Interim Report - Q1-Q3 2009 Company Announcement No 12/2009 27 October 2009 Contents Financial Review Group Financial Highlights 3 Summary 4 Financial Review 6 Management Statement 10 Financial Statements - Sydbank Group Income Statement 11 Statement of Comprehensive Income 11 Balance Sheet 12 Financial Highlights - Quarterly 13 Capital 14 Cash Flow Statement 16 Segment Statements 17 Notes 18 Supplementary Information 29 Group Financial Highlights Q1-Q3 Q1-Q3 Index Full year 2009 2008 09/08 2008 Income statement (DKKm) Core income excl trading income 2,450 2,236 110 3,066 Trading income 970 858 113 1,159 Total core income 3,420 3,094 111 4,225 Costs and depreciation 1,874 1,867 100 2,484 Core earnings before impairment 1,546 1,227 126 1,741 Impairment of loans and advances etc 849 85 - 544 Core earnings 697 1,142 61 1,197 Profit/(Loss) on investment portfolios 382 (362) - (385) Profit before non-recurring items 1,079 780 138 812 Non-recurring items, net - 180 - 162 Profit before contribution to the Danish Contingency Committee 1,079 960 112 974 Contribution to the Danish Contingency Committee 327 - - 163 Profit before tax 752 960 78 811 Tax 188 216 87 205 Profit for the period 564 744 76 606 Balance sheet highlights (DKKbn) Loans and advances at amortised cost 73.9 81.8 90 82.5 Loans and advances at fair value 9.1 10.2 89 13.3 Deposits and other debt 65.3 63.4 103 75.0 Bonds issued at amortised cost 10.1 10.1 100 10.1 Subordinated capital (Tier 2) 3.2 4.2 76 4.2 Shareholders' equity (Tier 1) 8.9 7.2 123 7.1 Total assets 153.4 143.5 107 156.0 Financial ratios per share (DKK per share of DKK 10) EPS Basic 8.7 11.7 9.5 EPS Diluted 8.7 11.7 9.5 Share price at end of period 133.3 156.3 64.3 Book value 120.8 113.3 112.5 Share price/book value 1.10 1.38 0.57 Average number of shares outstanding (millions) 64.8 63.5 63.4 Other financial ratios and key figures Solvency (total capital) ratio 14.8 15.5 14.7 Core capital (Tier 1) ratio 12.9 11.2 10.8 Pre-tax profit as % of average shareholders' equity 9.4 13.8 11.8 Post-tax profit as % of average shareholders' equity 7.1 10.7 8.8 Income/cost ratio (DKK) 1.25 1.46 1.24 Interest rate risk 0.4 1.0 1.4 Foreign exchange position 1.4 9.7 11.4 Foreign exchange risk 0.0 0.0 0.0 Loans and advances relative to deposits * 1.0 1.2 1.0 Loans and advances relative to shareholders' equity * 8.4 11.4 11.6 Growth in loans and advances during the period * (10.4) 9.8 10.7 Excess cover relative to statutory liquidity requirements 93.8 56.2 89.4 Total large exposures 20.1 53.3 23.8 Accumulated impairment ratio 1.5 0.9 1.0 Impairment ratio for the period 1.04 0.08 0.60 Number of full-time staff at end of period 2,385 2,487 96 2,479 Financial ratios are prepared according to “Recommendations & Financial Ratios 2005” published by the Danish Society of Financial Analysts. * Financial ratios calculated on the basis of loans and advances at amortised cost. Summary Considering the difficult economic situation, pre-tax profit of DKK 752m for the first nine months of 2009 is considered satisfactory. Pre-tax profit equals a return of 12.6% p.a. on average shareholders' equity (Tier 1). The Interim Report is characterised by: • 10% increase in core income excl trading income • 13% rise in trading income • Total core income of DKK 3,420m - an all-time high so far • Unchanged level of costs (core earnings) • Impairment of loans and advances of DKK 849m • Profit on investment portfolios of DKK 382m • Contribution of DKK 327m to the Danish Contingency Committee • 10% reduction in bank loans and advances to DKK 73.9bn • 13% decline in deposits to DKK 65.3bn • 25% increase in shareholders' equity (Tier 1) • Core capital (Tier 1) ratio of 12.9% • Solvency (total capital) ratio of 14.8%. Income statement - Q1-Q3 (DKKm) 2009 2008 Core income excl trading income 2,450 2,236 Trading income 970 858 Total core income 3,420 3,094 Costs and depreciation 1,874 1,867 Core earnings before impairment 1,546 1,227 Impairment of loans and advances etc 849 85 Core earnings 697 1,142 Profit/(Loss) on investment portfolios 382 (362) Profit before non-recurring items 1,079 780 Non-recurring items, net - 180 Profit before contribution to the Danish Contingency Committee 1,079 960 Contribution to the Danish Contingency Committee 327 - Profit before tax 752 960 Tax 188 216 Profit for the period 564 744 Core earnings before impairment represent DKK 1,546m against DKK 1,227m for the first nine months of 2008. The improvement of DKK 319m consists of a rise in core income excl trading income of DKK 214m, an increase in trading income of DKK 112m and a DKK 7m growth in costs (core earnings). Core earnings before impairment are in the upper end of the range as announced in the Interim Report for 1H 2009. Impairment of loans and advances and amounts owed represents DKK 849m (Q1-Q3 2008: DKK 85m). Profit on investment portfolios amounts to DKK 382m and the expense to the Danish Contingency Committee totals DKK 327m. Less a calculated tax charge of DKK 188m, profit for the period stands at DKK 564m. Profit for the period equals a return of 9.4% p.a. on average shareholders' equity (Tier 1). Earnings per share stands at DKK 8.7 compared with DKK 11.7 in 2008. In June and September 2009, the Group prepaid supplementary capital (Tier 2) representing EUR 140m. Subordinated capital (Tier 2) totals DKK 3,175m at end-September 2009. The Group's core capital (Tier 1) ratio has risen to 12.9% due to a successful share issue, a reduction in the portfolio of own shares and a core capital strengthened via income. The solvency (total capital) ratio stands at 14.8%. The Group's liquidity measured under the 15% and 10% statutory requirements constitutes 31.9% and 19.4%, respectively, at 30 September 2009. The Group projects core earnings before impairment of loans and advances in the region of DKK 1,900-2,100m in 2009. The estimate represents a positive change in level compared with previous announcements of DKK 1,800-2,000m. Financial Review Core income excl trading income Total core income excl trading income grew by 10% to DKK 2,450m. Core income excl trading income - Q1-Q3 (DKKm) 2009 2008 Interest margins etc 2,058 1,880 Mortgage credit 166 131 Payment services 108 105 Remortgaging and loan fees 61 54 Other commission 41 47 Other operating income 16 19 Total 2,450 2,236 Despite a 10% decline in bank loans and advances, income from interest margins etc continues to show significant robustness with an increase of DKK 178m to DKK 2,058m, a 9% rise. The remaining income components of core income excl trading income have gone up by a total of 10% compared with Q1-Q3 2008. Trading income Total trading income rose by 13% - from DKK 858m in 2008 to DKK 970m in 2009. The level of activity within Sydbank Markets, made up as the number of customer transactions, is in line with or above that of Q1-Q3 2008. Bond trading within the Group has benefited from a considerable increase in business volume with institutional clients. The Group's income from asset management is affected by reductions in volume triggered by the markets. Trading income - Q1-Q3 (DKKm) 2009 2008 Bonds 243 88 Shares 192 160 Foreign exchange 185 217 Money market 138 81 Asset management 212 312 Total 970 858 Costs and depreciation The Group's total costs and depreciation recorded DKK 2,082m against DKK 1,998m in 2008. In 2009 DKK 200m can be ascribed to guarantee commission to the Danish Contingency Committee and in 2008 DKK 124m can be ascribed to the integration of bankTrelleborg. Costs and depreciation - Q1-Q3 (DKKm) 2009 2008 Staff costs 1,099 1,087 Other administrative expenses 698 794 Depreciation and impairment of property, plant and equipment 85 117 Other operating expenses 200 1 Total costs and depreciation 2,082 1,998 Distributed as follows: Costs, core earnings 1,874 1,867 Costs, investment portfolio earnings 8 7 Costs, integration of bankTrelleborg - 124 Costs, guarantee commission to the Danish Contingency Committee 200 - Costs (core earnings) in 2009 are virtually unchanged compared with one year ago. At end-Q3 2009 the Group's staff numbered 2,385 (full-time equivalent) compared with 2,487 at 30 September 2008. Core earnings before impairment of loans and advances Core earnings before impairment of loans and advances represent DKK 1,546m - an increase of DKK 319m or 26% compared with one year ago. Impairment of loans and advances etc Impairment of loans and advances constitutes DKK 849m (2008: DKK 85m). Relative to loans and advances and guarantees made up at 30 September 2009, the impairment ratio stands at 1.04%. At end-September accumulated impairment and provisions (excl the provision of DKK 175m for the Danish Contingency Committee) amount to DKK 1,230m, a rise of DKK 171m compared with the beginning of the year. Core earnings Core earnings represent DKK 697m compared with DKK 1,142m in 2008. Investment portfolio earnings Less funding charges and less related costs of DKK 8m, investment portfolios generated a profit of DKK 382m (2008: loss of DKK 362m). The overall result is adversely affected by an unrealised capital loss of DKK 26m on the Group's portfolio of CDOs. The market value of the CDO portfolio represents DKK 45m as of 30 September 2009. The Group's interest rate risk comprises DKK 34m at 30 September. The Group's exchange rate risk continues to be very low and its equity position is modest. Contribution to the Danish Contingency Committee In Q1-Q3 2009, guarantee commission and the provision for the guarantee to the Danish Contingency Committee amount to DKK 200m and DKK 127m, respectively, totalling DKK 327m. Subsidiaries The subsidiary bank, Sydbank (Schweiz) AG, which conducts private banking activities in St. Gallen, Switzerland, recorded a loss after tax of DKK 7m (2008: loss of DKK 4m). Ejendomsselskabet recorded a loss after tax of DKK 1m (2008: loss of DKK 2m). Profit for the period Pre-tax profit amounts to DKK 752m. Less a calculated tax charge of DKK 188m, profit for the period stands at DKK 564m compared with DKK 744m in 2008. Return Return on shareholders' equity (Tier 1) represents 9.4% p.a. against 14.3% p.a. in 2008. Earnings per share decreased from DKK 11.7 to DKK 8.7. Developments in Q3 2009 Total core income decreased by DKK 50m in Q3 compared with Q2. DKK 10m can be ascribed to core income excl trading income and DKK 40m can be attributed to trading income. Costs decreased by DKK 43m compared with Q2, owing to a recurring seasonal adjustment. During the same period, impairment of loans and advances etc went down by DKK 11m, and investment portfolio earnings improved from DKK 139m in Q2 to DKK 171m in Q3. The contribution to the Danish Contingency Committee decreased by DKK 29m in Q3 from DKK 142m in Q2. After tax, profit for Q3 amounts to DKK 245m compared with DKK 195m in Q2. Balance sheet The Group's total assets made up DKK 153.4bn at 30 September 2009 against DKK 156.0bn at year-end 2008. Assets (DKKbn) 30 Sep 2009 31 Dec 2008 Amounts owed by credit institutions etc 14.5 12.9 Loans and advances at fair value (reverse repo transactions) 9.1 13.3 Loans and advances at amortised cost (bank loans and advances) 73.9 82.5 Securities and holdings etc 38.2 28.3 Assets related to pooled plans 6.4 5.8 Other assets etc 11.3 13.2 Total 153.4 156.0 The Group's bank loans and advances total DKK 73.9bn - a decline of 10% compared with year-end 2008 and 30 September 2008. Shareholders' equity and liabilities (DKKbn) 30 Sep 2009 31 Dec 2008 Amounts owed to credit institutions etc 45.1 38.9 Deposits and other debt 65.3 75.0 Deposits in pooled plans 6.4 5.8 Bonds issued 10.1 10.1 Other liabilities etc 14.2 14.8 Provisions 0.2 0.1 Subordinated capital (Tier 2) 3.2 4.2 Shareholders' equity (Tier 1) 8.9 7.1 Total 153.4 156.0 The Group's deposits make up DKK 65.3bn against DKK 75.0bn at year-end 2008 and DKK 63.4bn at end-September 2008. The decline in deposits in 2009 is solely ascribable to time deposits. Capital In June and September 2009, the Group prepaid supplementary capital (Tier 2) of EUR 100m and EUR 40m, respectively. Subordinated capital (Tier 2) totals DKK 3,175m. On 29 October 2009 a further DKK 50m in supplementary capital will be repaid. At end-Q3 2009, shareholders' equity (Tier 1) constitutes DKK 8,853m - an increase of DKK 1,765m equal to 25% since year-end 2008. The change comprises additions concerning the share issue in September of net DKK 855m, net sale of own shares of DKK 408m, profit for the period of DKK 564m and less tax concerning equity items of DKK 62m. In 2009, the core capital (Tier 1) ratio has grown from 10.8% to 12.9%. During the same period, the core capital (Tier 1) ratio excluding hybrid core capital has risen from 9.3% to 11.5%. At end-Q3 2009, the solvency (total capital) ratio stands at 14.8% compared with 14.7% at year-end 2008. Outlook for 2009 The Group projects core earnings before impairment of loans and advances in the region of DKK 1,900-2,100m in 2009. The estimate represents a positive change in level compared with previous announcements of DKK 1,800-2,000m. The Danish Contingency Committee Guarantee commission to the Danish Contingency Committee will represent DKK 70m in Q4 2009. To this must be added the Bank's share of the Committee's payment to cover any further loss of the Winding-Up Company - ranging from the loss of DKK 4.6bn so far up to DKK 10.0bn. Sydbank's share of this risk constitutes DKK 202m. Management Statement Today we have reviewed and approved the Interim Report - Q1-Q3 2009 of Sydbank A/S. The consolidated interim financial statements for Q1-Q3 2009 have been prepared in accordance with the International Financial Reporting Standards as approved by the EU. Furthermore, the Interim Report has been prepared in compliance with additional Danish disclosure requirements for interim reports of listed financial companies. The Interim Report has not been audited or reviewed. We consider the accounting policies applied to be appropriate and the Interim Report gives a true and fair view of the Group's assets, shareholders' equity and liabilities and financial position at 30 September 2009 and of the results of the Group's operations and consolidated cash flows for the accounting period 1 January - 30 September 2009 as well as a description of the most significant risks and elements of uncertainty which may affect the Group. Aabenraa, 27 October 2009 Group Executive Management Carsten Andersen Karen Frøsig (Group Chief Executive) Preben L. Hansen Allan Nørholm Board of Directors Kresten Philipsen Anders Thoustrup Svend Erik Busk (Chairman) (Vice-Chairman) Otto Christensen Peder Damgaard Harry Max Friedrichsen Peter Gæmelke Hanni Toosbuy Kasprzak Per Olesen Sven Rosenmeyer Paulsen Jan Uldahl-Jensen Margrethe Weber Income Statement - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm Note 2009 2008 2009 2008 Interest income 2 4,543 5,391 1,281 1,929 Interest expense 3 1,982 3,391 413 1,225 Net interest income 2,561 2,000 868 704 Dividends on shares 32 25 1 3 Fee and commission income 4 808 971 279 298 Fee and commission expense 120 122 38 39 Net interest and fee income 3,281 2,874 1,110 966 Market value adjustments 5 494 17 198 (167) Other operating income 6 16 138 5 7 Staff costs and administrative expenses 7 1,797 1,881 561 567 Depreciation and impairment of property, plant and equipment 85 117 28 42 Other operating expenses 200 0 71 0 Impairment of loans and advances etc 9 976 85 327 98 Profit on holdings in associates and subsidiaries 10 19 14 0 3 Profit on assets temporarily acquired 0 0 0 0 Profit before tax 752 960 326 102 Tax 11 188 216 82 26 Profit for the period 564 744 244 76 EPS Basic for the period (DKK) * 8.7 11.7 3.7 1.2 EPS Diluted for the period (DKK) * 8.7 11.7 3.7 1.2 Dividend per share (DKK) - - - - * Based on average number of shares outstanding, see page 14. Statement of Comprehensive Income - Sydbank Group Profit for the period 564 744 244 76 Other comprehensive income: Translation of foreign entities 2 11 (2) 4 Hedge of net investment in foreign entities (2) (11) 2 (4) Other comprehensive income after tax 0 0 0 0 Comprehensive income after tax 564 744 244 76 Balance Sheet - Sydbank Group 30 Sep 31 Dec 30 Sep DKKm Note 2009 2008 2008 Assets Cash and balances on demand at central banks 687 752 763 Amounts owed by credit institutions and central banks 12 13,865 12,165 13,513 Loans and advances at fair value 9,058 13,282 10,241 Loans and advances at amortised cost 73,941 82,476 81,798 Bonds at fair value 36,673 26,749 21,235 Shares etc 1,196 1,315 1,107 Holdings in associates etc 307 232 203 Assets related to pooled plans 6,364 5,777 6,131 Intangible assets 14 15 15 Total land and buildings 1,024 1,009 969 investment property 8 8 9 owner-occupied property 1,016 1,001 960 Other property, plant and equipment 128 158 111 Current tax assets 54 186 49 Deferred tax assets 10 10 24 Assets in temporary possession - 5 4 Other assets 13 10,002 11,796 7,276 Prepayments 55 48 61 Total assets 153,378 155,975 143,500 Shareholders' equity and liabilities Amounts owed to credit institutions and central banks 14 45,097 38,889 39,844 Deposits and other debt 15 65,281 75,007 63,406 Deposits in pooled plans 6,364 5,777 6,131 Bonds issued at amortised cost 10,090 10,096 10,085 Current tax liabilities 10 13 7 Other liabilities 16 14,256 14,764 12,395 Deferred income 6 19 97 Total liabilities 141,104 144,565 131,965 Provisions 17 246 103 124 Subordinated capital (Tier 2) 18 3,175 4,219 4,224 Shareholders' equity (Tier 1): Share capital 742 675 675 Revaluation reserves 90 91 91 Other reserves: Reserves according to articles of association 411 411 399 Reserve for net revaluation according to the equity method 20 20 11 Retained earnings 7,590 5,891 6,011 Total shareholders' equity (Tier 1) 8,853 7,088 7,187 Total shareholders' equity and liabilities 153,378 155,975 143,500 Group Financial Highlights - Quarterly Q3 Q2 Q1 Q4 Q3 Q2 Q1 2009 2009 2009 2008 2008 2008 2008 Income statement (DKKm) Core income excl trading income 809 819 822 830 754 778 704 Trading income 329 369 272 301 223 320 315 Total core income 1,138 1,188 1,094 1,131 977 1,098 1,019 Costs and depreciation 586 629 659 617 591 617 659 Core earnings before impairment 552 559 435 514 386 481 360 Impairment of loans and advances etc 284 295 270 459 98 6 (19) Core earnings 268 264 165 55 288 475 379 Profit/(Loss) on investment portfolios 171 139 72 (23) (170) (137) (55) Profit before non-recurring items 439 403 237 32 118 338 324 Non-recurring items, net - - - (18) (16) (2) 198 Profit before contribution to the Danish Contingency Committee 439 403 237 14 102 336 522 Contribution to the Danish Contingency Committee 113 142 72 163 - - - Profit before tax 326 261 165 (149) 102 336 522 Tax 81 66 41 (11) 26 89 101 Profit for the period 245 195 124 (138) 76 247 421 Balance sheet highlights (DKKbn) Loans and advances at amortised cost 73.9 75.6 78.2 82.5 81.8 82.5 81.3 Loans and advances at fair value 9.1 12.9 15.8 13.3 10.2 11.5 8.0 Deposits and other debt 65.3 71.6 73.5 75.0 63.4 67.6 70.1 Bonds issued at amortised cost 10.1 10.1 10.1 10.1 10.1 10.1 10.1 Subordinated capital (Tier 2) 3.2 3.5 4.2 4.2 4.2 4.2 4.2 Shareholders' equity (Tier 1) 8.9 7.5 7.2 7.1 7.2 7.1 6.8 Total assets 153.4 160.1 161.4 156.0 143.5 149.8 141.1 Financial ratios per share (DKK per share of DKK 10) EPS Basic 3.7 3.0 2.0 (2.2) 1.2 3.9 6.6 EPS Diluted 3.7 3.0 2.0 (2.2) 1.2 3.9 6.6 Share price at end of period 133.3 122.5 71.5 64.3 156.3 180.5 171.8 Book value 120.8 116.2 114.0 112.5 113.3 112.0 107.5 Share price/book value 1.10 1.05 0.63 0.57 1.38 1.61 1.60 Average number of shares outstanding (millions) 67.0 64.3 63.0 63.2 63.7 63.5 63.4 Other financial ratios and key figures Solvency (total capital) ratio 14.8 13.8 15.0 14.7 15.5 14.8 14.3 Core capital (Tier 1) ratio 12.9 11.4 11.3 10.8 11.2 10.7 10.1 Pre-tax profit as % of average equity 4.0 3.5 2.3 (2.1) 1.4 4.8 7.7 Post-tax profit as % of average equity 3.0 2.7 1.7 (1.9) 1.1 3.5 6.2 Income/cost ratio (DKK) 1.33 1.24 1.16 0.88 1.14 1.53 1.70 Interest rate risk 0.4 2.2 2.3 1.4 1.0 3.0 2.4 Foreign exchange position 1.4 3.4 1.5 11.4 9.7 12.9 5.6 Foreign exchange risk 0.0 0.1 0.0 0.0 0.0 0.0 0.0 Loans and advances relative to deposits * 1.0 1.0 1.0 1.0 1.2 1.1 1.1 Loans and advances relative to equity * 8,4 10,1 10,8 11,6 11,4 11,6 12,0 Growth in loans and advances during the period * (2.2) (3.3) (5.2) 0.8 (0.9) 1.5 9.2 Excess cover relative to statutory liquidity req. 93.8 106.8 66.6 89.4 56.2 69.7 78.5 Total large exposures 20.1 34.6 21.4 23.8 53.3 39.5 44.7 Accumulated impairment ratio 1.5 1.3 1.3 1.0 0.9 0.8 0.9 Impairment ratio for the period 0.35 0.37 0.27 0.50 0.10 0.01 (0.02) Number of full-time staff at end of period 2,385 2,414 2,429 2,479 2,487 2,457 2,469 Financial ratios are prepared according to “Recommendations & Financial Ratios 2005” published by the Danish Society of Financial Analysts. * Financial ratios calculated on the basis of loans and advances at amortised cost. Capital - Sydbank Group Reserve for Reserves net according to revaluation Share Revaluation articles of acc.to equity Retained Proposed DKKm capital reserves association method earnings dividend etc Total Shareholders' equity at 1 Jan 2009 675 91 411 20 5,891 - 7,088 Changes in equity in 2009: Purchase of own shares - - - - (2,223) - (2,223) Sale of own shares - - - - 2,631 - 2,631 Share issue * 67 - - - 788 - 855 Adjustment concerning property sold - (1) - - 1 - - Tax on equity items - - - - (62) - (62) Comprehensive income for the period - - - - 564 - 564 Total changes in equity 67 (1) - - 1,699 - 1,765 Shareholders' equity at 30 Sep 2009 742 90 411 20 7,590 - 8,853 Shareholders' equity at 1 Jan 2008 675 91 399 11 5,298 223 6,697 Changes in equity in 2008: Purchase of own shares - - - - (2,322) - (2,322) Sale of own shares - - - - 2,193 - 2,193 Adjusted purchase price bankTrelleborg - - - - (5) - (5) Employee shares - - - - 18 - 18 Adopted dividend etc - - - - - (223) (223) Tax on equity items - - - - 69 - 69 Dividends, own shares - - - - 16 - 16 Comprehensive income for the period - - - - 744 - 744 Total changes in equity - - - - 713 (223) 490 Shareholders' equity at 30 Sep 2008 675 91 399 11 6,011 - 7,187 * Shares issued in connection with capital increase of Sydbank A/S of DKK 67,499,990 nominal (6,749,999 shares of DKK 10 nominal). 30 Sep 31 Dec 30 Sep 2009 2008 2008 The Sydbank share Share capital (DKK) 742,499,990 675,000,000 675,000,000 Number of shares issued (number) 74,249,999 67,500,000 67,500,000 Shares outstanding at end of period (number) 73,295,694 63,011,999 63,449,489 Average number of shares outstanding (number) 64,771,336 63,446,971 63,532,166 Capital - Sydbank Group 30 Sep Full year 30 Sep DKKm 2009 2008 2008 Solvency: Shareholders' equity (Tier 1) 8,853 7,088 7,187 Revaluation reserves (90) (91) (91) Proposed dividend - - - Intangible assets and capitalised tax assets (24) (26) (39) Core capital (excl hybrid core capital) 8,739 6,971 7,057 Hybrid core capital 1,388 1,230 1,246 50% of holdings > 10% (106) (98) (100) 50% of total holdings etc > 10% - (34) - 50% of difference between expected losses and accounting value adjustments and accounting provisions (187) - - Core capital 9,834 8,069 8,203 Subordinated loan capital (Tier 2) 1,794 2,839 2,843 Revaluation reserves 90 91 91 Hybrid core capital - 158 145 Difference between expected losses and impairment charges - 26 259 Capital base before deductions 11,718 11,183 11,541 50% of holdings > 10% (106) (98) (100) 50% of total holdings etc > 10% - (34) - 50% of difference between expected losses and accounting value adjustments and accounting provisions (187) - - Holdings in associates (125) (62) (59) Capital base (Tiers 1+2) after deductions 11,300 10,989 11,382 Credit risk 62,608 60,616 59,303 Market risk 7,113 7,261 7,423 Operational risk 6,537 6,731 6,731 Risk-weighted items 76,258 74,608 73,457 Capital requirement under Pillar I 6,101 5,968 5,877 Pillar II and transitional rules (18) 711 1,147 Capital requirement 6,083 6,679 7,024 Core capital (Tier 1) ratio (excl hybrid core capital) 11.5 9.3 9.6 Core capital (Tier 1) ratio 12.9 10.8 11.2 Solvency (total capital) ratio 14.8 14.7 15.5 Cash Flow Statement - Sydbank Group Q1-Q3 Full year Q1-Q3 DKKm 2009 2008 2008 Operating activities: Pre-tax profit for the period 752 811 960 Taxes paid (103) (128) (88) Adjustment of non-cash operating items 1,185 731 126 Cash flows from working capital (2,075) (85) (111) Cash flows from operating activities (241) 1,329 887 Investing activities: Purchase and sale of holdings in associates (57) (22) 12 Purchase and sale of intangible assets - (16) (15) Purchase and sale of property, plant and equipment (69) (370) (229) Cash flows from investing activities (126) (408) (232) Financing activities: Purchase and sale of own holdings 347 8 (32) Dividend - (223) (223) Share issue 855 - - Raising of subordinated capital (Tier 2) (1,044) 390 396 Issue of bonds (6) 20 9 Cash flows from financing activities 152 195 150 Cash flows for the period (215) 1,116 805 Cash equivalent positions at 1 Jan 6,200 5,084 5,084 Cash flows for the period (changes during the period) (215) 1,116 805 Cash equivalent positions at end of period 5,985 6,200 5,889 Segment Statements - Sydbank Group DKKm Banking Markets Treasury Other Total Business segments Q1-Q3 2009: Core income excl trading income 2,506 (56) - - 2,450 Trading income 465 505 - - 970 Core income 2,971 449 - - 3,420 Costs and depreciation 1,613 222 8 39 1,882 Impairment of loans and advances etc 846 3 - - 849 Core earnings 512 224 (8) (39) 689 Investment portfolio income - - 388 2 390 Profit before non-recurring items 512 224 380 (37) 1,079 Non-recurring items, net - - - - - Profit before contribution to the Danish Contingency Committee 512 224 380 (37) 1,079 Contribution to the Danish Contingency Committee - - - 327 327 Profit for the period 512 224 380 (364) 752 Notes - Sydbank Group DKKm Note 1 Accounting policies: The Interim Report has been prepared in accordance with IAS 34 “Interim Financial Reporting” as approved by the EU and in compliance with additional Danish disclosure requirements for interim reports. As a result of the use of IAS 34, the presentation is less complete compared with the presentation of an annual report and the measurement principles are in compliance with IFRS. With the exception of the below, the accounting policies are consistent with those adopted in the 2008 Annual Report, to which reference is made. The 2008 Annual Report provides a comprehensive description of the accounting policies applied. As from 1 January 2009, the Group has implemented IAS 1 (Revised 2007) “Presentation of Financial Statements”, IAS 23 (Revised 2007) “Borrowing Costs”, and IFRS 8 “Operating Segments”. The implementation of the new reporting standards has not had any impact on recognition or measurement. IAS 1 and IFRS 8 have resulted in changes only in the notes and format. Any comparative figures in the notes have been restated. IAS 1 has changed the presentation of the primary statements. The Group has decided to present two statements: an income statement and a statement of comprehensive income which shows profit for the period and the elements of other comprehensive income. The measurement of certain assets and liabilities requires managerial estimates as to how future events will affect the value of such assets and liabilities. The significant estimates made by the management in the use of the Group's accounting policies and the inherent considerable uncertainty of such estimates used in the preparation of the condensed interim report are identical to those used in the preparation of the annual report as at 31 December 2008. The Group's significant risks and the external elements which may affect the Group are described in detail in the 2008 Annual Report. Notes - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm 2009 2008 2009 2008 Note 2 Interest income/forward premium of: Amounts owed by credit institutions and central banks 187 492 45 168 Loans and advances and other amounts owed 3,231 4,003 928 1,405 Bonds 953 507 299 214 Total derivatives 163 364 5 128 comprising Foreign exchange contracts 244 376 58 124 Interest rate contracts (83) (12) (53) 4 Other contracts 2 - 0 - Other interest income 9 25 4 14 Total 4,543 5,391 1,281 1,929 Of which income from genuine purchase and resale transactions stated under: Amounts owed by credit institutions and central banks 41 226 13 74 Loans and advances and other amounts owed 273 317 45 126 Note 3 Interest expense to: Credit institutions and central banks 559 875 118 362 Deposits and other debt 1,168 1,971 241 670 Bonds issued 161 369 32 130 Subordinated capital (Tier 2) 93 171 21 60 Other interest expense 1 5 1 3 Total 1,982 3,391 413 1,225 Of which expense to genuine sale and repurchase transactions stated under: Amounts owed to credit institutions and central banks 4 39 (9) 19 Deposits and other debt 6 13 0 5 Notes - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm 2009 2008 2009 2008 Note 4 Fee and commission income: Securities trading and custody accounts 433 589 154 173 Payment services 120 126 42 43 Loan fees 61 53 22 18 Guarantee commission 67 86 24 31 Other fees and commission 127 117 37 33 Total 808 971 279 298 Note 5 Market value adjustments: Other loans and advances and amounts owed at fair value (5) (2) (3) 1 Bonds 334 (338) 136 62 Shares etc 110 11 69 6 Investment property 0 - 0 - Foreign exchange 198 179 65 61 Total derivatives (142) 166 (69) (298) Assets related to pooled plans 653 (824) 378 (258) Deposits in pooled plans (653) 824 (378) 258 Other assets/liabilities (1) 1 0 1 Total 494 17 198 (167) Trading portfolio 464 (24) 183 (173) Equity investments 30 41 15 6 Total 494 17 198 (167) Note 6 Other operating income: Negative goodwill - 119 - - Rental income - real property 9 8 3 3 Other operating income 7 11 2 4 Total 16 138 5 7 Notes - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm 2009 2008 2009 2008 Note 7 Staff costs and administrative expenses: Salaries and emoluments to: Group Executive Management: Salaries 8 14 3 3 Pensions 1 1 0 0 Board of Directors 3 2 1 1 Shareholders' Committee 1 1 0 0 Total 13 18 4 4 Staff costs: Wages and salaries 898 885 281 280 Pensions 107 93 37 33 Social security contributions 6 5 4 3 Payroll tax etc 75 86 20 28 Total 1,086 1,069 342 344 Other administrative expenses: IT (including withdrawal and conversion in 2008) 364 444 112 124 Rent etc 100 112 35 37 Marketing and entertainment expenses 50 63 14 20 Other expenses 184 175 54 38 Total 698 794 215 219 Total 1,797 1,881 561 567 Note 8 Staff: Average number of staff (full-time equivalent) 2,471 2,494 2,445 2,527 Notes - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm 2009 2008 2009 2008 Note 9 Impairment of loans and advances recognised in the income statement: Impairment and provisions 621 51 191 47 Write-offs 376 71 144 56 Recovered from debt previously written off 21 37 8 5 Impairment of loans and advances etc 976 85 327 98 Impairment and provisions at end of period: Individual impairment and provisions 1,209 723 1,209 723 Collective impairment and provisions 196 188 196 188 Impairment and provisions at end of period 1,405 911 1,405 911 Individual impairment of loans and advances and provisions for guarantees: Impairment and provisions at 1 Jan 954 738 1,136 696 Exchange rate adjustment 0 2 1 0 Impairment and provisions during the period 597 512 186 182 Other movements 0 (455) 0 (137) Write-offs covered by impairment and provisions 342 74 114 18 Impairment and provisions at end of period 1,209 723 1,209 723 Individual impairment of loans and advances 1,016 699 1,016 699 Individual provisions for guarantees 193 24 193 24 Impairment and provisions at end of period 1,209 723 1,209 723 Collective impairment of loans and advances and provisions for guarantees: Impairment and provisions at 1 Jan 152 157 194 173 Impairment and provisions during the period 44 31 2 15 Impairment and provisions at end of period 196 188 196 188 Sum of loans and advances and amounts owed subject to collective impairment and provisions 22,589 18,761 22,589 18,761 Collective impairment and provisions 196 188 196 188 Loans and advances and amounts owed after collective impairment and provisions 22,393 18,573 22,393 18,573 Individual impairment of loans and advances subject to objective evidence of impairment: Balance before impairment of individually assessed loans and advances 2,116 1,400 2,116 1,400 Impairment of individually assessed loans and advances 1,016 699 1,016 699 Balance after impairment of individually assessed loans and advances 1,100 701 1,100 701 Notes - Sydbank Group Q1-Q3 Q1-Q3 Q3 Q3 DKKm 2009 2008 2009 2008 Note 10 Profit on holdings in associates and subsidiaries: Profit on holdings in associates etc 19 14 0 3 Total 19 14 0 3 Note 11 Effective tax rate: Current tax rate of the Sydbank Group 25.0 25.0 25.0 25.0 Adjustment of deferred tax due to changed corporation tax rate - - - - Permanent differences - (3.1) - - Adjustment of tax of previous years 0.1 0.6 0.1 - Total 25.1 22.5 25.1 25.0 30 Sep 31 Dec 30 Sep DKKm 2009 2008 2008 Note 12 Amounts owed by credit institutions and central banks: Amounts owed at notice by central banks 560 340 837 Amounts owed by credit institutions 13,305 11,825 12,676 Total 13,865 12,165 13,513 Note 13 Other assets: Positive market value of derivatives etc 8,905 10,574 6,003 Sundry debtors 334 265 626 Interest and commission receivable 761 957 647 Other assets 2 0 0 Total 10,002 11,796 7,276 Note 14 Amounts owed to credit institutions and central banks: Amounts owed to central banks 20,668 17,570 17,987 Amounts owed to credit institutions 24,429 21,319 21,857 Total 45,097 38,889 39,844 Notes - Sydbank Group 30 Sep 31 Dec 30 Sep DKKm 2009 2008 2008 Note 15 Deposits and other debt: On demand 38,961 37,843 38,275 At notice 732 727 748 Time deposits 19,987 30,784 19,477 Special categories of deposits 5,601 5,653 4,906 Total 65,281 75,007 63,406 Note 16 Other liabilities: Negative market value of derivatives etc 8,205 8,833 4,660 Sundry creditors 5,562 5,286 6,710 Interest and commission etc 489 629 1,025 Other liabilities 0 16 0 Total 14,256 14,764 12,395 Note 17 Provisions: Provisions for pensions and similar obligations 4 4 4 Provisions for deferred tax 25 24 71 Provisions for guarantees 193 66 39 Other provisions 24 9 10 Total 246 103 124 Notes - Sydbank Group 30 Sep 31 Dec 30 Sep DKKm 2009 2008 2008 Note 18 Subordinated capital (Tier 2): Interest rate Nominal (m) Maturity Floating Bond loan EUR 100 29.06.12 - 745 745 Floating Bond loan EUR 40 17.09.12 - 298 298 Floating Bond loan DKK 50 29.10.12 50 50 50 Floating Bond loan EUR 100 21.10.13 744 745 745 Floating Bond loan DKK 200 14.11.14 200 200 200 Floating Bond loan EUR 100 04.04.15 744 744 746 Floating Bond loan EUR 8 31.10.15 55 55 56 Total supplementary capital 1,793 2,837 2,840 Floating Bond loan EUR 100 Perpetual 738 738 739 Floating Bond loan EUR 75 Perpetual 559 559 560 Floating Bond loan DKK 85 Perpetual 85 85 85 Total hybrid core capital 1,382 1,382 1,384 Total 3,175 4,219 4,224 Note 19 Contingent liabilities and other obligating agreements: Contingent liabilities: Financial guarantees 2,668 3,050 4,310 Mortgage finance guarantees 1,363 979 926 Registration and remortgaging guarantees 3,824 3,239 2,757 Loss guarantee/guarantee, the Danish Contingency Committee 576 871 - Other contingent liabilities 1,358 1,436 1,679 Total 9,789 9,575 9,672 Other obligating agreements: Irrevocable credit commitments 10 5 163 Other liabilities 55 74 79 Total 65 79 242 Notes - Sydbank Group DKKm Note 19 - continued A group of minority shareholders (“Foreningen af Minoritetsaktionærer i bankTrelleborg”) has filed a class action regarding the legality of the compulsory redemption against Fonden for bankTrelleborg, Sydbank and the Danish Financial Supervisory Authority. In continuation of the transfer of the shares in bankTrelleborg to Sydbank, the shares were priced by appraisers in accordance with section 144 (4) of the Danish Financial Business Act. A few shareholders have brought the findings of the appraisers before the courts. Moreover, in Q2 2009 the group of minority shareholders (“Foreningen af Minoritetsaktionærer i bankTrelleborg”) filed an action against Sydbank regarding an inadequate prospectus in connection with the conversion of sparTrelleborg to bankTrelleborg. Finally, the Group is party to a number of legal actions. These legal actions are under continuous review and the necessary provisions made are based on an assessment of the risk of loss. Pending legal actions are not expected to have any significant impact on the financial position of the Group. Sydbank and the majority of Danish banks participate in the government guarantee scheme which was adopted by the Danish parliament on 10 October 2008. The scheme extends from 5 October 2008 to 30 September 2010 and involves an unconditional government guarantee for the obligations of Danish banks, except for subordinated capital and covered bonds. Note 20 Collateral: As of 30 September 2009 the Group had deposited securities at a market value of DKK 21,910m with Danish and foreign exchanges and clearing centres etc in connection with margin calls and securities settlements etc. Note 21 Related parties: Sydbank is the bank of a number of related parties. Related party transactions are settled on market terms. No unusual transactions took place with related parties in Q1-Q3 2009. Reference is made to the Group's 2008 Annual Report for a detailed description of related party transactions. Notes - Sydbank Group 30 Sep 31 Dec 30 Sep DKKm 2009 2008 2008 Note 22 Reporting events occurring after the balance sheet date: After the expiry of Q3, no matters of significant impact on the financial position of the Sydbank Group have occurred. Note 23 Genuine sale and repurchase transactions and genuine purchase and resale transactions: Of the below asset items genuine purchase and resale transactions amount to: Amounts owed by credit institutions and central banks 5,014 2,408 6,731 Loans and advances at fair value 9,058 13,282 10,241 Assets bought as part of genuine sale and repurchase transactions Asset item: Bonds at fair value 13,884 16,039 14,660 Shares etc 31 4 718 Of the below liability items genuine sale and repurchase transactions amount to: Amounts owed to credit institutions and central banks 4,283 1,108 883 Deposits and other debt - - 880 Assets sold as part of genuine sale and repurchase transactions Asset item: Bonds at fair value 4,243 1,108 1,322 Shares etc - - - Note 24 Large shareholders: Nykredit and ATP own more than 5% of the Bank's share capital. Notes - Sydbank Group Q1-Q3 Q1-Q3 Index Full year DKKm 2009 2008 09/08 2008 Note 25 Core income: Core income excl trading income: Interest margins etc 2,058 1,880 109 2,610 Mortgage credit 166 131 127 176 Payment services 108 105 103 136 Remortgaging and loan fees 61 54 113 73 Other commission 41 47 87 48 Other operating income 16 19 84 23 Total 2,450 2,236 110 3,066 Trading income: Bonds 243 88 276 156 Shares 192 160 120 193 Foreign exchange 185 217 85 311 Money market 138 81 170 124 Asset management 212 312 68 375 Total 970 858 113 1,159 Q3 Q2 Q1 Q4 Q3 Q2 Q1 DKKm 2009 2009 2009 2008 2008 2008 2008 Core income excl trading income: Interest margins etc 680 679 699 730 642 651 587 Mortgage credit 57 61 48 45 39 44 48 Payment services 33 43 32 31 34 41 30 Remortgaging and loan fees 21 21 19 19 18 18 18 Other commission 13 11 17 1 14 18 15 Other operating income 5 4 7 4 7 6 6 Total 809 819 822 830 754 778 704 Trading income: Bonds 88 94 61 68 15 33 40 Shares 67 78 47 33 18 78 64 Foreign exchange 51 57 77 94 81 62 74 Money market 45 67 26 43 18 30 33 Asset management 78 73 61 63 91 117 104 Total 329 369 272 301 223 320 315 Supplementary Information Financial calendar In 2010 the Group's company statements will be released as follows: - 2009 Annual Report 16 February 2010 - General Meeting 4 March 2010 - Interim Report - Q1 2010 27 April 2010 - Interim Report - 1H 2010 17 August 2010 - Interim Report Q1-Q3 2010 26 October 2010 Sydbank contacts Carsten Andersen, Group Chief Executive Tel +45 74 36 20 00 Mogens Sandbæk, CFO Tel +45 74 36 24 00 Jakob Aakjær, Head of Executive Secretariat Tel +45 74 36 20 05 Address Sydbank A/S Peberlyk 4 DK-6200 Aabenraa Tel +45 74 36 36 36 CVR No DK 12626509 Relevant links www.sydbank.dk www.sydbank.com For further information reference is made to Sydbank's audited 2008 Annual Report at sydbank.com/about/ir/finreports.