on which  

management’s estimates are based.  

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.  

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

pected credit loss impairment model in IFRS 9, which depends on  

whether the credit risk has increased significantly since initial  

recognition. If the credit risk has not increased significantly, the im-  

pairment charge equals the expected credit losses resulting from de-  

fault events that are possible within the next 12 months (stage 1). If  

the credit risk has increased significantly, the loan is more than 30  

days past due, or the loans is in default or otherwise impaired, the  

impairment charge equals the lifetime expected credit losses (stages  

2 and 3).  

In determining the impairment for expected credit losses, manage-  

ment exercises judgement and uses estimates and assumptions. The  

expected credit loss is calculated for all individual loans as a func-  

tion of PD (probability of default), EAD (exposure at default) and  

LGD (loss given default) and incorporates forward-looking infor-  

mation. The estimation of expected credit losses involves forecast-  

ing future economic conditions over a number of years. Such fore-  

casts are subject to management judgement and those judgements  

may be sources of measurement uncertainty that have significant  

risk of resulting in a material adjustment to a carrying amount in fu-  

ture periods.  

The incorporation of forward-looking elements reflects the expecta-  

tions of the Group’s senior management and involves the creation  

of scenarios (base case, upside and downside), including an assess-  

ment of the probability for each scenario. The purpose of using  

multiple scenarios is to model the non-linear impact of assumptions  

about macroeconomic factors on the expected credit losses.  

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 2023 have been updated with the latest macroeconomic data.  

Compared to the end of 2022, the base case and upside scenarios  

have been revised to reflect expectations of higher inflation, de-  

creasing house prices and interest rate hikes. The scenario  

weighting have been updated to increase the weight on the upside  

scenario to 20% (10% in 2022), by decreasing the weight on the  

base case scenario to 60% (70% in 2022). The weight on the down-  

side scenario remains at 20% (20% in 2022) despite the use of a se-  

vere stagflation scenario.  

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

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

2023, the base case scenario reflects a slowdown in the Nordic  

economies however, with a soft landing. Inflation is expected to  

come down and interest rates will slowly begin to decrease. GDP  

growth will remain weak across the Nordic economies and labour  

markets remain tight with only modest increases in unemployment.  

Interest rates is expected to continue to weigh on house prices, how-  

ever, the worst part is expected to be behind us.  

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.  

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.  

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 balance  

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 princi-  

pal 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  

The upside scenario represents a slightly better outlook than the  

base case scenario across the macroeconomic parameters. In this  

scenario, sentiment improves, and consumers follow the US in run-  

ning down a significant proportion of the savings accumulated dur-  

ing the pandemic. The consumer-led recovery causes inflation to  

take longer to return to target, prompting further policy rate hikes  

and high rates for longer. Higher demand supports the housing mar-  

kets, but higher interest rates become an increasing headwind. The  

housing market fares somewhat better than in the base case.  

The Group’s downside scenario is the severe recession with high in-  

terest rates scenario (reflecting a stagflation scenario) applied in the  

Group’s ICAAP processes, and it is similar in nature to regulatory  

stress tests. The severe recession scenario reflected negative growth,  

increasing interest rates, and falling property prices for a longer pe-  

riod. A trigger of the economic setback could be continued macroe-  

conomic worsening and challenges linked to high business costs  

while inflation remain elevated. 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.  

At the end of 2023, the fair value adjustment of the credit risk on  

mortgage loans was calculated at DKK 2,656 million (2022:  

DKK 2,862 million), reducing the value of mortgage loans. The  

base case scenario enters with a probability of 60% (2022: 70%),  

the downside scenario with a probability of 20% (2022: 20%) and  

the upside scenario with a probability of 20% (2022: 10%). If the  

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

value adjustment at end-2023 would be DKK 2,450 million (2022:  

DKK 2,600 million). The fair value adjustment at the end of 2023  

would increase to DKK 4,225 million (2022: DKK 4,000 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 2,400 million (2022:  

DKK 2,500 million).  

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 2023,  

the allowance account would increase by DKK 25 million (2022:  

DKK 25 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 2023, the post-model adjust-  

ments amounted to DKK 1,241 million (2022: DKK 1,220 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.  

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  

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.  

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  

8,075  

-

-

-

-

8,075  

Due from credit institutions and  

central banks  

3,543  

-

-

-

-

3,543  

Bonds  

32,773  

-

16,804  

-

-

49,577  

Loans  

219  

-

-

753,624  

-

753,843  

Shares  

-

-

3

-

-

3

Derivatives (Other assets)  

-

29  

-

-

-

29  

Total assets, 31 December 2023  

44,610  

29  

16,807  

753,624  

-

815,070  

Total assets, 31 December 2022  

42,413  

103  

13,274  

724,438  

-

780,228  

Liabilities  

Due to credit institutions and central  

banks  

2,000  

-

-

-

-

2,000  

Issued bonds  

-

-

-

-

756,509  

756,509  

Derivatives (Other liabilities)  

-

186  

-

-

-

186  

Total liabilities, 31 December 2023  

2,000  

186  

-

-

756,509  

758,695  

Total liabilities, 31 December 2022  

2,000  

9

-

-

724,105  

726,114  

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 life-  

time expected credit losses is recognised. A significant credit risk  

increase 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 11. For  

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

The  

Realkredit Danmark Group uses the option to continue to recognise  

interest income on mortgage loans measured at fair value on the ba-  

sis of the contractual interest rates.  

A definition of default is used in the measurement of expected  

credit losses and the assessment to determine movements between  

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

management and capital adequacy purposes. To support a more har-  

monised approach regarding the application of the definition of de-  

fault, the European Banking Authority (EBA) issued the following  

products that guide the application of the definition 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.  

The Group’s definition of default for accounting purposes aligns  

with the regulatory purposes. All exposures that are considered de-  

fault are also considered Stage 3 exposures. This is applicable for  

exposures that are default due to either the 90 days past due default  

trigger or the unlikeliness to pay default triggers.  

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 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 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 classifica-  

tion 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  

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’.  

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  

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 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  

expectations of senior management. The Danske Bank Group’s inde-  

pendent macroeconomic research unit creates three macroeconomic  

scenarios (base case, upside and downside), including an assessment  

of the probability for each scenario. The purpose of using multiple  

scenarios is to model the non-linear impact of assumptions about  

macroeconomic factors on the expected credit losses. Afterwards  

there is a process to ensure review and sign-off of the scenarios.  

Management’s approval of scenarios can include adjustments to the  

scenarios or to which scenarios are used, the assigned probability  

weighting and post-model adjustments to cover the outlook for par-  

ticular high-risk portfolios, 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. How-  

ever, for significant 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.  

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

period converging to steady state in year seven. The base case is  

based on the macroeconomic outlook as disclosed in the Danske  

Bank Group’s Nordic Outlook reports.  

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.  

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  

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.  

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.  

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.  

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.  

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.  

INCOME STATEMENT  

Interest income and expense  

Interest income and expenses include interest and administration  

margins on financial instruments measured at fair value.  

Standards and interpretations not yet in force  

The International Accounting Standards Board (IASB) has issued  

amendments to existing international accounting standards (IAS 1,  

IAS 7 and IAS 21, IFRS 7 and IFRS 16) that have not yet come into  

force. The changes are not expected to have any material impact on  

the Group’s financial 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, Executive Order No. 1593 of 9 November 2020 and  

Executive Order no. 116 of 27 January 2023. The rules are con-  

sistent with the Group’s measurement principles under IFRS.  

Holdings in subsidiary undertakings are measured using the equity  

method.  

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. Other comprehensive income also in-  

cludes actuarial gains or losses on defined benefit pension plans.  

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  

2023 the ESEF Taxonomy for 2022 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  

has incorporated entity specific extensions to the taxonomy. These  

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-2023-12-31-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.