DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

Contents

DANSKE MORTGAGE BANK PLC

BOARD OF DIRECTORS’ REPORT 2022................................... 3

Financial Highlights............................................................................10

Corporate Governance.....................................................................12

Risk Management Disclosure......................................................15

IFRS FINANCIAL STATEMENTS..................................................22

Statement of Comprehensive Income.....................................22

Balance sheet........................................................................................22

Statement of changes in Equity ..................................................23

Cash Flow Statement........................................................................24

NOTES TO THE FINANCIAL STATEMENTS...........................25

Summary of Signiﬁcant Accounting

Policies and Estimates.....................................................................25

SEGMENT INFORMATION..............................................................27

OTHER NOTES.......................................................................................28

DANSKE MORTGAGE BANK PLC’S BOARD OF

DIRECTORS’ PROPOSAL TO THE ANNUAL

GENERAL MEETING FOR THE DISTRIBUTION

OF PROFIT AND SIGNING OF

ANNUAL REPORT 2022 ................................................................54

THE AUDITOR’S NOTE......................................................................55

ACCOUNTING MATERIAL 2022................................................56

Danske Mortgage Bank Plc is a Finnish bank, which is part of the Danske Bank Group. Danske Bank Group is one of the

largest ﬁnancial enterprises in the Nordic region. This Financial Statement and Board of Directors’ report covers Danske

Mortgage Bank Plc.

This document is an English translation of the ofﬁcial Finnish Annual Report.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

Danske Mortgage Bank Plc

Board of Directors’ Report 2022

Danske Mortgage Bank Plc in brief

and short-term funding were executed through Danske

Bank A/S. The amount of cover pool eligible loans in

the Danske Bank Group’s Finnish operations has been

stable.

Danske Mortgage Bank Plc is a wholly-owned subsidiary

of Danske Bank A/S, the parent company of Danske

Bank Group. The Group is headquartered in Copenhagen

and Danske Bank’s share is quoted on the Nasdaq OMX

Copenhagen.

Throughout this Annual Report the term “Bank” refers to

Danske Mortgage Bank Plc. The Danske Bank Group is

referred to as “Group”.

Danske Mortgage Bank Plc is operating as an issuer of

covered bonds. Bonds issued by the Bank are covered by

a pool of loans consisting of Finnish household mort-

gages. The Bank does not act as the originator of hous-

ing loans as it purchases loans from Danske Bank A/S,

Finland Branch. The purchased loans are long term

loans for Finnish households having a residential real

estate or share of a housing company as collateral. Loan

servicing process as many other processes are out-

sourced to Danske Bank A/S. This way loan purchases

are not having an effect on the service received by the

customers.

Danske Mortgage Bank Plc is domiciled in Helsinki and

its business identity code is 2825892-7.

Operating environment

The Finnish economy continued to recover during the

ﬁrst half of 2022 from the 2020 recession. GDP volume

grew approximately nearly 2 per cent in full year 2022.

During the ﬁrst half of 2022, lifting of covid lockdown

measures had a signiﬁcant positive impact on growth

in services demand and production. At the same time,

consumption of goods was weakened by high inﬂation

and rising interest rates.

Act on Mortgage Credit Banks and Covered Bonds

(151/2022) was enacted 8th July, 2022 repealing the

earlier act on mortgage banking activities. The new act

harmonizes mortgage banking activities in Europe, but in

practise the activities continue in very similar fashion as

before. Using transitional rule in the new act, we have

converted the bonds originally issued under the previous

act to fully conform to new act, and our activities are

solely under the new act 151/2022.

The European Central Bank tightened monetary policy in

order to limit inﬂation and 12 month Euribor rate rose

from -0.5 per cent to above 3 per cent during the year.

The loan burden on households and companies grows

with a lag. Russian invasion into Ukraine increased

future uncertainty and weakened exports. The economic

conditions weakened during the second half of the year

as consumers adapted to rising prices and interest

rates. Weaker growth in export markets reduced

demand for Finnish export goods and investments suf-

fered from uncertainty. Energy crisis increased espe-

cially electricity price and cost burden rose for house-

holds as well as businesses. The number of construction

permits started to fall, but a large number of new apart-

ments were ﬁnished at the end of the year.

Danske Mortgage Bank Plc’s operations continued sta-

ble during 2022 in all aspects. The quality of the loan

portfolio has remained at good level and even improved.

The Bank’s earnings were at the same level compared to

previous year being moderate.

In September 2022 the Bank issued a covered bond

with nominal value EUR 1250 million. The Bank bought

housing loans with 738 million euros, and sold housing

loans back to Danske Bank A/S, Finland branch with

29 million euros. Customers were paying back their

housing loans with 0.8 billion euros. During the year

no bond was matured. Taking into account the loan

portfolio in Danske Bank A/S, Finland branch, the bank

has access to enough loans for new issuance. Hedging

The number of transactions in the housing market and

drawdowns of new housing loans fell by roughly one third

during the second half of the year. Housing prices fell

slightly after June. Labour market remained stable

throughout the year and employment rate rose to about

75 per cent at the end of the year. Open vacancies were

plentiful and many businesses suffered from a labour

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

3

shortage. Business conﬁdence and especially consumer

conﬁdence weakened during the year, because the War

in Ukraine, inﬂation and rising interest rates pushed

expectations lower.

Balance sheet and funding

Danske Mortgage Bank Plc’s total balance sheet for

2022 was EUR 4,237.3 million (4,332.3 million). Loans

and receivables from customers amounted to EUR

4,028.6 million (4,117.0 million).

Financial review

The comparison ﬁgures in parentheses refer to 2021

ﬁgures.

The Bank’s other investment securities portfolio con-

sists of liquidity coverage ratio (LCR) eligible bonds.

Other investment securities amounted to EUR 91.5 mil-

lion at the end of 2022 (35.4 million).

The Bank’s proﬁt before taxes was EUR 16.3 million

(17.1 million). The result was EUR 13.1 million (13.7

million).

The ﬁnancial and liquidity situation was good. All short-

term funding was received from the Group. The Bank’s

liquidity buffer was EUR 113.9 million at the end of

2022 (179.7 million) and it consisted of deposits in the

central bank and central bank eligible high quality liquid

bonds.

Return on equity amounted to 3.8 per cent for 2022

(4.1 per cent). Equity has increased by EUR 13.1 million

during 2022 mainly due to a decision to refrain from

distribution of proﬁt in 2021.

Total operating income for 2022 amounted to EUR 31.9

million (37.7 million) and the net interest income was

EUR 32.3 million (36.2 million). The Bank’s net fee

income totalled EUR 1.6 million (2.1 million). Net trading

income was EUR -2.4 million (-0.8 million).

With a liquidity coverage ratio (LCR) of 1389 per cent

end of 2022 (720 per cent), the Bank was compliant

with the regulatory minimum requirement of 100 per

cent at the end of reporting period. According to the

Capital Requirements Regulation (EU) No 575/2013

banks must have a LCR of at least 100 per cent.

The Bank’s cost to income ratio was 44.8 per cent

(47.0 per cent) and the Bank’s operating expenses

totalled EUR 14.3 million (17.7 million). The lower costs

is explained by decrease in the Group’s internal

recharges.

Net Stable Funding Ratio (NSFR) presents the ratio of

available stable funding to required stable funding. The

Bank’s NSFR was 112 per cent end of December 2022

(127 per cent) which complies with the 100 per cent

requirement. Available stable funding totaled to EUR

3,611.7 million end of December 2022 (3,981.0), which

is EUR 412.4 million (851.0) above the required stable

funding. Intra group funding totalled to 390 million euros,

having residual maturity over one year and was counted

in full for stable funding.

Impairment charges and ﬁnal write-offs totalled to EUR

1.3 million (2.9 million) of which ﬁnal write-offs were

0.9 million euros (3.3 million). In year 2021 impairment

charges where high due to matching the treatment of

concessions with the Danske Bank Group’s changed

practices. Despite the uncertainty in economic develop-

ments, the impairments are still moderate.

At the beginning of 2022 the Bank’s equity was EUR

339.8 million. The Bank refrained from distribution of

proﬁts in 2022. The result for 2022 was EUR 13.1 mil-

lion. At the end of 2022 the amount of equity totalled

EUR 352.9 million.

Rating categories and corresponding probability of

default ranges can be found in the Risk Management

Disclosure, from page 15. Non-performing loans are

sold regularly to Danske Bank A/S, Finland Branch and

ﬁnal write offs realize from loan sales.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

4

Prime quality Finnish housing loans

Capital and solvency

Danske Mortgage Bank Plc loan portfolio consists of

prime quality Finnish housing loans. Customers are con-

centrated to the best rating classes on the rating scale.

Impairments are 0.07 per cent of the loan portfolio and

on the low level. The balance of non-performing loans is

low as they are sold back to Danske Bank A/S, Finland

Branch.

The objective of the Bank’s capital and solvency manage-

ment is to have an adequate amount of capital to support

its business strategy and to fulﬁl the regulatory capital

requirements. The Bank also needs to ensure that it is

sufﬁciently capitalized to withstand severe macroeco-

nomic downturns. The Bank is using the internal rating

based (IRB) approach for calculation of capital require-

ments for credit risk for retail exposures. Otherwise,

standard method is applied for credit risk. For opera-

tional risk standard method is applied in calculating

capital requirement.

Collateral types include shares of housing companies

and single properties. Other collateral types include

typically deposits or securities that are not counted as

eligible collateral for cover pool purposes.

Capital management and practices are based on an

internal capital and liquidity adequacy assessment pro-

cess (ICLAAP). In this process, the Bank identiﬁes its

risks and determines its solvency need.

NUMBER OF COLLATERAL TYPES

3 %

Total capital consists of tier 1 capital that is common

equity tier 1 capital after deductions. On 31 December

2022, the total capital amounted to EUR 335.9 million

(322.4 million), and the total capital ratio was 60.2

(63.4) per cent. The common equity tier 1 capital ratio

was 60.2 (63.4) per cent. Total capital has increased by

EUR 13.5 million mainly due to the decision to refrain

from distribution of proﬁt in 2022.

39 %

57 %

Shares of Housing Company

Residential Real Estates

Other

Risk exposure amount (REA) was EUR 558.3 million

(508.8 million).

Loan exposures are concentrated to customers in Hel-

sinki capital area. In general loans have a high collateral

degree and they are predominantly located in the growth

areas.

Proﬁt after taxes is not included in Tier 1 distributable

capital.

EXPOSURE DISTRIBUTION BY AREA

2 %

16 %

10 %

9 %

7 %

12 %

44 %

Central Finland

Eastern Finland

Western Finland

Uusimaa

Other

Capital Area

Northern Finland

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

5

Leverage ratio

Capital buffers

According to the Capital Requirements Directive (CRD

IV) credit institutions must have a well-established prac-

tice to identify, manage and monitor risks to avoid exces-

sive leverage. Indicators for excessive leverage shall

include the leverage ratio and shall be monitored under

the Pillar 2 process. Credit institutions must also be

able to withstand a range of different stress events with

respect to the risk of excessive leverage.

In April 2020 the FIN-FSA decided to lower the Finnish

credit institutions’ capital requirements and the sys-

temic risk buffer for the Bank is still 0%. However,

FIN-FSA is preparing to make a decision on a systemic

risk buffer in early 2023 to strengthen the banking

sector’s risk resilience.

On December 2022the FIN-FSA decided not to increase

the countercyclical capital buffer requirement (variable

capital add-on) applicable to banks. The requirement will

remain at zero until further notice.

The CRR/CRD IV requires credit institutions to calculate,

report and monitor their leverage ratios. The leverage

ratio is deﬁned as ratio of tier 1 capital from the total

exposure. In order to count in the leverage ratio, the tier

1 capital must be eligible under the CRR. The total expo-

sure measure is the sum of the exposure values of all

assets and off-balance sheet items not deducted from

tier 1 capital. Speciﬁc adjustments apply to derivatives.

The Pillar II requirement for the interest rate risk of

banking book has been remained unchanged compared

to previous year.

The minimum own funds requirements and capital

buffers as well as the Pillar II requirement are listed

under the leverage ratio table for the Bank.

The Bank has processes in place for the identiﬁcation,

management and monitoring of the risk of excessive lev-

erage. The leverage ratio is also part of the Bank’s risk

appetite framework.

Minimum requirement for own funds and

eligible liabilities (MREL)

The Finnish Financial Stability Authority has determined

the minimum requirement for own funds and eligible lia-

bilities for the Bank. The internal MREL consists of

requirement based on the total risk exposure amount

(TREA), amounting to 17.25 per cent, and requirement

based on the leverage ratio exposure measure (LRE)

amounting to 5.33 per cent. Starting from 1 January

2024 the 19.85 per cent requirement based on TREA

has to be met and a requirement of 5.91 per cent based

on LRE must be met.

Credit institutions are subject to a 3 per cent leverage

ratio requirement, which is a binding constraint. The

Bank´s leverage ratio was 7.9 (7.4) per cent on 31

December 2022. The leverage ratio is calculated based

on the fourth quarter end ﬁgures whereby the tier 1 cap-

ital was EUR 335.9 million (322.4 million) and leverage

ratio exposure EUR 4,244.7 million (4,351.6 million).

Leverage ratio table is presented after the solvency

table as per 31 December 2022.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

6

SOLVENCY

Own funds

EURm

31.12.2022

31.12.2021

Common Equity Tier 1 capital before deductions

Share capital

352.9

70.0

339.8

70.0

Reserves for invested unrestricted equity

Retained earnings

215.0

54.8

215.0

41.2

Total comprehensive income for the period

13.1

13.7

Deductions from CET1 capital

-17.0

-13.1

-0.3

-17.4

-13.7

-0.1

Proposed/paid dividends /part of proﬁt not included in CET1

Value adjustments due to the requirements for prudent valuation

IRB shortfall of credit risk adjustments to expected losses

-3.6

-3.7

Common Equity Tier 1 (CET1)

Additional Tier 1 capital (AT1)

Tier 1capital (T1 = CET1 + AT1)

Tier 2 capital (T2)

335.9

-

322.4

-

335.9

-

322.4

-

Total capital (TC = T1 + T2)

Total risk exposure amount (REA)

335.9

558.3

322.4

508.8

Capital requirement ( 8% of risk exposure amount)

Credit and counterparty risk

44.7

36.6

8.1

40.7

35.9

4.8

Operational risk

Common equity tier 1 capital ratio (%)

Tier 1 capital ratio (%)

60.2%

63.4%

Total capital ratio (%)

Company’s capital adequacy ratio has been calculated both in accordance with Credit Institutions Act Sect 9-10 and EU Capital Requirement Regulation (CRR).

LEVERAGE RATIO

EURm

31.12.2022

31.12.2021

Total assets

4,237.3

4,332.3

Derivatives accounting asset value

-21.3

32.3

-9.0

32.0

Derivatives exposure to counterparty risk ex. collateral

Adjustment to CET1 due to prudential ﬁlters

Total exposure for leverage ratio calculation

Reported tier 1 capital (transitional rules)

Tier 1 capital (fully phased-in rules)

-3.6

-3.7

4,244.7

335.9

7.9%

4,351.6

322.4

7.4%

Leverage ratio (transitional rules)

Leverage ratio (fully phased-in rules)

7.9%

7.4%

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

7

Minimum own funds requirements and capital buffers

31.12.2022

31.12.2021

Minimum requirements

(% of total risk exposure amount):

Common Equity Tier (CET) 1 capital ratio

Tier 1 capital ratio

4.5%

6.0%

8.0%

4.5%

6.0%

8.0%

Total capital ratio

Capital buffers (% of total risk exposure amount):

Capital conservation buffer ¹⁾

2.5%

Institution-speciﬁc countercyclical capital buffer

Countercyclical buffer ²⁾

Systemic risk buffer ³⁾

0.0%

-

Minimum requirement including capital buffers

(% of total risk exposure amount):

Common Equity Tier (CET) 1 capital ratio

7.0%

Pillar 2 add-ons (EUR million)

Interest rate risk in the banking book (IRRBB)

10.0

Leverage ratio requirement:⁴⁾

3.0%

1) Valid from 1.1.2015 onwards.

2) On 19th December 2022, the FIN-FSA decided not to set any countercyclical buffer.

3) Valid from 1.7.2019 onwards until the FIN-FSA decided on 6 April 2020 to remove Systemic risk buffer requirement.

4) Valid from 28.6.2021 onwards.

Credit ratings

Danske Mortgage Bank Plc’s shares, ownership and

group structure

Issued covered bonds are rated ‘Aaa’ by Moody’s

Investor Services.

Danske Mortgage Bank Plc is part of the Danske Bank

Group. The parent company of the Danske Bank Group is

Danske Bank A/S.

Employees and organization

The Bank had 6 (5) employees at the end of the ﬁnancial

year. The average during ﬁnancial period was 6 (6).

Danske Mortgage Bank Plc’s share capital is EUR 70.0

million, divided into 106,000 shares. Danske Bank A/S

holds the entire stock of Danske Mortgage Bank Plc.

Danske Mortgage Plc’s Board of Directors, auditors

and committees

Annual general meeting was held on 10 March 2022,

where composition of the Board remained unchanged.

Board members were Stojko Gjurovski (Chairman)

Robert Wagner, Kimberly Bauner, Riikka Laine-Tolonen,

Tomi Dahlberg and Maisa Hyrkkänen. Kimberly Bauner

resigned from Board on 26th August, 2022 and Riikka

Laine-Tolonen on 27th October, 2022. Terese Dissing

was elected to join the Bank’s Board of Directors on

16 December 2022.

Risk management

The Bank’s principles for risk management are based on

legislation for mortgage banks. The main objective of

risk management is to ensure that the capital base is

adequate in relation to the risks arising from the busi-

ness activities. The Board of Directors of the Bank

establishes the principles of risk management, risk lim-

its and other general guidelines according to which risk

management is organized at the Bank.

Pekka Toivonen is the CEO of the Bank and Jari Raassina

is his deputy.

To ensure that the Bank’s risk management organization

meets both the external and internal requirements, the

Board of Directors has also set up a Risk Council com-

posed of the operative management members. The Risk

Council’s main objective is to ensure that the Bank is

compliant with the risk management guidelines issued

by the Board of Directors and that the Bank monitors all

types of risk and provides reports to concerned parties.

On March 10, 2022 the Annual general meeting of the

Bank elected Deloitte Ltd Audit Firm, as auditor of Dan-

ske Mortgage Bank Plc, with Aleksi Martamo, APA, as

the Key audit partner.

Related party loans and receivables are listed in note 19

and corporate governance principles are found on page

12.

The main risks associated with the Bank’s activities are

credit risk, interest rate and liquidity risks of banking

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

8

book, non-ﬁnancial risks and various business risks. The

credit risk exposure has the largest impact on capital

requirement. The majority of the non-ﬁnancial risks are

related to outsourced services and processes.

Bank A/S, Finland Branch’s stock of housing loans and

Danske Bank A/S Group’s funding demand. In the future,

the Bank seeks to issue at least one benchmark-size

covered bond per year.

The Bank’s risk position has been low. The main risks

associate with the development in the general economic

environment and investment market and future changes

in ﬁnancial regulations.

The Bank is rather well protected against changes in

the level of interest rates. Therefore, impact of interest

rate risk to net proﬁt is limited. The development in the

Finnish economy affects it mostly through credit losses

and level of new sales loan margins. The reﬁnancing cost

of the Bank is dependent on the credit rating of Danske

Bank A/S and development in the global and the Finnish

economy. The Bank’s business is stable and the number

of personnel is expected to remain at the current level.

In relation to the loan portfolio, non-performing loans

were at a low level. Non-performing loans that are

delayed for over 90 days amounted to EUR 0.0 million

(0.4 million). Impairment charges and ﬁnal write-offs for

2022 totalled EUR 1.3 million (2.9 million). Allowance

account at 31 December 2022 amounted to EUR 2.7

million (31 December 2021 EUR 2.0 million).

Higher than normal economic uncertainty may increase

the expected credit losses of the Bank, but different

buffers will help to keep the amount of distressed loans

still low.

More detailed information of risks and risk management

can be found in the Risk Management Disclosure on

page 15.

In the credit granting process, the customer’s ability to

manage his total debt has been assessed and a stress

test has been carried out to determine how the customer

would be able to manage his credit at a much higher inter-

est rate than the prevailing market rate. Customers will

also be able to obtain temporary concessions for their

loans, such as the interest only period, which we expect to

increase in 2023. In any event, if the customer’s ability to

pay is still insufﬁcient, the value of the collateral protects

the Bank from credit risk. By undervaluing the value of the

collateral, the Bank has also been prepared to allow the

value of the collateral to be decreased. The Bank’s hous-

ing loans have been concentrated in the capital region and

other growth centers, where there is still a functioning

housing market, although prices have fallen slightly.

Sustainability

According to the Accounting Act, Chapter 3 a the Bank

does not prepare sustainability report. The Parent Com-

pany, Danske Bank A/S, with its registered ofﬁce in Den-

mark, prepares a sustainability report for the Group of

which Danske Mortgage Bank Plc is part of. The Group’s

sustainability report is available on Danske Bank’s web-

sites https://danskebank.com/sustainability. The bank is

preparing for the upcoming entity level sustainability

reporting as required by regulation.

Events after the reporting period

There are no material events after the reporting period.

We expect the volume of the Bank’s covered bonds to

grow, which we will collateralize by purchasing more

housing loans.

Outlook for 2023

Risk of a recession has increased as the energy crisis,

high inﬂation and interest rates burden the consumer.

Export outlook is frail and many investment decisions are

postponed due to weaker demand, rising interest rates

and high costs straining proﬁtability. Housing construc-

tion slows down, but investment into domestic energy

production grows. In the main scenario we expect that the

recession is shallow and employment remains relatively

stable. Housing markets will book fewer transactions and

the price level falls slightly. The European Central Bank

hikes policy rates during the ﬁrst half of the year, but

interest rates stop rising during the second half of the

year. Inﬂation begins to fall slowly during the spring.

The increase in the balance sheet and rising interest

rates will improve the Bank’s performance moderately

compared to last year. However, even in the most severe

scenario, we expect the Bank’s result in 2023 to be

positive.

This guidance is generally subject to uncertainty related

to future macroeconomic and business development.

Helsinki, 3 February 2023

Danske Mortgage Bank Plc

Board of Directors

The development of the Bank’s business volume is

dependent on the development of volume of Danske

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

9

FINANCIAL HIGHLIGHTS

EURm

2022

2021

2020

Revenue

44.4

32.3

72.8

16.3

36.8

31.9

14.3

44.8

4,237.3

352.9

0.3

55.6

36.2

65.0

17.1

30.7

37.7

17.7

47.0

4,332.3

339.8

0.3

89.3

42.2

47.2

28.4

31.8

44.9

15.8

35.2

5,949.0

326.2

0.4

Net interest income

% of revenue

Proﬁt before taxes

% of revenue

Total income¹⁾

Total operating expenses²⁾

Cost to income ratio

Total assets

Equity

Return on assets, %

Return on equity, %

Equity/assets ratio, %

Solvency ratio, %³⁾

Impairment on loans and receivables⁴⁾

Off-balance sheet items

Average number of staff

FTE at end of period

3.8

4.1

7.2

8.3

7.8

5.5

60.2

1.3

63.4

2.9

33.6

0.7

-

6

5

6

The ﬁnancial highlights have been calculated as referred to in the regulations of the Finnish Financial Supervision Authority, taking into account renamed income

statement and balance sheet items due to changes in the accounting practice

1) Total income comprises the income in the formula for the cost to income ratio.

2) Total operating expenses comprise the cost in the formula for the cost to income ratio.

3) Capital adequacy ratio has been calculated both in accordance with Credit Institutions Act Sect 9-10 and EU Capital Requirement Regulation (CRR). For calculation of

credit risk exposure amount in Retail, the Bank applies internal model (IRB) and otherwise standard method. For calculation of risk exposure amount in operational risk,

it applies standard method.

4) Impairment on loans and receivables includes impairment losses, reversals of them, write-offs and recoveries. (-) net loss positive.

Definition of Alternative Performance Measures

The Bank’s management believes that the alternative

performance measures (APMs) used in the Board of

Directors’ report provide valuable information to readers

of the ﬁnancial statements. The APMs provide more

consistent basis for assessing the performance of the

Bank. They are also important aspect of the way in which

the Bank’s management monitor’s performance.

The Annual report contains a number of key perfor-

mance indicators (so-called alternative performance

measures - APMs), which provide further information

about the Bank. There are no adjusting items, which

means that net proﬁt is the same in the ﬁnancial high-

lights and in the IFRS income statement. The differences

between the ﬁnancial highlights and the IFRS ﬁnancial

statements relate only to additional ﬁgures being pre-

sented in Board of Directors’ disclosure which are not

required by the IFRS -standards.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

10

Definitions of additional performance measures presented in Financial Highlights:

Revenues:

interest income, fee income, net result from items at fair value

and other operating income

Cost to income ratio, %:

staff costs + other operating expenses + depreciations and impairments

net interest income + net result from items at fair value + net fee income

+ other operating income

Return on equity, %

Return on assets, %

Equity/assets ratio, %

proﬁt before taxes - taxes

equity (average) + non-controlling interests (average)

proﬁt before taxes - taxes

average total assets

equity + non-controlling interests

total assets

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

11

Corporate governance

The Bank’s corporate governance complies with the gen-

eral requirements laid down in Chapters 7, 8 and 9 of

the Act on Credit Institutions. Further information on the

Bank’s corporate governance is available on the web:

https://danskebank.com/investor-relations/debt/

danske-mortgage-bank.

The Board of Directors has approved written rules of

procedure deﬁning the Board’s duties and its meeting

arrangements. The Board of Directors and the chief

executive ofﬁcer (CEO) shall manage the Bank in a pro-

fessional manner and in accordance with sound and

prudent business principles.

General meeting

The Board of Directors of the Bank convened 12 times

during 2022. The fee resulting from 2022 was EUR

32.0 thousand for the Bank’s Board members who are

not within the Group.

The supreme decision-making power in the Bank is

exercised by its shareholders at a General Meeting of

shareholders.

Board of Directors

Chief Executive Officer and Management team

The Bank’s Board of Directors appoints the CEO and

Deputy CEO. The CEO is responsible for the Bank’s day-

to-day management in accordance with the Limited Lia-

bility Companies Act and the instructions and orders

issued by the Board of Directors. The CEO’s duties

include managing and overseeing the Bank’s business

operations, preparing matters for consideration by the

Board of Directors and executing the decisions of the

Board.

The Board of Directors shall consist of at least three and

not more than seven ordinary members. The term of

ofﬁce of a member of the Board of Directors ends at the

end of the ﬁrst Annual General Meeting following the

election.

At their ﬁrst meeting following the Annual General Meet-

ing, the members of the Board of Directors shall elect a

Chairperson from amongst themselves and a Vice Chair-

person for a term of ofﬁce that ends at the end of the

ﬁrst Annual General Meeting following the election.

The Bank’s CEO is Pekka Toivonen (b. 1967) and Deputy

CEO Jari Raassina (b. 1965).

At the end of the ﬁnancial year the members of the

Board of Directors were Stojko Gjurovski (chairman),

Robert Wagner, Tomi Dahlberg and Maisa Hyrkkänen.

Tomi Dahlberg and Maisa Hyrkkänen are independent of

the Danske Bank Group.

In 2022 the CEO and Deputy CEO were paid a salary and

fringe beneﬁts of EUR 299.8 thousand.

CEO’s period of notice is six (6) months and the sever-

ance compensation to the CEO in addition to the salary

paid for the period of notice equals to six (6) months’

salary.

The Board of Directors is responsible for the Bank’s

administration and for organizing operations, and for

ensuring that the supervision of the Bank’s accounting

and asset management has been arranged properly. The

Board handles all important and signiﬁcant issues of

general scope relevant to the operation of the Bank. The

Board takes decisions on matters such as the Bank’s

business strategy. It approves the budget and the princi-

ples for arranging the Bank’s risk management and

internal control. The Board also decides the basis for the

Bank’s remuneration system and other far-reaching mat-

ters that concern the personnel. In accordance with the

principles of good governance, the Board also ensures

that the Bank, in its operations, endorses the corporate

values set out for compliance.

The Management Team assists the CEO. It convenes at

the invitation of its chairman once a month. The Manage-

ment team is responsible for supporting the CEO in the

preparation and implementation of the Bank’s strategy,

coordination of the Bank’s operations, preparation and

implementation of signiﬁcant or fundamental matters,

and ensuring internal cooperation and communication.

In its operations the Bank has high moral and ethical

standards. The Bank constantly ensures that its opera-

tions comply with all applicable laws and regulations.

The responsibility for supervising compliance with laws

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

12

and regulations lies with the Law and regulations lies

with the operating management and the Board of Direc-

tors. Various rules and regulations have been issued to

support operations and ensure that applicable laws and

regulations are respected throughout the organisation.

concerning corporate governance in the Group is avail-

able on: www.danskebank.com.

The Bank is a bond issuer and therefore publishes the

following description of the main features of the internal

control and risk management systems related to its

ﬁnancial reporting process. Further information on the

principles concerning corporate governance in the Bank

is available on www.danskebank.com/investor-relations/

debt/danske-mortgage-bank.

Remuneration

Preparation of the Bank’s remuneration policy is based

on the remuneration policy of the Group taking into

account the Finnish regulations. The remuneration policy

is subject to the approval of the Bank’s Board of Direc-

tors, which also monitors the implementation and func-

tioning of the policy each year.

The Bank uses internal control to insure

• the correctness of ﬁnancial reporting and of other

information used in management decision-making

• compliance with laws and regulations and with the

decisions of administrative organs and other inter-

nal rules and procedures.

The Bank has a remuneration scheme covering the

entire personnel. The aim of the remuneration scheme is

to support the implementation of the Bank’s strategy and

to achieve the targets set for the business areas.

The Bank’s management operates the system of control

and supervision in order to reduce the ﬁnancial report-

ing risks and to oversee compliance with reporting rules

and regulations. With the controls imposed the aim is to

prevent, detect and rectify any errors and distortions in

ﬁnancial reporting, though this cannot guarantee the

complete absence of errors.

More information regarding remuneration can be found

in the Bank’s remuneration policy www.danskebank.com/

investor-relations/debt/danske-mortgage-bank under

section Remuneration.

Auditors

The Bank has one auditor, which must be a ﬁrm of

authorised public accountants approved by the Finnish

Patent and Registration Ofﬁce. The term of the auditor

lasts until the next Annual General Meeting following the

auditor’s appointment.

The Bank’s Board of Directors regularly assesses

whether the company’s internal control and risk manage-

ment systems are appropriately organised. The Board’s

assessment is based on e.g. reports prepared by the

Group’s Internal Audit unit. The Board and the CEO regu-

larly receive information on the Bank’s ﬁnancial position,

changes in rules and regulations and compliance with

these within the Group.

The Bank’s auditor is Deloitte Ltd Audit Firm with Aleksi

Martamo, Authorized Public Accountant as the Key audit

partner. The primary function of the statutory audit is to

verify that the Bank’s ﬁnancial statements provide a true

and fair view of the Bank’s performance and ﬁnancial

position for each accounting period.

The work of Internal Audit is subject to the Group’s Term

of Reference. This guidance states that the internal

auditing tasks include ensuring the adequacy and efﬁ-

ciency of internal control and of the controls on adminis-

trative, accounting and risk management procedures.

Internal Audit also ensures that reporting is reliable and

that laws and regulations are complied with appropri-

ately. In the auditing process Internal audit complies with

the international internal auditing standards and ethical

principles and audit also uses auditing procedures

approved by the Group that are based on examining and

testing the functioning of the control arrangements.

Description of the main features of the internal

control and risk management systems related to the

financial reporting process

The Bank is a wholly owned subsidiary of Danske Bank

A/S. Danske Bank A/S is a listed company and is the

parent company of the Group. The governance of the

Danske Bank A/S Group accords with the legislative

requirements concerning Danish listed companies and

especially with the legislative requirements concerning

companies in the ﬁnancial sector. The Bank complies in

all essential respects with the good governance recom-

mendations issued by Denmark’s Committee on Corpo-

rate Governance. Further information on the principles

Local internal auditing is undertaken in cooperation with

the Group’s Internal Audit. The Bank’s Board of Directors

approves the yearly plan of internal audit. Internal audit

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

13

reports its auditing work to the Board of Directors and

monitors the measures taken in order to reduce the

risks detected.

monitoring of the quantity and quality of activities and

operations to reporting of risk-adjusted proﬁtability.

Most of the indicators are monitored monthly, but

selected indicators are monitored weekly or even daily.

Internal Accounting also monitors the Bank’s market

share and developments among competitors and in the

operating environment.

Good control environment practice is based on carefully

speciﬁed authorisations within the Group, appropriate

division of work tasks, regular reporting and the trans-

parency of activities. In management’s internal reporting

the same principles are observed as in external report-

ing, and the principles are the same throughout the

Group. The Group’s common IT system creates the basis

for reliable documentation of accounting data and

reduces the ﬁnancial reporting risks.

Besides the parties referred to above, supervision at the

Bank is also undertaken by the Company’s Risk Council.

The Council’s chairman is the Company’s CEO. The

purpose of the Risk Council is to oversee the Bank’s

compliance with all guidance on risk management set

by the Board.

Management Reporting supports the Banks’s senior

management by producing monitoring and analysis of

the performance. The indicators monitored vary from

More information on the Bank’s risk management can be

read on page 15.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

14

Risk management disclosure

and controls in place to comply with the policies and man-

Risk management general principles and

governance

dates to exercise sound risk management.

The main objectives of the risk management processes

are to ensure that risks are properly identiﬁed, risk meas-

urement is independent and the capital base is adequate

in relation to the risks. The risks related to the Bank’s

activities and the sufﬁciency of the Bank’s capitalisation

in relation to these risks are regularly evaluated. Clearly

deﬁned strategies and responsibilities, together with

strong commitment to the risk management process, are

our tools to manage risks.

The second line of defence is represented by functions

that monitor whether the operations and service organi-

sations adhere to the general policies and mandates.

These functions are located in Risk Management and

Compliance units.

The third line of defence is represented by Internal Audit.

The Bank’s Risk Management, which is an independent

unit, monitors the Bank’s risk position according to the

principles and limits set by the Board of Directors of the

Bank. The Chief Risk Ofﬁcer (CRO) is responsible for ade-

quate and sound oversight of the Bank’s risk manage-

ment, providing an overview of the Bank’s risks and cre-

ating an overall risk picture.

The Board of Directors of the Bank is responsible for

ensuring that the Bank’s risks are properly managed and

controlled. The Board sets the principles of risk manage-

ment and provides guidance on the organisation of risk

management and internal controls. To ensure that the

risk governance structure is adequate both in terms of

internal and external needs, the Board has established

the Risk Council, which is composed of members of the

executive management and nominated the Bank’s CEO as

Chairman of the Council.

Finance is responsible for solvency reporting including

the ICLAAP process.

The principles and practices of risk management in the

Bank are carried out consistently with the risk policies of

the Group and supported by the corresponding Group

functions. Additional information on the Group level risks

and risk approaches can be found in the Group’s Annual

Report and Risk Management Report for 2022.

The Risk Council’s main tasks are:

• to ensure that the Bank is compliant with the risk

instructions issued by the Board of Directors

• to ensure that all risk types in the Bank are moni-

tored and reported to relevant parties including

the Board of Directors

• to ensure that the Bank’s risk position is aligned

with the Group’s risk strategy

Minimum regulatory capital

Banking is a highly regulated business. There are formal

rules for minimum capital and capital structure in capital

adequacy regulation. Also bank’s largest exposures are

limited based on the own funds of the bank.

• to ensure that the Group’s risk policies are

implemented in the Bank

• to ensure that the Bank fulﬁls all regulatory

requirements.

The Bank’s day-to-day risk management practices are

organised in three lines of defence. This organization

ensures a segregation of duties between (1) units that

enter into business transactions with customers or oth-

erwise expose the Bank to risk, (2) units in charge of risk

oversight and control and (3) the internal audit function.

The credit Institutions Act gives multiple options for

methods institutions may use in capital adequacy calcula-

tion. In December 2017 the Bank got approval from its

supervisors to use the Internal Rating Based methodol-

ogy (IRB) for retail exposures. Hence, the Bank uses IRB

approach to its retail portfolio and standard method to

other credit risk portfolios. Standard method is used for

operational risks.

The ﬁrst line of defence is represented by the operations

and service organisations and their support functions.

Capital adequacy is reported quarterly to Finnish Finan-

cial Supervisory Authority (FIN-FSA). The Bank fulﬁlled

the regulatory minimum capital requirements in 2022.

Each unit operates in accordance with the risk policies

and delegated mandates. The units are responsible for

having adequate skills, operating procedures, systems

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

15

Credit institutions are subject to a 3 per cent leverage

ratio requirement, which is a binding constraint. The

requirement comes from a reform package issued on

7 June 2019 in order to improve the resilience of EU

credit institutions.

measure (“LRE”) amounting to 5.91 per cent. These

requirements have to be met in full as from 1 January

2024. Until that the 17.25 per cent requirement based

on TREA and a requirement of 5.33 per cent based on

LRE, which were set in December 21, 2021 and will

remain in force until 31.12.2023.

In December 2022, the Finnish Financial Stability Author-

ity determined the minimum requirement for own funds

and eligible liabilities for the Bank. The internal MREL

consists of requirement based on the total risk exposure

amount (“TREA”), amounting to 19.85 per cent, and

a requirement based on the leverage ratio exposure

Minimum capital requirements set by capital adequacy

regulation are presented in the Risk Table 1 below. Total

capital requirement was EUR 44.7 million at end of 2022

(EUR 40.7 million). In addition to this Pillar 2 requirement

from the interest risk is EUR 10 million (EUR 10 million).

RISK TABLE 1

Pillar 1 regulatory capital requirements by portfolio,

Capital requirement

2022

Risk exposure amount

2022

EURm

2021

Credit and counterparty credit risk:

Standardised approach:

Institutions

2.6

0.2

0.5

0.0

3.3

0.9

0.2

0.0

1.2

33.0

2.3

11.1

2.4

Corporates

Covered bonds

5.8

2.0

Other items

0.0

Standardised approach, total

IRB approach:

41.1

15.5

Retail

36.8

0.0

34.6

0.0

460.3

0.0

433.1

0.0

Other non-credit obligation

IRB approach, total

36.8

40.1

4.6

34.6

35.9

4.8

460.3

501.4

56.9

433.1

448.6

60.2

Credit and counterparty credit risk, total

Operational risk - standardised, total

Total risk exposure amount

Total minimum capital requirement

558.3

508.8

44.7

40.7

Capital management process

Main risk types

The Bank follows the capital management practices in

the ICAAP (Internal Capital Adequacy Assessment Pro-

cess) for Pillar II that are deﬁned in the regulatory frame-

work in the Capital Requirements Directive (CRD).

The major risk associated with the Bank’s activities is

the credit risk arising from the loans. Interest rate risk

arising from loan portfolio and its reﬁnancing is hedged

by derivatives. Liquidity risk is not signiﬁcant. Non-ﬁnan-

cial and business risks are inherent in all business

areas.

The Bank’s ICAAP consists of evaluating all relevant

risks that the Bank is exposed to. Besides the Pillar I risk

types credit and operational risks the Bank sets capital

aside for interest rate risk of the banking book, business

risk and, if required by stress tests, for business cycle

volatility buffer. Liquidity risk is taken into account

through stress testing.

The mortgage banking result mainly depends on loan and

deposit margins, business volumes, the size and struc-

ture of the balance sheet, impairment losses and cost

efﬁciency. The margin between loans and deposits in

banking, with a hedged interest rate and liquidity risk

proﬁle, changes slowly. Possible sources of result ﬂuc-

tuations are unexpected losses in the credit and non-

ﬁnancial risk areas. In addition to these risks sustain-

ability and reputational risks are recognised as cross

risk taxonomy risks.

The Bank’s ICLAAP (Internal Capital and Liquidity Ade-

quacy Assessment Process) 2021 report has been pre-

pared and approved by the Board of Directors and deliv-

ered to supervisors. The ICLAAP 2022 report will be

prepared during Q1 2023 as requested by supervisors.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

16

credit scores are updated monthly through an auto-

mated process. For more information about the Bank’s

classiﬁcation models, including changes and improve-

ments to the models, see Risk Management 2022

report of the Group.

Credit risk

Credit risk is the risk of losses arising because counter-

parties or debtors fail to meet their payment obligations

to the Bank. Credit risk includes country, settlement and

counterparty credit risk.

Credit risks of customers

The Bank’s loan portfolio consists of Finnish mortgages

that have been granted based on the Group’s credit pol-

icy, and in addition the loans bought to the Bank need to

be cover pool eligible. The Bank buys loans when needed

from Danske Bank A/S, Finland Branch. The Group’s

guidelines lay down uniform principles for credit risk tak-

ing, with the aim of ensuring high quality in the credit pro-

cess. Loans that are not cover pool eligible are sold to

Danske Bank A/S, Finland Branch on regular basis.

As part of the loan granting process, the debt servicing

capacity is assessed and stressed by using materially

higher interest rates compared to current levels. Loans

are collateralised by housing company shares or resi-

dential real estate. Delinquencies are followed daily.

Credit exposure

The ﬁgures in Risk Tables 2 and 3 show the Bank’s credit

exposure. At the end of 2022 the Bank’s lending-related

credit exposure activities amounted to EUR 4.1 billion

(4.3 billion). Exposures to the Danske Bank Group were

EUR 62.8 million (0.4 million) and they are excluded

from the tables.

Credit decision authority in the Bank is delegated to the

management of the Danske Bank A/S, Finland Branch

Credit department and to authorised credit ofﬁcers in the

business units. The amount of the authorisation varies

according to customer rating, total exposure and collat-

eral level. All credit applications are initiated and pre-

pared in the business units. Credit decisions are primar-

ily based on rating, loan repayment ability, collateral and

other risk mitigates offered, as well as acceptable return

on allocated capital.

RISK TABLE 2

Credit exposure relating to lending

activities by segments, EURm

2022

2021

Public Institutions

Personal Customers

Total

29.5

4,028.6

4,058.1

165.1

4,117.0

4,282.1

Customer classification

All customers of the Group are assigned a credit grade

describing the creditworthiness of the customer prior to

granting of credit facilities in order to ensure good credit

quality and provide credit to the customers in the most

capital efﬁcient manner. The main objective of the risk

classiﬁcation is to rank customer base according to

default risk by estimating the probability of default (PD)

of each customer. This credit grade consists of 11 main

rating grades and 26 subgrades.

The Bank’s credit exposure by credit classiﬁcation is pre-

sented in Risk Table 3.

The Bank assigns credit scores to retail customers. The

Bank has developed statistical models based on the

information it possesses about customers to predict the

likelihood that a customer will default. These scoring

models utilise public and internal information on the bor-

rower’s payment behaviour. The important variables in

scoring are e.g. education, employment and other rele-

vant factors in forecasting customer credit worthiness.

On top of the statistical calculation, the score can be

downgraded to another classiﬁcation if a risk event is

registered on the customer. Risk events are registered

both automatically and manually by an advisor. The

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

17

RISK TABLE 3

Credit portfolio broken down by rating category and stages in IFRS 9, EURm

Net exposure,

ex collateral

PD level

Gross exposure

Expected Credit Loss

Net exposure

2022

Upper

Lower Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3

1

0.00

0.01

0.03

0.06

0.14

0.31

0.63

1.90

7.98

25.70

0.01

0.03

0.06

-

107.5

631.8

-

0.0

0.1

0.2

0.1

0.0

0.6

-

107.5

631.8

1,286.0

1,146.9

526.1

149.2

9.0

-

29.5

2.1

-

2

-

3

0.2

0.0

0.1

0.3

0.1

1.1

0.0

1.8

-

0.2

-

4

0.14 1,286.1

0.31 1,147.1

0.6

-

0.6

-

7.2

-

5

7.2

-

7.1

-

8.8

0.0

0.4

0.7

0.4

0.0

0.3

0.0

1.8

6

0.63

1.90

526.2

149.3

9.0

55.3

70.9

13.9

8.1

-

55.1

70.6

13.8

8.0

-

5.4

7

-

1.7

8

7.98

-

0.1

9

25.70

99.99

13.0

3.3

-

13.0

0.1

10

11 *)

Total

30.0

0.6

3.3

28.9

0.6

-

0.1

100.00 100.00

0.7

0.2

0.7

-0.2

0.0

3,873.8 186.9

0.2 3,873.2 185.1

54.8

*) Default

Net exposure,

ex collateral

PD level

Gross exposure

Expected Credit Loss

Net exposure

2021

Upper

Lower Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3 Stage 1 Stage 2 Stage 3

1

0.00

0.01

0.03

0.06

0.14

0.31

0.63

1.90

7.98

25.70

0.01

0.03

0.06

-

259.8

700.3

-

0.3

-

0.0

0.1

0.0

0.3

-

0.0

0.5

0.1

0.7

0.0

1.5

-

259.8

700.3

1,332.1

1,052.1

514.9

133.9

9.7

-

0.3

-

165.4

3.1

-

2

-

3

7.3

-

7.3

-

0.1

0.2

0.5

1.0

0.2

0.1

0.3

0.0

2.5

-

4

0.14 1,332.1

0.31 1,052.2

14.3

24.9

24.4

-

14.3

24.9

24.3

128.2

15.9

19.8

31.6

0.2

-

9.9

-

5

-

10.7

6.4

-

6

0.63

1.90

515.0

-

7

134.0 128.7

-

2.4

8

7.98

9.7

2.8

3.6

0.0

16.0

19.9

32.3

0.2

-

0.2

-

9

25.70

99.99

0.2

6.0

0.1

6.3

0.0

0.1

0.0

2.8

0.2

5.9

0.1

-

10

11 *)

Total

3.6

0.0

0.1

0.0

0.1

100.00 100.00

0.0

4,009.7 268.1

0.1 4,009.4 266.6

6.2 198.1

*) Default

The rating distribution is very good. At the end of 2022,

the share of customers classiﬁed into the seven best rat-

ing classes was 98 per cent of the total exposure (98 per

cent). Exposures are concentrated to the capital area and

to the largest cities.

Credit risk mitigation and collateral management

In order to mitigate credit risk, the Bank applies a num-

ber of credit risk mitigation measures. The most impor-

tant ones are collaterals and guarantees. Loans in the

Bank have shares of housing company or residential

real estates as collateral. All collaterals are located in

Finland. Collateral is also a key component in the Group’s

calculation of economic capital and risk exposure

amount.

In relation to loan portfolio, non-performing loans were

at low level. Non-performing loans that are delayed for

over 90 days amounted to EUR 0.0 million at the end of

2022 (0.4 million). Impairment charges and ﬁnal write-

offs totalled to EUR 1.3 million (2.9 million) of which ﬁnal

write-offs were 0.9 million euros (3.3 million). Non-per-

forming loans are sold regularly to Danske Bank A/S,

Finland Branch.

Collateral is valued in accordance with the Group’s writ-

ten collateral valuation instructions, the requirement in

the EU regulation and EBA Guidelines on loan origination

and monitoring. All collaterals are valued at the time

they are pledged and regularly thereafter.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

18

Residential properties, shares of housing companies and

shares of real estate companies in residential use must

be assessed by a valuer who is independent of the credit

decision process. An independent valuer refers to a per-

son who has sufﬁcient qualiﬁcations for and experience

in valuation. Valuations are made within the Group by an

independent valuator or in some cases, external inde-

pendent valuators are used.

The Bank can make use of forbearance measures to

assist the customers in ﬁnancial difﬁculties and to mini-

mize credit losses. Concessions granted to customers

include interest-only schedules, temporary payment holi-

days, term extensions, cancellation of outstanding fees

and in exceptional cases temporary interest-reduction

schedules. Because of the length of the workout pro-

cesses, the Group is likely to maintain impairments for

forbearance customers in stage 3 for several years even

though customer starts to pay back loan normally.

The latest housing price information is followed regularly

and monitored at least quarterly. The risk of changes in

fair value is covered by a similar haircut process

throughout the Group. Risk Table 4 presents the amount

of collateral allocated to agreements after haircuts, thus

possible over collateralisation is not visible.

Forbearance plans must comply with the Group’s Credit

Policy. They are used as an instrument to maintain

longterm customer relationships during economic down-

turn if there is a realistic possibility that the customer

will be able to meet obligations again. The purpose of the

plans is therefore to minimise loss in the event of

default.

RISK TABLE 4

Types of collateral, EURm

2022

2021

Real property

Bank accounts

Custody accounts/securities

Guarantees

3,979.0

3.8

4,527.5

6.8

If it proves impossible to improve a customer’s ﬁnancial

situation by forbearance measures, the Group will con-

sider whether to subject the customer’s assets to a

forced sale or whether the assets could be realised later

at higher net proceeds.

0.6

0.8

47.9

0.0

62.2

0.0

Other assets

Total

4,031.3

4,597.3

Non-performing assets and forbearance

In 2022 corona crises did not impact to customers

remarkably and the number of concessions has been on

the same level as before the corona crices.

The Bank applied the same principles as the Group in

non-performing asset and forbearance loan manage-

ment.

Market risk

From the beginning of 2018, the Group has deﬁned non-

performing loans as facilities in stage 3. For retail expo-

sures, only impaired facilities are included in non-per-

forming loans. For non-retail exposures with one or more

non-performing loans, the entire amount of the custom-

er’s exposure is considered non-performing.

Market risk is deﬁned as the risk of losses caused by

changes in the market value of ﬁnancial assets, liabilities

and off-balance sheet items resulting from changes in

market prices or rates. Market risk in the Bank consists

of the EUR interest rate risk and credit spread risk in the

banking book. Interest rate risk is composed of yield

curve risk, basis risk, and option risk arising from refer-

ence rate ﬂoors on ﬂoating rate loans. The Bank meas-

ures the effects of interest rate risk on valuation

changes based on net present value and earnings at risk.

From August 2021 all exposures in stage 3 are consid-

ered as non-performing loans.

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

19

Liquidity risk

Governance and limit structure

Liquidity risk means the risk that the costs to obtain

funds becomes excessive, lack of ﬁnancing prevents the

Bank from maintaining its current business model, or

the Bank ultimately cannot fulﬁl its payment obligations

due to lack of funds. The Board of Directors has

approved a liquidity policy for the Bank. The policy speci-

ﬁes the aims, limits, calculation and responsibilities of all

parts of the Bank’s liquidity risk control and manage-

ment.

The Bank’s Board of Directors approves the market risk

policy and overall limits for market risk. The Board also

decides on the general principles for managing and mon-

itoring market risks based on the market risk policy and

delegated market risk limits provided by the Group. The

Chief Executive Ofﬁcer (CEO) is responsible for the mar-

ket risks. The Bank’s Treasury actively manages market

risks within the set of allocated limits. Trades related to

position management are executed in the Treasury and

Trading function of the Group.

The Bank minimises the short term liquidity risk. The

Bank conforms to the Liquidity Coverage Ratio (LCR)

deﬁned in Capital Requirements Directive (CRD) and

Capital Requirements Regulation (CRR).

Measurement, monitoring and management reporting on

market risks are carried out in Risk Management. Mar-

ket risk exposure is calculated in a limit control system

that is linked to the trading systems. Limits are moni-

tored systematically, and in case of limit violations, fol-

low-up procedures have been established. In addition,

Risk Management monitors risk levels intraday and con-

ducts intra-day spot checks.

Structural liquidity risk is an inherent part of the Bank’s

business strategy and it is managed in support of a cau-

tious and conservative risk proﬁle. The Bank adapts and

anticipates foreseeable regulatory requirements on

structural liquidity risk management and complies with

requirements of net stable funding ratio (NSFR) that

became binding in 28th June 2021.

Market risk position

The Bank’s banking book interest rate risk arises pri-

marily from issued covered bonds, mortgages and deriv-

atives hedging both of these items. Also the liquidity

buffer bonds and short-term funding have an impact on

the interest rate risk. The goal is to hedge the balance

sheet in a way that interest rate risk changes do not

have essential impact on the Banks proﬁtability. During

2022 the Bank had only EUR denominated business

activities. As part of the limit monitoring the banking

book interest rate position is stress tested by a 1 per-

centage point parallel increase and decrease of yield

curves as well as with regulatory scenarios.

The Bank’s Treasury is responsible for the practical and

day-to-day liquidity management and execution of the

Policy. Risk Management is responsible for day-to-day

monitoring, controlling and reporting the liquidity risk

limits. The Bank has a liquidity line from Danske Bank

A/S for short and medium term funding needs.

Liquidity management is based on monitoring and man-

agement of short-term and long-term liquidity risks. The

management of operational liquidity risk aims primarily

at ensuring that the Bank always has a liquidity buffer

that is able, in the short term, to absorb the net effects

of current transactions and expected changes in liquid-

ity, under both normal and stressed conditions. The

Bank’s liquidity buffer consists of deposits in the central

bank and central bank eligible high quality liquidity

bonds.

The bank also estimates interest rate risk exposure in

the banking book from the earnings perspective, called

net interest income (NII) risk. It is measured as the pro-

jected loss of earnings over a 12 month period upon a

parallel shift up or down in yields of 1 percentage point

while balance sheet structure remains unchanged. In

risk measurement, interest rate levels cannot fall below

the determined ﬂoor level of -2 per cent.

Risk Table 5 presents the Bank’s ﬁnancial liabilities at

the end of 2022 divided by maturity proﬁle. The liabili-

ties, which have no contractual maturities, are included

in section “< 3 months”.

At the year-end of 2022, net present value based inter-

est rate risk of the Bank in the scenario of parallel down-

ward shift of one percent across the yield curve is EUR

-0.8 million (EUR -0.4 million). Correspondingly, earnings

based risk of the Bank in the scenario of parallel shift of

one percent across the yield curve is EUR -3.6 million

(EUR -5.9 million).

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

20

RISK TABLE 5.

Maturity proﬁle of ﬁnancial liabilities based on contractual

maturities, EURm.

Liabilities

2022

Total

< 3 months 3-12 months

1-5 years

> 5 years

Due to credit institutions and central banks

Debt securities in issue

390.1

3,228.2

3,618.2

0.1

-

758.9

390.0

1,623.5

2,013.5

-

845.8

Financial liabilities total

0.1

Undrawn loans, overdraft facilities and other

-

2021

< 3 months 3-12 months

Liabilities

Total

1-5 years

> 5 years

Due to credit institutions and central banks

Debt securities in issue

1.732.5

2.245.3

3.977.8

12.5

0.1

620.0

2.9

1.100.0

1.244.9

2.344.9

-

997.4

Financial liabilities total

12.6

622.9

Undrawn loans, overdraft facilities and other

-

Non-financial risk

management. The compliance function assists manage-

ment in ensuring that the Bank and its employees comply

with applicable laws and regulations as well as ethical

standards in order to mitigate the Bank’s compliance risk.

Non-ﬁnancial risk is the risks of losses resulting from

inadequate or failed internal processes or systems, staff

or from external events.

In the Bank reputation risk is assessed and managed in

line with the non-ﬁnancial risk management approach

and can be seen as a consequence of non-ﬁnancial risk

events or a failure to comply with the laws and rules, or

self-regulatory organisation standards and code of con-

duct applicable to the Bank.

The Bank applies the Group’s approach for identiﬁcation,

assessment and management of non-ﬁnancial risks. The

Bank conducts on ongoing basis the non-ﬁnancial risk

identiﬁcation and assessment process to identify all

material internal and external non-ﬁnancial risks facing

the organisation. In addition, likelihood, monetary, cus-

tomer, regulatory and reputational impacts of the identi-

ﬁed risks are assessed. The process also includes moni-

toring of the identiﬁed risks. Local key controls and pos-

sible key risk indicators are identiﬁed for the material

risks, so that the status of the risks can be monitored

over time. Action plans for material risks where the level

of internal control has been assessed to be ineffective

are established. General mitigation strategies for key

risks are developed and implemented by the Group and

local mitigation strategies are developed and imple-

mented by the Bank. The Bank’s Management Team,

Risk Council and the Board of Directors are regularly

informed about the Bank’s material non-ﬁnancial risks.

Non-ﬁnancial risks are divided into the following

categories:

• Model risks

• Operational risks

• Technology and Data risks

• Financial control and strategic risks

• Financial crime risks

• Regulatory Compliance risks

The Bank deﬁnes non-ﬁnancial risk events as non-ﬁnan-

cial risks, which have occurred and have resulted in

ﬁnancial losses/gains or could have resulted in ﬁnancial

losses/gains (a near miss event). Non-ﬁnancial risk event

may also have a reputational impact, customer impact

or regulatory impact. The management of non-ﬁnancial

risks enhances the efﬁciency of the Bank’s internal pro-

cesses and decreases ﬂuctuations in returns.

The Bank operates under a culture of open disclosure of

risks in which staff should report errors and weaknesses

within the Bank so future losses may be minimised by

taking preventative measures. Each employee within the

Bank is responsible for the day-to-day management of

non-ﬁnancial risks and reporting of actual events within

their respective area. It is the responsibility of persons in

charge of the outsourced services in resource areas to

identify and manage the risks for which they are account-

able and disclose information on non-ﬁnancial risk events.

Non-ﬁnancial risk events are regularly reported to the

Bank’s Risk Council and Board of Directors.

The Bank’s Board of Directors approves proper and

effective non-ﬁnancial risk policy, which creates a frame-

work for managing non-ﬁnancial risks. Risk Management

is responsible for the independent oversight of non-ﬁnan-

cial risk management and governance, and it performs a

consulting and review role to the Bank’s approach to

non-ﬁnancial risk management. Internal audit assesses

the adequacy and efﬁciency of internal control and risk

DANSKE MORTGAGE BANK PLC BOARD OF DIRECTORS’ REPORT 2022

21

IFRS ﬁnancial statements

Statement of comprehensive income

EURm

Note

1-12/2022

1-12/2021

Interest income calculated using the effective interest method

Other interest income

1

37.4

7.4

31.7

22.4

17.9

36.2

Interest expense

12.5

32.3

Net interest income

Fee income

2

3

1.6

0.0

2.1

0.0

Fee expenses

Net result from items at fair value

Other income

-2.4

0.3

-0.8

0.2

Total operating income

31.9

37.7

Staff costs

4

5

0.7

13.6

14.3

0.7

17.0

17.7

Other operating expenses

Total operating expenses

Loan impairment charges

6

7

1.3

2.9

Proﬁt before taxes

16.3

17.1

Taxes

3.3

3.4

Net proﬁt after tax

13.1

13.7

Total comprehensive income for the ﬁnancial year

13.1

13.7

Balance sheet

EURm

Note

12/2022

12/2021

Assets

Cash and balances with central banks

Loans and receivables to credit institutions

Trading portfolio assets

Loans and receivables to customers

Tax assets

11

12

6

29.5

62.8

165.1

4.4

21.3

9.0

4,028.6

-

4,117.0

0.4

13

10

14

Other investment securities

Other assets

91.5

35.4

3.6

1.0

Total assets

4,237.3

4,332.3

Liabilities

Due to credit institutions and central banks

Trading portfolio liabilities

Debt securities in issue

Tax liabilities

15

12

16

13

17

390.1

256.6

3,228.2

0.6

1,732.5

13.8

2,245.3

-

Other liabilities

9.0

0.9

Total liabilities

3,884.4

3,992.5

Equity

Share capital

Reserves

70.0

215.0

67.9

70.0

215.0

54.8

Retained earnings

Total equity

352.9

339.8

Total equity and liabilities

4,237.3

4,332.3

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

22

Reserve for

invested un-

restricted equity

Statement of changes in equity

EURm

Retained

earnings

Share capital

70.0

Total

Equity at 1 January 2022

Total comprehensive income

Equity at 31 December 2022

215.0

54.8

13.1

67.9

339.8

13.1

70.0

215.0

352.9

Reserve for

invested un-

restricted equity

Statement of changes in equity

EURm

Retained

earnings

Share capital

70.0

Total

Equity at 1 January 2021

Total comprehensive income

Equity at 31 December 2021

215.0

41.2

13.7

54.8

326.2

13.7

70.0

215.0

339.8

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

23

Cash ﬂow statement

The Bank has prepared its cash ﬂow statement

according to the indirect method. The statement is

based on the pre-tax proﬁt for the year and shows the

cash ﬂows from operating activities and the increase

or decrease in cash and cash equivalents during the

ﬁnancial year.

Cash and cash equivalent consists of cash in hand

and demand deposits with central banks and

amounts due from credit institutions and central

banks with original maturities shorter than three

months.

EURm

1-12/2022

1-12/2021

Cash ﬂow from operations

Proﬁt before tax

16.3

1.3

17.1

2.9

Loan impairment charges

Tax paid

-2.3

5.6

-3.7

Other non-cash operating items

Total

-19.9

-3.6

20.9

Changes in operating capital

Due to credit institutions

Trading portfolio

-1,342.4

230.5

-56.1

-56.8

66.8

Other ﬁnancial instruments

Loans and receivables

Debt securities in issue net ¹⁾

Other assets/liabilities

Cash ﬂow from operations

5.4

87.1

1,504.1

-1,555.0

-0.3

982.9

20.6

-56.5

-39.4

Cash and cash equivalents, beginning of period

Change in cash and cash equivalents

148.8

-56.5

92.2

188.2

-39.4

Cash and cash equivalents, end of period

148.8

Cash in hand and demand deposits with central banks ²⁾

Amounts due from credit institutions and central banks within 3 months

Total

29.5

62.8

92.2

144.4

4.4

148.8

1) Debt securities in issue are presented separately including both debt securities issued and matured during the ﬁnancial year.

2) The minimum reserve is not included in the amount.

Reconciliation of liabilities arising from financing

activities

On 31st December 2022 there were no liabilities

arising from ﬁnancing activities.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

24

Danske Mortgage Bank Plc

notes to the ﬁnancial statements

Accounting principles

Changes to significant accounting policies and

presentation during the year

Summary of Signiﬁcant Accounting

Policies and Estimates

On 1 January 2022, the Bank implemented the amend-

ments to IAS 16, IAS 37, IFRS 3 and Annual Improve-

General

ments to IFRS Standards 2018-2020. The implementa-

tion of the amendments to IFRSs had no impact on the

ﬁnancial statements.

The Bank prepares its ﬁnancial statements in accord-

ance with the International Financial Reporting Stand-

ards (IFRSs), issued by the International Accounting

Standards Board (IASB) and IFRIC Interpretations issued

by the IFRS Interpretations Committee, as endorsed by

the EU. In addition, certain requirements in accordance

with the Finnish Accounting Act, the Finnish Act on

Credit Institutions, the Finnish Financial Supervisory

Authority’s regulations and guidelines and the decision

of the Ministry of Finance on ﬁnancial statements and

consolidated statements of credit institutions have also

been applied.

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 stand-

ards (IFRS 16, IAS 1, IAS 8 and IAS 12), that have not

yet come into force. The Bank has not early adopted any

of the changes. No signiﬁcant impact is expected from

the changes to IFRS.

Critical judgements and estimation uncertainty

Management’s judgement, estimates and assumptions

of future events that will signiﬁcantly affect the carrying

amounts of assets and liabilities underlie the prepara-

tion of the ﬁnancial statements. The estimates and

assumptions that are deemed critical to the ﬁnancial

statements are regarding the measurement of loans and

receivables. The estimates and assumptions are based

on premises that management ﬁnds reasonable but are

inherently uncertain and unpredictable. The premises

may be incomplete, unexpected future events or situa-

tions may occur, and other parties may arrive at other

estimated values

The ﬁnancial statements are presented in euro (EUR), in

million euros with one decimal, unless otherwise stated.

The Risk management Disclosure is presented in euro

(EUR), in million euros with one decimal. The ﬁgures in

notes are rounded so combined individual ﬁgures might

differ from the presented total amount.

For the purpose of clarity, the primary ﬁnancial state-

ments and the notes to the ﬁnancial statements are pre-

pared using the concepts of materiality and relevance.

This means that the line items not considered material

in terms of quantitative and qualitative measures or rel-

evant to ﬁnancial statement users are aggregated and

presented together with other items in the primary ﬁnan-

cial statements. Similarly, information not considered

material is not presented in the notes.

Measurement of expected credit losses on loans,

financial guarantees and loan commitments and

bonds measured at amortised cost

The three-stage expected credit loss impairment model

in IFRS 9 depends on whether the credit risk has

increased signiﬁcantly since initial recognition. The

impairment charge for expected credit losses depends

on whether the credit risk has increased signiﬁcantly

since initial recognition. If the credit risk has not

increased signiﬁcantly, the impairment charge equals

the expected credit losses resulting from default events

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

Signiﬁcant accounting policies have been incorporated

into the notes to which they relate. Except the changes

presented below, the Bank has not changed its signiﬁ-

cant accounting policies from those applied in the

Annual Report 2021.

Financial statements is adopted by general meeting on

10. March 2023.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

25

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.

If the credit risk has increased signiﬁcantly, the loan is

more than 30 days past due, or the loan is in default or

otherwise impaired, the impairment charge equals the

lifetime expected credit losses (stages 2 and 3). The

allowance account is relatively stable in terms of

changes to the deﬁnition of signiﬁcant increase in credit

risk. Non-performing loans are sold back to Danske Bank

A/S, Finland Branch.

The applied scenarios that drive the expected credit loss

calculation in 2022 have been updated with the latest

macroeconomic data. Compared to the end of 2021, all

three scenarios have been revised to reﬂect expecta-

tions of higher inﬂation and interest rate hikes fuelled by

the war in Ukraine. The scenario weighting remained

unchanged from the end of 2021.

The expected credit loss is calculated for all individual

facilities as a function of probability of default (PD), expo-

sure at default (EAD) and loss given default (LGD) and it

incorporates forward-looking information. The estima-

tion of expected credit losses involves forecasting future

economic conditions over a number of years. Such fore-

casts are subject to management judgement and those

judgements may be sources of measurement uncer-

tainty that have a signiﬁcant risk of resulting in a mate-

rial adjustment to a carrying amount in future periods.

The incorporation of forward-looking elements reﬂects

the expectations of the Group’s senior management and

involves the creation of 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.

The scenarios used are described more closely in the

following section.

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 prices 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 mar-

kets. Consumer sentiment increases and consumers

run down a large proportion of the savings accumulated

during the crisis.

Accounting treatment of the impacts from the

Ukraine War

In 2022, ﬁnancial markets have been under pressure

due to the uncertainty caused by high inﬂation and

energy prices as a consequence of the war in Ukraine,

which has exacerbated macroeconomic uncertainties.

The Group and Bank have considered the impact of the

war on critical areas such as the credit portfolio and

macroeconomic scenarios. The Bank almost has no

direct exposures to customers in or from Russia,

Ukraine or Belarus. The share of such loans are just 0.2

million euro. However, the bank’s macroeconomic sce-

narios have been updated to reﬂect expectations of

higher inﬂation and interest, which are fuelled by the war

in Ukraine.

The Group’s downside scenario is a stagﬂation scenario,

calibrated to a level of severity resembling the recession

in 2008-2009, however with high interest rates and

high inﬂation. A trigger of the economic setback could be

continued macroeconomic worsening and challenges

linked to high business costs while inﬂation remains 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

Bank is represented.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

26

Forecasts are produced for the coming three years.

After this period, the outlook returns to a steady-state

level after a further four years.

Translation of transactions in foreign currency

The presentation currency of the ﬁnancial statement is

euro, which is also the functional currency. Transactions

in foreign currency are translated at the exchange rate

of the transaction date. Gains and losses on exchange

rate differences between the transaction date and the

settlement date are recognised in the income statement.

Based on these assessments, the allowance account at

31 December 2022 amounted to EUR 2.7 million (31

December 2021 EUR 2.0 million). Loans accounted

at 31 December 2022 for about 95.1 % of total assets

(31 December 2021: 95.0 %).

Non-monetary assets and liabilities in foreign currency

that are subsequently revalued at fair value are trans-

lated at the exchange rates at the date of revaluation.

Exchange rate adjustments are included in the fair value

adjustment of an asset or liability. Other non-monetary

items in foreign currency are translated at the exchange

rates at the transaction date.

Except as described above, all other policies and princi-

ples remain in place.

More information regarding expected credit losses,

nature and extent of risks arising from ﬁnancial instru-

ments can be found in Risk Management Disclosure

starting from page 15.

Segment information

Danske Mortgage Bank Plc has only one business

segment and therefore separate segment report

outlined in IFRS 8 is not presented

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

27

Other notes

1. Net interest income

Interest income and expenses arising from interest-

bearing ﬁnancial instruments measured at amortised

cost are recognised in the income statement accord-

ing to the effective interest method on the basis of

the cost of the individual ﬁnancial instrument. Interest

includes amortised amounts of fees that are an inte-

gral part of the effective yield on a ﬁnancial instru-

ment, such as origination fees and amortised differ-

ences between cost and redemption price, if any.

Interest income and expenses also include interest on

ﬁnancial instruments measured at fair value through

proﬁt or loss, but not interest on assets and deposits

under pooled schemes and unit-linked investment

contracts; the latter is recognised under Net result

from items at fair value.

EURm

Interest income calculated using effective interest method

1-12/2022

1-12/2021

Loans and receivables to credit institutions

Loans and receivables to customers

Other interest income

0.1

37.4

0.0

-1.5

32.9

0.2

Total

37.4

31.7

Interest income

Debt securities

Derivatives, net

Total

-0.1

7.4

0.0

22.4

Interest expenses

Amounts owed to credit institutions

Debt securities in issue

Other interest expenses

Total

0.0

12.4

0.0

-6.1

24.0

0.0

12.5

17.9

Net interest income

32.3

36.2

Of which entities of the same group

Interest income

7.5

0.0

22.1

-6.1

Interest expenses

Negative interest income and negative interest expenses during 2022 amounted to 0.0 million euros (2021: 1.5 million euros) and 0.0 million euros

(2021: 6.1 million euros), respectively. Negative interest income is offset against interest income and negative interest expense against interest expenses.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

28

2. Fee income and expenses

Fee income and expenses are presented on a net fee

income basis as presented to key management for

decision making purposes. Net fee income is broken

down by fee type, on the basis of the underlying activ-

ity. Fee income consists mainly of loan invoicing fees

and loan change fees. Fees that form an integral part

of the effective rates of interest loans, advances and

deposits are carried under Interest income or Inter-

est expense.

Fee income is recognised to reﬂect the transfer of

services to customers at an amount that reﬂects the

consideration that is expected to be received in

exchange for such services. The Bank identiﬁes the

performance obligation agreed with the customer,

and recognises consideration and income in line with

the transfer of services.

EURm

Net fee income by fee type

1-12/2022

1-12/2021

Loan fees and Guarantees

Other

1.6

0.0

1.6

0.0

1.6

2.1

0.0

2.1

0.0

2.1

Total, fee income

Fee expenses

Total

3. Net result from items at fair value

Net result from items at fair value includes realised

and unrealised capital gains and losses on ﬁnancial

assets and ﬁnancial liabilities recognised at fair value

For ﬁnancial assets and liabilities subject to fair value

hedge accounting, the fair value adjustments of the

hedged ﬁnancial instrument and the hedging instru-

through proﬁt or loss as well as exchange rate adjust- ments are recognised in Net result from items at fair

ments.

value. Therefore, any hedge ineffectiveness is pre-

sented in Net result from items at fair value.

EURm

1-12/2022

-2.4

1-12/2021

-0.8

Net result from items at fair value

Net result from categories of ﬁnancial instruments

Loans and deposits

-25.2

-1.3

-7.0

-0.3

Bonds (investment securities)

Issued bonds

263.1

-238.9

-2.4

57.7

-51.2

-0.8

Trading portfolio assets and liabilities (Derivatives)

Total

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

29

4. Staff costs

Salaries and other remuneration that the Bank

expects to pay for work carried out during the year are

expensed under Staff costs and administrative

expenses. This item includes salaries, holiday allow-

ances, pension costs and other remuneration. Perfor-

mance-based pay is expensed as it is earned. Part of

the performance-based pay for the year is paid in the

form of conditional shares to Management and other

material risk takers. More about remuneration can be

read in the Bank’s remuneration policy on Internet:

www.danskebank.com/investor-relations/debt/dan-

ske-mortgage-bank under section Remuneration.

granted. Under deﬁned contribution pension plans, the

Bank pays regular contributions to insurance com-

pany and has no legal or constructive obligations to

pay future contribution. Such payments are expensed

as they are earned by the staff, and the obligations

under the plans are taken over by the insurance com-

panies and other institutions. The retirement age of

the Managing Director and Deputy Managing Director

is statutory.

The Group is required to identify all employees whose

professional activities could have a material impact

on the risk proﬁle of the Bank in accordance with cur-

rent legislation. In Danske Mortgage Bank Plc, there

are six Risk Takers including managing Director and

Deputy managing Director.

The Bank’s pension obligations consist of deﬁned con-

tribution beneﬁt pension plan for its personnel under

the Employees’ Pensions Act (TyEL) in Finland and no

voluntary supplimentary pension beneﬁts has been

EURm

Staff costs

1-12/2022

1-12/2021

Wages and salaries

0.6

0.0

0.1

0.0

0.1

0.7

0.6

0.0

0.1

0.0

0.1

0.7

of which variable remuneration

Pension costs - deﬁned contribution plans

Other social security costs

Other

Staff costs, total

Compensation paid by the Bank for termination of

employment contracts is determined in accordance with

legislation in force. During the accounting period the

Bank has not paid any signing bonuses for new employ-

ees or granted severance packages.

The members of the Board of Directors of the Bank, who

are employees of the Group, receive no remuneration for

the membership of the Bank’s Board of Directors.

Loans and receivables from management

Management includes key management personnel with

close family members and entities that are controlled or

signiﬁcantly inﬂuenced by these. There has not been

loans or receivables from key management personnel in

accounting periods 2022 and 2021.

Average staff

numbers

1-12/2022

1-12/2021

Full-time staff

6

Key management personnel

The key management personnel in Danske Mortgage

Bank Plc consists of the members of the Board of

Directors of the Bank, Managing Director and Deputy

Managing Director.

Share-based payments

Effective from 2018, Danske Mortgage Bank Plc has

granted rights to conditional shares to the Management

and other material risk takers as part of the variable

remuneration. Incentive payments reﬂected individual

performance and also depended on ﬁnancial results and

other measures of value creation for a given year. Rights

were granted in the ﬁrst quarter of the year following the

year in which they were earned. 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.

Management’s and board of directors’ remuneration

EUR 1,000

1-12/2022

1-12/2021

Remuneration for Managing

Director, Deputy Managing Director

299.8

32.0

293.8

32.0

Remuneration for the members of

Board of Directors

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

30

Conditional shares – programme 2018

conditional share programme are granted as a portion of

the annual bonus earned.

Rights to the Danske Bank A/S shares under the condi-

tional share programme vest up to four years after being

granted provided that the employee, with the exception

of retirement, has not resigned from the Group. In addi-

tion to this requirement, rights to shares vest only if the

Group as a whole and the employee´s department meet

certain performance targets within the next three years.

Rights to buy the Danske Bank A/S shares under the

The fair value of the conditional shares is calculated as

the share price less the payment made by the employee.

Intrinsic value is expensed in the year in which rights to

conditional shares are earned, while the time value is

accrued over the remaining service period, which is the

vesting period of up to three years.

Number of shares

Top

Fair value (1000 EUR)

End of year

Employee

payment

price (EUR)

Manage-

ment

Conditional shares

Total

At issue

2022

Granted 2019

2019, beg.

Granted 2019

Exercised 2019

Forfeited 2019

Other changes 2019

2019, end

618

10.3

8.9

-371

-

247

-

4.1

3.6

3.3

3.8

Vested 2020

-

Exercised 2020

Forfeited 2020

Other changes 2020

2020, end

-

247

Vested 2021

-

Exercised 2021

Forfeited 2021

Other changes 2021

2021, end

-

247

Vested 2022

-

Exercised 2022

Forfeited 2022

Other changes 2022

2022, end

-

247

4.1

14.5

5.8

4.6

15.1

6.0

Granted 2020

2020, beg.

Granted 2020

Exercised 2020

Forfeited 2020

Other changes 2020

2020, end

1,115

-669

-

446

-

Vested 2021

-

Exercised 2021

Forfeited 2021

Other changes 2021

2021, end

-

446

5.8

8.2

Vested 2022

-

Exercised 2022

Forfeited 2022

Other changes 2022

2022, end

-

446

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

31

Number of shares

Top

Fair value (1000 EUR)

End of year

Employee

payment

price (EUR)

Manage-

ment

Conditional shares

Total

At issue

2022

12.1

4.8

Granted 2021

2021, beg.

Granted 2021

Exercised 2021

Forfeited 2021

Other changes 2021

2021, end

655

10.6

-393

-

262

-

4.2

Vested 2022

-

Exercised 2022

Forfeited 2022

Other changes 2022

2022, end

-

262

4.2

10.9

4.3

4.8

13.0

5.2

Granted 2022

2022, beg.

Granted 2022

Exercised 2022

Forfeited 2022

Other changes 2022

2022, end

704

-424

-

280

-

Share price at

grant date

(DKK)

Share price

at year end

(DKK)

Share price at

grant date

(EUR)

Share price

at year end

(EUR)

Conditional shares: Calc. used to calculate the fair value of

conditional shares as of 31 December 2022

EUR : DKK

Granted in 2019

Granted in 2020

Granted in 2021

Granted in 2022

124.21

96.60

137.30

7.4365

16.70

12.99

16.21

15.43

18.46

120.51

114.76

Conditional shares: Calc. used to calculate the fair value of

conditional shares as of 31 December 2021

Granted in 2019

Granted in 2020

Granted in 2021

124.21

96.60

112.95

7.4365

16.70

12.99

16.21

15.19

120.51

Conditional shares: Calc. used to calculate the fair value of

conditional shares as of 31 December 2020

Granted in 2019

Granted in 2020

124.21

96.60

100.65

7.4393

16.70

12.99

13.53

Conditional shares: Calc. used to calculate the fair value of

conditional shares as of 31 December 2019

Granted in 2019

124.21

107.80

7.4698

16.63

14.43

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

32

5. Other operating expenses and audit fees and ﬁnancial stability

authority contributions

EURm

Other operating expenses

1-12/2022

1-12/2021

Financial stability fund expenses

Other services ^*)

1.8

11.8

13.6

1.3

15.7

17.0

Other operating expenses, total

*) Other operating expenses is mainly coming from the costs from services bought from the Group.

1000 EUR

Audit fees

1-12/2022

1-12/2021

Audit

74.9

24.8

99.7

59.9

22.3

82.2

Audit-related services

Audit fees, total (incl. VAT)

Financial stability authority contributions

The Financial Stability Authority manages the Finan-

cial Stability Fund, which includes the Resolution

Fund. Contributions used for building up the Resolu-

tion Fund are collected from all credit institutions

and investment ﬁrms within the scope of the resolu-

tion legislation. The contributions are determined

based on the size of the institution and risks involved

in its business.

The contributions of credit institutions are deter-

mined on the level of the Banking Union, and they are

calculated by the Single Resolution Board (SRB).

In the Banking Union, a single target level for the

Single Resolution Fund is introduced gradually. In

other words, the annual individual contributions of

Finnish institutions is increasingly dependent on the

aggregate amount of covered deposits in the entire

Banking Union, not only in Finland.

Financial stability authority contributions

EURm

1-12/2022

1-12/2021

Financial stability authority contributions

Resolution contributions

1.7

0.0

1.8

1.3

0.0

1.3

Administration fee

Financial stability authority contributions, total

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

33

6. Loan impairment charges and loans and receivables from customers

The Bank buys the loans from Danske Bank A/S, Fin-

land Branch. Loans and receivables consists of loans

and receivables that have been granted to customers

by Danske Bank A/S, Finland Branch and have been

acquired after disbursement. Loans and receivables

includes conventional bank loans, except for transac-

tions with credit institutions and central banks.

quently, they are measured at amortised cost,

according to the effective interest method, less

impairment charges for expected credit losses. The

difference between the value at initial recognition and

the redemption value is amortised over the term to

maturity and recognised under Interest income. If

ﬁxed-rate loans and receivables and amounts due are

accounted for under hedge accounting that is deter-

mined effective, the fair value of the hedged interest

rate risk is added to the amortised cost of the assets.

At initial recognition, loans and receivables are meas-

ured at fair value plus transaction costs. Subse-

EURm

2022

Loans and receivables from customers

Stage 1

Stage 2

Stage 3

Total

Gross carrying amount 1 January 2022

Transferred to Stage 1

Transferred to Stage 2

Transferred to Stage 3

New assets

3,844.6

143.6

-99.2

268.1

-143.0

100.0

-

6.3

-0.5

-0.8

-

4,119.0

-

676.6

-372.1

-349.1

3,844.4

26.1

-

702.8

-420.6

-369.8

4,031.3

Assets derecognised

-43.6

-20.7

186.9

-4.9

-0.1

0.0

Other *)

Gross carrying amount 31 December 2022

*) includes loan repayments

EURm

2021

Total

Loans and receivables from customers

Stage 1

Stage 2

Stage 3

Gross carrying amount 1 January 2021

Transferred to Stage 1

Transferred to Stage 2

Transferred to Stage 3

New assets

5,173.7

79.7

449.9

-79.7

107.3

-4.0

2.7

5,626.2

-

-107.3

-2.3

6.3

-

97.2

2.7

99.9

Assets derecognised

-1,028.5

-367.9

3,844.6

-188.8

-19.3

268.1

-2.7

-

-1,220.0

-387.1

4,119.0

Other

Gross carrying amount 31 December 2021

*) includes loan repayments

6.3

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

34

Impairment for expected credit losses

The impairment charge for expected credit losses

depends on whether the credit risk has increased

signiﬁcantly since initial recognition and follows a

three stage model:

The expected credit loss is calculated for all individ-

ual facilities as a function of the probability of default

(PD), the exposure at default (EaD) and the loss given

default (LGD) and incorporates forward looking ele-

ments. For facilities in stages 2 and 3, the lifetime

expected credit losses cover the expected remaining

lifetime of a facility.

• Stage 1: If the credit risk has not increased sig-

niﬁcantly, the impairment charge equals the

expected credit losses resulting from default

events that are possible within the next 12

months.

Expected credit loss impairment charges are booked

in an allowance account and allocated to individual

exposures.

• Stage 2: If the credit risk has increased signiﬁ-

cantly, the loan is transferred to stage 2 and an

impairment charge equal to the lifetime expected

credit losses is recognised.

The Bank sells non-performing loan agreements back

to Danske Bank A/S, Finland Branch.

• Stage 3: If the loan is in default, it is transferred

to stage 3, for which the impairment charge con-

tinues to equal the lifetime expected credit

losses but with interest income being recognised

on the net carrying amount.

Loan impairment charges

EUR 1,000

1-12/2022

1-12/2021

Impact of net remeasurement of ECL

(incl. changes in models)

1,402.9

-146.2

-924.2

924.2

0.0

3,049.5

-158.3

-3,258.2

3,255.2

-0.1

ECL on assets derecognised

Decrease of provisions to cover realised loan losses

Final write-offs

Interest income, effective interest method

Total

1,256.7

2,888.2

Reconciliation of total allowance account

EUR 1,000

2022

Total

Stage 1

Stage 2

Stage 3

Balance at the beginning of period

Transferred to Stage 1 during the period

Transferred to Stage 2 during the period

Transferred to Stage 3 during the period

ECL on new assets

323.4

809.4

-21.1

-1.2

1,517.9

-791.8

45.2

144.5

-17.6

-24.1

118.9

-

1,985.9

-

-117.7

-

ECL on assets derecognised

24.5

-99.3

-71.4

-146.2

Impact of net remeasurement of ECL

(incl. changes in models)

-606.8

-89.4

1,219.5

-27.9

802.6

-806.9

99.4

1,415.3

-924.2

336.6

Write-offs debited to the allowance account

Other changes

197.4

636.7

39.9

Balance at end of period

1,785.7

245.4

2,667.8

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

35

Reconciliation of total allowance account

EUR 1,000

2021

Total

Stage 1

Stage 2

Stage 3

Balance at the beginning of period

Transferred to Stage 1 during the period

Transferred to Stage 2 during the period

Transferred to Stage 3 during the period

ECL on new assets

457.9

277.0

-80.7

-3.9

1,748.2

-275.0

88.6

20.9

-2.0

-7.9

147.7

-

2,226.7

-

-143.8

-

77.3

-158.3

ECL on assets derecognised

-62.8

-95.5

-

Impact of net remeasurement of ECL

(incl. changes in models)

-239.7

-105.0

3.2

2,818.2

-2,675.0

52.4

477.1

-478.2

-13.4

3,055.6

-3,258.2

42.1

Write-offs debited to the allowance account

Other changes

Balance at end of period

323.4

1,517.9

144.2

1,985.6

Signiﬁcant increase in credit risk (transfer from stage 1

to stage 2)

Stage 3 (credit-impaired facilities)

A facility is transferred from stage 2 to stage 3 when it

becomes credit-impaired. A facility becomes credit-

impaired when one or more events that have a detrimen-

tal impact on the estimated future cash ﬂows have

occurred. This includes observable data about

(a) signiﬁcant ﬁnancial difﬁculty of the issuer or the

borrower;

The classiﬁcation of facilities between stages 1 and 2 for

the purpose of calculating expected credit losses

depends on whether the credit risk has increased signiﬁ-

cantly since initial recognition. The assessment of

whether credit risk has increased signiﬁcantly since ini-

tial recognition is performed by considering the change

in the risk of default occurring over the remaining life

time of the facility and incorporating forward-looking

information. A facility is transferred from stage 1 to

stage 2 based on observed increases in the probability

of default:

(b) a breach of contract, such as a default or past due

event;

(c) the borrower, for ﬁnancial or contractual reasons

relating to the borrower’s ﬁnancial difﬁculty, having

been granted a concession that would not otherwise

have been considered;

• For facilities originated below 1% in PD: An increase

in the facility’s 12-month PD of at least 0.5 percent-

age points and a doubling up of the facility’s lifetime

PD since origination.

(d) it is becoming probable that the borrower will enter

into bankruptcy or other ﬁnancial restructuring; and

(e) the purchase or origination of a ﬁnancial asset at a

high rate of discount that reﬂects the incurred credit

loss.

• For facilities originated above 1% in PD: An increase

in the facility’s 12 month PD of 2 percentage points

or a doubling of the facility’s lifetime PD since origi-

nation.

Deﬁnition of default

To support a more harmonised approach regarding the

application of the deﬁnition of default, the European

Banking Authority (EBA) has issued the following prod-

ucts that guides the application of the deﬁnition of

default: the Guidelines on the application of the deﬁnition

of default, EBA/GL/2016/07 and the Regulatory Techni-

cal Standards (RTS) on the materiality threshold for

credit obligations past due, EBA/RTS/2016/06.

In addition, facilities that are more than 30 days past

due are moved to stage 2. Finally, customers subject to

forbearance measures are placed in stage 2, if the Bank,

in the most likely outcome, expects no loss, or if the cus-

tomers are subject to the two-year probation period for

performing forborne exposures.

The Bank has implemented the new requirements

related to the deﬁnition of default in January 2022 in

order to align the existing deﬁnition of default to the new

requirements outlined in the Guidelines and the RTS.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

36

The newly deﬁnition of default is used in the measure-

ment 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. According to the revised

deﬁnition of default, exposures that are considered

default 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.

The purpose of using multiple scenarios is to model the

non-linear impact of assumptions about macroeconomic

factors on the expected credit losses. Management’s

approval of scenarios can include adjustments to the

scenarios, probability weighting and management over-

lays to cover the outlook for particular high-risk portfo-

lios, which are not provided by the Group’s macroecono-

mists. The approved scenarios are used to calculate the

impairment levels. Technically, the forward-looking infor-

mation is used directly in the PDs through an estimate

of general changes to the PDs and the LGDs in the

expected credit loss calculation.

Calculation of expected credit losses

The expected credit loss is calculated for all individual

facilities as a function of the probability of default (PD),

the exposure at default (EaD) and the loss given default

(LGD). In general, the Bank’s IFRS 9 impairment models

and parameters draw on the Group’s internal models in

order to ensure alignment of models across the Group.

New models and calculations have been developed espe-

cially for IFRS 9 purposes, including models for lifetime

PD, prepayment and forward-looking LGD. All expected

credit loss impairment charges are allocated to individ-

ual exposures.

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 Group’s Nordic Outlook reports.

Modiﬁcation

When a loan is replaced by a new loan or the original

loan contract is modiﬁed it is assessed whether this

should be accounted for as derecognition of the loan and

recognition of a new loan, or as a modiﬁcation of the old

loan. This depends on whether the changes to the con-

tractual cash ﬂows or other contractual terms are sig-

niﬁcant or not. If the change is signiﬁcant, it is accounted

for as derecognition of the old loan and recognition of the

new loan. If the change is not signiﬁcant, the modiﬁcation

is accounted for as a modiﬁcation of the old loan. In gen-

eral, if the modiﬁcation results in a new loan contract

and loan identiﬁcation, the modiﬁcation is considered

signiﬁcant and leads to derecognition of the old loan and

recognition of a new loan. If this is not the case, the mod-

iﬁcation does not lead to derecognition of the original

loan.

Expected remaining lifetime

For most facilities, the expected lifetime is limited to the

remaining contractual maturity and is adjusted for

expected prepayment. For exposures with weak credit

quality, the likelihood of prepayment is not included. For

exposures that include both a loan and an undrawn com-

mitment and where a contractual ability to demand pre-

payment and cancellation of the undrawn commitment

does not limit the Bank’s exposure to credit losses to the

contractual notice period, the expected lifetime is the

period during which the Bank expects to be exposed to

credit losses. This period is estimated on the basis of

the normal credit risk management actions.

If the old ﬁnancial asset is not derecognised, the original

effective interest rate remains unchanged, and the net

present value of the changed contractual cash ﬂows rep-

resents the carrying amount of the ﬁnancial asset after

the modiﬁcation. The difference between the net present

value of the original contractual cash ﬂows and the modi-

ﬁed contractual cash ﬂows are recognised in P/L as a

modiﬁcation gain or loss. If the modiﬁcation loss relates

to modiﬁcations on loans subject to forbearance meas-

ures the modiﬁcation loss is presented in the income

statement under Loan impairment charges.

Incorporation of forward-looking information

The forward-looking elements of the calculation reﬂect

the current unbiased expectations of the Bank’s senior

management. The process consists of the creation of

macroeconomic scenarios (base case, upside and down-

side), including an assessment of the probability of each

scenario, by the Group’s independent macroeconomic

research unit, the review and sign-off of the scenarios

(through the organization) and a process for adjusting

scenarios given new information during the quarter.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

37

In terms of stage allocation, it is important whether a

modiﬁcation leads to derecognition of the old loan and

recognition of a new loan or not. If the replacing loan is

considered to be a new loan, the loan will (unless the

new loan is credit-impaired at initial recognition) be rec-

ognised in stage 1 at initial recognition, i.e. the initial

credit risk is reset. If the replacing loan is considered an

amendment to the old loan, the initial credit risk is not

reset.

The Bank buys new loans from Danske Bank A/S, Finland

Branch. However, there might be modiﬁcations to the

loans that are in the Bank’s balance sheet if the modiﬁca-

tions do not result in derecognition of the old loan and

recognition of the new loan.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

38

7. Taxes

Calculated current and deferred tax on the proﬁt for

the year are recognised in the income statement.

Current tax is calculated based on the valid tax rate.

EURm

1-12/2022

1-12/2021

Taxes on taxable income for the year

Taxes arising from previous years

Taxes for the ﬁnancial year total

3.3

0.0

3.3

3.4

0.0

3.4

Effective tax rate

20.0%

Reconciliation between income taxes in income statement and taxes

calculated at domestic tax rate 20% (20%)

Proﬁt before taxes

16.3

3.3

17.1

3.4

Taxes calculated at domestic tax rate

Taxes arising from previous years

Taxes in Income statement

0.0

3.3

3.4

8. Classiﬁcation of ﬁnancial instruments and non-ﬁnancial assets

The purchase and sale of ﬁnancial assets and liabili-

ties at fair value through proﬁt or loss are recognised

in the balance sheet on the settlement date, or the

date on which the Bank agrees to buy or sell the asset

or liability in question. Loans are recognised as ﬁnan-

cial assets on the settlement date mentioned in the

loan purchase contract between Danske Mortgage

Bank Plc and Danske Bank A/S, Finland Branch. Deriv-

ative instruments, quoted securities and foreign

exchange spot transactions are recognized on and

derecognized from the balance sheet on the settle-

ment date.

assets has expired or all risks and rewards of owner-

ship have been transferred. Financial liabilities are

derecognised when they are extinguished, i.e. when

the obligation is discharged, cancels or expires.

Financial assets and liabilities are offset and the net

amount reported in balance sheet only if there is a

legally enforceable right to offset the recognised

amounts and there is an intention to settle on a net

basis. Transaction costs are included in the initial car-

rying amount, unless the item is measured at fair

value through the proﬁt and loss. The Bank uses the

option in IFRS 9 to continue to apply the hedge

accounting provisions in IAS 39.

Financial assets are derecognised when the contrac-

tual right to receive cash ﬂows from the ﬁnancial

Classification and measurement of financial assets

and financial liabilities under IFRS 9 – general

Under IFRS 9, financial assets are classified on the

basis of the 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

categories:

Financial assets are measured at AMC if they are held

within a business model for the purpose of collecting

contractual cash ﬂows (held to collect) and if cash ﬂows

are solely payments of principal and interest on the prin-

cipal amount outstanding. In general, this is the case for

the Bank’s loan portfolio.

Danske Mortgage Bank Plc does not have ﬁnancial

assets that are measured at FVOCI.

• Amortised cost (AMC)

• Fair value through other comprehensive income

(FVOCI)

All other ﬁnancial assets are mandatorily measured at

FVPL including ﬁnancial assets within other business

models such as ﬁnancial assets managed at fair value or

• Fair value through proﬁt or loss (FVPL)

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

39

held for trading and ﬁnancial assets with contractual

cash ﬂows that are not solely payments of principal and

interest on the principal amount outstanding.

ment. The interest must represent only consideration for

the time value of money, credit risk, other basic lending

risks and a proﬁt margin consistent with basic lending

features. If the cash ﬂows introduce more than de minimis

exposure to risk or volatility that is not consistent with

basic lending features, the ﬁnancial asset is mandatorily

recognised at FVPL.

Generally, ﬁnancial liabilities are measured at amortised

cost with bifurcation of embedded derivatives not

closely related to the host contract. Derivatives are

measured at fair value.

In general, the Bank’s portfolios of ﬁnancial assets that

are “held to collect” (loans) have contractual cash ﬂows

that are consistent with the SPPI test, i.e. they have basic

lending features.

The SPPI test (solely payment of principal and

interest on the principal amount outstanding)

The second step in the classiﬁcation of the ﬁnancial

assets in portfolios being “held to collect” and “held to col-

lect and sell” relates to the assessment of whether the

contractual cash ﬂows are consistent with the SPPI test.

The principal amount reﬂects the fair value at initial rec-

ognition less any subsequent changes, e.g. due to repay-

The table below shows the classiﬁcation of the Bank’s

ﬁnancial instruments.

Fair value through

Amortised cost

proﬁt or loss

Held to collect

Non-ﬁnancial

assets and

liabilities

EURm

ﬁnancial

assets Liabilities

Managed at

fair value

Assets

Hedge

Total

Cash and balances with central banks

Loans and receivables to credit institutions

Trading portfolio assets

29.5

62.8

29.5

62.8

Derivatives

21.3

20.6

42.0

21.3

91.5

Investment securities, bonds

Loans and receivables to customers

Other assets

91.5

4,008.0

4,028.6

3.6

Total 31.12.2022

4,100.2

-

91.5

3.6

4,237.3

EURm

Liabilities

Due to credit institutions and central banks

Trading porfolio liabilities

Debt securities in issue

-> Bonds

390.1

2,965.3

3,355.4

390.1

256.6

262.8

3,228.2

0.6

Tax liabilities

0.6

9.0

9.6

Other liabilities

9.0

Total 31.12.2022

-

519.4

3,884.4

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

40

Fair value through

proﬁt or loss

Amortised cost

Held to collect

Non-ﬁnancial

assets and

liabilities

EURm

Assets

ﬁnancial

assets Liabilities

Managed at

fair value

Hedge

Total

Cash and balances with central banks

Loans and receivables to credit institutions

Trading portfolio assets

Derivatives

165.1

4.4

165.1

4.4

9.0

4.6

9.0

35.4

Investment securities, bonds

Loans and receivables to customers

Tax assets

35.4

4,112.4

4,117.0

0.4

1.0

1.4

Other assets

1.0

Total 31.12.2021

4,281.8

-

35.4

13.7

4,332.3

EURm

Liabilities

Due to credit institutions and central banks

Trading porfolio liabilities

Debt securities in issue

-> Bonds

1,732.5

13.8

0.2

2,245.1

2,245.3

0.9

Other liabilities

0.9

Total 31.12.2021

-

3,977.6

-

14.0

0.9

3,992.5

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

41

9. Balance sheet items broken down by expected due date

The balance sheet items are presented in order of

liquidity instead of distinguishing between current and

non-current items. The table below shows the balance

sheet items expected to mature within one year (cur-

rent) and after more than one year (non-current).

2022

EURm

Total

< 1 year

> 1 year

Assets

Cash and balances with central banks

Loans and receivables to credit institutions

Trading portfolio assets

Other investment securities

Loans and receivables to customers

Other assets

29.5

62.8

29.5

62.8

-

1.5

21.3

19.9

91.5

19.1

72.4

4,028.6

3.6

276.1

3.6

3,752.5

-

Total

4,237.3

410.9

3,826.4

Liabilities

Due to credit institutions and central banks

390.1

256.6

3,228.2

0.6

0.1

79.7

758.9

0.6

390.0

176.9

2,469.3

-

Derivatives and other ﬁnancial liabilities held for trading

Debt securities in issue

Tax liabilities

Other liabilities

Total

9.0

-

3,884.4

848.1

3,036.3

2021

EURm

Total

< 1 year

> 1 year

Assets

Cash and balances with central banks

Loans and receivables to credit institutions

Trading portfolio assets

Other investment securities

Loans and receivables to customers

Tax assets

165.1

4.4

165.1

4.4

-

9.0

5.9

3.1

35.4

-

35.4

4,117.0

0.4

333.7

0.4

3,783.3

-

Other assets

1.0

Total

4,332.3

510.5

3,821.8

Liabilities

Due to credit institutions and central banks

Derivatives and other ﬁnancial liabilities held for trading

Debt securities in issue

1,732.5

13.8

632.5

-4.0

1,100.0

17.8

2,245.3

0.9

3.0

2,242.3

-

Other liabilities

0.9

Total

3,992.5

632.3

3,360.1

Maturity analysis of past due ﬁnancial assets, net

EURm

2022

2021

Assets past due 30-90 days

9.4

1.0

0.0

-

4.9

6.4

0.4

-

Unlikely to pay

Nonperforming assets past due at least 90 days but no more than 180 days

Nonperforming assets past due at least 180 days - 1 year

Nonperforming assets more than 1 year

-

Receivables with forbearance measures, gross carrying amount

26.4

159.7

Maturity analysis for derivatives is included in note 12.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

42

10. Fair value information

Fair value

used to measure fair value. The fair value of more

complex ﬁnancial instruments, such as swaptions,

interest rate caps and ﬂoors, and other OTC prod-

ucts, is measured on the basis of internal models,

many of which are based on valuation techniques

generally accepted within the industry.

Financial instruments are carried on the balance

sheet at fair value or amortised cost. The fair value of

ﬁnancial assets and liabilities is measured on the

basis of quoted market prices of ﬁnancial instru-

ments traded in active markets. If an active market

exists, fair value is based on the most recently

observed market price on the balance sheet date.

The results of calculations made on the basis of valu-

ation techniques are often estimates, because exact

values cannot be determined from market observa-

tions. Consequently, additional parameters, such as

liquidity and counterparty risk, are sometimes used

to measure fair value.

If a ﬁnancial instrument is quoted in a market that is

not active, the valuation is based on the most recent

transaction price. It adjusts the price for subsequent

changes in market conditions, for instance by includ-

ing transactions in similar ﬁnancial instruments that

are motivated by normal business considerations.

If, at the time of acquisition, a difference arises

between the value of a ﬁnancial instrument calcu-

lated on the basis of non-observable inputs and

actual cost [day-one proﬁt and loss] and the differ-

ence is not the result of transaction costs, the Bank

calibrates the model parameters to the actual cost.

If an active market does not exist, the fair value of

standard and simple ﬁnancial instruments, such as

interest rate and currency swaps and unlisted bonds,

is measured according to generally accepted meas-

urement methods. Market-based parameters are

Financial instruments measured at fair value

Generally, the Bank applies valuation techniques to OTC

derivatives and unlisted trading portfolio assets and lia-

bilities. The most frequently used valuation and estima-

tion techniques include the pricing of transactions with

future settlement and swap models that apply present

value calculations, credit pricing models and options

models, such as Black & Scholes models. In most cases,

valuation is based substantially on observable input.

prices category (level 1). Financial instruments valued

substantially on the basis of other observable input are

recognised in the Observable input category (level 2).

Other ﬁnancial instruments are recognised in the

Non-observable input category (level 3).

During the reporting period ending 31 December 2022,

there were no transfers between Level 1 (Quoted prices)

and Level 2 (Observable input) fair value measurements,

and no transfers into and out of Level 3 (Non-observable

input) fair value measurements.

Financial instruments valued on the basis of quoted

prices in an active market are recognised in the Quoted

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

43

Non-

observable

input

2022

EURm

Quoted

prices

Observable

input

Total

Financial assets

Investment securities, bonds

Derivative ﬁnancial instruments

Total

63.4

0.0

28.1

21.3

49.4

-

0.0

-

91.5

21.3

63.4

112.8

Financial assets

Derivative ﬁnancial instruments

Total

0.0

256.6

0.0

256.6

-

256.6

-

2021

Financial assets

Investment securities, bonds

Derivative ﬁnancial instruments

Total

30.3

-

5.1

9.0

-

35.4

9.0

30.3

14.1

44.4

Financial liabilities

Derivative ﬁnancial instruments

Total

-

13.8

-

13.8

-

13.8

-

Financial instruments at amortised cost

The fair value of Debt securities in issue amounted to

EUR 3,500.7 million (2021: EUR 2,259.7) compared to

the carrying amount of EUR 3,228.2 million (2021: EUR

2,245.3). For the majority of the debt securities issued

the fair value reﬂects the quoted price, i.e. a level 1

measurement. For other ﬁnancial instruments, no signiﬁ-

cant difference between the estimated fair value and

amortised cost exists.

For the vast majority of amounts due to the Bank, such

as loans and receivables, active market does not exist.

Consequently, the Bank bases its fair value estimates on

data showing changes in market conditions after the ini-

tial recognition of the individual instrument and affecting

the price that would have been ﬁxed if the terms had

been agreed at the balance sheet date. Other parties

may make other estimates. The maturity of the items

included in cash and balances at central bank is so

short, that carrying amount represents also fair value.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

44

11. Cash and balances at central banks and loans and receivebles from

credit institutions

Amounts due from credit institutions and central

banks comprise amounts due from other credit insti-

tutions and term deposits with central banks.

Amounts due from credit institutions and central

banks are measured at amortised cost as described

under Loans and receivables at amortised cost.

EURm

2022

2021

Balances with central banks

29.5

165.1

Loans and receivables from credit institutions

Other loans

Allowances

Total

62.8

0.0

4.4

0.0

92.3

169.5

Balances with central banks are on stage 1 in the stage

division according to IFRS 9 -standard.

12. Derivative ﬁnancial instruments

The Bank uses derivative instruments for hedging

purposes. The derivatives used are interest rate

derivatives. Derivatives held for hedging purposes are

used for hedging loans and issued bonds. Interest rate

swaps are designated as fair value hedges. Hedges

protect the Bank against fair value changes caused by

the changes in market interest rates.

ing to a ﬁxed rate, the interest rate risk against market

rates arises on the current period of the ﬂoating rate

loan. The Bank uses derivatives to hedge the interest

rate risk of the ﬁxed interest rate period of the ﬁxed

rate loans, ﬂoating rate loans and ﬁxed rate issued

bonds.

If the hedge criteria cease to be met, the accumulated

value adjustments of the hedged items are amortised

over the term to maturity.

The Bank measures all loans and issued bonds at

amortised cost. Majority of the loans in the Bank are

ﬂoating rate loans. When a ﬂoating rate loan has a ﬁx-

2022

2021

Fair value

Assets Liabilities

Fair value

Assets Liabilities

EURm

Notional

amount

Notional

amount

Derivatives held for hedging

Fair value hedges

21.3

256.6

8,127.7

9.0

13.8

8,247.4

Interest rate

OTC derivatives

21.3

256.6

8,127.7

9.0

13.8

8,247.4

Total derivatives held for hedging

21.3

256.6

8,127.7

9.0

13.8

8,247.4

with Group companies:

21.3

256.6

8,127.7

9.0

13.8

8,247.4

Nominal value of the underlying instrument

Remaining maturity

Less than

1 year

1-5

years

Over Less than

1-5

years

Over

5 years

1 year

0.0

8,111.0

16.7

-

8,103.9

143.5

with Group companies:

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

45

Explanation of hedge accounting

The Bank uses the option in IFRS 9 to continue to use

the fair value hedge accounting provisions in IAS 39.

With effective hedging, the hedged interest rate risk on

hedged assets and liabilities is measured at fair value

and recognised as a value adjustment of the hedged

items. Value adjustments are carried in the income

statement under Net result from items at fair value. Any

ineffective portion of a hedge that lies within the range

for effective hedging is therefore also included under

Net result from items at fair value.

The interest rate risk arising on the ﬁxed-rate periods of

assets and liabilities is hedged by derivatives. Hedges

are executed when it is required to match the risk aris-

ing from assets and liabilities to minimize the total inter-

est rate risk.

For hedged assets and liabilities to which a ﬁxed rate of

interest applies for a speciﬁed period of time starting at

the commencement date of the agreement, future inter-

est payments are divided into basic interest and a cus-

tomer margin and into periods of time. By entering into

swaps or forwards with matching payment proﬁles in the

same currencies and for the same periods, the Bank

hedges the risk at a portfolio level from the commence-

ment date of the hedged items. The fair values of the

hedged interest rate risk and the hedging derivatives are

measured at frequent intervals to ensure that changes

in the fair value of hedged interest rate risk lie within a

band of 80-125% of the changes in the fair value of the

hedging derivatives. Portfolios of hedging derivatives are

adjusted if necessary.

The ongoing Interest Rate Benchmark Reform will

replace existing benchmark inter-bank offered rates

(IBORs) with alternative risk-free rates. There is cur-

rently uncertainty as to the timing and the methods of

transition for the different IBORs and whether some

existing benchmarks will continue to be supported. The

calculation methodology behind EURIBOR has been

amended and is now recognised as being fully compliant

with the EU Benchmark Regulation.

At the end of 2022, the carrying amounts of effectively

hedged ﬁnancial assets and liabilities were EUR 4,043.3

million (4,128.3 million) and EUR 3,237.2 million

(2,250.2 million), respectively. The table below shows

the value adjustments of these assets and liabilities and

the hedging derivatives. The value adjustments have

been recognised in the income statement as Net result

from items at fair value.

Hedge ineffectiveness relates to the fact that the fair

value changes to the hedged items are measured based

on the interest rate curve relevant for each hedged item

while the fair value of the ﬁxed legs of the hedging deriva-

tives are measured based on a swap curve. Further, the

adjustment of the portfolios of hedging derivatives to

changes in hedged positions is not done instantly, and

some hedge ineffectiveness can therefore exist.

At the end of 2022, the Bank has no derivatives that are

yet to transition to alternate benchmark rates.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

46

EURm

Effect of interest rate hedging on proﬁt

2022

2021

Effect of ﬁxed-rate assets hedging on proﬁt

Hedged loans

Hedging derivatives

Total

-25.3

25.2

-0.1

-7.7

7.4

-0.3

Effect of ﬁxed-rate liability hedging on proﬁt

Hedged issues

Hedging derivatives

Total

263.1

-261,6

1,5

57.7

-57.7

0.0

The tables below shows the hedging derivatives and the

hedged ﬁxed interest rate ﬁnancial instruments.

Carrying amount of

hedging derivatives

Changes

in fair value

used for

calculating

hedge

Nominal

amount of

hedging

derivatives

Assets

21.3

9.0

Liabilities

ineffectiveness

Interest rate risk (interest rate swaps). 2022

Interest rate risk (interest rate swaps). 2021

7,563.9

6,373.7

256.6

13.8

-236.4

-50.4

Accumulated amount

of fair value hedge

adjustments on the

hedged item included in

Change in value

used for

Carrying amount

of hedged items

calculating

hedge

Fixed interest rate risk on

2022

Assets Liabilities

Assets

Liabilities ineffectiveness

Loans

4,043.3

-20.6

-25.3

Issued bonds

Total. 2022

3,237.2

-262.8

263.1

4,043.3 3,237.2

-20.6

-262.8

237.8

2021

Loans

4,128.3

4.6

-7.7

57.7

50.1

Issued bonds

Total. 2021

2,250.2

0.2

4,128.3 2,250.2

4.6

0.2

Hedge ineffectiveness recognised in the income statement, 2022

Hedge ineffectiveness recognised in the income statement, 2021

1.4

-0.3

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

47

Offsetting

Assets and liabilities are netted when the Bank and

the counterparty have a legally enforceable right to

set off recognised amounts and intend either to settle

the balance on a net basis or to realise the asset and

settle the liability simultaneously.

EURm

Derivatives with positive fair value

12/2022

12/2021

Derivatives with positive fair value before netting

Carrying amount

21.3

9.0

Netting (under capital adequacy rules)

Net current exposure

256.6

-235.3

-

13.8

-4.7

Collateral

-12.5

7.7

Net amount

-235.3

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

48

13. Tax assets and tax liabilities

Current tax assets and liabilities are recognised on

the balance sheet as the estimated tax payable on

the proﬁt for the year adjusted for prepaid tax and

possible tax payments for previous years. Tax assets

and liabilities are netted if permitted by law and pro-

vided that the items are expected to be subject to net

or simultaneous settlement.

Deferred tax is recognised under Deferred tax assets

and Deferred tax liabilities.

Deferred tax is measured on the basis of the tax reg-

ulations and rates that, according to the rules in

force at the balance sheet date, are applicable at the

time the deferred tax is expected to crystallise as

current tax. Adopted changes in deferred tax as a

result of changes in tax rates applied are recognised

in the income statement.

Deferred tax on all temporary differences between

the tax base of assets and liabilities and their carry-

ing amounts is accounted for in accordance with the

balance sheet liability method. Deferred tax is not

recognised on temporary differences of items if the

temporary differences arose at the time of acquisi-

tion without effect on net proﬁt or taxable income.

Tax assets arising from unused tax losses are recog-

nised to the extent that such unused tax losses and

unused tax credits can be used.

EURm

2022

2021

Income tax assets

-

0.4

Total tax assets

-

0.4

Income tax liabilities

0.6

-

Total tax liabilities

0.6

-

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

49

14. Other assets

Other assets includes interest and commission due and other receivables.

EURm

2022

2021

Other assets

Accrued interest

Other

3.6

0.0

3.6

1.0

0.0

1.0

Total

15. Amounts owed to credit institutions

Amounts due to credit institutions are measured at amortised cost.

EURm

2022

2021

Amounts owed to credit institutions

Other

390.1

1,732.5

Total

390.1

1,732.5

16. Debt securities in issue and ﬁnancial liabilities at fair value through p/l

Other issued bonds comprise bonds issued by the Bank. Other issued bonds are measured at amortised cost

plus the fair value of the hedged interest rate risk.

EURm

2022

2021

Debt securities in issue

Finnish covered bonds

3,228.2

2,245.3

Nominal value

EURm

31 December

2022

1 January 2022

Issued

Redeemed

Covered bonds

2,250.0

1,250.0

-

3,500.0

Nimellisarvo

EURm

31 December

2021

1 January 2021

Issued

Redeemed

Covered bonds

3,750.0

500.0

2,000.0

2,250.0

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

50

17. Other liabilities

Other liabilities includes accrued interest, fees and

commissions that do not form part of the amortised

cost of a ﬁnancial instrument. Other liabilities also

includes pension obligations.

A provision is recognised if, as a result of a past event,

the Bank has a present legal or constructive obliga-

tion that can be estimated reliably, and it is probable

that an outﬂow of economic beneﬁts will be required

to settle the obligation.

EURm

2022

2021

Provisions

0.0

Other liabilities

Accruals and deferred income

Deferred interest

Other accruals

8.5

0.5

0.0

9.0

0.3

0.6

0.1

0.9

Other

Total other liabilities

If a lawsuit is likely to result in a payment obligation,

a liability is recognised if it can be measured reliably.

The liability is recognised at the present value of

expected payments.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

51

18. Contingent liabilities and commitments

Off-balance sheet items

Off-balance sheet items consist mainly of commitments

to extend credit. Commitments to extend credit are irrev-

ocable commitments and comprise undrawn loans.

The commitments are stated to the amount that can be

required to be paid on the basis of the commitment. Pro-

visions for irrevocable loan commitments are recognised

under Other liabilities if it is probable that drawings will

be made under a loan commitment. Off-balance sheet

items are mainly at the stage 1.

Danske Mortgage Bank did not have any material off-balance sheet items at 31 December 2021 and 31 December 2022.

Carrying amount

of encumbered

assets

Fair value of Carrying amount

encumbered of unencumbered unencumbered

Fair value of

Asset encumbrance

EURm

assets

176.2

assets

37.7

Assets December 31, 2022

Equity instruments

Debt securities

3,974.9

37.7

Other assets

3,974.9

138.5

Assets December 31, 2021

Equity instruments

Debt securities

5,027.7

205.3

35.6

Other assets

5,027.7

169.7

Collateral received

Danske Mortgage Bank didn’t have any received collaterals at 31 December 2022.

Assets, collateral received

and own debt securities

issued other than covered

bonds and ABSs encumbered

Matching liabilities,

contingent liabilities

or securities lent

EURm

Encumbered assets/collateral received and associated liabilities

Carrying amount of selected ﬁnancial liabilities 31.12.2022

Carrying amount of selected ﬁnancial liabilities 31.12.2021

2,742.5

2,796.8

3,974.9

5,027.7

Loans and securities serving as collateral for covered

bond issuance is the main category of encumbered

assets. Coverd bond issuance is a strategic long-term

funding measure that entails ring-fencing assets

according to statutory regulation. Encumbered assets

and associated liabilities are disclosed based on median

values of quarterly data.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

52

19. Related party transactions with group companies and other related parties

Parties with control interest

EURm

2022

2021

Loans and receivables

Securities

62.8

21.3

4.4

9.0

Deposits

390.1

256.6

1,732.5

13.8

Derivatives

Interest income

7.5

0.0

22.1

-6.1

Interest expenses

Purchases from group companies

Sales to group companies

11.5

0.3

15.2

0.2

There are not expected credit losses booked for receiva-

bles from related parties. Interest expenses from related

parties were positive interest in 2021.

prises Board of Directors and executive management,

including close family members and companies, in which

key management personnel or their close family mem-

bers have considerable inﬂuence.

Related party comprises the parent company, key man-

agement personnel and other related-party companies.

Parties with signiﬁcant inﬂuence include the parent com-

pany and its branches. Key management personnel com-

Information regarding management’s related party

transactions is presented in Note 4.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

53

Danske Mortgage Bank Plc’s

Board of Directors’ proposal to the

Annual General Meeting for the

distribution of proﬁt and signing

of Annual Report 2022

The company’s distributable assets in the ﬁnancial state-

ments total EUR 282,890,177.20 of which proﬁt for the

ﬁnancial year totals EUR 13,060,214.34.

The Board of Directors proposes to the Annual General

Meeting of Shareholders that:

1. a dividend of EUR 13,060,214.34 be paid and

2. EUR 269,829,962.86 will be left in shareholders’

equity.

Helsinki, 3rd February 2023

Stojko Gjurovski

(Chairman)

Robert Wagner

Terese Dissing

Tomi Dahlberg

Maisa Hyrkkänen

Pekka Toivonen

(CEO)

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

54

The auditor’s note

A report on the audit performed has been issued today.

Helsinki, 3rd February 2023

Deloitte Ltd

Audit Firm

Aleksi Martamo

Authorized Public Accountant

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

55

Accounting material 2022

The Bank uses the accounting system of Danske Bank

A/S which is administered by the Group headquarters in

Denmark. In the year end this accounting material is ﬁled

electronically and stored in Finland as two copies.

Financial statement and Board of Directors’ report as

bound versions are stored in Danske Bank A/S, Finland

Branch’s Accounting department.

General ledger accounting reports are stored electroni-

cally:

• Daily journals

• General ledger

• Income statements and balance sheets

• Charts of accounts

• Vouchers for notes to the ﬁnancial statements

Financial statement speciﬁcations are mainly included in

the ﬁnancial statement material gathered and stored by

Accounting department.

DANSKE MORTGAGE BANK PLC IFRS FINANCIAL STATEMENTS 2022

56