The year was characterised by difficult financial markets, a further decline in interest rates, a slight worsening of the macroeconomic environment and persistently strong competition in all markets. Customer activity was still at a good level, though, and our partnership agreements continued to help us grow lending in most Nordic markets. Regulatory and compliance costs continued to increase, and an expected rise in impairments also had a negative effect on the result.

The Danske Bank Group delivered a net profit for 2019 of DKK 15.1 billion, against DKK 15.2 billion the year before. The result was as expected and was affected by a number of non-recurring items, including goodwill impairment charges, the sales of Danica Pension Sweden and LR Realkredit A/S and a net positive tax adjustment. The non-recurring items are described in detail in company announcements nos 10, 19 and 20 in 2019. Our financial performance remains under pressure, but the underlying business is solid, with lending growth and high customer activity. 

The return on shareholders’ equity in 2019 was 9.6%, against 9.8% in 2018.

Total income amounted to DKK 45.0 billion, an increase of 1% from the level in 2018. 

• Net interest income totalled DKK 21.9 billion, a decrease of 7%. Lending grew on almost all our Nordic markets, but the positive effect of this was offset by higher funding costs and pressure on margins. The growth in lending was among other things driven by our partnership agreements. 
• Net fee income amounted to DKK 15.9 billion, an increase of 3% from the level in 2018. Net fee income was positively affected by significant remortgaging activity in Denmark and higher performance fees at Wealth Management in the fourth quarter. Fee income was adversely affected by the amount set aside for compensation of Flexinvest Fri customers in the second quarter of 2019.
• Net trading income totalled DKK 5.0 billion, an increase of 7% from the level in 2018. The financial markets were affected by challenging conditions in 2019, and the increase in income was driven mainly by the sale of LR Realkredit A/S and higher remortgaging activity.
• Other income amounted to DKK 2.2 billion, against DKK 0.7 billion in 2018. The increase was due mainly to the gain on the sale of Danica Pension Sweden.
  

Operating expenses amounted to DKK 27.5 billion, an increase of 10% from the level in 2018. The increase was primarily the result of higher costs for compliance and AML-related activities as well as costs for the Estonia case.

Credit quality remained solid in 2019 on the back of our strong focus on this area. Loan impairments amounted to DKK 1.5 billion in 2019, against a net reversal of DKK 0.7 billion in 2018. The charges were due mainly to single-name exposures and a review of our loan portfolio across business units.

At the end of December 2019, total lending was up 3%, and total deposits were up 8% from the level at the end of 2018. Denmark, Norway and Finland saw increases in lending, while lending measured in local currency was flat in Sweden.

The execution of our Better Bank plan was off to a good start, and we have taken a number of specific initiatives. We accelerated our efforts to digitise more in a number of the areas that are most important to our customers, we initiated a simplification of our product range and we took action to become more disciplined in terms of costs across the Group. 

In addition, we have set specific targets for our ambitions within societal impact and sustainability that we must reach by 2023:

Sustainable investing
DKK 30 billion invested in the green transition through Danica Pension.

Sustainable financing
Volume of sustainable financing (green loans and arranged bonds) well above DKK 100 billion. 

Governance 
Over 95% of employees complete training in risk and compliance.

Diversity and inclusion
35% share of women in senior leadership positions.

Environmental footprint
10% reduction in own CO2 emissions from the level in 2019 and 75% reduction from 2010. 

Entrepreneurship
10,000 start-ups and scale-ups supported with tools, services and expertise.

Financial literacy
2 million people supported with financial literacy tools and expertise. 

We refer to Sustainability Report 2019, which is available at danskebank.com/societal-impact
 
Our ambitions for societal impact and sustainability are part of our overall ambitions that we must meet by 2023. We announced the ambitions on 1 November 2019:

• We are on average among the top two on customer satisfaction in everything we do.
• At least 90% of employees are engaged.
• We operate sustainably, ethically and transparently – and have a positive impact on the societies we are a part of. 
• We aim to achieve a return on shareholders’ equity of 9-10% and a cost/income ratio in the low 50s by continuously improving the profitability level, leveraging our full potential