Annual Report 2006 [PDF] - Jyske Bank

Annual 

Report 

2006

Jyske Bank A/S 

Vestergade 8-16 

DK-8600 Silkeborg 

ANNUAL REPORT 

5 YEAR SUMMARY 2 

SUMMARY 3 

THE JYSKE BANK SHARE 5 

RESULT AND OUTLOOK 8 

RISK AND CAPITAL MANAGEMENT 15 

MANAGEMENT AND AUDITORS’ REPORTS 

ANNUAL ACCOUNTS 

Tel: +45 89 89 89 89 

Fax: +45 89 89 19 99 

E-mail jyskebank@jyskebank.dk 

www.jyskebank.dk 

CVR no. 17 61 66 17 

Prepress and printing: Silkeborg Bogtryk 

MANAGEMENT REPORT 34 

AUDITORS’ REPORT 35 

ANNUAL ACCOUNTS 37 

ACCOUNTING POLICIES 38 

PROFIT AND LOSS ACCOUNT 46 

BALANCE SHEET 47 

STATEMENT OF CHANGES IN 

SHAREHOLDER’S FUNDS 

CASH FLOW STATEMENT 50 

NOTES 51 

THE JYSKE BANK GROUP 89 

5 YEAR SUMMARY JYSKE BANK A/S 90 

DIRECTORSHIPS 91 

CONCEPTS, ETC. 93 

CONTENTS 

JYSKE BANK ANNUAL REPORT 2006 1 

48

5 YEAR SUMMARY 

SUMMARY OF PROFIT AND LOSS ACCOUNT (DKKm) 2006 2005 2004 2003 2002 

Net interest income 3,036 2,754 2,695 2,724 2,826 

Dividends, etc. 24 20 42 84 64 

Net fee and commission income 1,634 1,473 1,082 924 758 

Net interest and fee income 4,694 4,247 3,819 3,732 3,648 

Revaluations 1,142 947 951 695 386 

Other operating income 395 386 350 815 203 

Operating expenses and depreciation 3,777 3,334 3,030 2,711 2,598 

Credit loss expenses 

Profit/loss on investments in associates and group 

-348 69 327 400 408 

enterprises 8 -3 197 -322 -148 

Pre-tax result 2,810 2,174 1,960 1,809 1,083 

Tax 676 473 553 525 572 

Net profit/loss for the year 2,134 1,701 1,407 1,284 511 

of which minority shareholders 27 29 5 0 0 

BALANCE, END OF PERIOD (DKKm) 2006 2005 2004 2003 2002 

Advances 107,185 90,880 74,598 63,761 95,302 

Deposits including pool deposits 88,841 79,848 68,655 63,816 58,963 

Issued bonds 25,393 15,967 11,915 8,064 43,362 

Total assets 160,656 141,571 125,173 116,425 153,169 

Shareholders’ funds 9,637 9,477 7,858 7,843 6,658 

Subordinated debt 3,318 2,559 2,737 1,809 2,600 

KEY FIGURES 2006 2005 2004 2003 2002 

The Jyske Bank share 

Face value: DKK 10 

Pre-tax result 46.72 34.73 30.00 24.61 14.66 

Net profit/loss for the year 35.02 26.70 21.45 17.47 6.92 

Net profit/loss (diluted) 35.02 26.70 21.45 17.47 6.92 

Core earnings 37.74 27.90 17.19 15.24 12.54 

Price at end of period 401 310 206 156 96 

Book value 169 152 123 109 89 

Price/book value 2.38 2.04 1.67 1.43 1.08 

Price/earnings 11.5 11.6 9.6 8.9 13.8 

The Jyske Bank Group 

Solvency ratio 11.3 11.7 11.9 12.4 11.3 

Core capital percentage incl. hybrid capital 9.7 10.9 10.0 10.2 8.2 

Core capital percentage excl. hybrid capital 8.2 9.3 8.9 10.2 8.2 

Pre-tax result as % of average shareholders’ funds 29.4 24.8 25.0 24.6 16.9 

Net result as % of average shareholders’ funds 22.3 19.4 17.9 17.4 8.0 

Income on every krone of expenditure 1.8 1.6 1.6 1.6 1.4 

Interest-rate risk 1.1 0.5 0.6 1.7 1.0 

Foreign currency position 24.2 19.8 16.1 13.6 17.1 

Currency risk 0.2 0.2 0.1 0.1 0.4 

Statutory liquidity surplus 45.7 48.1 124.3 112.6 63.8 

Total large commitments 43.4 98.3 76.7 62.6 76.5 

Accumulated impairment ratio 0.6 1.1 2.1 2.5 1.8 

Impairment ratio for the year -0.3 0.1 0.3 0.5 0.4 

Increase in advances for the year 17.9 21.4 17.0 -33.1 15.5 

Ratio between advances and deposits 1.2 1.2 1.1 1.0 1.7 

Ratio between advances and shareholders’ funds 11.1 9.6 9.5 8.1 14.3 

Number of full-time staff at year-end 4,216 4,026 3,713 3,547 3,359 

Key figures are based on the definitions and guidelines of the Danish Financial Supervisory Authority. 

Comparative figures for 2005 have been adjusted, cf. Accounting Policies. 

2 JYSKE BANK ANNUAL REPORT 2006

Summary 

- PRE-TAX PROFIT OF DKK 2,810 MILLION 

SUMMARY 

- Core earnings amounted to DKK 2,270m 

- Profit on own securities portfolio net of funding costs amounted to DKK 289m 

- Pre-tax result equates to a return on opening shareholders’ funds of 29.7% 

- The solvency ratio is 11.3% (Tier 1 9.7%) 

- Advances and deposits increased by 18% and 11%, respectively 

- The use of economic capital increased by 12% 

- Motion to reduce the share capital by a nominal amount of DKK 10m 

corresponding to 1 million shares, and to further reduce the share capital by a 

nominal amount of DKK 7.5m corresponding to 0.75 million shares 

- A net influx of 11,300 customers in the Danish branch network, of which 4,900 

were registered in the 4 th quarter. 

Jyske Bank’s result for 2006 is based on generally high levels of activity, an 

increase in the Group’s core earnings capacity, and a low level of credit risk and a 

moderate level of market risk. Core earnings continue to develop satisfactorily, and 

the return on the Bank’s own securities portfolio is close to the average return for 

the past five years. 

Pre-tax result 

DKKm 

3,000 

2,500 

2,000 

1,500 

1,000 

500 

0 

2002 

2003 

Group earnings were influenced by the continued positive developments within the 

Danish economy and the financial markets. Together with a satisfactory influx of 

11,300 new customers of which 4,900 were registered in the 4 th quarter, this 

contributed to an increase in the levels of both deposits and advances and an 

increase in the number of securities and currency transactions. Intensified 

competition ensured that interest margins were maintained at a low level. 

Due to the increasing level of activity and the fact that the Bank expects to be able 

to expand its market opportunities in the coming years, investments in IT, premises 

(including ”Jyske Differences 2 nd generation”) and improved financial and risk 

management tools have increased. 

The healthy growth of the Danish economy supports a satisfactory trend in the 

financial circumstances of the Bank’s customers. And together with the use of 

advanced risk management tools this meant that the quality of the Group’s credit 

portfolio continued at a high level in 2006. 

As announced to the Stock Exchange on 16 January 2007, and following 

discussions with the Danish Financial Supervisory Authority, the Bank has adjusted 

2004 

2005 

2006 

JYSKE BANK ANNUAL REPORT 2006 3

SUMMARY 

4 JYSKE BANK ANNUAL REPORT 2006 

the method for the calculation of credit loss expenses, etc. In accordance with the 

Danish Financial Supervisory Authority’s letter of information to the Danish 

financial sector dated 6 December 2006, the Bank has revised the estimated useful 

life of tangible and intangible assets. 

In 2006, the return on the Jyske Bank share amounted to 29.4%. Over the past 10 

years, the annual return has averaged 25.8%. The net result per share was DKK 

35.02 compared with DKK 26.70 in 2005. At year-end 2006, the capitalisation was 

DKK 24.9bn, the highest in the history of the Bank. 

In 2006, Jyske Bank welcomed almost 6,000 new shareholders (net), the total at 

year-end 2006 being more than 245,000. 

At year-end 2006, the Group shareholder’s funds amounted to DKK 9.6bn, and the 

capital base to DKK 12.6bn. The solvency ratio is 11.3% of which Tier 1 is 9.7%. 

The core capital ratio excl. hybrid tier 1 capital is 8.2%. 

In accordance with its message to the Copenhagen Stock Exchange dated 4 

December 2006, the Supervisory Board proposed that the nominal share capital be 

reduced by DKK 42,5m, or 4.25 million shares, from DKK 620m to DKK 577.5m. 

The Supervisory Board proposes a reduction of the share capital by a nominal 

amount of DKK 10.0m, or 1.0 million shares, to DKK 567.5m and a further 

reduction of the share capital by a nominal amount of DKK 7.5m, or 0.75 million 

shares, to DKK 560m. 

At year-end 2006, the economic capital was calculated as DKK 5.8bn against DKK 

5.2bn at year-end 2005. The increase compared with last year is primarily the 

result of rising advances stated as expected exposure at default. The increase in 

advances for the full year exceeds the increase in the level of credit risk due to 

increased collateral and higher average credit quality. The increase in operational 

risk is partly explained by the increase in business volume. The level of market risk 

also increased in 2006. The trend in risk categories during 2006 has led to an 

increase in the concentration of credit risk and the overall diversification effect 

amounted to 23%. 

A new branch financial statement based on the principles of RAROC was 

introduced in the first quarter of 2006. The Bank now applies RAROC-based 

methodology when assessing individual transactions as well as results at branch, 

division and unit level throughout the Danish branch network. 

Given the opportunity in September 2006, the Bank applied for ”advanced bank” 

status under the new Capital Requirements Directive (Basel II). Management 

expects the Danish Financial Supervisory Authority to return with a reply to the 

Bank’s application before year-end 2007. 

The outlook for 2007 is stable and the Bank has made a good start to the new 

year. Consequently, the result for 2007 is also expected to be favourable. Core 

earnings exclusive of credit loss expenses are expected to be in line with, or over, 

the level for 2006, based on an assumption that present earning streams are 

maintained. 

Based on the Bank’s anticipated increase in risk-weighted assets, and its long-term 

targets with regard to capital and solvency, opening shareholders’ funds 2007 are 

expected to exceed closing shareholder‘s funds at year-end 2007.


THE JYSKE BANK SHARE 

In 2006, the return on the Jyske Bank share amounted to 29.4%. At year-end 

2006, the price was DKK 401, corresponding to a market value of DKK 24.9bn 

against DKK 19.5bn at year-end 2005. The net result per share was DKK 35.02 for 

2006 compared with DKK 26.70 in 2005. At year-end 2006, the book value per 

share was DKK 169, and price/book value 2.38. 

Trend in market prices 

Index 100 = 28.12.2001 

500 

400 

300 

200 

100 

0 

2001 2002 2003 2004 2005 2006 

Jyske Bank Banks, etc. OMXC20 

Over the past 10 years, the average annual return on the Jyske Bank share has 

been 25.8%, compared with an average yield on 10-year Danish government 

bonds of -1.0% in 2006 and 7.2% over the past 10 years. 

10 years current return 

% p.a. 

30 

25 

20 

15 

10 

5 

0 

2002 2003 2004 2005 2006 

Jyske Bank 10-year government bonds 

At year-end 2006, the share capital amounted to DKK 620m and comprised 62 

million shares at a face value of DKK 10 (one class of shares). All shares are listed 

on the Copenhagen Stock Exchange and are freely negotiable. A single 

shareholder, however, is not allowed to acquire 10% or more of the share capital 

without the prior consent of the Bank, cf. Art. 3 of Bank’s Articles of Association. 

Each share represents one vote. No shareholder shall cast more than 4,000 votes 

on his own behalf. According to Art. 4 of the Bank’s Articles of Association, the 

Supervisory Board shall be authorised to increase the share capital by DKK 

1,000m. Subject to a resolution passed at the Annual General Meeting, the Bank’s 

Supervisory Board shall be authorised to acquire Jyske Bank shares not exceeding 

1/10 of the share capital. 

At the Annual General Meeting, the Supervisory Board will propose a dividend 

percentage of 0 for 2006 as has been the case in previous years. 




As notified to the Copenhagen Stock Exchange on 4 December 2006, the 

Supervisory Board proposed that the nominal share capital be reduced by DKK 

42.5m, or 4.25 million shares, from DKK 620m to DKK 577.5m. The Supervisory 

Board proposes a reduction of the share capital by a nominal amount of DKK 

10.0m, or 1.0 million shares, to DKK 567.5m and a further reduction of the share 

capital by a nominal amount of DKK 7.5m, or 0.75 million shares, to DKK 560m. 

In 2006, Jyske Bank welcomed almost 6,000 new shareholders (net), the total at 

year-end 2006 being more than 245,000. 38% of the share capital is owned by 

shareholders holding less than 1,000 shares each. At year-end 2006, Nykredit, 

Copenhagen and Jyske Bank, Silkeborg held in excess of 5% of the shares in 

Jyske Bank. 

Breakdown of share capital 

40% 

30% 

20% 

10% 

0% 

Shareholders < 

1,000 shares 

Employee share scheme 

Shareholders 

1,000-20,000 

shares 

Shareholders > 

20,000 shares 

Unknown 

shareholders 

Own shares 

Until 31 March 2006, Jyske Bank operated an employee share scheme 

supplemented with an employee share savings scheme. Every full-time employee 

could acquire shares corresponding to a market value of up to DKK 30,000 a year, 

including an own contribution of up to DKK 13,200, subject to certain conditions 

being met in terms of overall Group earnings. Under the employee share scheme, 

shares corresponding to the market value of up to DKK 6,000 were allocated and 

under the employee share savings scheme employees had the opportunity to 

acquire shares corresponding to the value of DKK 24,000 including an own 

contribution of DKK 13,200. 

For the six-month period from 1 April until 30 September 2006, the above scheme 

was replaced by a share savings scheme under which employees are offered the 

opportunity to acquire shares corresponding to the market value of up to DKK 

39,000 a year, including an own contribution of up to DKK 17,160. 

The discount element (the fair value) of the schemes amounting to DKK 27m was 

charged to the Profit and Loss Account over the period of allocation. A total of 

144,126 shares were allocated at a price of DKK 187.50 each, which were 

calculated at the quoted fair value at the time of allocation less the employees’ own 

contribution. The measurement of fair value does not include anticipated dividend, 

etc. 

With effect from 1 October 2006, the Bank has offered its employees bonds and 

shares as part of an optional remuneration package covering the period 1 October 

2006 until 31 December 2007. 

Management participates in the schemes on the same terms as the employees.


Election of shareholder representatives and members of the Supervisory 

Board 

According to the Bank’s Articles of Association, Shareholders’ Representatives 

shall be elected for a term of three years by the shareholders attending the Annual 

General Meeting. The Bank is divided into three geographical regions, the 

representatives of which shall successively stand for election. Among the 

representatives up for election, the Shareholders’ Representatives shall appoint 

the members of the Jyske Bank Supervisory Board, who are also elected for a term 

of three years. Members of the Shareholders’ Representatives representing 

Southern Division are up for election at the Annual General Meeting on 13 March 

2007. 

Amendments to Articles of Association 

Motions to amend the Articles of Association shall only be adopted by ¾ of the 

votes cast at the General Meeting and by ¾ of the voting share capital represented 

at the General Meeting and where no less than 90% of the share capital is 

represented at the General Meeting. Where less than 90 per cent of the voting 

share capital is represented at the General Meeting, but said motion obtained both 

¾ of the votes cast and ¾ of the voting capital represented at the General Meeting, 

and where the motion was moved by the Shareholders’ Representatives and/or the 

Supervisory Board, said motion may be adopted by a new General Meeting by the 

said qualified majority irrespective of the proportion of the share capital 

represented. Motions to voluntarily wind up the Bank or merge with other financial 

institutions where the Bank will not be the surviving company shall only be adopted 

according to the same rules. 

General meeting 

The Annual General Meeting of Jyske Bank will be held in Silkeborg on 13 March 

2007. 

Corporate Governance 

In principle, Jyske Bank observes the guidelines of corporate governance as set 

out by the Copenhagen Stock Exchange - cf. the issuer’s obligation to make 

disclosures to the Copenhagen Stock Exchange, art 36 – subject to the following 

material exceptions: 

- Where a take-over bid is presented, the Bank’s Supervisory Board 

reserves its legal right to make such arrangements as it deems appropriate 

to defend the Bank’s goal of remaining an independent bank domiciled in 

Silkeborg, Denmark. 

- The Supervisory Board considers the prescribed guidelines for its work to 

be adequate and has no intention of introducing any significant changes as 

regards recruitment criteria, limits to the number of other directorships, 

change of one-year term of office and evaluation procedures, etc. 

- The Bank has no intention of disclosing information on individual 

remuneration, etc, as this is considered a private matter. Jyske Bank does 

not operate any incentive or bonus schemes for the management or 

employees in general. 


RESULT AND OUTLOOK 

Result and outlook 


The Jyske Bank Group’s consolidated pre-tax profit for 2006 amounted to DKK 

2,810m, corresponding to a return on opening shareholders' funds of 29.7%. 

This is the best result in the history of the Bank, and compared with 2005 – another 

record year – the result increased by 29%. 

The result was influenced by the following general trends: 

- A higher level of activity and business volume 

- Positive trend in gross earnings despite intensified competition 

- Rising costs due to the high level of business activity and investments 

- Credit loss expenses affected by a change in the method for their 

calculation 

- Satisfactory return on the Bank’s own securities portfolio, etc. 

PRE-TAX PROFIT 2002 - 2006 

DKKm 2006 2005 2004 2003 2002 


Dividends, etc. 16 17 37 81 48 

Net fee and commission income 1,649 1,488 1,093 931 760 


Revaluations 641 572 384 332 188 


Gross earnings 5,683 5,142 4,466 4,222 3,922 



Profit/loss on investments in associates and 

-345 72 330 404 411 

group enterprises 

3 -5 -1 -2 -4 

Core earnings 2,270 1,747 1,123 1,120 926 

Profit on own securities portfolio 289 388 570 156 157 

Sale of Totalkredit 251 39 267 533 0 

Pre-tax result 2,810 2,174 1,960 1,809 1,083 

The result comprises core earnings of DKK 2,270m, a return on the Bank’s own 

securities portfolio of DKK 289m and DKK 251m relating to the sale of Totalkredit. 

CORE EARNINGS AND PROFIT/LOSS ON OWN SECURITIES PORTFOLIO 2006 

Total 

DKKm Core 

earnings 

Profit on own 

securities 

portfolio 

Sale of 

Totalkredit 

Net interest income 2,982 25 29 3,036 

Dividends, etc. 16 8 0 24 

Net fee and commission income 1,649 -15 0 1,634 

Net interest and fee income 4,647 18 29 4,694 

Revaluations 641 279 222 1,142 

Other operating income 395 0 0 395 

Gross earnings 5,683 297 251 6,231 

Operating expenses and depreciation 3,761 16 0 3,777 

Credit loss expenses -345 -3 0 -348 

Profit/loss on investments in associates and 

group enterprises 

3 5 0 8 

Pre-tax result 2,270 289 251 2,810

Core earnings 


Core earnings are the Group’s earnings on customer-driven transactions, equating 

to the result exclusive of the return on the Group’s own securities portfolio. Core 

earnings are also stated exclusive of the Bank’s profit on the sale of Totalkredit. 

The Group’s customer-related activities are undertaken by the Bank’s four units. 

The Domestic business unit is responsible for business with the Group’s domestic 

corporate and retail customers. Jyske Markets is responsible for activities relating 

to securities and currency transactions and asset management. Private Banking is 

responsible for investment advice to the Group’s international clients. Jyske Finans 

offers solutions within the areas of leasing and financing. Finally, there are a 

number of Group non-financial business areas. 

Business volume 

Group deposits (including pool deposits) increased by 11% in 2006 to DKK 89bn. 

Advances increased by 18% to DKK 107bn. Growth was influenced by rising 

activity in the Danish economy and was based on a general increase in all 

customer segments. 

The volume of advances to retail customers increased by 15%. The increase was 

widely based. 

Corporate sector lending increased by 21% in 2006. 

The net inflow of customers into the Danish branch network reached a satisfactory 

11,300, of which 4,900 alone were registered in the 4 th quarter following the 

introduction ”Jyske Differences 2 nd generation”. 

Customer demand for pension schemes increased significantly, and deposits into 

pension accounts and products increased by 25% compared with 2005. 

Deposits and advances * 

DKKbn 

120 

100 

80 

60 

40 

20 

0 

2002 2003 2004 2005 2006 

Deposits including pool deposits Advances 

* The decline in advances from 2002 to 2003 is explained by the fact that Totalkredit is no longer 

consolidated into the Group accounts for Jyske Bank 

Trading activity in the securities and FX markets was strong in 2006. Group 

initiatives within the area of asset management have led to a rise in total funds 

under management by the Jyske Bank Group (including private banking activities, 

investment pools and asset management agreements) to DKK 69bn against DKK 

66bn at year-end 2005. 



Breakdown of funds under management 

Private Banking 

61% 


Investment pools 

18% 

Portfolio management 

21% 

Funds under management in the Bank’s pension pools increased by 23% from 

DKK 10.2bn at year-end 2005 to DKK 12.5bn at year-end 2006. There was a 

considerable increase in the monies invested, and the return on shares further 

improved the net worth of funds under management. 

The number of new portfolio management agreements increased, and at year-end 

2006 funds under management amounted to DKK 14.6bn, an increase of 23% 

compared with year-end 2005. 

Jyske Bank is the custodian bank for the mutual fund group Jyske Invest. Funds 

under management in Jyske Invest increased by 21% from DKK 46.1bn at yearend 

2005 to DKK 55.6bn at year-end 2006. 

Funds under management with Jyske Invest 

DKKbn 

60 

50 

40 

30 

20 

10 

0 

2002 

Gross earnings 

2003 

2004 

Gross earnings on customer-related transactions rose by 11%. 

Net interest income under core earnings amounted to DKK 2,982m, an increase of 

11% supported by an increase in business volumes and a rise in lending interest 

rates. The trend in advances was to a certain extent characterised by an increase 

in low-risk advances as well as continued intensity of competition. 

Other income increased by 10% to DKK 2,701m. The increase is primarily 

accounted for by higher activity within securities trading and currency transactions 

and a rise in demand for portfolio management services by customers. 

2005 


Breakdown of fee income 

Expenses 

Securities trading and 

safe-custody accounts 

58% 


Loan management fee 

7% 

Payment transfers 9% Guarantee commission 

11% 

Other 15% 

In accordance with the Danish Financial Supervisory Authority’s letter to the 

Danish financial sector dated 6 December 2006, the Bank has revised the 

estimated useful life of tangible and intangible assets. 

Expenses amounted to DKK 3,761m, corresponding to an increase of 13%. In 

addition to the introduction of ”Jyske Differences 2 nd generation ”, works have been 

started to expand the Bank’s Head Office, to extensively refurbish the buildings 

housing JN Data, to renovate branch premises and to update a substantial number 

of the Bank’s basic IT systems. Furthermore, substantial resources have been 

employed to establish a framework that conforms to the Capital Requirements 

Directive (Basel II) for “advanced bank” status, including projects aimed at 

enhancing the identification and assessment of operational risks. 

Breakdown of expenses 

IT 

10% 

Other 

25% 

Rent, etc. 

3% 

Depreciation 

5% 

Salaries 

57% 

The number of full-time employees is 4,216, an increase of 190 compared with 

year-end 2005. As announced to the Copenhagen Stock Exchange on 21 

November 2006 in connection with the organisational change, etc., a number of 

rationalisation processes have been introduced, and accordingly the number of 

employees is declining. 



Number of employees 

5,000 

4,000 

3,000 

2,000 

1,000 


0 

2002 

2003 

2004 

2005 


Traditionally, Jyske Bank has paid particular attention to training the majority of its 

employees in-house. This is still the case, and in 2006 approx. 150 new members 

of staff were hired for trainee positions. The trainees are placed in customerrelated 

functions (such as junior clerks, etc.) and in IT functions with the Bank’s 

Head Office (such as IT programmers). 

Provisions for credit loss expenses, etc. 

As announced to the Stock Exchange on 16 January 2007, and following 

discussions with the Danish Financial Supervisory Authority, the Bank has adjusted 

the method for the calculation of credit loss expenses, etc. 

In 2006, a net amount of DKK 345m was booked as income following the writeback 

of credit loss expenses. 

The level of group credit risk is still low. The healthy growth of the Danish economy 

supports a satisfactory trend in the financial circumstances of the Bank’s 

customers. Together with the use of advanced risk management tools, this meant 

that the quality of the Group’s credit portfolio remained high in 2006. For further 

information on the breakdown of and trend in Group credit risks, see page 18. 


DKKm 

500 

400 

300 

200 

100 

0 

-100 

-200 

-300 

-400 

2002 

2003 

Figures for 2001-2004 are based on previous accounting standards, whereas for 2005 they are stated 

according to IFRS. 

The loan impairment balance and total provisions amounted to DKK 766m against 

DKK 1,279m at the beginning of 2006. 

2004 

2005 



Core earnings 

Pre-tax core earnings amounted to DKK 2,270m against DKK 1,747m in 2005, 

corresponding to an increase of 30%. About one third of the Group’s core earnings 

were generated by international private banking activities and trading business with 

international counterparties. 

Core earnings 

DKKm 

2,500 

2,000 

1,500 

1,000 

500 

0 

2002 

2003 

2004 

2005 

Core earnings are in line with the forecasts made during the year. 

Profit on own securities portfolio 

The return on the Bank’s own securities portfolio includes the Group’s portfolio of 

shares, bonds, derivative financial instruments, etc. 

In 2006, the return on the Bank's own securities portfolio amounted to a profit of 

DKK 289m net of funding costs against DKK 388m in 2005. The return was 

generated with a low Value-at-Risk. For further information on the breakdown of 

and trend in Group market risks, see Market Risk. 

Profit on own securities portfolio 

DKKm 

600 

400 

200 

0 

2002 

2003 

The strategy behind the Group's investments is formulated on the basis of a longterm 

horizon, and takes into account the Group's overall risk position. The return 

on the Group’s own securities portfolio may vary from year to year, but the longterm 

average profit has been satisfactory. In the past five years, the annual 

average return on the Bank’s own securities portfolio (including the revaluation of 

capital holdings and net of funding costs) was DKK 312m. 

2004 

2005 





Totalkredit 


In 2003, Jyske Bank sold 55% of its shares in Totalkredit to Nykredit. At the same 

time the Bank issued buy-options to Nykredit to purchase 23% in 2004 and the 

remaining 22% in 2006. As a result of the agreement to sell Totalkredit, the Bank’s 

result for 2006 was positively affected by an amount of DKK 251m. 

Outlook 

The outlook for 2007 is stable and the Bank has made a good start to the new 

year. Consequently, the result for 2007 is also expected to be favourable. Core 

earnings exclusive of credit loss expenses are expected to be in line with, or over, 

the level for 2006, based on an assumption that present earning streams are 

maintained. 

Based on the Bank’s anticipated increase in risk-weighted assets, and its long-term 

targets and polities with regard to capital and solvency, opening shareholders’ 

funds 2007 are expected to exceed closing shareholder‘s funds at year-end 2007. 

Capital 

At year-end 2006, Group shareholders’ funds amounted to DKK 9.6bn, the capital 

base to DKK 12.6bn. The solvency ratio is 11.3% of which Tier 1 is 9.7%. The core 

capital ratio exclusive of hybrid tier 1 capital is 8.2%. 

SOLVENCY AS AT 31 DECEMBER 2006 

Solvency 

excl. hybrid Tier 1- 

Hybrid Tier 1capitalcapital 

Solvency 

incl. hybrid Tier 1capital 

Tier 1 8.2% 1.5% 9.7% 

Tier 2 1.6% 0.0% 1.6% 

Total 9.8% 1.5% 11.3% 

Jyske Bank's long-term targets for capital and solvency remain unchanged. The 

aim of the Management is to ensure an appropriate capital structure taking into 

account the difference in the cost of equity capital and subordinated debt, as well 

as the general trend in the Danish economy. Taking into account these factors, the 

Bank’s solvency ratio meets the target of at least 7% for core capital (excl. hybrid 

Tier 1) and approx. 10% for the capital base. 

Other remarks 

With effect from 1 October 2006, Jyske Bank held a 50% interest in JN Data 

against 51% previously. As at the above date, JN Data is consolidated into the 

Jyske Bank Group accounts on a 50% pro rata basis, as opposed to full 

consolidation in the past.

Risk and capital management 

RISK AND CAPITAL MANAGEMENT 

Jyske Bank operates advanced and integrated solutions for the identification and 

management of Group risks and for the assessment of capital requirements for the 

hedging of risks. The management of capital is based on the principles of RAROC 

(Risk Adjusted Return on Capital), and these are applied at all levels throughout. 

In the past year, focus has primarily been on the further development of 

methodologies and models for the calculation of credit risk, and the development of 

models for the management and calculation of operational risks. Work is 

continuously being done to improve, further develop and embed these models. 

Given the opportunity in September 2006, the Bank applied for ”advanced bank” 

status under the new capital allocation rules. Said rules ensure a closer correlation 

between the actual risk and the capital required to hedge said risk. Management 

expects the Danish Financial Supervisory Authority to return with a reply to the 

Bank’s application before year-end 2007. 

Organisation 

The Supervisory Board lays down general policies, guidelines and principles for 

risk and capital management. The Supervisory Board regularly receives detailed 

reports on the trend in risks and the degree of utilisation of allocated risk limits. 

“Treasury, Finance & Risk Management” is in charge of overall financial and risk 

management as well as capital optimisation. The unit includes divisions 

responsible for: 

• The Bank’s own securities portfolio and balance-sheet management 

(Treasury) 

• Financial management and customer-oriented financial and risk 

management tools (Finance) 

• Calculating, supervising, analysing, modelling and reporting Group risks 

and the ensuring capital requirements (Risk Management) 

Departments without direct business responsibilities submit new risk management 

principals and policies to the Group Management and Supervisory Board for 

approval. The departments are subsequently responsible for the implementation 

said principles and policies with a view to improving both risk management and 

capital allocation. The Risk Management Division checks that Group risks do not 

exceed the limits laid down by the Supervisory Board. 

The day-to-day management of Group credit risks is undertaken by branch account 

managers and divisional centres. The Risk Management Division is responsible for 

the supervision of the Group’s overall credit risks. 

The Finance Division is responsible for the day-to-day management of Group 

market risk. The investment philosophy of the Finance Division is based on macroeconomic 

principles and is thus of a long-term nature. Performance is measured in 

absolute terms on the basis of long-term RAROC performance indicators. 

The day-to-day management of significant Group operational risks is undertaken 

by the Risk Management Division which reports said risks to Group Management 

and the Supervisory Board on a regular basis. 




Group market risk positions are assessed on a monthly basis by the Asset and 

Liability Committee. The committee is charged with ensuring that the Group’s 

actual risk profile is in line with the intended risk profile. 

At quarterly meetings, the Group Risk Committee decides on measures aimed at 

meeting the statutory capital requirements, internal procedures for risk 

measurement and management, adequate capital base and solvency 

requirements, capital and liquidity reserves and the relevant contingency plans and 

finally the allocation of risk capital to units and types of risks. 

Financial management 

RAROC is the Group’s primary performance-measurement tool. It is a 

measurement and management tool designed to measure risk-adjusted financial 

performance. The different characteristics of risk associated with the Group’s 

business areas and activities may be quantified as a single figure, expressed as 

economic capital. RAROC is thus applied to provide a consistent risk-adjusted view 

of profitability across the Group’s activities regardless of risk profiles and 

categories. RAROC has strengthened the Group’s risk management by charging 

the cost of risk to specific activities. 

A new branch financial statement based on the principles of RAROC was 

introduced in the first quarter of 2006. The Bank now applies RAROC-based 

methodology when assessing individual transactions as well as results at branch, 

division and unit level throughout the Danish branch network. 

Economic capital 

Economic capital is a key concept in the management of the Bank’s risk and 

capital structure. Economic capital is the minimum capital required to support the 

current level of risk at 12 months’ sight. This includes the quantification of risk 

across risk categories, and is a central concept in the Bank’s internal financial 

management. At present, Jyske Bank’s capital structure is based on current 

regulatory ratios for risk-weighted assets, and at the time of writing, economic 

capital is solely an internal measure for the Bank’s capital requirement. 

Jyske Bank allocates economic capital to risks such as credit, market, operational, 

business and liquidity risk. 

Jyske Bank has decided that the economic capital must cover at least 99.97% of 

non-anticipated losses over a 12 month period. The calculation of economic capital 

is based on the assumption that the current level of risk, the current portfolio and 

the current risk categories remain constant over a 12 month period. 

At year-end 2006, the economic capital was calculated as DKK 5.8bn against DKK 

5.2m at year-end 2005 and as DKK 4.6bn at year-end 2004. The increase 

compared with last year is primarily the result of rising advances stated as 

expected exposure at default. The increase in advances for the full year exceeds 

the increase in the level of credit risk due to increased collateral and higher 

average credit quality. Other types of risk were subject to minor adjustments in 

2006. The increase in operational risk is partly explained by the increase in 

business volume. The level of market risk also increased in 2006 and fluctuated 

over the year. The trend in risk categories during 2006 has led to an increase in the 

concentration of credit risk and the overall diversification effect amounted to 23%. 

Of the economic capital at year-end 2006, 76% related to credit risk, 11% to 

market risk, etc. and other risks to 13%.


ECONOMIC CAPITAL - DIVERSIFIED 

2006 2006 2005 2005 2004 2004 

DKKm % DKKm % DKKm % 

Credit risk 4,375 76 

3,856 74 

3,190 70 

Market risk 604 10 

549 11 

664 14 

Liquidity risk 35 1 

28 1 

36 1 

Operational risk 302 5 

250 5 

239 5 

Business risk 470 8 

491 9 

460 10 

Total 5,786 100 

5,174 100 

4,589 100 



Credit risk 


Credit risk is calculated on the basis of internal systems which facilitate credit 

scoring, the assessment of a customer’s total commitment in the event of default 

(Exposure at Default, EAD) and the assessment of collateral on the basis of 

realisable values. See ”Concepts, etc.” at the end of the Annual Report. 

Credit policy 

Jyske Bank assumes credit risks on the basis of a Group credit policy designed to 

ensure that Group losses are acceptable in relation to the Group capital base, 

business volume and the general trend in the Danish economy. Customer 

transactions must generate a satisfactory long-term return when calculated 

according to the principles of RAROC. 

Risk diversification is a key consideration. A single commitment or a group of 

related commitments must not be a size whereby a loss can affect the financial 

well-being of the Bank. The risk associated with commitments exceeding 10% of 

the Bank’s capital base is closely monitored to ensure that the individual risk and 

the total gross commitments are maintained at a comfortable level. 

The breakdown of Group commitments by sector and geographical area is 

constantly monitored and analysed with a particular view to reducing the risk 

associated with specific high-risk sectors and geographical areas. 

Specific credit policies have been formulated for all areas in which the Group 

assumes credit risks laying down risk levels and describing undesirable types of 

business. The central element in the assessment of the creditworthiness of 

corporate customers is their ability to service their debt using liquidity generated 

through operations in relation to the level of financial strength. For retail customers, 

importance is attached to the balance between net income, expenses and assets. 

The policies are regularly adjusted to meet current requirements and adapted to 

the management tools available to account managers and the supervisory 

functions. 

Risk assessment 

For the classification and risk-profiling of customers, each is assigned a credit 

rating based on account behaviour or accounting information and a qualitative 

assessment. The models are based on Jyske Bank’s own data during a full 

economic cycle. The credit rating is reviewed at least once a year as well as in 

connection with all material credit decisions. The credit rating is primarily assigned 

on the basis of statistically-based models, but where these cannot be readily 

applied an individual assessment will be made by a unit independent of 

commercial responsibility. 

At least once a year, the credit rating methodology is reviewed to assess its 

reliability to predict risk and classify customers, and all credit ratings are recalculated 

accordingly. 

Security 

With a view to supporting the credit assessment and to limiting the associated risk, 

consideration is given as to whether collateral must be provided. Where the credit 

risk is not considered insignificant, customers are typically required to provide full 

for partial security for their credit facilities. 

The value of collateral is assessed on the compulsory sale value, and in the 

majority of cases the assessment is based on expert models or statistical models 

which themselves are based on historical data for the realisation of security. The


models relating to real estate and vehicles include on-going updating of the 

collateral value taking into account market-related changes in value and wear and 

tear. 

For certain asset types, valuation is not model based. Value is then assessed by 

an independent unit which is removed from commercial responsibility. 

Credit organisation 

Jyske Bank attaches great importance to the decentralisation of its decisionmaking 

process with regard to the granting of credit to customers. The authority to 

approve credits has therefore been delegated to branch account mangers and 

divisional centre staff so that the majority of decisions are made de-centrally. 

Authority is delegated on the basis of perceived need and competence. 

Credit procedures are adjusted to match the level of risk, which has been assessed 

on the basis of credit rating, the size of the commitment and the collateral provided. 

Account managers also use credit management tools designed to measure risk 

against return. 

Treasury, Finance & Risk Management, a division separate from customer-oriented 

functions, is responsible for the supervision of Group credit risks and the 

development of associated systems and concepts. The development of monitoring 

concepts and tools is on an ongoing basis, and is in accordance with RAROC 

principles. 

Group credit quality in terms of overall risk, single commitment risk and satisfactory 

risk diversification is monitored on the basis of accumulated data, the specific 

credit quality of each department and on the basis of a review of selected large 

commitments. 

The monitoring of risk includes the quantitative control of data used in risk and 

RAROC calculations. 

Loan impairment and provisions for guarantees 

Individual loan impairment 

Impairment of significant loans 

All significant Group commitments are assessed on an individual basis with a view 

to determining whether on the basis of actual events there is an objective indication 

of impairment. 

The write-down shall be calculated as the difference between the booked amount 

before impairment and the net present value of anticipated probability weighted 

future payments. 

Individual loan impairment, small commitments 

Where an individual objective indication of impairment is determined, small loans 

and assets are treated on a case-by-case basis. The write-down shall be 

calculated as the difference between the booked amount before impairment and 

the net present value of anticipated future payments. 



Loan impairment by groups 


Model-based loan impairment 

Commitments which are not assessed individually are classified into relevant 

uniform segments, and thereafter sub-divided dependent on the estimated credit 

risk. An objective indication of impairment is deemed present upon the 

identification of data for individual groups which indicates a decline in future 

payments made by said groups. 

Where on the basis of the above, an objective indication of impairment is 

determined for a given group, the total value of the group is written down by the 

discounted extraordinary anticipated loss. 

Macroeconomic impairment 

For advances and assets not covered by individual or model-based impairment, an 

assessment is undertaken to determine whether there is an objective indication of 

impairment on a portfolio basis. 

The assessment is undertaken on the basis of a test of current macro-economic 

conditions. 

The model includes classic explanatory elements such as property prices, 

unemployment, etc. It includes data from a 30 year-period, including periods of 

high and low business activity. 

Guarantees, unutilised credit commitments and financial instruments 

Guarantee debtors holding significant commitments 

The risk associated with a guarantee is subject to individual assessment based on 

the likelihood that the guarantee results in a drain on the Bank’s resources, 

including the risk that the debtor is not able to meet the Bank’s claim. 

Real estate guarantees (mortgage credit guarantees) 

On the basis of the historical loss experience of the mortgage credit sector 

(modified to the Bank’s customer portfolio), a method has been established to 

estimate the risk of loss on mortgage credit guarantees relating to commercial and 

private properties alike. 

Other guarantees 

On the basis of historical loss experiences, the Bank makes an estimate of the 

expected costs of making claims under a guarantee. The estimate includes an 

assessment of the risk associated with relevant types of guarantees (payment 

guarantees, performance guarantees, etc.) and the current risk of loss on a 

portfolio basis. 

As regards commitments which are deemed to represent a current risk of loss, an 

individual assessment is made of expected costs involved in making claims under 

guaranteed commitments. 

Provisions are made for the estimated risk of loss. 

Financial instruments and unutilised credit commitments 

The assessment of the risk associated with financial instruments is based on the 

likelihood that the Bank suffers a loss in the event of the counterparty’s default. 

The risk on financial instruments is measured at market value with reference to 

historical losses on uniform groups of risk-bearing counterparties.


Committed lines are assessed on an individual basis. Where the line cannot be 

cancelled, it is assessed whether the potential risk of loss associated with the 

draw-down exceeds the economic benefits. Where a liability exists, a provision is 

recognised for the estimated risk associated with draw-down. 

Write-off of losses 

An estimated loss is written off immediately once a loss is deemed unavoidable. 



Credit risk 2006 


Calculation at bank level according to EAD 

The Bank’s credit customers are categorised into 14 credit classes, 1 indicating the 

lowest risk of loss and 14 the highest. High risk and potentially risk making 

commitments are not included in the 14 rating classes. 

Advances broken down by rating class * 

25% 

20% 

15% 

10% 

5% 

0% 

1 2 3 4 5 6 7 8 9 10 11 12 13 14 

2006 2005 2004 

* Total advances are stated as exposure at default, EAD. This concept is material to the 

calculation of credit risk, but should not be mistaken for advances and guarantees as 

stated in the Group Balance Sheet. 

The graph includes Jyske Bank and is exclusive of commitments with banks and sovereign 

states whose ratings are typically 1 or 2. The calculation of ratings is based on a number of 

advanced and constantly revised models, which are checked annual and constantly 

developed. This may cause minor deviations in the figures. 

The model precludes private individuals from being assigned a rating class of 1. 

AVERAGE RATING 

31.12.2006 31.12.2005 31.12.2004 

Customers excl. of banks and sovereign states 5.0 

5.1 

5.3 

The change in the average credit rating is primarily explained by fluctuations in the 

existing customer base, primarily retail customers. 

At year-end 2006, the average credit rating of customers inclusive of banks and 

sovereign states was 4.6 compared with 4.8 at year-end 2005. 

Rating classes 12-14 are assigned to customers associated with the highest risk of 

loss to the Bank. 

RATINGS 12-14 

Advances as % of total advances 31.12.2006 31.12.2005 31.12.2004 

Business customers 1.5 1.9 3.3 

Private customers 0.7 

1.0 

1.4 

Total 1.2 

1.6 

2.8 

The decrease is explained by a decline in advances to customers within these 

rating classes and an overall increase in total advances.

HIGH-RISK COMMITMENTS 


DKKm 2006 %* 2005 %* 

Advances 833 0.7 1,051 1.0 

Security 249 236 

Loan impairment balance 

* as % of total advances 

459 815 

The anticipated exposure at default (EAD) of high risk or potentially loss making 

commitments declined from 2005 to 2006. An increasing share of said 

commitments are covered by security. 

The trend in the rating classes 1-5, which equate to the ”Investment Grade” rating 

of international rating agencies, shows a continued increase in advances to these 

customers. 

RATINGS 1-5 

Advances as % of total advances 31.12.2006 31.12.2005 31.12.2004 

Business customers 56.7 57.0 54.5 

Private customers 79.8 72.3 69.7 

Total 64.6 61.9 58.9 

Overall, the trend in average risk classes shows a continued improvement in the 

risk-profiling of total advances as a result of the increase in advances within the 

classes 1-5, the reduction in advances to classes 12-14 and the decline in 

advances to high risk or potentially loss making customers. 

The below table illustrates the breakdown of total advances by main sectors and 

risk classes. 

LOANS AND GUARANTEES BY SECTOR AND CREDIT RATING 2006 

Non- Rating Rating Rating Loss % of 

Parent company – percentage breakdown of EAD Total rated 1-5 6-10 11-14 total losses 

States 3 0 4 0 0 0 

Public authorities in general 0 1 1 0 0 0 

Total government and public authority 3 1 5 0 0 0 

Banks 7 1 10 0 1 0 

Agriculture, forestry, etc 7 4 7 7 7 3 

Fishing industry 1 0 0 1 2 4 

Manufacturing, mining, etc. 10 2 9 11 9 5 

Construction 2 1 1 5 7 5 

Commerce and hotel 8 3 4 17 24 18 

Transport 2 1 2 3 5 3 

Finance and insurance 11 27 14 5 4 0 

Property admin. and service 16 43 10 28 20 25 

Other sectors 2 5 2 3 4 1 

Corporates in total 66 87 59 80 83 64 

Private customers 31 12 36 20 17 36 

Total 100 100 100 100 100 100 




LOANS AND GUARANTEES BY SECTOR AND CREDIT RATING 2005 

Non- Rating Rating Rating Loss % of 

Parent company – percentage breakdown of EAD Total rated 1-5 6-10 11-14 total losses 

States 2 0 2 0 0 0 

Public authorities in general 1 0 1 0 0 0 

Total government and public authority 3 0 3 0 0 0 

Banks 7 1 11 0 0 0 

Agriculture, forestry, etc 7 4 6 9 8 4 

Fishing industry 1 1 0 1 3 3 

Manufacturing, mining, etc. 11 2 11 11 7 46 

Construction 2 1 1 5 10 6 

Commerce and hotel 9 4 4 18 29 8 

Transport 3 1 3 4 7 4 

Finance and insurance 12 36 17 3 1 1 

Property admin. and service 13 37 9 22 12 15 

Other sectors 2 4 2 3 3 0 

Corporates in total 67 91 64 76 80 87 

Private customers 30 9 33 24 20 13 

Total 100 100 100 100 100 100 

The breakdown into main sectors is for Jyske Bank A/S, and has not changed to 

any significant extent over the past years, nor are there any material deviations 

compared with the sector in general. 

The volume of advances on which a credit rating has not been calculated (incl. 

sovereign states and banks) amounted to 4% compared with 5% in 2005. Not all 

commitments have been rated as total advances and the loss on certain types of 

commitments is so limited that it has not yet been possible to establish a statistical 

model nor is it possible to calculate a credit rating. The credit rating methodology is 

constantly under review, and in future it will be possible to assign ratings to an 

increasing number of loans. 

Calculation at group level according to IFRS 

LOANS AND GUARANTEES BY SECTOR 

Group figures – percentage breakdown 2006 2005 

States 6 3 

Public authorities in general 1 1 

Total government and public authority 7 4 

Banks 5 7 

Agriculture, forestry, etc 3 4 

Fishing industry 0 0 

Manufacturing, mining, etc. 7 7 

Construction 2 2 

Commerce and hotel 6 7 

Transport 2 3 

Finance and insurance 18 18 

Property admin. and service 9 8 

Other sectors 7 5 

Corporates in total 59 61 

Private customers 34 35 

Total 100 100 

At group level, there were only minor changes from 2005 to 2006. 

The geographic breakdown of total Group advances is illustrated below. The 

majority of loans are placed in zone A countries. Zone A countries are EU and 

OECD member states and certain other countries. The geographic breakdown 

remains stable compared with past years. 

Loans and guarantees with countries outside Zone A are limited, and relate 

primarily to investment business fully secured by liquid assets.


LOANS AND GUARANTEES BY COUNTRY AND CUSTOMER SEGMENT 2006 

Group figures – percentage breakdown Customers Banks States, etc. Total 

Denmark (zone A) 83 

55 100 82 

EU (zone A) 12 

29 0 13 

Other European zone A - countries 1 

7 0 1 

USA + Canada (zone A) 1 

9 0 1 

Other zone A - countries 0 0 0 0 

South America 0 0 0 0 

Rest of the world 3 

0 0 3 

Total 100 100 100 100 

LOANS AND GUARANTEES BY COUNTRY AND CUSTOMER SEGMENT 2005 

Group figures – percentage breakdown Customers Banks States, etc. Total 

Denmark (zone A) 83 

54 100 82 

EU (zone A) 12 

29 0 13 

Other European zone A - countries 1 

7 0 1 

USA + Canada (zone A) 1 

10 0 1 

Other zone A - countries 0 0 0 0 

South America 0 0 0 0 

Rest of the world 3 

0 0 3 

Total 100 100 100 100 

The trend in total commitments which exceed 10% of the Group’s capital base is 

illustrated below. The trend continues to decline and reflects the Bank’s policy of 

not assuming specific concentration risks on individual customers. 

Commitments in excess of 10% of the capital base 

% 

200 

150 

100 

50 

0 

2000 2001 2002 2003 2004 2005 2006 

% of capital base 

* The increase in the period 2004-2005 is primarily accounted for by the fact that geared bonds, including geared mortgage 

bonds, were included in the commitment with the issuer. With effect from 2006, the above-mentioned securities are not 

longer included. 



Write-downs and provisions 


LOSSES, IMPAIRMENT LOSSES AND PROVISONS ON GUARANTEES 

Group figures, DKKm 2006 2005 

IMPAIRMENT LOSS, COMMITMENTS ASSESSED INDIVIDUALLY 

Impairment loss, significant loans 292 417 

Impairment loss, small individual loans 138 214 

Total 

IMPAIRMENT LOSS, COMMITMENTS ASSESSED ON A PORTFOLIO 

BASIS 

430 631 

Model based impairment loss 209 307 

Macroeconomic impairment loss 0 197 

Total 209 504 

Loan impairment balance 639 1,135 

PROVISIONS FOR GUARANTEES 

Provisions for guarantees on real property 63 61 

Provisions for other guarantees 59 79 

Provisions for financial instruments, etc. 5 4 

Total provisions for loss on guarantees 127 144 

Loan impairment balance and total provisions 766 1,279 

WRITE-OFFS 

Loss on individually assessed commitments 158 328 

Loss on loans assessed on a portfolio basis 123 127 

Total write-offs 281 455 

Recoveries 80 75 

Interest-rate regulation 36 64 

Credit loss expenses -348 69 

A net amount of DKK 348m was booked as income following the write-back of 

credit loss expenses. The level was favourably affected by the market situation and 

the adjustment in the method used for the calculation of credit loss expenses, etc. 

as agreed between the Bank and the Danish Financial Supervisory Authority, cf. 

the Bank’s accounting policies. 

The Bank’s macro economic impairment is DKK 0 and reflects the strong Danish 

economy, the record low level of unemployment, high property prices, etc. Any 

negative change in macroeconomic factors may increase the level of the Bank’s 

macroeconomic impairment.

DKKm Impairment 

loss (IL) 

Low risk 181 

High risk 263 

Non-performing 

Impairment assessed individually or 

195 

on a portfolio basis 

639 

Macroeconomic impairment loss - 

Provisions for guarantees 127 

The Group 766 

DKKm Impairment 

loss (IL) 

Low risk 292 

High risk 468 

Non-performing 

Impairment assessed individually or 

178 

on a portfolio basis 938 

Macroeconomic impairment loss 197 

Provisions for guarantees 144 

The Group 1,279 


PROBLEM LOANS 2006 

PROBLEM LOANS 2005 

Advances Collateral 

(CL) 

1,350 

548 

702 

202 

266 

47 

2,318 

797 

Advances Collateral 

(CL) 

1,465 

874 

221 

2,560 

627 

197 

39 

863 

IL as % of 

advances-CL 

23 

53 

89 


42 

IL as % of 

advances-CL 

Problem loans are broken down into three categories: Low risk, high risk and 

potentially loss-making commitments. Low-risk problem loans are assigned a credit 

rating of typically 12-14. Risky and potentially loss making commitments relate to 

customers, who are no longer deemed capable of meeting their obligations 

towards the Bank, neither individually nor on a portfolio basis. Said loans or loan 

portfolios are subject to an objective indication of impairment. 

DKKm 

ADVANCES WITH OBJECTIVE EVIDENCE OF IMPAIRMENT 

2006 2005 

Objective evidence of individual advances 1,147 898 

Objective evidence of groups of advances 1,171 1,662 

Total 2,318 2,560 

Total advances to clients subject to an objective indication amounted to DKK 

2,318m and is calculated before credit loss expenses. Credit loss expenses 

amounted to a total of DKK 639bn, and after credit loss expenses total advances 

therefore amounted to DKK 1,679m. 

DKKm 

INTEREST AND BALANCE ON IMPAIRED LOANS 


Balance on impaired loans 2,318 2,560 

Interest for the year 157 169 

The balance of impaired loans amounted to 2.2% of total group advances and loan 

impairment balance to 0.6%. 

The decline in write-downs and provisions for the year can be attributed to the 

positive trend in the Danish economy and the resultant improvement in corporate 

sector earnings and capital structure as well as private households – in particular 

as a result of the general increase in property prises and the change in the method 

used for the calculation of credit loss expenses which was the result of the Bank’s 

discussions with the Danish Financial Supervisory Authority. 

35 

69 

98 

55


Market risk 


Market risk arises from the Bank’s exposure to open positions in the financial 

markets such as interest-rate, currency, stock-market and commodity positions. In 

assessing, managing and controlling market risk, the Jyske Bank Group has 

adopted a fully-integrated approach comprising both the banking and trading book. 

Jyske Bank has developed policies and procedures for the management of market 

risk. Said policies relate to the identification and measurement of various 

categories of market risk and define specific limits with regard to the market risk 

acceptable to the Group. The risk management database allows Jyske Bank to 

generate detailed risk reports based on Group positions. 

Jyske Bank has implemented a three-level approach to define the acceptable level 

of market risk: The first level reflects the limits of overall Group market risk. The 

limits are defined by the Supervisory Board and delegated to the CEO. The second 

level comprises the delegation by the CEO of maximum risk limits to the heads of 

Jyske Markets and Treasury, the only units authorised to assume significant 

market risk. The third level reflects the further delegation of credit lines by the 

heads of the above mentioned units to staff with Jyske Markets and Treasury. 

Market risks in other Group entities are chiefly hedged on a daily basis by the 

parent company. 

Controls have been established to ensure that each position and transaction 

complies with the risk management policy and degree of authorisation. All risk 

positions are monitored on a daily basis by a function independent of commercial 

responsibility. The Management Board is immediately notified of any positions 

exceeding the pre-determined limits. The Supervisory Board and Internal Audit are 

immediately notified of any positions exceeding the overall authority of the 

Management Board. 

Not all aspects of market risk may be quantified using only one method of 

calculation. Calculations, measurements and empowerment are therefore based 

on a number of different methods. In the day-to-day risk management, traditional 

risk measures are used alongside more advanced internal mathematical/statistical 

models such as Value at Risk. To ensure an adequate degree of accuracy in the 

internal model, results are checked on an on-going basis. 

Market risks are managed at Group level. The optimisation of the Group’s own 

market risk is undertaken by Treasury. Furthermore, Jyske Markets is in charge of 

position-taking primarily aimed at enhancing trading activities.

Market risk 2006 


For a definition of key figures, see “Concepts, etc.” at the end of the Annual Report. 

Value-at-Risk 

The market risk on the Group’s own securities portfolio was maintained at a 

moderate level throughout 2006. 

As at year-end 2006, the Bank’s interest rate, currency and stock market risk – 

expressed as Value-at-Risk – amounted to DKK 14m (calculated with a time frame 

of one day and 99% probability). At year-end 2005, Value-At-Risk amounted to 

DKK 11m. The increase was accounted for by rising interest-rate and currency 

risks. 

Value at Risk 

as % of shareholders’ funds end of quarter 

0.5 

0.4 

0.3 

0.2 

0.1 

0.0 

Interest-rate risk 

2002 2003 2004 2005 2006 

The Group’s global interest-rate risk is determined on the basis of the evaluation of 

the long-term equilibrium level combined with the outlook for the economy as a 

whole. Over the past years, the Group’s interest-rate risk vis-à-vis shareholders’ 

funds has been very moderate, as anticipated earnings did not measure up with 

the risk. In keeping with generally rising interest rates in 2006, the level of risk 

increased moderately. The still moderate level of risk reflects that global real 

interest rate is deemed to be low compared with a long-term average. 

Interest-rate risk 1 

as % of shareholders’ funds at end of quarter 

3.00 

2.50 

2.00 

1.50 

1.00 

0.50 

0.00 

-0.50 

2002 2003 2004 2005 2006 



Currency risk 


Currency risk is expressed as Value at Risk (calculated with a time frame of one 

day and 99 % probability) and is shown below. Group currency risk increased in 

2006 and is now above the level of previous years. Positions in traditional and 

emerging market currencies have increased, as the FX market in general is not 

deemed to reflect long-term real-economic circumstances. At year-end 2006, the 

largest risk positions were in NOK and JPY. 

Currency Value at Risk 

as % of shareholders’ funds end of quarter 

0.14 

0.12 

0.10 

0.08 

0.06 

0.04 

0.02 

0.00 

Stock-market risk 

2002 2003 2004 2005 2006 

At year-end 2006, total Group stock-market risk A was close to zero having been at 

a very low level for the entire year. Stock-market risk B also remained at a fairly 

constant level in 2006. This reflects both index-hedged positions in individual 

equities and sectors and also spread positions between country indices. A positive 

outlook for the Japanese economy in this regard has resulted in the maintenance 

of a positive position in Japanese equities. 


as % of shareholders’ funds at end of quarter 

2.00 

1.50 

1.00 

0.50 

0.00 

-0.50 

2002 2003 2004 2005 2006 

Stock-market risk A Stock-market risk B

Liquidity risk 

Liquidity management 


The Group’s liquidity management is designed to ensure adequate liquidity for the 

timely fulfilment of Jyske Bank’s payment obligations at reasonable funding costs. 

The Supervisory Board has established liquidity policies that include guidelines and 

limits for cash management, funding diversification and asset liquidity. Liquidity 

positions are monitored on a daily basis against authorised quantitative limits. 

Liquidity positions that exceed authorised limits are promptly reported to the 

Management Board. 

In the second quarter of 2006, the Bank introduced a new liquidity management 

system which is based on the new principles of liquidity management, in line with 

the guidelines from the Basel Committee. The liquidity management system 

incorporates three elements: 

1. Flow analysis in relation to the time differential between future in-flows and 

out-flows of payments. Payments from the asset side of the liquidity 

balance are aggregated into groups in order of their liquidity, whereas 

payments from the liability side are aggregated into groups according to 

their stability in various scenarios. 

2. Stress testing analysing the consequences of unfavourable scenarios on 

the funding situation. Stress testing involves the use of embedded balance 

sheet liquidity for the hedging of any liquidity requirements. 

3. Liquidity contingency planning whereby given emergency scenarios are 

described as are the range of measures that are required to relieve the 

situation. 

The new principles are under constant development, and it is anticipated that they 

will be fully implemented in the course of 2007. In connection with the 

implementation of the new principles of liquidity management, the Bank has 

established a dedicated liquidity portfolio managed by Treasury. The portfolio 

includes liquid assets, which may be either sold or applied towards funding via 

repo transactions. The portfolio is used as a buffer to bring embedded liquidity to 

the required level. 

Liquid assets include only assets with a high degree of creditworthiness and 

negotiability, and which are not placed as collateral or used in the daily operation of 

the Bank. Such assets may be immediately sold or charged as security for loans 

and thereby provide a swift and efficient source of liquidity. 

Source of funding and organisation 

Jyske Bank’s primary source of funding is retail deposits. The Bank’s source of 

funding also includes the inter-bank market, the fixed-term market, bilateral 

agreements, the market for commercial papers (CP) and the market for the 

issuance of bonds. 

Short-term operational liquidity management is undertaken by Jyske Markets. 

Jyske Markets is an active player in the international market for currency liquidity 

and related derivatives, and market-maker in the Nordic inter-bank money markets. 

In addition, funding for the Bank's activities is obtained through the raising of 

unsecured short-term loans in the wholesale market (fixed-term deposits). 

Continued activity in the above-mentioned markets contribute to increased security 

as regards the refinancing of short-term liquidity. 




To strengthen diversity within its short-term liquidity management, Jyske Bank 

established a French-regulated CP programme in 2006 with a registered maximum 

limit of EUR 2bn. Funding under this facility will typically mature in 3-6 months. At 

year-end 2006, funds drawn under the facility amounted to DKK 4.85bn. Jyske 

Bank will make a particular effort to raise investor awareness of the Bank’s CP 

programme. The CP programme is used for operational as well as strategic 

liquidity management. 

Treasury is in charge of strategic liquidity management. For this purpose, Jyske 

Bank has operated a Euro Medium Term Note Programme (EMTN) since 1999. At 

year-end 2006, the Bank had drawn a total of DKK 22.6bn. The primary investor 

segment for bonds issued under the Bank’s EMTN programme is well diversified 

throughout Europe. Since 2004, the Bank has issued strategic benchmark bonds 

and extended the investor base to include investors in Asia where promotional 

activities have also been launched. The aim is to continuously expand the investor 

base and to increase investor awareness of Jyske Bank well in advance of a 

possible need to raise funds. At year-end 2006, Jyske Bank had issued four 

benchmark bonds: 

BENCHMARK ISSUES AS AT 31.12.2006 

Currency and size Expiry 

USD 750m 16.12.2009 

USD 500m 06.06.2011 

EUR 500m 04.04.2012 

EUR 500m 06.06.2013 

In the second quarter of 2006, Jyske Bank established a EUR 500m revolving 

syndicated loan facility with Citigroup Corporate & Investment Banking, Deutsche 

Bank AG, London Branch, J.P. Morgan plc and Societé Generale Corporate & 

Investment Banking, as Lead Managers. A total of 15 highly rated banks have 

committed themselves under the facility. Aligned to Moody’s rating scale on a 

conservative basis, the weighted credit rating of the facility was approx. Aa2 at 

year-end 2006. The facility will be used as a standby source of immediate liquid 

funding, even in times of unfavourable market conditions. 

Credit ratings 

The Group’s credit ratings are material to the price of liquidity and capital as well as 

funding flexibility in the form of market access. In the spring of 2006, Jyske Bank 

signed an agreement with Standard and Poor’s (S&P) as to the publication of their 

rating of the Jyske Bank Group. At year-end 2006, S&P assigned the Group a 

long-term rating of A (”positive outlook”) and a short-term rating of A-1. The Group 

is now rated by Moody’s as well as Standard and Poor’s. At year-end 2006, 

Moody’s assigned the Group a long-term rating of A1 (”stable outlook”), a shortterm 

rating of P-1 and an individual rating of B-. 

CREDIT RATING 

Long-term Shot-term Individual 

Moody's 

debt 

debt 

1993 A3 P-2 - 

1997 A2 P-1 C + 

1999 A1 P-1 C + 

2001 A1 P-1 B - 

Standard and Poor's 

2006 A A-1 -

Operational risk 


Operational risk is inherent in all the Bank’s processes and is defined as the 

potential loss as the result of operational errors and events caused by human 

beings, processes, systems or external events. The definition also includes 

commercial and image risk. The risk may arise from the inappropriate behaviour of 

employees, the breakdown of IT systems, breach of policies, legal risks, the failure 

to comply with statutory regulations, etc. Operational risk is managed group-wide 

using a system of comprehensive policies and controls designed to provide the 

best possible process environment. At organisational level, operational risk is in 

part minimised by separating the execution of activities from the control of said 

activities. Internal Audit performs interim audit to obtain a high level of assurance 

that principles and procedures are adhered to on a continuous basis. 

For the past couple of years, the Bank has worked on enhancing the internal 

management, measurement and reporting of operational risks. Focus has primarily 

been on the Group’s most significant risks, and the concept is based on Danish 

statutory principles on capital requirements on scenario analyses, risk indicators 

and the use of internal and external loss-related data. In 2006, the concepts were 

implemented throughout most of the Group, and the units which have not yet been 

analysed will follow in 2007. In the course of 2007, the Bank will, therefore, revise 

its RAROC statements to include internal operational risk models. 

For the calculation of capital requirements (CRD), the Bank uses the standardised 

method for operational risk. 

Operational risk is included in the on-going RAROC reporting at unit level. 


MANAGEMENT REPORT 

MANAGEMENT REPORT 

The Supervisory Board and the Management Board have today discussed and approved the Annual Report 2006 of 

Jyske Bank A/S. 

The Group annual accounts have been prepared in accordance with the International Financial Reporting Standards 

(IFRS) as approved by the EU, and the annual accounts of the parent company have been prepared pursuant to the 

provisions of the Danish Financial Services Act. Furthermore, the Annual Report has been prepared in accordance with 

the disclosure requirements as to annual reports of listed financial undertakings. In our opinion, the accounting policies 

are appropriate and the Annual Report thus gives a true and fair view of the Group’s and parent company’s assets and 

liabilities and financial position as at 31 December 2006 as well as the result of the activities of the Group and parent 

company and the Group cash flow for the financial year 2006. 

The Annual Report is submitted to the General Meeting for approval. 

Silkeborg, 20 February 2007 

ANDERS DAM 

CEO 

SVEN BUHRKALL 

Chairman 

LARS AARUP JENSEN 

Employee Representative 


MANAGEMENT BOARD 

JØRGEN CHRISTENSEN LEIF F. LARSEN PER MUNKHOLM POULSEN 

NIELS ERIK CARSTENS 

Deputy Chairman 

SUPERVISORY BOARD 

KURT BRUSGAARD ERIK RASK PETERSEN 

HAGGAI KUNISCH 


PHILIP BARUCH JENS A. BORUP 

MARIANNE LILLEVANG 


/JENS BORUM

AUDITORS’ REPORT 

INTERNAL AUDIT 


We have audited the Annual Report of Jyske Bank A/S for the financial year 2006. The Group Annual Report has been 

prepared in accordance with the International Financial Reporting Standards (IFRS) as approved by the EU; the annual 

accounts of the parent company have been prepared pursuant to the provisions of the Danish Financial Services Act. 

Furthermore, the Annual Report has been prepared in accordance with the disclosure requirements as to annual 

reports of listed financial undertakings. 

The Annual Report is the responsibility of the Bank’s Management. Our responsibility is to express an opinion on the 

Annual Report based on our audit. 

The Audit 

We conducted our audit on the basis of the Statutory Order from the Danish Financial Supervisory Authority on Auditing 

Financial Enterprises, etc. and Financial Groups and in accordance with Danish Auditing Standards. Said standards 

stipulate that the audit be prepared and conducted with a view to verifying that the annual report does not include 

material misinformation. The actual audit process was planned and conducted as agreed with the external auditors. 

Our audit was planned and based on annual assessments of business procedures and internal control procedures 

designed to regulate the Group’s and the Bank’s material commercial risks and reporting procedures. Based on 

importance and risk, the audit includes examining, on a test basis, evidence supporting the amounts and disclosures in 

the Annual Report. The audit also includes assessing the accounting policies used and significant accounting estimates 

made by the Management, as well as evaluating the overall presentation in the Annual Report. 

We believe that our audit provides a reasonable basis for our opinion. 

Our audit has not resulted in any qualification. 

Conclusion 

In our opinion, the business procedures and internal control procedures designed to regulate the Group’s and the 

Bank’s material commercial risks and reporting procedures, are adequate. 

In our opinion, the Annual Report gives a true and fair view of the Group’s assets, liabilities and financial position as at 

31 December 2006 as well as the result of the activities of the Group and of the cash flow for the financial year 2006 in 

accordance with the International Financial Reporting Standards as approved by the EU and the Danish disclosure 

requirements as to annual reports of listed financial undertakings. 

In our opinion, the Annual Report gives a true and fair view of the parent company’s assets, liabilities and financial 

position as at 31 December 2006 as well as the result of the activities of the parent company for the financial year 2006 

pursuant to the provisions of the Danish Financial Services Act and the Danish disclosure requirements as to annual 

reports of listed financial undertakings. 


Internal Audit 

HENNING SØRENSEN 



INDEPENDENT AUDITORS’ REPORT 

To the shareholders of Jyske Bank A/S 

We have audited the annual report of Jyske Bank A/S for the financial year 1 January to 31 December 2006. The 

annual report comprises the Management’s review, the statement by Management on the annual report, the accounting 

policies, the income statement, the balance sheet, the statement of changes in equity and the notes to the financial 

statements for both the Group and the Parent and the cash flow statement for the Group. The consolidated financial 

statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU, 

and the parent financial statements have been prepared in accordance with the Danish Financial Business Act. In 

addition, the annual report has been prepared in accordance with additional Danish disclosure requirements for annual 

reports of listed financial services companies. 

Management’s responsibility for the annual report 

Management is responsible for the preparation and fair presentation of an annual report in accordance with 

International Financial Reporting Standards as adopted by the EU in respect of the consolidated financial statements, in 

accordance with the Danish Financial Business Act in respect of the parent financial statements, and additional Danish 

disclosure requirements for listed financial companies. This responsibility includes: designing, implementing and 

maintaining internal control relevant to the preparation and fair presentation of an annual report that is free from 

material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and 

making accounting estimates that are reasonable in the circumstances. 

Auditor’s responsibility and basis of opinion 

Our responsibility is to express an opinion on this annual report based on our audit. We conducted our audit in 

accordance with Danish and International Standards on Auditing. Those Standards require that we comply with ethical 

requirements and plan and perform the audit to obtain reasonable assurance whether the annual report is free from 

material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the annual 

report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material 

misstatement of the annual report, whether due to fraud or error. In making those risk assessments, the auditor 

considers internal control relevant to the entity’s preparation and fair presentation of an annual report in order to design 

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the 

effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies 

used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall 

presentation of the annual report. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit 

opinion. 

Our audit has not resulted in any qualification. 

Opinion 

In our opinion, the annual report gives a true and fair view of the Group’s financial position at 31 December 2006 and of 

its financial performance and its cash flows for the financial year 1 January to 31 December 2006 in accordance with 

International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for 

annual reports of listed financial services companies. 

In addition, in our opinion, the annual report gives a true and fair view of the Parent’s financial position at 31 December 

2006 and of its financial performance for the financial year 1 January to 31 December 2006 in accordance with the 

Danish Financial Business Act and additional Danish disclosure requirements for annual reports of listed financial 

services companies. 


DELOITTE ERNST & YOUNG 

State-authorised Firm of Accountants State-authorised Firm of Accountants 

ERIK HOLST JØRGENSEN HENRIK A. LAURSEN PETER HERTZ 

State-authorised Public Accountants State-authorised Public Accountant 




ACCOUNTING POLICIES 38 



STATEMENT OF CHANGES IN SHAREHOLDERS’ 

FUNDS 

48 

CASH FLOW STATEMENT 50 

NOTES 51 



CREDIT RISKS 72 

MARKET RISKS 76 

DERIVATIVE FINANCIAL INSSTRUMENTS 81 

OTHERS 83 

THE JYSKE BANK GROUP 89 

JYSKE BANK A/S 90 

DIRECTORSHIPS 91 

CONCEPTS, ETC. 93 


ACCOUNTING POLICIES 

Accounting policies 

Basis of Accounts 

The Group Annual Report has been prepared 

in accordance with the International Financial 

Reporting Standards (IFRS) as approved by 

the EU. The parent company Annual Report is 

presented in accordance with the provisions of 

the Danish Financial Business Act, including 

the Danish Executive Order on Financial 

Reporting by Credit Institutions, Stockbrokers, 

etc. Furthermore, the Annual Report is 

presented in accordance with the Danish 

disclosure requirements relating to listed 

financial undertakings. 

Additional Danish reporting requirements for 

the Group are laid down in the IFRS 

regulations relating to financial enterprises 

prepared in accordance with the provisions of 

the Danish Financial Business Act and by the 

Copenhagen Stock Exchange. Additional 

requirements for the parent company are 

similarly laid down in the Danish Financial 

Business Act and by the Copenhagen Stock 

Exchange. 

The rules applying to recognition and 

measurement within the parent company are 

consistent with IFRS with the exception of the 

measurement of the book value of associated 

undertaking and group enterprises, where 

IFRS lay down measurement at cost or fair 

value. 

Information required in accordance with IFRS 

and any relevant Danish regulations is 

DKKm 


included in the notes and the Management 

Report, which is an integral part of the Annual 

Report. 

The figures included in the Annual Report are 

stated in Danish kroner which are considered 

the base currency of the Group’s activities and 

the functional currency of the parent company. 

The amounts stated have been rounded off to 

the nearest million in the Management Report 

and to the nearest thousand in the Group and 

Annual Accounts. 

Revised accounting policies and estimates 

As notified to the Copenhagen Stock 

Exchange on 16 January 2007, the Bank has, 

following discussion with the Danish Financial 

Supervisory Authority, adjusted the method 

applied to credit loss expenses, etc. The 

adjustment does not result in any changes to 

the method applied by the Group for the 

recognition and measurement of advances, 

etc. The adjustment primarily implies that the 

calculation of loan impairment by groups 

(model-based and macro economic) will be 

adjusted in areas where the Authority 

expressed concerns that the previously 

applied method would result in conservative 

measurements. The following items are 

affected: 

THE JYSKE BANK GROUP 

Shareholders’ 

funds 

01.01.2005 


2005 


funds 

31.12.2005 




funds 

31.12.2006 

Amount according to previous accounting policies 7,786 2,202 9,223 2,744 9,336 

Adjusted method for the calculation of credit loss 

expenses and provisions for loss on guarantees. 380 -28 352 66 418 

Tax effect of change -106 -98 -117 

Amount according to revised accounting policies 8,060 2,174 9,477 2,810 9,637 

Comparative figures for 2005 have been 

adjusted. 

The adjusted income per share and diluted 

earnings per share in 2005 amounted to DKK 

26.70 and DKK 26.70. 

In June 2005, IASB elected to amend IAS 39, 

financial instruments: recognition and 

measurement to the effect that the possibility 

of recognising the regulation of the fair value of 

financial assets and liabilities in the Profit and 

Loss Account is restricted. The amendment 

does not affect the Annual Report 2006. 

The Bank has revised the estimated useful life 

of tangible and intangible assets acquired in 

2006. The revision is made in accordance with 

the Danish Financial Supervisory Authority’s 

letter of information to the Danish financial 

sector dated 6 December 2006 on the 

accounting rules relating to the use of limits in 

connection with the capitalisation of the 

acquisition of property, plant and equipment. 

The effect in terms of money – compared with 

previously applied useful lives of similar 

tangible and intangible assets – favourably 

influences the pre-tax result 2006 by DKK 

244m and will reduce the expected results for 

2007 and 2008 by approx. DKK 50m. The 

amount is influenced by the "Jyske Differences 

2 nd Generation” completed in 2006. The Bank 

has decided to make said adjustments with 

effect from 2006 only, as past investments 

were spread over the years in such a way that 

the re-calculation of past balances would not 

result in any change in the result of individual 

years.

The accounting policies are otherwise identical 

to those applied to the accounts in 2005. 

Accounting standards and interpretations 

not implemented 

At the time of the publication of this Annual 

Report, a number of new or revised standards 

have not been implemented into this Annual 

Report. This includes IFRS 7, Financial 

instruments: Information and changes to IAS 

39 relating to financial guarantee contracts – 

and interpretations. Management deems that 

the future implementation of said standards 

will not have any significant effect on the 

Annual Report. 

Recognition and measurement 

Assets are recognised in the Balance Sheet 

when it is deemed probable that future 

economic benefits will flow to the Group and 

the asset value can be measured reliably. 

Liabilities are recognised in the Balance Sheet 

when they are deemed probable and can be 

measured reliably. 

At initial recognition, assets and liabilities are 

measured at fair value. Subsequently, assets 

and liabilities are measured as described for 

each item below. 

At recognition and measurement, allowance is 

made for gains, losses and risks which result 

prior to the date of the Annual Report and 

which confirm or invalidate conditions which 

existed on the balance sheet date. 

Income is recognised in the Profit and Loss 

Account as earned. Incurred expenses which 

relate directly to the generation of the year’s 

earnings are recognised in the Profit and Loss 

Account. The value adjustment of financial 

assets, liabilities and derivatives are 

recognised in the Profit and Loss Account with 

the exception of the value adjustment of 

transactions entered into with a view to 

hedging net investments in associated 

undertakings and group enterprises abroad. 

The latter value adjustment is recognised 

directly in shareholders’ funds. 

Financial instruments are recognised at the 

date of settlement. 

Accounting estimates 

When measuring the accounting value of 

certain assets and liabilities, an estimate is 

required of the influence of future events on 

the value of said assets and liabilities on the 

balance sheet date. Estimates, which are of 

material importance to the presentation of 

accounts, are among other things based on 

the write-down on advances deemed to be 

impaired, the fair value of unlisted financial 

instruments and provisions already 

recognised. 

The estimates are based on assumptions 

which the Management deems reasonable, but 

which are of course uncertain. Furthermore, 


the Group is subject to risks and uncertainties, 

and consequently the actual results may differ 

from said estimates. Key assumptions and any 

specific risks to which the Group is subject are 

stated in the Management Report and the 

notes. 

The write-down of advances and other 

receivables is subject to a substantial degree 

of estimation as regards the quantification of 

the risk that all future payments may not be 

made. Where it is established that not all 

future payments will be received, the 

determination of the size of anticipated 

payments, including estimated realisable value 

of the security provided and anticipated 

dividend payments by estates is also subject 

to a substantial degree of estimation. 

Provisions for losses on guarantees are 

subject to the uncertainty of assessing to what 

extent the guarantee may be called upon as a 

consequence of the financial collapse of the 

guarantee party. 

The measurement of the fair value of unlisted 

financial instruments is subject to a substantial 

degree of estimation. Fair value is calculated 

on the basis of market prices in liquid markets 

and recognised value assessment techniques, 

which include discounted cash flow models 

and models for the pricing of options. Input 

variables in value assessment methods 

include non-listed yield curves, exchange rates 

and curves, which indicate the volatility of the 

underlying assets, and the calculated fair value 

is thus subject to some uncertainty. Unlisted 

shares are measured at an estimated fair 

value on the basis of the available budget and 

accounting figures of the company in question 

or at the management’s best estimate. 

Provisions for pensions, etc. are subject to a 

substantial degree of estimation with regard to 

the determination of future employee turnover, 

discount rate, the rate of wage and salary 

increase, and the return on associated assets. 

Provisions for pension liabilities, etc. are based 

on actuary calculations and their 

recommended estimates. 

Principles of Consolidation 

The Group Annual Report 

The consolidated accounts comprise the 

accounts of Jyske Bank A/S and the 

undertakings in which the Bank holds a direct 

or indirect interest of more than 50% of the 

voting rights or has by other means a 

controlling interest. A controlling interest is 

assumed where the Bank is authorised to 

manage the controlling company’s financial 

and operational decision-making process with 

a view to benefiting from its activities. 

Companies are included in the Group 

accounts on a pro-rata basis, where the Bank 

holds at least 20% of the voting shares or the 

capital, and where the company is operated 

jointly with others. 

Companies where the holdings of the Bank are 

acquired with a view to temporary ownership 

and are related to the liquidation of 

commitments or to their restructuring, and 



which are expected to be sold within 1 year, 

are not consolidated into the Group accounts. 

Principles of consolidation 

The Group accounts consolidate the accounts 

of Jyske Bank A/S with those of its 

subsidiaries and have been presented in 

accordance with the Group’s accounting 

policies. Intra-group credit and debit items, 

intra-group share holdings, commitments and 

guarantees have been eliminated. Pro-rata 

consolidation reflects the degree to which the 

Group owns shares in a particular company. 

Mergers 

Upon acquisition, the assets, liabilities and 

contingent liabilities of subsidiaries are 

measured at fair value on the date of 

acquisition. A positive difference between the 

cost of the acquired investment and the fair 

value of the identifiable net assets is 

recognised as goodwill. A negative difference 

between the cost of the acquired investment 

and the fair value of the identifiable net assets 

is recognised in the Profit and Loss Account at 

the date of acquisition. Minority interests are 

calculated as the proportionate share of the 

fair value of assets and liabilities. 

The results of subsidiaries which are bought or 

sold are recognised in the Group Profit and 

Loss Account at the time when the controlling 

interest is transferred to the Group, and are no 

longer included in the group accounts from the 

time, when the controlling interest ceases to 

exist. 

Intra-group transactions 

Intra-group transactions are entered into on 

market terms or on the basis of actual cost. 

Discontinued operations and long-term 

assets available for sale 

Discontinued operations are material lines of 

business or geographical areas, which have 

been sold or which are available for sale. 

Subsidiaries which have been acquired 

exclusively with a view to resale are 

considered discontinued operations. 

Discontinued operations are stated separately 

in the Profit and Loss Account and separately 

under assets and liabilities, respectively. 

Non-current assets and groups of assets 

available for sale are stated separately in the 

balance sheet as short-term assets. Liabilities 

directly associated with the asset in question 

are stated as short-term liabilities in the 

balance sheet. 

Non-current assets available for sale are not 

written down, but measured at accounting 

value or fair value less selling costs, which 

ever is lowest. 

Investments in associated undertakings 

An associated undertaking is an undertaking in 

which the Group holds a significant but not 


controlling interest, by participating in said 

company’s financial and operational decisionmaking 

process, and which does not quality as 

a subsidiary or joint venture. Undertakings in 

which the Group holds between 20-50% of the 

voting rights are deemed to be associate 

undertakings. 

Investments in associated undertakings are 

recognised and measured in the Group 

accounts and the accounts of the parent 

company according to the equity method. 

Accordingly, investments are measured at the 

pro-rata share of the undertaking’s equity 

value calculated in accordance with the 

Group’s accounting policies less/plus 

unrealised intra-group profits and losses and 

the booked amount of goodwill. 

The pro-rata share of the undertakings’ results 

after tax and elimination of unrealised intragroup 

profits and losses less write-down of 

goodwill is recognised in the Profit and Loss 

Account. The pro-rata share of all transactions 

and events recognised directly in the 

shareholders’ funds of the associated 

undertaking is recognised in the Group and 

parent company shareholders’ funds. 

Holdings in group enterprises 

A group enterprise is an enterprise in which 

the Group holds a controlling interest, cf. the 

paragraph on consolidation. 

Investments in group enterprises are 

measured in the parent company accounts 

according to the equity method. A positive 

difference between cost and the fair value of 

net assets at the time of acquisition of a group 

enterprise is recognised as goodwill under 

intangible assets. 

Investment in joint ventures 

A joint venture is a contractual relationship 

whereby the Group and other interested 

parties undertake a commercial activity of 

which they have joint control. The Group 

states any investment in jointly controlled 

undertakings as consolidated on a pro-rata 

basis. 

Where the Group trades with a jointly 

controlled undertaking, any unrealised gains 

and losses compared with the Group’s interest 

in the joint venture is eliminated, except in the 

event that any unrealised losses reflect an 

impairment loss. 

Goodwill 

Consolidated goodwill is the amount by which 

the cost of an acquired subsidiary or jointly 

controlled undertaking exceeds the Group’s 

share of the fair value of identifiable assets, 

liabilities and contingent liabilities, if any, at the 

time of acquisition. Consolidated goodwill is 

recognised as an asset and is thus subject to 

annual impairment tests. Any impairment loss 

is recognised in the Profit and Loss Account 

and cannot be subsequently written back.

Goodwill in connection with the acquisition of 

an associated undertaking is included in the 

booked value of the associated undertaking. 

Upon the sale of a subsidiary, associated 

undertaking or joint venture, the book value of 

goodwill is included in the gain or loss. 

Negative goodwill 

Negative goodwill is the amount by which the 

Group’s share of the fair value of identifiable 

assets, liabilities and contingent liabilities 

exceeds the cost of the acquired subsidiary, 

associated undertaking or joint venture at the 

time of acquisition. Negative goodwill is 

recognised as income in the Profit and Loss 

Account. 

Negative goodwill in connection with the 

acquisition of an associated undertaking is 

deducted from the booked value of the 

associated undertaking. Negative goodwill in 

connection with the acquisition of subsidiaries 

and joint ventures is stated separately in the 

Balance Sheet as a deduction from assets. 

Translation of foreign currency amounts 

upon consolidation 

Balance-sheet items relating to the Bank's 

foreign subsidiaries are translated according to 

the year-end exchange rates. The Profit and 

Loss account items are translated at the 

average exchange rates for the year. Changes 

in the value of opening shareholders' funds 

due to exchange-rate movements during the 

year, are included in shareholders’ funds 

under foreign currency translation reserve. 

Differences between exchange-rates at yearend 

and average exchange rates with regard 

to subsidiaries are included in shareholders’ 

funds under foreign currency translation 

reserve. 

Foreign currency transactions 

Transactions in other currencies than Danish 

kroner are translated at the official exchange 

rate on the day of the transactions. Unsettled 

foreign currency transactions on the balancesheet 

date are translated at the official 

exchange rate on balance sheet date. The 

Danish central bank's official rates are applied 

where possible. Unquoted currencies are 

booked at estimated rates of exchange. 

Non-monetary assets and liabilities acquired in 

a foreign currency, which are not restated at 

fair value, are not subject to translation 

adjustments. In connection with a nonmonetary 

asset the fair value of which exceeds 

that stated in the Profit and Loss Account, 

unrealised exchange rate differences are 

recognised in the Profit and Loss Account. 

Foreign exchange gains and losses are 

included in the result for the year, with the 

exception of exchange rate differences related 

to non-monetary assets and liabilities, where 

changes in the fair value are recognised 

directly in shareholders’ funds, and exchange 

rate hedging of net investments in international 


subsidiaries where the exchange rate 

adjustment is recognised in shareholders’ 

funds as well. 

Leasing 

Leases are classified as finance leases when 

all material risks and returns associated with 

the title to an asset are transferred to the 

lessee. All other leases are classified as 

operational leases. 

Amounts due from holders of finance leases 

are recognised as advances equal to the 

Group’s net investment in the leases. Income 

from finance leases is booked periodically over 

the term of the leases to reflect a continual 

periodic return on the Group’s outstanding net 

investment in the leases. Income from 

operational leasing contracts is recognised on 

a straight-line basis over the actual leasing 

period. 

Tax 

Jyske Bank is taxed jointly with the majority of 

its subsidiaries. Tax on the year’s income is 

divided among the jointly taxed Danish 

companies in proportion to their taxable 

income. Domestic corporate tax payable by 

the jointly taxed companies is paid in 

accordance with the Danish instalment tax 

scheme. 

Tax comprises current tax and any change in 

deferred tax as well as the readjustment of tax 

for previous years. Current tax is based on the 

year’s taxable income. Deferred tax is 

recognised and measured in accordance with 

the balance-sheet liability method on the basis 

of the difference between the accounting and 

tax value of assets and liabilities. Overall, 

deferred tax liabilities are recognised on the 

basis of temporary differences, and deferred 

tax assets are recognised to the extent that it 

is deemed probable that taxable income exists 

against which deductible temporary 

differences may be offset. Such assets and 

liabilities are not recognised where the 

temporary difference is due to goodwill. 

Provisions are not made in the Balance Sheet 

for tax payable on the sale of an investment in 

a subsidiary company where such an 

investment is not expected to be disposed of 

within a short period of time, or where the 

management may plan arrange a sale which is 

not subject to tax. 

Deferred tax is calculated at current tax rates 

in the accounting year in which the liability is 

settled, or the asset is realised. Deferred tax is 

registered in the Profit and Loss Account, 

unless associated with items which have been 

booked as an expense or income directly in 

shareholders’ funds, in which case the 

deferred tax is registered in shareholders’ 

funds as well. Deferred tax assets and 

liabilities are offset where attributable to tax 

levied by the same tax authority, and where it 

is the intention of the Group to settle its current 

tax assets and liabilities on a net basis. 



Financial instruments, trading portfolio 

Financial instruments included in the trading 

portfolio are instruments which have been 

acquired with a view to generating a profit 

through short-term price or margin fluctuations, 

or instruments included in a portfolio 

characterised by short-term profit-taking. 

Assets in the trading portfolio comprise money 

market instruments, other instruments of debt 

including negotiable loans and equity 

instruments held by the Group. Liabilities in the 

trading portfolio comprise liabilities to supply a 

trading portfolio of money market instruments, 

other debt instruments and equity instruments 

which the Group has sold to a third party 

without owning them. Upon initial recognition, 

financial instruments are measured at fair 

value and subsequently at fair value adjusted 

over the Profit and Loss Account. 

Upon initial and subsequent recognition, 

shares in sector-owned companies are 

measured at fair value. Unrealised gains and 

losses as a result of a change in fair value are 

recognised in the Profit and Loss Account in 

accordance with the IAS 39 fair value option. 

Shares for which a fair value cannot be reliably 

measured, are recognised at cost less any 

impairment loss. Gains and losses upon 

disposal or repayment and unrealised gains 

and losses as a result of a change in fair value 

are recognised in the Profit and Loss Account. 

Derivative financial instruments are recognised 

initially and subsequently at fair value. The 

positive and negative fair value of derivative 

financial instruments is recognised under 

Other Assets/Other Liabilities. The fair value of 

derivative financial instruments is calculated 

on the basis of market data and recognised 

valuation models. Certain contracts are subject 

to terms and conditions similar to those of 

derivative financial instruments. Such 

embedded derivative financial instruments are 

under specific assumptions, recognised 

separately at fair value. 

Balances due from credit institutions and 

central banks 

Initially, balances due from credit institutions 

and central banks are recognised at fair value 

plus directly attributable costs, less fees and 

commissions received which are directly 

associated with the amount due. 

Subsequently, advances are measured at 

amortised cost in accordance with the effective 

interest method. 

Advances 

Initially, loans are recognised at fair value plus 

directly attributable costs, less fees received 

which are directly associated with the granting 

of the loan. Subsequently, advances are 

measured at amortised cost in accordance 

with the effective interest method. 

The need for impairment loan write-down is 

assessed on a case-by-case basis. Significant 

loans are reviewed individually, and other 


loans subject to similar credit risks, are 

reviewed on a portfolio basis. Where on the 

basis of actual events, write-downs are 

deemed necessary by objective standards, 

and said events affect the size of anticipated 

future payments, write-downs shall be made. 

The write-down shall be calculated as the 

difference between the booked amount of the 

loan and the net present value of anticipated 

future payments. 

Subsequent changes to amounts and timing of 

anticipated future payments compared with 

previous assessments are recognised under 

credit loss expenses. Where a loan is deemed 

to be uncollectible or is cancelled in part or in 

full, it is written off. 

Please see the section on credit risk on page 

18. 

Repos and reverse repos 

Securities sold subject to repurchase 

agreements (repos) remain in the Balance 

Sheet under securities, carry interest and are 

subject to revaluation. Amounts received are 

recognised as deposits or balances due to 

credit institutions. 

Securities bought subject to reverse 

repurchase agreements (reverse repos) are 

recognised as advances or balances due from 

credit institutions, and the return is recognised 

under interest income. 

Tangible assets 

Land and buildings are recognised in the 

Balance Sheet at the restated value 

corresponding to the fair value on the date of 

the revaluation less write-offs and 

depreciation. Revaluation is made at a 

frequency deemed adequate frequency to 

ensure that the accounting value is not 

materially different from the presumed fair 

value on the balance sheet date. A reduction 

in the booked value as a result of the 

revaluation of land and buildings is charged to 

the Profit and Loss Account to the extent that 

the amount exceeds the revaluation reserves 

under shareholders’ funds attributable to the 

past revaluation of the asset. Any increase as 

a result of the revaluation of land and building 

is included in the revaluation reserves unless 

the increase cancels out a deduction in the 

revaluation of the same asset which was 

previously recognised as an expense. 

The valuation of selected land and buildings is 

carried out with the assistance of external 

experts. 

In connection with the regular valuation of land 

and buildings, the value of each building is 

stated on the basis of a return method in 

accordance with recognised standards. The 

value of the building is recognised at cash 

value before interest and depreciation. The 

operating income from the property includes 

rent income less maintenance costs, 

administrative costs and other operating costs. 

The required rate of return on the property is

determined to best reflect the transactions 

undertaken until the date of the valuation, and 

is based on the principle of permanent 

increase in value. The required rate of return 

on the property is discussed with local and 

national estate agents. Once a year, spot 

checks are made of a number of properties 

with the assistance of an external appraiser. 

The depreciation of re-valued buildings is 

recognised in the Profit and Loss Account. 

Upon the subsequent sale of a re-valued 

building, any relevant revaluation reserves are 

transferred directly to retained earnings. 

Equipment is recognised at cost less 

accumulated write-offs and depreciation. 

Tangible assets are written off on a straightline 

basis over the estimated useful life of the 

asset to the estimated residual value. Land is 

not written off. The following depreciation 

periods apply: 

Buildings Max. 50 yrs 

Equipment and refurbishment 

of rented premises Max. 5 yrs 

Residual value of buildings Max. 75% 

Investment properties 

Investment properties held with a view to 

rental income and/or capital gain are 

recognised at fair value on the Balance Sheet 

date. Gains and losses attributable to changes 

in the fair value of investment properties are 

included in the result for the period in which 

they are arise. 

Intangible assets 

IT development costs are recognised at cost 

less accumulated depreciation and 

amortisation. Amortisation is provided on a 

straight-line basis over the estimated useful life 

of max. 3 years. 

Internally generated intangible assets are 

charged in the year of acquisition, as the 

conditions for capitalisation are not deemed to 

be fulfilled. 

Balance due to credit institutions and 

central banks 

Balances due to credit institutions and central 

banks are recognised at fair value equal to 

payments received less directly attributable, 

paid transaction costs. Subsequently, said 

balances are measured at amortised cost 

according to the effective interest method. 

Issued bonds and subordinated debt 

Issued bonds and subordinated debt are 

recognised at fair value equal to payments 

received less directly attributable, paid 

transaction costs. Subsequently, issued bonds 

and subordinated debt are measured at 


amortised cost according to the effective 

interest method. 

Provisions 

Provisions are recognised when the Group 

has a legal or actual obligation as a result of 

past events, and when it is deemed probable 

that an outflow of financially beneficial 

resources is required to meet the obligation, 

and a reliable estimate of the obligation can be 

made. 

Provisions are measured as the best estimates 

of the cost of meeting the liabilities on the 

balance sheet date. Provisions the expected 

due date of which exceeds the balance sheet 

date by 12 months are measured at present 

value, if of material importance, otherwise at 

cost. 

Hedge accounting 

The Group hedges the net interest rate risk on 

a portfolio of assets and liabilities as well as 

the hedging of the foreign currency translation 

risk of its subsidiaries. 

The fair value and subsequent value 

adjustments of derivative financial instruments, 

which are classified as and meet the 

requirements for the hedging of the fair value 

of a recognised asset or liability, are 

recognised in the Profit and Loss Account 

together with the value adjustment of the 

hedged asset or liability, independent of 

interest rate levels. 

The fair value and the subsequent value 

adjustment of derivative financial instruments 

which are applied towards the hedging of net 

investments in international subsidiaries, and 

which offer efficient protection against 

exchange rate changes in said companies, are 

recognised directly in shareholders’ funds 

under the separate heading of reserve for 

exchange rate adjustment. 

Shareholders’ funds 

Share capital is classified as shareholders’ 

funds where there is no obligation to transfer 

cash or other assets. 

A proposed dividend is recognised as a liability 

at the time when the motion is approved at the 

Annual General Meeting. Dividend for the year 

is stated separately under shareholders’ funds. 

The foreign currency translation reserve 

includes translation differences which are the 

result of the translation of locally denominated 

results and net investments in foreign units 

into Danish kroner. It also includes the foreign 

currency translation adjustment of financial 

liabilities for the hedging of net investments in 

international units. 

The revaluation reserve relates to the 

revaluation of tangible assets less deferred tax 

on the revaluation. The reserve is dissolved 

once the assets are sold or cancelled. 



A reserve according to the equity method 

include value adjustment of investments in 

associated and group enterprises. The reserve 

is reduced by the distribution of dividend to the 

parent company and by other changes in 

equity in associated and group enterprises. 

Accumulated profit includes non-distributed 

dividends from previous years. 

Minority interests equate to the booked 

amount of the share of the net assets of 

associated enterprises which is not controlled 

by Jyske Bank A/S. 

Own shares 

Acquisition costs, consideration and dividend 

on own shares are recognised directly in 

retained profits under shareholders’ funds. A 

capital reduction as a result of the cancellation 

of own shares reduces the share capital by an 

amount equal to the nominal value of the 

investment at the time of the registration of the 

capital reduction. 

Interest 

Interest income and expenses on all interestbearing 

instruments are recognised in the 

Profit and Loss Account under the accruals 

principle and subject to the effective interest 

rate based on the anticipated useful life of the 

financial instrument. For floating rate assets 

and liabilities the rate of interest is applied until 

the next interest rate fixing date. 

Interest includes the amortisation of fees which 

are an integral part of the effective return on a 

financial instrument, including front-end fees. 

Loans are written down to the recoverable 

amount, and interest income is then 

recognised in proportion to the rate of interest 

applied in connection with the discounting of 

future cash flows for the purpose of measuring 

the recoverable amount. 

Fees 

Income related to services rendered over a 

given period of time is accrued over the 

service period. This includes guarantee 

commission and portfolio management fees. 

Other fees are recognised in the Profit and 

Loss Account once the transaction is 

completed. This includes securities and safecustody 

fees and transfer fees. 

Share-based payment 

Group Management and members of staff 

have been covered by the same share-based 

compensation scheme in the form of a general 

employee share scheme. Pursuant to IFRS 2 

(share-based compensation) the scheme is 

equity-settled and subject to incorporated 

conditions. Share-based compensation is 

recognised as staff costs in the Profit and Loss 

Account. The expense is measured at fair 

value at the time of payment and is recognised 

in the Profit and Loss Account and 

shareholders’ funds over the vesting period. 


Pension schemes and other long-term 

employee benefits 

The Group has entered into defined 

contribution pension plans with the majority of 

its employees. 

Under the defined contribution pension plan, 

the Group makes fixed contributions to an 

independent pension fund, etc. The Group is 

under no other obligation to make further 

contributions. Contributions are included in the 

Profit and Loss Account over the vesting 

period. 

Under a defined benefit pension plan, the 

Group is obliged to pay a certain amount when 

an employee retires. Liabilities in connection 

with defined benefit plans are automatically 

calculated by actuarially discounting pension 

liabilities to present value. Present value is 

calculated on the basis of assumptions relating 

to the future trend in interest rates, inflation, 

mortality and disablement. 

Anniversary bonuses are recognised as the 

present value of the part of the overall liability 

which relates to the term during which 

employees were employed with the Group. 

Due consideration is paid to staff turnover, etc. 

The liability is recognised under provisions for 

pensions, etc. 

Earnings per share 

Earnings per share is calculated by dividing 

the result for the year exclusive of minority 

shareholders’ interests by the weighted 

average number of shares in circulation in the 

financial year. 

Diluted earnings per share are calculated in 

the same manner as earnings per share, but 

the decisive factors are adjusted to reflect the 

effect of all diluted share capital. 

Segment information 

Information on business and geographical 

spread is given as primary and secondary 

segments. Geographical segments are 

determined according to where transactions 

are booked. Segment information is prepared 

in accordance with the Group accounting 

policies. 

Cash flow statement 

The Cash Flow Statement shows Group cash 

flows relating to operational, investment and 

financing activity for the year, changes in cash 

and cash equivalents for the financial year, 

and cash and cash equivalents at the 

beginning of the year and at year-end. The 

cash flow statement is presented in 

accordance with the indirect method based on 

the result for the year. 

Cash flow derived from operations calculated 

as the result for the year adjusted for non-cash 

operating items, changes in operating capital 

and paid corporate tax. Cash flows relating to

investment activity include the purchase and 

sale of enterprises and non-current assets. 

Cash flows relating to financing activity include 

distribution and movements in shareholders’ 

funds and subordinated debt. 

Cash and cash equivalents include cash and 

free balances due from credit institutions and 

central banks with an original time to maturity 

of less than three months. 



PROFIT AND LOSS ACCOUNT 2006 

Note 

The Jyske Bank Group Jyske Bank 

(DKK 1,000) 2006 2005 2006 2005 

1 Interest income 6,130,810 4,630,712 5,710,715 4,231,591 

2 Interest expenses 3,095,049 1,876,650 3,209,589 1,969,269 

Net interest income 3,035,761 2,754,062 2,501,126 2,262,322 

Dividends, etc. 23,638 20,276 23,638 20,276 

3 Fees and commission received 1,783,540 1,600,250 1,427,526 1,259,625 

Fees and commission paid 148,670 127,888 118,246 109,677 

Net interest and fee income 4,694,269 4,246,700 3,834,044 3,432,546 

4 Revaluations 1,142,037 947,074 1,070,922 868,243 

5 Other operating income 395,274 386,148 187,519 157,105 

6,7 Personnel and administrative expenses 3,619,670 3,091,029 3,160,740 2,663,710 

18-20 Amortisation and depreciation of tangible and intangible assets 175,232 236,392 93,073 122,379 

Other operating expenses -17,764 6,449 -17,980 6,160 

13 Credit loss expenses -348,048 68,618 -323,106 66,341 

8 Profit/loss on investments in associates and 

group enterprises 7,647 -2,640 594,008 529,417 

Pre-tax result 2,810,137 2,174,794 2,773,766 2,128,721 

9 Tax 676,611 473,441 667,208 456,771 

Net profit/loss for the year 2,133,526 1,701,353 2,106,558 1,671,950 

To be broken down as follows: 

The Jyske Bank A/S shareholders 2,106,558 1,671,950 

Minority shareholders 26,968 29,403 

2,133,526 1,701,353 

Earnings per share 

10 Earnings per share, DKK 35.02 26.70 

10 Earnings per share DKK, diluted 35.02 26.70 

Proposal for distribution of profit for the year 

Proposed dividends 0 0 

Total appropriation to capital and reserves 2,106,558 1,671,950 

2,106,558 1,671,950 


Note 

BALANCE SHEET AS AT 31 DECEMBER 2006 



ASSETS 

Cash in hand and balances at call with centralbanks 974,510 914,341 950,986 867,000 

11,12 Balances due from credit institutions and central banks 15,720,403 12,913,498 34,667,852 30,184,291 

11,13 Advances 107,185,481 90,880,003 84,887,511 70,550,148 

11,14 Bonds 13,681,784 15,823,101 13,432,557 15,522,852 

15 Shares, etc. 1,103,388 1,298,843 738,594 958,893 

16 Investments in associated undertakings 8,340 8,302 500,583 307,282 

16 Holdings in subsidiaries 0 0 3,561,662 3,746,730 

17 Assets in investment pools 11,894,216 9,597,598 11,894,216 9,597,598 

18 Intangible assets 255,749 213,938 239,635 207,828 

19 Domicile properties 1,702,625 1,547,316 1,549,869 1,399,819 

20 Other tangible assets 332,425 154,257 248,111 48,002 

Current tax assets 4,394 0 0 29,516 

21 Deferred tax assets 13,870 2,154 0 0 

22 Other assets 7,613,538 7,989,216 7,194,195 7,736,171 

Accrued income and deferred expenses 165,653 228,164 92,978 137,384 

Total assets 160,656,376 141,570,731 159,958,749 141,293,514 

LIABILITIES 

Payables 

11,23 Balance due to credit institutions and central banks 17,535,903 17,007,997 24,332,150 23,173,346 

11,24 Deposits 76,277,022 69,701,887 69,771,017 64,083,231 

Deposits in investment pools 12,564,028 10,145,986 12,564,028 10,145,986 

11 Issued bonds 25,393,117 15,966,610 25,393,117 15,966,610 

Current tax liabilities 149,412 110,516 6,042 0 

25 Other liabilities 14,653,017 15,568,011 14,291,535 15,240,004 

Accrued expenses and deferred income 152,186 129,865 2,153 8,058 

Total payables 146,724,685 128,630,872 146,360,042 128,617,235 

Provisions 

26 Provisions for pensions, etc. 523,833 482,060 453,587 409,499 

21 Provisions for deferred tax 322,467 248,921 68,550 2,361 

13 Provisions for loss on guarantees 126,913 143,579 173,217 279,592 

27 Other provisions 3,579 29,289 3,579 29,289 

Total provisions 976,792 903,849 698,933 720,741 

11,28 Subordinated debt 3,317,920 2,558,952 3,317,920 2,558,952 

29 Shareholders’ funds 

Share capital 620,000 631,000 620,000 631,000 

Revaluation reserves 172,030 145,230 135,590 113,686 

Reserve according to the equity method 0 0 1,780,737 1,471,356 

Accumulated profit 8,789,824 8,620,356 7,045,527 7,180,544 

Minority shareholders 55,125 80,472 0 0 

Total shareholders’ funds 9,636,979 9,477,058 9,581,854 9,396,586 

Total liabilities 160,656,376 141,570,731 159,958,749 141,293,514 

Number of shares (1,000) face value DKK 10 62,000 63,100 62,000 63,100 

Total face value of shares 620,000 631,000 620,000 631,000 


STATEMENT OF CHANGES IN SHAREHOLDER’S FUNDS 


(DKK 1,000) 


Share capital Currency 

translation 

reserve 

Revaluation 

reserves 

Accumulated 

profit 

Total Minority 

shareholders 

Total 

shareholders’ 

funds 

Shareholders’ funds as at 1 January 2006 631,000 0 145,230 8,620,356 9,396,586 80,472 9,477,058 

Currency translation of international units 0 -411 0 0 -411 0 -411 

Hedging of international units for accounting purposes 0 411 0 0 411 0 411 

Write-up of real property 0 0 26,800 -236 26,564 0 26,564 

Tax on equity items 

Net income recognised directly in shareholders’ 

0 0 0 -53,183 -53,183 0 -53,183 

funds 

0 0 26,800 -53,419 -26,619 0 -26,619 

Net profit/loss for the year 0 0 0 2,106,558 2,106,558 26,968 2,133,526 

Total income 0 0 26,800 2,053,139 2,079,939 26,968 2,106,907 

Capital reduction -11,000 0 0 11,000 0 0 0 

Acquisition of own shares 0 0 0 -3,299,803 -3,299,803 0 -3,299,803 

Sale of own shares 0 0 0 1,378,108 1,378,108 0 1,378,108 

Share-based payment 0 0 0 27,024 27,024 0 27,024 

Adjustment of minority shareholders 0 0 0 0 0 -52,315 -52,315 

Shareholders’ funds as at 31 December 2006 620,000 0 172,030 8,789,824 9,581,854 55,125 9,636,979 

(DKK 1,000) 


translation 

reserve 

Revaluation 

reserves 

Accumulated 

profit 

Total Minority 

shareholders 

Total 


funds 

Shareholders’ funds as at 1 January 2005 680,000 0 121,416 6,970,823 7,772,239 86,102 7,858,341 

Revised accounting policies 0 0 0 211,347 211,347 -9,344 202,003 

Adjusted shareholders’ funds 1 January 2005 680,000 0 121,416 7,182,170 7,983,586 76,758 8,060,344 

Currency translation of international units 0 39,639 0 0 39,639 0 39,639 

Hedging of international units for accounting purposes 0 -39,639 0 0 -39,639 0 -39,639 

Write-up of real property 0 0 23,814 -233 23,581 0 23,581 



0 0 0 -46,329 -46,329 0 -46,329 

funds 

0 0 23,814 -46,562 -22,748 0 -22,748 

Net profit/loss for the year 0 0 0 1,671,950 1,671,950 29,403 1,701,353 

Total income 0 0 23,814 1,625,388 1,649,202 29,403 1,678,605 

Capital reduction -49,000 0 0 49,000 0 0 0 

Acquisition of own shares 0 0 0 -2,661,253 -2,661,253 0 -2,661,253 

Sale of own shares 0 0 0 2,376,731 2,376,731 0 2,376,731 

Share-based payment 0 0 0 48,320 48,320 0 48,320 

Adjustment of minority shareholders 0 0 0 0 0 -25,689 -25,689 

Shareholders’ funds as at 31 December 2005 631,000 0 145,230 8,620,356 9,396,586 80,472 9,477,058

Jyske Bank 

(DKK 1,000) 

STATEMENT OF CHANGES IN SHAREHOLDER’S FUNDS 


translation 

reserve 

Revaluation 

reserves 

Reserve 

according to 

the equity 

method 

Accumulated 

profit 

Shareholders’ funds as at 1 January 2006 631,000 0 113,686 1,471,356 7,180,544 9,396,586 

Currency translation of international units 0 -411 0 0 0 -411 

Hedging of international units for accounting purposes 0 411 0 0 0 411 

Write-up of real property 0 0 21,904 4,660 0 26,564 



0 0 0 0 -53,183 -53,183 

funds 

0 0 21,904 4,660 -53,183 -26,619 

Net profit/loss for the year 0 0 0 304,721 1,801,837 2,106,558 

Total income 0 0 21,904 309,381 1,748,654 2,079,939 

Capital reduction -11,000 0 0 0 11,000 0 

Acquisition of own shares 0 0 0 0 -3,299,803 -3,299,803 

Sale of own shares 0 0 0 0 1,378,108 1,378,108 

Share-based payment 0 0 0 0 27,024 27,024 

Shareholders’ funds as at 31 December 2006 620,000 0 135,590 1,780,737 7,045,527 9,581,854 

(DKK 1,000) 


translation 

reserve 

Revaluation 

reserves 

Reserve 

according to 

the equity 

method 

Accumulated 

profit 

Shareholders’ funds as at 1 January 2005 680,000 0 92,381 1,414,738 5,585,120 7,772,239 

Revised accounting policies 0 0 0 -21,320 232,667 211,347 

Adjusted shareholders’ funds 1 January 2005 680,000 0 92,381 1,393,418 5,817,787 7,983,586 

Currency translation of international units 0 39,639 0 0 0 39,639 

Hedging of international units for accounting purposes 0 -39,639 0 0 0 -39,639 

Write-up of real property 0 0 21,305 2,276 0 23,581 



0 0 0 0 -46,329 -46,329 

funds 

0 0 21,305 2,276 -46,329 -22,748 

Net profit/loss for the year 0 0 0 75,662 1,596,288 1,671,950 

Total income 0 0 21,305 77,938 1,549,959 1,649,202 

Capital reduction -49,000 0 0 0 49,000 0 

Acquisition of own shares 0 0 0 0 -2,661,253 -2,661,253 

Sale of own shares 0 0 0 0 2,376,731 2,376,731 

Share-based payment 0 0 0 0 48,320 48,320 

Shareholders’ funds as at 31 December 2005 631,000 0 113,686 1,471,356 7,180,544 9,396,586 

Total 

Total 


CASH FLOW STATEMENT 

Note 


(DKK 1,000) 2006 2005 

Net profit/loss for the year 2,133,526 1,701,353 

ADJUSTMENT OF NON-LIQUID OPERATING ITEMS, ETC. 

Credit loss expenses -348,048 68,618 

Amortisation and depreciation of tangible and intangible assets 175,232 236,392 

Unrealised market value adjustment of investments in securities -68,500 -273,500 

Unrealised market value adjustment of investments in associates and group enterprises -7,647 2,640 

Interest, not paid 130,277 -41,767 

Other outstanding operating items 84,229 -52,157 

Tax 676,611 473,441 

Tax paid, net -629,574 -190,856 

Total 2,146,106 1,924,164 

CHANGE IN OPERATION CAPITAL 

Advances -15,957,430 -15,979,915 

Deposits 8,993,177 11,192,494 

Issued bonds 9,426,507 4,051,984 

Credit institutions, net 1,118,418 3,559,905 

Other assets and liabilities -562,361 -2,025,967 

Total 3,018,311 798,501 

Cash flows from operating activities 5,164,417 2,722,665 

50 Acquisition of subsidiaries -20,148 -12,804 

Sale of subsidiaries 0 0 

Acquisiton of tangible assets -462,473 -246,257 

Acquisiton of intangible assets -61,483 -24,948 

Cash flows from investment activities -544,104 -284,009 

Buy-back of own shares -1,921,695 -284,522 

Subordinated debt 758,968 -178,269 

Cash flows from financing activities -1,162,727 -462,791 

Cash flow for the year 3,457,586 1,975,865 

Liquid assets, beginning of period 11,067,585 9,091,720 

Liquid assets, end of period 14,525,171 11,067,585 

Liquid assets, end of period, comprise: 

Cash in hand, etc. 974,510 914,341 

Amounts due from credit institutions and central banks in less than three months 13,550,661 10,153,244 

Liquid assets, end of period 14,525,171 11,067,585 


Note 

NOTES TO THE PROFIT AND LOSS ACCOUNT 



1 Interest income 

Balances due from credit institutions and central banks 519,335 331,753 867,993 567,449 

Advances 4,667,119 3,493,771 3,907,723 2,869,085 

Bonds 504,089 572,709 494,732 562,737 

Derivative instruments 440,238 219,776 440,238 219,776 

Of which: 

Currency contracts 517,429 371,975 517,429 371,975 

Interest-rate contracts -77,191 -152,199 -77,191 -152,199 

Other 29 12,703 29 12,544 

Total 6,130,810 4,630,712 5,710,715 4,231,591 

Of which income from repos 

Balances due from credit institutions and central banks 80,065 49,016 80,065 49,016 

Advances 11,037 19,144 11,037 19,144 

2 Interest expenses 

Balance due to credit institutions and central banks 458,265 204,067 716,917 406,283 

Deposits 1,751,422 1,121,438 1,607,561 1,013,182 

Issued bonds 741,613 418,142 741,613 418,142 

Subordinated debt 138,674 131,148 138,674 131,148 

Other 5,075 1,855 4,824 514 

Total 3,095,049 1,876,650 3,209,589 1,969,269 

Of which expenses on repos 


Deposits 1,599 4,909 1,599 4,909 

3 Fees and commission received 

Securities trading and safe-custody accounts 1,039,611 810,877 860,826 652,321 

Payment transfers 157,378 159,041 157,378 159,041 

Loan management fee 128,893 184,783 108,493 158,586 

Guarantee commission 194,918 174,344 189,366 171,846 

Other fees and commissions 262,740 271,205 111,463 117,831 

Total 1,783,540 1,600,250 1,427,526 1,259,625 



Note 



4 Revaluations 

Bonds 149,238 187,156 151,470 187,459 

Shares, etc. 416,733 197,208 392,096 161,186 

r Foreign exchange 

Currency, interest-rate, share, commodity and other contracts 

344,052 291,120 294,860 247,115 

and other derivative instruments 

269,347 285,933 269,440 286,069 

Assets in investment pools 1,036,087 1,438,210 1,036,087 1,438,210 

Deposits in investment pools -1,036,087 -1,438,210 -1,036,087 -1,438,210 

Other assets -112,865 -38,718 -112,476 -38,863 

Issued bonds 10,101 -3,025 10,101 -3,025 

Other liabilities 65,431 27,400 65,431 28,302 

Total 1,142,037 947,074 1,070,922 868,243 

Revaluation of trading portfolio 899,527 898,699 830,966 822,206 

Revaluation of investment portfolio 242,510 48,375 239,956 46,037 

Total 1,142,037 947,074 1,070,922 868,243 

5 Other operating income 

Income on real estate 48,191 47,292 58,040 57,322 

Profit from the sale of real property/machinery and equipment 3,801 9,433 3,400 1,418 

Other ordinary income 343,282 329,423 126,079 98,365 

Total 395,274 386,148 187,519 157,105 

6 Personnel and administrative expenses 

Staff costs 

Salaries, etc. 1,764,603 1,575,492 1,442,467 1,267,134 

Pensions 249,710 226,057 210,377 191,730 

Social security 151,263 134,573 140,597 125,215 

Total 2,165,576 1,936,122 1,793,441 1,584,079 

Salaries and emoluments to management bodies 

Management Board 14,767 16,169 14,767 16,169 

Supervisory Board 1,030 1,030 1,030 1,030 

Shareholder representatives 1,793 1,767 1,793 1,767 

Total 17,590 18,966 17,590 18,966 

Other administrative expenses 1,436,504 1,135,941 1,349,709 1,060,665 

Total personnel and administrative expenses 3,619,670 3,091,029 3,160,740 2,663,710 

Salaries, etc. 

Salaries and other short-term employee benefits 1,731,587 1,520,093 1,413,001 1,218,401 

Other long-term employee benefits 5,992 7,079 4,979 5,784 

Share-based payment 27,024 48,320 24,487 42,949 

Total 1,764,603 1,575,492 1,442,467 1,267,134 


Note 




Other administrative expenses 

IT 361,161 274,082 519,432 406,071 

Rent, lighting, heating, etc. 99,628 83,207 69,543 62,170 

Postage, telephone, etc 123,107 98,667 111,845 87,624 

Other administrative expenses 852,608 679,985 648,889 504,800 

Total 1,436,504 1,135,941 1,349,709 1,060,665 

7 Auditors’ fee 

Total fee to Jyske Bank A/S's auditors elected at the Annual 

General Meeting and to locally elected auditors in the 

international units 6,051 6,067 3,998 4,038 

Of which for services other than auditing 2,647 2,671 2,411 2,394 

In addition to fees to the auditors elected at the Annual General 

Meeting expenses were also incurred by the Internal Audit 

Department 

8 Profit/loss on investments in associates and group 

enterprises 

9 Tax 

Profit/loss on investments in associated undertakings 7,647 -2,640 20,529 31,037 

Profit/loss on holdings in group enterprises 0 0 573,479 498,380 

Total 7,647 -2,640 594,008 529,417 

Current tax 662,935 636,304 507,338 469,436 

Change in deferred tax 47,037 -69,073 60,059 -26,662 

Tax on consolidated undertakings 0 0 131,953 104,495 

Adjustment of tax for previous years. -33,361 -103,491 -32,142 -100,199 

Tax on loan impairment balance 0 9,701 0 9,701 

Total 676,611 473,441 667,208 456,771 

Effective tax rate 

Danish corporate tax rate 28.0 28.0 28.0 28.0 

Revised Danish corporate tax rate 0.0 -0.7 0.0 -0.7 

Adjustments as regards previous years -1.1 -4.5 -1.2 -4.6 

Sale of Totalkredit -2.2 -0.1 -2.2 -0.1 

Non-taxable income and non-deductible 

expenses, etc. -0.1 -0.1 -0.1 -0.1 

Tax on loan impairment balance 0.0 0.3 0.0 0.3 

Other -0.5 -1.1 -0.4 -1.3 

Effective tax rate 24.1 21.8 24.1 21.5 



Note 



10 Earnings per share 

Net profit/loss for the year 2,133,526 1,701,353 

Of which minority shareholders -26,968 -29,403 

The share held by Jyske Bank A/S shareholders 2,106,558 1,671,950 

Average number of shares 62,687,500 63,829,167 

Average number of own shares -2,535,490 -1,208,556 

Average number of shares in circulation 60,152,010 62,620,611 

Number of outstanding shares in circulation at year end 56,753,227 61,999,902 

Earnings per share (EPS) DKK 35.02 26.70 

Earnings per share, diluted (EPS-D) DKK 35.02 26.70 

Core earnings per share 

Core earnings 2,270,000 1,747,000 

Average number of shares in circulation 60,152,010 62,620,611 

Core earnings per share 37.74 27.90 


Note 

(DKK 1,000) 

11 Contractual time to maturity 

NOTES TO THE BALANCE SHEET 

The Jyske Bank Group 2006 At call Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 

Balances due from credit institutions and central 

banks 

Fixed interest rate 437,351 13,901,968 0 0 0 14,339,319 

Floating rate 1,379,472 1,612 0 0 0 1,381,084 

Total 1,816,823 13,903,580 0 0 0 15,720,403 

Advances 

Fixed interest rate 57,988 17,960,219 3,271,775 4,014,979 2,868,303 28,173,264 

Floating rate 365,175 19,923,074 26,329,933 17,552,771 14,841,264 79,012,217 

Total 423,163 37,883,293 29,601,708 21,567,750 17,709,567 107,185,481 

Bonds 


Floating rate 0 123,920 0 1,636,166 3,325,978 5,086,064 

Total 1,444 2,608,666 1,183,307 2,886,502 7,001,865 13,681,784 

LIABILITIES 

Balance due to credit institutions and central banks 

Fixed interest rate 571,101 9,574,867 3,053,774 0 0 13,199,742 

Floating rate 3,952,145 240,176 143,840 0 0 4,336,161 

Total 4,523,246 9,815,043 3,197,614 0 0 17,535,903 

Deposits 

Fixed interest rate 0 17,390,233 920,465 38,652 0 18,349,350 

Floating rate 49,304,779 3,956,647 596,358 608,506 3,461,382 57,927,672 

Total 49,304,779 21,346,880 1,516,823 647,158 3,461,382 76,277,022 

Issued bonds 

Fixed interest rate 0 4,885,725 871,037 1,634,464 161,974 7,553,200 

Floating rate 0 0 167,760 10,216,157 7,456,000 17,839,917 

Total 0 4,885,725 1,038,797 11,850,621 7,617,974 25,393,117 

Subordinated debt 

Fixed interest rate 0 0 0 0 447,360 447,360 

Floating rate 0 0 0 0 2,870,560 2,870,560 

Total 0 0 0 0 3,317,920 3,317,920 



Note 

(DKK 1,000) 


The Jyske Bank Group 2005 At call Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 


banks 

Fixed interest rate 352,147 8,690,400 1,117,361 790,319 0 10,950,227 

Floating rate 1,896,234 67,037 0 0 0 1,963,271 

Total 2,248,381 8,757,437 1,117,361 790,319 0 12,913,498 

Advances 


Floating rate 905,671 14,851,582 21,052,543 16,576,446 11,580,517 64,966,759 

Total 979,572 30,492,827 25,498,651 20,392,304 13,516,649 90,880,003 

Bonds 

Fixed interest rate 3,847 2,613,840 490,925 2,004,750 4,880,912 9,994,274 

Floating rate 0 4,938 73,954 2,223,300 3,526,635 5,828,827 

Total 3,847 2,618,778 564,879 4,228,050 8,407,547 15,823,101 

LIABILITIES 



Floating rate 4,225,731 216,749 101,429 0 0 4,543,909 

Total 4,796,893 10,222,222 1,988,882 0 0 17,007,997 

Deposits 

Fixed interest rate 65 15,591,350 1,233,908 51,971 0 16,877,294 

Floating rate 45,386,323 4,776,187 649,683 579,349 1,433,051 52,824,593 

Total 45,386,388 20,367,537 1,883,591 631,320 1,433,051 69,701,887 

Issued bonds 

Fixed interest rate 0 219,473 188,100 1,254,576 149,210 1,811,359 

Floating rate 0 2,238,150 0 7,813,826 4,103,275 14,155,251 

Total 0 2,457,623 188,100 9,068,402 4,252,485 15,966,610 


Fixed interest rate 0 0 0 74,605 447,631 522,236 

Floating rate 0 0 96,986 186,512 1,753,218 2,036,716 

Total 0 0 96,986 261,117 2,200,849 2,558,952 


Note 

(DKK 1,000) 



Jyske Bank 2006 At call Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 


banks 

Fixed interest rate 437,351 29,630,103 2,699,197 436,753 231,592 33,434,996 

Floating rate 1,232,835 21 0 0 0 1,232,856 

Total 1,670,186 29,630,124 2,699,197 436,753 231,592 34,667,852 

Advances 


Floating rate 140,323 16,528,277 28,666,666 12,887,288 16,372,452 74,595,006 

Total 338,894 19,371,869 30,881,229 15,936,233 18,359,286 84,887,511 

Bonds 


Floating rate 0 123,920 0 1,636,166 3,076,751 4,836,837 

Total 1,444 2,608,666 1,183,307 2,886,502 6,752,638 13,432,557 

LIABILITIES 



Floating rate 5,121,979 178,781 0 0 0 5,300,760 

Total 5,693,080 15,514,071 3,124,999 0 0 24,332,150 

Deposits 

Fixed interest rate 0 15,009,741 760,130 38,652 0 15,808,523 

Floating rate 49,364,395 372,621 156,855 607,241 3,461,382 53,962,494 

Total 49,364,395 15,382,362 916,985 645,893 3,461,382 69,771,017 

Issued bonds 

Fixed interest rate 0 4,885,725 871,037 1,634,464 161,974 7,553,200 

Floating rate 0 0 167,760 10,216,157 7,456,000 17,839,917 

Total 0 4,885,725 1,038,797 11,850,621 7,617,974 25,393,117 


Fixed interest rate 0 0 0 0 447,360 447,360 

Floating rate 0 0 0 0 2,870,560 2,870,560 

Total 0 0 0 0 3,317,920 3,317,920 



Note 

(DKK 1,000) 


Jyske Bank 2005 At call Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 


banks 

Fixed interest rate 352,147 22,356,094 4,857,637 563,120 321,317 28,450,315 

Floating rate 1,733,976 0 0 0 0 1,733,976 

Total 2,086,123 22,356,094 4,857,637 563,120 321,317 30,184,291 

Advances 


Floating rate 223,245 11,355,675 23,601,320 13,052,920 12,615,750 60,848,910 

Total 241,276 14,194,409 26,264,811 15,907,149 13,942,503 70,550,148 

Bonds 

Fixed interest rate 3,847 2,613,840 490,925 2,004,750 4,880,912 9,994,274 

Floating rate 0 4,938 73,954 2,223,300 3,226,386 5,528,578 

Total 3,847 2,618,778 564,879 4,228,050 8,107,298 15,522,852 

LIABILITIES 


Fixed interest rate 571,162 15,450,485 1,948,816 7,312 0 17,977,775 

Floating rate 5,187,292 8,279 0 0 0 5,195,571 

Total 5,758,454 15,458,764 1,948,816 7,312 0 23,173,346 

Deposits 

Fixed interest rate 0 13,330,597 1,173,316 44,660 0 14,548,573 

Floating rate 45,523,873 1,487,378 172,647 578,080 1,772,680 49,534,658 

Total 45,523,873 14,817,975 1,345,963 622,740 1,772,680 64,083,231 

Issued bonds 

Fixed interest rate 0 219,473 188,100 1,254,576 149,210 1,811,359 

Floating rate 0 2,238,150 0 7,813,826 4,103,275 14,155,251 

Total 0 2,457,623 188,100 9,068,402 4,252,485 15,966,610 


Fixed interest rate 0 0 0 74,605 447,631 522,236 

Floating rate 0 0 96,986 186,512 1,753,218 2,036,716 

Total 0 0 96,986 261,117 2,200,849 2,558,952 


Note 

(DKK 1,000) 

11 Anticipated actual time to maturity 


The Jyske Bank Group 2006 Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 


banks 2,112,943 271,839 10,610,645 2,724,976 15,720,403 

Advances 4,412,163 16,640,721 58,522,367 27,610,230 107,185,481 

LIABILITIES 


14,338,289 3,197,614 0 0 17,535,903 

Deposits 10,436,990 12,819,818 13,049,352 39,970,862 76,277,022 

Issued bonds 4,885,725 1,038,797 11,850,621 7,617,974 25,393,117 

The Jyske Bank Group 2005 Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 

ASSETS 


banks 1,790,515 2,100,983 8,537,045 484,955 12,913,498 

Advances 1,409,459 11,646,870 53,141,078 24,682,596 90,880,003 

LIABILITIES 


15,019,115 1,988,882 0 0 17,007,997 

Deposits 728,803 6,582,977 27,148,886 35,241,221 69,701,887 

Issued bonds 2,457,623 188,100 9,068,402 4,252,485 15,966,610 

Standard terms 

Retail customers 

The Bank’s standard notice of termination for floating rate loans and credits is three months. Fixed-rate loans are uncallable. 

Customers may terminate their commitment with the Bank without notice, or in the case of fixed-rate credits at a notice of two 

business days. In the case of default, the Bank may terminate any agreement without notice. 

In principle, an agreement is signed to provide the Bank with information of a financial nature. Said agreement may be waived 

where additional information on commitment, behaviour and collateral is deemed adequate to assess the credit risk. 

Small and medium-sized commercial customers 

The Bank’s standard notice of termination for floating rate loans and credits is four weeks. Fixed-rate loans are uncallable. In 

the case of default, the commitment may be terminated without notice. 

Unless security has been provided in full, the customer is obliged to furnish the Bank with information of a financial nature. 

It is the Bank’s policy that the majority shareholder provides a guarantee for the commitment in part or in full. 

Corporate customers 

The terms of notice are agreed upon on an ad-hoc basis, possibly in keeping with the terms otherwise applicable to 

commercial customers. As regards facilities, which are uncallable at short notice, covenants regarding financial ratios and 

material adverse changes are considered standard terms. 

In principle, financial information shall be submitted on quarterly basis. 

Typically, agreements on ISDA or service agreements, negative pledge or Pari passu are entered into. 



Note 



12 Balances due from credit institutions and central banks 

At notice with central banks 8,492,518 3,697,495 8,492,518 3,697,495 

Credit institutions 7,227,885 9,216,003 26,175,334 26,486,796 

Total 15,720,403 12,913,498 34,667,852 30,184,291 

13 Credit loss expenses 

Loan impairment balance and total provisions as at 1 

January 

1,278,636 1,526,379 1,163,224 1,379,832 

Currency translation adjustment 87 308 0 1 

Loan impairment/provisions for the full year -404,613 -1,843 -379,910 -5,378 

Loss already covered by loan impairment/provisions -144,285 -310,333 -121,060 -262,608 

Adjustment relating to interest-rate discounting 

Loan impairment balance and total provisions 

36,461 64,125 29,946 51,377 

as at 31.12. 766,286 1,278,636 692,200 1,163,224 

Loan impairment balance 639,373 1,135,057 518,983 883,632 

Provisions for guarantees 126,913 143,579 173,217 279,592 

Loan impairment balance and total provisions 

as at 31.12. 

766,286 1,278,636 692,200 1,163,224 

Loan impairment/provisions for the full year -404,613 -1,843 -379,910 -5,376 

Loss not already covered by loan impairment/provisions 136,741 144,739 133,785 141,649 

Recoveries -80,176 -74,278 -76,981 -69,932 

Recognised in the Profit and Loss Account -348,048 68,618 -323,106 66,341 

Individual loan impairment as at 01.01 633,774 854,424 443,922 569,177 

Change in exchange rates 87 302 0 0 

Loan impairment for the full year -83,657 43,498 -14,404 101,928 

Loss already covered by impairment -140,360 -296,091 -118,348 -252,151 

Adjustment relating to interest-rate discounting 20,192 31,641 16,349 24,968 

Individual loan impairment as at 31.12 430,036 633,774 327,519 443,922 

Individual provisions for loss on guarantees as at 01.01 38,153 34,460 123,940 186,360 


Provisions for the full year -12,271 17,935 -70,842 -51,963 

Loss already covered by provisions -3,925 -14,242 -2,712 -10,457 

Individual provisions for loss on guarantees as at 31.12 21,957 38,153 50,386 123,940 

Loan impairment as at 01.01, by groups 501,283 546,813 439,710 460,070 


Loan impairment for the full year -308,215 -78,020 -261,843 -46,770 

Adjustment relating to interest-rate discounting 16,269 32,484 13,597 26,409 

Loan impairment as at 31.12, by groups 209,337 501,283 191,464 439,710 

Provisions for loss on guarantees as at 01.01, by groups 105,426 90,682 155,652 164,225 


Provisions for the full year -470 14,744 -32,821 -8,573 

Provisions for loss on guarantees as at 31.12, by groups 104,956 105,426 122,831 155,652 


Note 




14 Bonds stated at fair value 

Mortgage credit bonds 8,096,475 11,102,199 8,057,221 11,003,639 

Government bonds 1,723,609 1,363,504 1,633,750 1,179,319 

Other bonds 3,861,700 3,357,398 3,741,586 3,339,894 

Total 13,681,784 15,823,101 13,432,557 15,522,852 

Security 

Bonds deposited at Danmarks Nationalbank, the Danish 

Securities Centre and at foreign clearing houses, etc. in 

connection with clearing, margin collateral and settlement of 

securities (market value) 

15 Shares, etc. 

Note 

186,930 381,960 

Shares/mutual fund certificates listed on the Copenhagen 

Stock Exchange 93,085 145,967 93,085 145,967 

Shares/mutual fund certificates listed on other 

exchanges 212,339 259,322 212,339 259,322 

Unlisted shares are stated at fair value. 797,934 893,524 433,170 553,604 

Other shares 30 30 0 0 

Total 1,103,388 1,298,843 738,594 958,893 

(DKK 1,000) 

16 Group enterprises and associated undertakings 2006 

Group 

enterprises 

Associated 

undertakings 

Group 

enterprises 

Associated 

undertakings 

Total cost, beginning of period 0 16,542 2,831,471 251,585 

Currency translation adjustment 0 0 -3,291 0 

Additions 0 4 120,148 177,809 

Disposal 0 0 666,527 0 

Total cost, end of period 0 16,546 2,281,801 429,394 

Write-ups and write-downs, Jan. 1 0 -8,240 915,259 55,697 


Result 0 0 438,951 0 

Dividend 0 0 115,980 0 

Goodwill - 0 - 0 

Other capital movements 0 0 4,660 0 

Write-ups/downs for the year - 34 - 15,492 

Reversed write-ups/downs 0 0 35,991 0 

Write-ups/downs at year-end 0 -8,206 1,279,861 71,189 

Recognised value, end of period 0 8,340 3,561,662 500,583 

of which credit institutions 0 0 2,456,809 0 

See Group chart page 89 




Note 

(DKK 1,000) 

16 Group enterprises and associated undertakings 2005 

Note 



Group 

enterprises 

Associated 

undertakings 

Group 

enterprises 

Associated 

undertakings 

Total cost, beginning of period 0 342,581 2,625,761 517,083 

Currency translation adjustment 0 0 31,370 0 

Additions 0 2,119 184,000 1,069 

Disposal 0 328,158 9,660 266,567 

Total cost, end of period 0 16,542 2,831,471 251,585 

Write-ups and write-downs, Jan. 1 0 -265,157 937,047 -173,313 

Change of practice 0 0 -21,320 0 

Currency translation adjustment 0 0 7,962 0 

Result 0 0 393,886 0 

Dividend 0 0 151,168 0 

Goodwill - 0 - 0 

Other capital movements 0 0 -256,168 0 

Write-ups/downs for the year - -4,349 - 29,335 

Reversed write-ups/downs 0 -261,266 5,020 -199,675 

Write-ups/downs at year-end 0 -8,240 915,259 55,697 

Recognised value, end of period 0 8,302 3,746,730 307,282 

of which credit institutions 0 0 2,274,505 0 

(DKK 1,000) 2006 2006 


2005 2005 

17 Investment pools 

ASSETS 

Pension pools 

Children’s 

savings pools Pension pools 

Children’s 

savings pools 

Cash 656,807 28,908 547,634 28,275 

Index bonds 162,518 7,717 197,650 9,356 

Other bonds 5,416,385 234,572 5,082,637 240,050 

Other shares, etc. 5,698,562 247,249 3,765,505 181,310 

Mutual funds 0 0 24,897 1,202 

Other assets 121,910 5,303 90,762 4,229 

Total assets 12,056,182 523,749 9,709,085 464,422

Note 

(DKK 1,000) 

18 Intangible assets 2006 



Goodwill Other Total Goodwill Other Total 

Total cost, beginning of period 200,631 39,331 239,962 200,631 18,934 219,565 

Currency translation adjustment -121 0 -121 -121 0 -121 

Additions 2,583 61,820 64,403 2,583 44,337 46,920 

Disposal 0 7,841 7,841 0 0 0 

Total cost, end of period 203,093 93,310 296,403 203,093 63,271 266,364 

Write downs and depreciation, Jan. 1 0 26,024 26,024 0 11,737 11,737 

Currency translation adjustment 0 0 0 0 0 0 

Write downs for the year - 19,672 19,672 - 14,992 14,992 

Depreciation for the year 0 0 0 0 0 0 

Reversed write downs and depreciation 0 5,042 5,042 - 0 0 

Write downs/depreciation, year-end 0 40,654 40,654 0 26,729 26,729 

Recognised value, end of period 203,093 52,656 255,749 203,093 36,542 239,635 

On the basis of an impairment test, it is not deemed necessary to write-down goodwill acquired in connection with the acquisition of 60% of the subsidiary company, 

Berben's Effectenkantoor. 

By the impairment test the discounted values of anticipated future cash flows are compared with the book values. 

Future cash-flows will be based on realised result for 2006 and projections for the coming five years. 

The terminal value for the period 2012 and later is determined on the assumption of an annual rate of growth of 3%. The discount rate is 10% before tax. 

18 Intangible assets 2005 

Goodwill Other Total Goodwill Other Total 

Total cost, beginning of period 183,809 31,430 215,239 183,809 15,684 199,493 


Additions 16,269 7,901 24,170 16,269 3,250 19,519 

Disposal 0 0 0 0 0 0 

Total cost, end of period 200,631 39,331 239,962 200,631 18,934 219,565 

Write downs and depreciation, Jan. 1 0 14,103 14,103 0 6,397 6,397 


Write downs for the year - 11,921 11,921 - 5,340 5,340 

Depreciation for the year 0 0 0 0 0 0 

Reversed write downs and depreciation 0 0 0 - 0 0 

Write downs/depreciation, year-end 0 26,024 26,024 0 11,737 11,737 

Recognised value, end of period 200,631 13,307 213,938 200,631 7,197 207,828 



Note 



19 Domicile properties 

Restated value, beginning of period 1,547,316 1,541,250 1,399,819 1,398,451 

Currency translation adjustment 1,414 2,587 -27 39 

Additions during the year, including improvements 150,864 21,644 150,778 21,014 

Disposals for the year 9,695 3,053 9,695 3,053 

Depreciation 8,416 8,326 7,488 7,458 

Positive changes in value recognised directly in shareholders’ 

funds during the year 26,564 23,581 21,904 21,305 

Positive changes in value recognised directly in the Profit and 

Loss Account during the year 10,076 0 10,076 0 

Negative changes in values recognised directly in the Profit 

and Loss Account during the year 15,498 30,367 15,498 30,479 

Restated value, end of period 1,702,625 1,547,316 1,549,869 1,399,819 

Cost less accumulated depreciation and amortisation 1,488,808 1,360,302 1,371,789 1,243,643 

For mortgage credit institutions, collateral has been provided in 

the form of land and buildings the booked amount of which is 1,361,054 1,248,893 1,361,054 1,248,893 

20 Other tangible assets 

Total cost, beginning of period 434,488 335,512 167,991 147,561 

Currency translation adjustment -467 383 -1 0 

Additions 331,609 111,366 265,586 22,666 

Disposal 102,695 12,773 2,125 2,236 

Total cost, end of period 662,935 434,488 431,451 167,991 

Write downs and depreciation, Jan. 1 280,231 220,781 119,989 111,885 

Currency translation adjustment -478 161 0 0 

Write downs for the year 141,722 72,959 65,171 10,039 

Reversed write downs and depreciation 90,965 13,670 1,820 1,935 

Write downs/depreciation, year-end 330,510 280,231 183,340 119,989 

Recognised value, end of period 332,425 154,257 248,111 48,002 

Other tangible assets comprise equipment and refurbishment of rented premises 


Note 





21 Deferred tax 

Deferred tax assets 13,870 2,154 0 0 

Deferred tax liabilities 322,467 248,921 68,550 2,361 

Net deferred tax 308,597 246,767 68,550 2,361 

In addition to the provisions for deferred tax shown in the balance sheet, deferred tax amounted to DKK 0m (2005 DKK 0m) relating to shares in associated 

and group undertakings and joint ventures held for less than 3 years. 

Change in deferred tax 

The Jyske Bank Group 2006 

Beginning of 

year 

Foreign 

currency 

translation 

adjustment 

Recognised in 

the net profit 

for the year 

Recognised in 


funds 

Other 

adjustments Year-end 

Intangible assets 953 0 11,896 0 0 12,849 

Tangible assets 347,551 0 -6,677 6,130 0 347,004 

Advances, etc. -10,529 0 -43,686 0 0 -54,215 

Provisions for pensions, etc. -134,738 -44 -9,984 0 0 -144,766 

Other 43,530 -1,208 95,488 0 9,915 147,725 

Total 246,767 -1,252 47,037 6,130 9,915 308,597 

The Jyske Bank Group 2005 

Beginning of 

year 

Foreign 

currency 

translation 

adjustment 

Recognised in 


for the year 

Recognised in 


funds 

Other 


Intangible assets -2,818 0 3,771 0 0 953 


Advances, etc. -9,830 0 -699 0 0 -10,529 

Provisions for pensions, etc. -143,471 0 8,733 0 0 -134,738 

Other 115,323 -237 -62,734 0 -8,822 43,530 

Total 281,170 -237 -69,073 43,729 -8,822 246,767 

Jyske Bank 2006 

Beginning of 

year 

Foreign 

currency 

translation 

adjustment 

Recognised in 


for the year 

Recognised in 


funds 

Other 


Intangible assets 2,222 0 7,729 0 0 9,951 


Advances, etc. -38,781 0 -3,811 0 0 -42,592 

Provisions for pensions, etc. -115,467 0 -11,537 0 0 -127,004 

Other 35,651 0 79,174 0 0 114,825 

Total 2,361 0 60,059 6,130 0 68,550 

Jyske Bank 2005 

Beginning of 

year 

Foreign 

currency 

translation 

adjustment 

Recognised in 


for the year 

Recognised in 


funds 

Other 


Intangible assets 2,786 0 -564 0 0 2,222 

Tangible assets 25,707 0 49,300 43,729 0 118,736 

Advances, etc. -12,125 0 -26,656 0 0 -38,781 

Provisions for pensions, etc. -133,779 0 18,312 0 0 -115,467 

Other 102,705 0 -67,054 0 0 35,651 

Total -14,706 0 -26,662 43,729 0 2,361 



Note 



22 Other assets 

Positive market value of derivative instruments 6,627,709 6,688,284 6,610,561 6,683,938 

Interest and commission due 404,402 859,374 417,091 876,264 

Other assets 581,427 441,558 166,543 175,969 

Total 7,613,538 7,989,216 7,194,195 7,736,171 

23 Balance due to credit institutions and central banks 

Central banks 311,333 275,545 311,333 275,545 

Balance due to credit institutions 17,224,570 16,732,452 24,020,817 22,897,801 

Total 17,535,903 17,007,997 24,332,150 23,173,346 

24 Deposits 

At call 53,499,995 48,891,466 49,671,751 45,753,986 

At notice 516,614 484,337 379,679 338,195 

Time deposits 18,303,568 16,810,098 15,762,742 14,475,064 

Special deposits 3,956,845 3,515,986 3,956,845 3,515,986 

Total 76,277,022 69,701,887 69,771,017 64,083,231 

25 Other liabilities 

Repo/reverse repos 1,723,863 2,500,865 1,723,863 2,500,865 

Negative market value of derivative instruments 6,486,951 6,140,135 6,486,890 6,143,866 

Interest and commission owed 322,205 646,909 333,619 718,867 

Other liabilities 6,119,998 6,280,102 5,747,163 5,876,406 

Total 14,653,017 15,568,011 14,291,535 15,240,004 


Note 




26 Provisions for pensions and similar liabilities 

Provisions for pensions and similar liabilities 

Provisions for defined benefit plans 455,063 421,715 393,622 356,872 

Provisions for long-term employee benefits 68,770 60,345 59,965 52,627 

Recognised in the balance sheet, end of period 523,833 482,060 453,587 409,499 

Provisions for defined benefit plans 

Present value of pension obligation 586,699 550,182 507,837 472,046 

Commercial value of pension assets 131,636 128,467 114,215 115,174 

Net liabilities recognised in the balance sheet 455,063 421,715 393,622 356,872 

Increase in provisions for defined benefit plans 

Provisions, beginning of period 550,182 484,565 472,046 412,781 


Disposals relating to divestment of undertakings -12,266 0 0 0 

Costs for the current financial year 25,297 56,517 20,313 53,187 

Calculated interest expenses 27,523 19,493 23,602 15,867 

Actuarial losses/gains 4,708 283 0 0 

Pensions paid -9,108 -10,723 -8,124 -9,789 

Provisions, end of period 586,699 550,182 507,837 472,046 

Increase in fair value of pension assets 

Assets, beginning of period 128,467 68,151 115,175 55,926 

Revaluations 131 0 0 0 

Anticipated return on pension assets 733 653 0 0 

Actuarial gains/losses 866 0 0 0 

Contributions paid 1,461 61,306 0 59,248 

Pensions paid -22 -1,643 -960 0 

Assets, end of period 131,636 128,467 114,215 115,174 

Pension costs recognised in the Profit and Loss Account 

Costs for the current financial year 25,297 56,517 20,313 53,187 

Calculated interest related to liabilities 27,523 19,493 23,602 15,867 

Anticipated return on pension assets -733 -653 0 0 

Total recognised defined benefit plans 52,087 75,357 43,915 69,054 

Total recognised defined contribution plans 197,623 150,700 166,462 122,676 

Recognised in the Profit and Loss Account 249,710 226,057 210,377 191,730 

The cost is recognised under staff and administrative expenses 

Pension assets: 

Shares 12,653 43,203 12,653 43,203 

Liquid assets 101,562 71,972 101,562 71,972 

Others 17,421 13,292 0 0 

Return on pension assets 

Actual return on pension assets 1,599 653 0 0 

Anticipated return on pension assets 733 653 0 0 

Actuarial losses on assets related to the schemes 866 0 0 0 

Pension assets include 3,380 shares in Jyske Bank A/S (2005: 103,380 shares). 



Note 


(DKK 1,000) 2006 2005 2004 

26 Group pension liabilities 

Actuarial pension liabilities 586,699 550,182 472,046 

Pension assets 131,636 128,467 115,174 

Surplus/deficit 455,063 421,715 356,872 

Empirical changes to pension liabilities 4,708 - - 

Empirical changes to pension assets 866 - - 

Actuarial assumptions 

Defined benefit plans 

Gibraltar 

Discount rate 5.10% 5.20% 

Future rate of salary increase 5.10% 4.80% 

Anticipated return on pension assets 5.40% 5.40% 

Retirement remuneration 



Jyske Banks Pensionstilskudsfond 



Long-term employee benefits 



Defined contribution pension plans 

A large part of the Group’s pension schemes are defined contribution plans under which payments are made into pension 

funds, primarily Bankpension. Said payments are charged to the Profit and Loss Account as accrued. 

Defined benefit plans 

Upon retirement from the Group, retirement remuneration equalling a maximum of one year’s salary is paid. In 2006, a total of 

DKK 433.6m (2005: DKK 411.3m) was recognised in the Balance Sheet, calculated as the present value of the part of the 

overall liability which relates to the term during which employees were employed with the Group. Employees hired not later 

than 31 August 2005 are offered participation in retirement remuneration scheme. 

Jyske Bank (Gibraltar) operate defined benefit plans. Said plans are managed by independent pension funds, which invest 

contributed funds to cover their liabilities. At year-end 2006, provisions amounted to DKK 14.9m and determined as the present 

value of the liabilities of DKK 32.3m less the fair value of the assets of DKK 17.4m. 

Jyske Bank A/S’s Pensionstilskudsfond is a fund which offers supplementary pensions to current and former members of the 

Jyske Bank Management Board and their surviving relatives. At year-end 2006, provisions amounted to DKK 6.6m and 

determined as the present value of the liabilities of DKK 120.8m less the fair value of the assets of DKK 114.2m. 

Long-term employee benefits 

An anniversary bonus equalling one month’s pay is paid when an employee has been with the Group for 25 years and 40 

years. At year-end 2006, provisions amounted to DKK 51.4m and determined as the present value of the total liability. 

Other long-term employee benefits relate to other salary and pension-related benefits paid to an employee upon his/her 

retirement. In 2002, a provision of DKK 17.4m was made. 


Note 




27 Other provisions 

Provisions for litigation, beginning of period 29,289 28,220 29,289 28,220 

Provisions for the year 0 4,500 0 4,500 

Reversed provisions for the year 17,465 36 17,465 36 

Provisions drawn upon for the year 8,245 3,395 8,245 3,395 

Provisions for ligitation, end of period 3,579 29,289 3,579 29,289 

The Bank is a party to a number of legal disputes arising from its business activities. The Bank estimates the risk involved in 

each individual case, and makes any necessary provisions which are booked under contingent liabilities. Cases for which 

provisions are made are expected to be concluded in 2007. There are no other significant contingent liabilities which have not 

been included in the Balance Sheet. 

28 Subordinated debt 

Subordinated debt: 

Var.% bond loan EUR 25m 05.05.2009 * 0 186,512 0 186,512 

Var.% bond loan EUR 5m 29.06.2006 0 37,302 0 37,302 

Var.% bond loan EUR 8m 28.07.2006 0 59,684 0 59,684 

6.41% bond loan EUR 10m 12.11.2009 * 0 74,605 0 74,605 

6.73% bond loan EUR 15m 2017-2026 111,840 111,908 111,840 111,908 

7.00% bond loan EUR 25m 29.05.2024 * 186,400 186,513 186,400 186,513 

Var.% bond loan EUR 10m 13.02.2023 74,560 74,605 74,560 74,605 

5.65% bond loan EUR 10m 27.03.2023 74,560 74,605 74,560 74,605 

5.67% bond loan EUR 10m 31.07.2023 74,560 74,605 74,560 74,605 

Var.% bond loan EUR 5m 19.04.2016 1,118,400 0 1,118,400 0 

1,640,320 880,339 1,640,320 880,339 

Hybrid core capital: 

Var.% bond loan EUR 125m Perpetual 932,000 932,563 932,000 932,563 

Var.% bond loan EUR 100m Perpetual 745,600 746,050 745,600 746,050 

1,677,600 1,678,613 1,677,600 1,678,613 

Total 3,317,920 2,558,952 3,317,920 2,558,952 

Subordinated debt included in the capital base 3,317,920 2,486,212 3,317,920 2,486,212 

* Jyske Bank can prepay the notes at the coupon date 3 years before the specified maturity date. 

Hybrid core capital is not subject to a maturity date. Subject to the approval of the Danish Financial Supervisory Authority, 

issues may be terminated by Jyske Bank, however, not until 10 years after the date of issue at the earliest. The loans cannot 

be terminated by the creditor. Under the loan agreements, borrowers are allowed to postpone interest payments on hybrid core 

capital, in the event that they are not able to meet the solvency requirements. Under such circumstances, dividend payments 

and the buy-back of issued shares are subject to certain restrictions. The rate of interest is floating, but maximised at 9% p.a. 

for the EUR 125m loan and 8% p.a. for the EUR 100m loan. 



Note 



29 Portfolio of own shares 

Own shares (’000) 5,255 1,103 5,255 1,103 

Nominal value of own shares (DKK ’000) 52,552 11,026 52,552 11,026 

Portfolio of own shares as % of the share capital 


8.48 1.75 8.48 1.75 

Acquisition of own shares 

Own shares (’000) 9,576 9,487 9,576 9,487 


Portfolio of acquired own shares as % of the share capital 

15.45 15.04 15.45 15.04 

Sale of own shares 

Own shares (’000) 4,324 8,397 4,324 8,397 


Portfolio of sold own shares as % of the share capital 

6.97 13.31 6.97 13.31 

Cancellation of own shares 

Own shares (’000), effected 1,100 4,900 1,100 4,900 

Total purchase price 3,299,803 2,661,253 3,299,803 2,661,253 

Total sales price 1,378,108 2,376,731 1,378,108 2,376,731 

The acquisition of own shares is primarily explained by transactions involving the Bank’s customers and other investors wishing to buy 

Jyske Bank shares. 

The Bank has acquired own shares which were subsequently cancelled thus reducing the nominal share capital. 

Share capital 

Opening share capital, no. of shares. 63,100,000 68,000,000 63,100,000 68,000,000 

Capital reduction as a result of the cancellation of own shares -1,100,000 -4,900,000 -1,100,000 -4,900,000 

Closing share capital, no. of shares. 62,000,000 63,100,000 62,000,000 63,100,000 

30 Solvency calculation and capital requirements 

Shareholders’ funds 9,636,979 9,477,058 9,581,854 9,396,586 

of which revalutation reserves 172,030 145,230 135,590 113,686 

Core capital 9,464,949 9,331,828 9,446,264 9,282,900 

Including hybrid core capital 1,622,705 1,608,659 1,624,699 1,601,483 

Deductions 269,619 216,092 239,635 207,828 

Core capital including hybrid core capital 

Including subordinated debt and revaluation 

10,818,035 10,724,395 10,831,328 10,676,555 

reserves 

1,812,350 952,829 1,775,910 921,285 

Excess hybrid core capital 54,895 69,954 52,901 77,130 

Deductions 44,946 262,899 1,123 1,035 

Subordinated debt less deductions 1,822,299 759,884 1,827,688 997,380 

Capital base less deductions 12,640,334 11,484,279 12,659,016 11,673,935 

Base capital requirements (solvency requirement) 8,937,576 7,882,583 8,952,150 8,007,905 

Weighted items not included in the trading portfolio 99,594,321 86,392,048 99,828,077 88,028,843 

Weighted items with market risk 12,125,374 12,140,241 12,073,804 12,069,966 

Total weighted items 111,719,695 98,532,289 111,901,881 100,098,809 

Solvency ratio 11.3 11.7 11.3 11.7 

Core capital ratio including hybrid core capital 9.7 10.9 9.7 10.7 

Core capital ratio excluding hybrid core capital 8.2 9.3 8.2 9.1

Note 




31 Repos and reverse repos 

Repos are included in the following items with: 

Balances due from credit institutions and central banks 2,169,742 2,760,254 2,169,742 2,760,254 

Advances 106,019 817,167 106,019 817,167 

Repos are included in the following items with 


Deposits and other debt 0 227,159 0 227,159 

Assets sold in connection with repos/reverse repos: 

Bonds 60,177 583,638 60,177 583,638 

32 Subordinated lending 

Associated undertakings 0 0 0 0 

Group enterprises 0 0 0 0 

Other undertakings 311,568 808,016 311,568 808,016 


NOTES TO CREDIT RISKS 

Notes to Credit Risks 

Note 

(DKK 1,000) 

33 Maturity matrix unutilised irrecoverable credit commitments 

Note 

The Jyske Bank Group 2006 Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 


banks 

Fixed interest rate 0 0 0 0 0 

Floating rate 414,000 0 0 0 414,000 

Total 414,000 0 0 0 414,000 

Advances 


Floating rate 872,068 193,531 1,122,493 486,776 2,674,868 

Total 872,068 193,531 1,122,493 486,776 2,674,868 

The Jyske Bank Group 2005 Up to 3 mth. 3 mth.-1 year 1-5 yrs over 5 years Total 


banks 


Floating rate 500,000 0 0 0 500,000 

Total 500,000 0 0 0 500,000 

Advances 


Floating rate 0 1,626,127 420,980 1,465,932 3,513,039 

Total 0 1,626,127 420,980 1,465,932 3,513,039 



34 Leasing contracts by contractual time to maturity* 

Gross leasing of a financial nature 

Maturity less than 1 year 1,627,365 1,610,927 

Maturity 1-5 years 3,549,704 2,803,609 

Maturity more than 5 years 491,682 527,185 

Total 5,668,751 4,941,721 

of which un-earned, future financial income 635,456 487,782 

Net leasing of a financial nature 5,033,295 4,453,939 

Net leasing of a financial nature 

Maturity less than 1 year 1,411,008 1,446,787 

Maturity 1-5 years 3,163,850 2,516,874 

Maturity more than 5 years 458,437 490,278 

Total 5,033,295 4,453,939 

Of the net investment, the non-guaranteed residual value, 

which accrue to the Group (open residual value) amount to 94,237 61,162 

Write-down of finance leases 32,040 58,818 

*) The Group's leases, entered into by the subsidiary Jyske Finans, are of a financial nature, and are recognised under Advances 

in the balance sheet. 

Leases include primarily equipment and to a lesser extent commercial properties. Primarily cars and vans; at the time of writing the 

stated non-guaranteed residual values relate to said agreements alone. 

Agreements are to a certain extent entered into in co-operation with distributors who guarantee the residual value. 


Note 




35 Guaranties, etc. 

Financial guarantees 10,929,226 9,697,042 26,648,991 23,318,938 

Guarantee for loss on mortgage credits 11,273,364 9,889,357 11,273,364 9,889,357 

Registration and re-financing guarantees 1,591,557 2,673,902 1,591,557 2,673,902 

Other guarantees 1,218,520 2,179,257 1,218,520 2,179,257 

Total 25,012,667 24,439,558 40,732,432 38,061,454 

Guarantees 

Basis of Accounts 

The credit review of the guarantee applicant takes into consideration the risk associated with the guarantee. 

Financial guarantees are primarily payment guarantees, and the risk is similar to that on credits. 

Guarantees for losses on mortgage credits are typically granted in relation to the ultimate risk on mortgage credit loans to 

retail customers and to a limited extend in relation to loans secured on commercial properties. The guarantee related to private 

property is within 80% and in relation to commercial properties within 60-80% of the property value as assessed by 

professional expert. 

Refinancing and registration guarantees are granted in connection with the registration of new and refinanced mortgage 

credit loans. Said guarantees are subject to an insignificant degree of risk. 

Other guarantees include other forms of guarantees at varying degrees of risk. Approx 35% involve performance guarantees. 

The risk is deemed to be less than on e.g. credits subject to flexible drawdown. 

36 Irrevocable credit commitments etc. 

Irrevocable credit commitments 1,609,269 1,886,912 1,609,269 1,886,912 

Other commitments 256,741 262,748 256,741 262,748 

Total 1,866,010 2,149,660 1,866,010 2,149,660 

Irrevocable credit commitments comprise only credit commitments with a term to maturity of more than one year as set out 

by the Danish Financial Supervisory Authority. 

The maximum credit risk is identical to the booked value of balances at call with central banks, balances due from credit 

institutions and central banks, advances, bonds and the positive market value of derivative financial instruments and offbalance 

sheet items in the form of guarantees and credit commitments. For the Jyske Bank Group, this amounts to DKK 

171,055m as at 31.12.2006 (2005: DKK 154,379m). 

37 Value of realised securities 

DKKm 2006 2005 

Real property, retail 41 21 

Real property, corporate 49 53 

Personal property, cars and rolling stock 49 29 

Other personal property 26 51 

Other security 13 23 

Guarantees 18 28 

Total 196 205 

Terms for satisfaction the possession of mortgaged property 

Where an agreement to enforce a security cannot be obtained, the customer is given adequate notice in the event of default – 

typically at least 8 days unless there is a risk of an irretrievable decrease in value. 

In relation to loans and credits backed by securities, specific limits are agreed upon for the provision of additional collateral or a 

forced sale of assets. Traditionally, a forced sale will be executed where the market value of the collateral amounts to 105- 

110% of the credit risk. 



38 Security by type 


DKKm Security Security 

Cash balances 10,522 5,346 

Highly liquid securities 27,349 32,328 

Real property, retail 22,083 11,067 

Real property, corporate 14,720 16,167 

Personal property, cars and rolling stock 5,311 4,573 

Other personal property 2,751 2,109 

Other security 1,494 2,381 

Total 84,230 73,971 

The collateral values are typically as follows: 

Private residential property: 60-90% depending on the source of appreciation, age, location, size and marketability. 

Commercial properties: 60-85% depending on source of appreciation, age, location and marketability of commercial value or 

independent assessment not more than three years old, alternatively the public assessment. 

The value of properties is assessed statistically on the basis of the trend the price of comparable properties. 

Personal property: 40-85% of the purchase price or independent assessment based on historical experience depending on 

the nature of the object. The value is reduced by 5-40% on an annual basis based on historical experiences. 

Highly liquid securities: 50-85% of an officially quoted market value of negotiable securities rated at least BBB-/Baa3. 

Guarantees: Are not added to the collateral value. At Group level, the credit rating of guarantor may be transferred to the 

debtor provided the credit rating of the guarantor is higher. 

39 Commitments covered by bank and other guarantees - 2006 

DKKm 

Bank guarantees 

Partly covered Fully covered 

Commitment, credit rating 1-5 97 68 



Commitment, no credit rating 149 19 

Total bank guarantees 

Guarantees 

352 336 

Commitment, credit rating 1-5 0 9,164 

Commitment, credit rating 6-10 2,873 12,107 


Commitment, no credit rating 447 2,787 

Total guarantees 3,874 25,224 

Total 4,226 25,560 

Commitments covered by bank and other guarantees - 2005 

DKKm Partly covered Fully covered 

Bank guarantees 




Commitment, no credit rating 24 11 

Total bank guarantees 291 104 

Guarantees 


Commitment, credit rating 6-10 2,495 10,702 


Commitment, no credit rating 523 1,434 

Total guarantees 3,578 19,882 

Total 3,869 19,986 

See page 22 for further information on credit ratings. 


40 Types of products subject to specific security - 2006 

DKKm 

Loan/guarantee type 

Advances Security 

Security as % of 

advances 

Guarantee for mortgage credit loans 11,273 11,273 100.0% 

Carloans Jyske Finans 5,833 4,138 70.9% 

Invest Loan, subsidiaries 9,174 9,173 100.0% 

Total 26,280 24,584 93.5% 

Types of products subject to specific security - 2005 

DKKm 

Loan/guarantee type 

Advances Security 

Security as % of 

advances 

Guarantee for mortgage credit loans 9,889 9,889 100.0% 

Carloans Jyske Finans 5,006 3,568 71.3% 

Invest Loan, subsidiaries 12,964 12,934 99.8% 

Total 27,859 26,391 94.7% 



NOTES TO MARKET RISKS 

Notes to Market Risks 

For further comments on risk developments, see the section on ”Risk and capital management” on page 15. For a definition of risk key 

figures, see the end of the Annual Report. 


Interest-rate risk is measured on the basis of duration. Duration is the interest rate risk resulting from a general 1 percentage point 

increase in interest rates. Duration denotes a percentage gain or loss if all rates of interest (across all currencies and all interest rate 

curves) simultaneously increased by one percentage point. The calculation is based on the entire portfolio of interest-related 

instruments in the banking and trading book. 

Because of Jyske Bank’s exposure to Danish mortgage credit bonds, comprehensive risk management models have been developed 

to take into account the embedded prepayment option. As Danish mortgage bonds are to a large extent issued with an embedded right 

of prepayment at a price of 100, standard risk indicators such as duration cannot be applied unless they are adjusted for this abovementioned 

right. Jyske Bank makes such adjustments. Risk management includes the calculation of and limits on OAS positions 

(Option-Adjusted Spreads). 

41 Interest-rate risk by currency and duration 2006 

DKKm = 10 

year 

Total 

DKK 29 3 31 95 158 

EUR -8 -2 -10 14 -6 

GBP -3 1 1 -5 -6 

JPY -1 -5 -19 -14 -39 

NOK -5 -2 0 0 -7 

USD 1 4 0 3 8 

Other 0 -5 11 6 12 

Total 13 -6 14 99 120 

Interest-rate risk by currency and duration 2005 

DKKm = 10 

year 

Total 

DKK 21 3 8 73 105 

EUR 0 0 -34 -33 -67 

HUF 0 0 4 0 4 

JPY 2 -1 -5 -4 -8 

PLN 0 0 4 1 5 

USD 0 5 -6 6 5 

Other -3 0 5 6 8 

Total 20 7 -24 49 52 


42 Interest-rate risk by product and duration 2006 


DKKm = 10 year Total 

Assets 

Balances with credit institutions and central banks 50 32 19 13 114 

Advances 3 8 12 21 44 

Bonds 40 13 11 153 217 

Liabilities 

Balance due to credit institutions and central banks -79 -29 2 -6 -112 

Deposits -1 1 0 0 0 

Issued bonds 1 0 -1 -12 -12 

Subordinated debt 0 -1 -2 -47 -50 

Derivative instruments 

Interest-rate and currency swaps -9 -26 -13 -16 -64 

Derivative financial instruments in general 5 -5 -2 8 6 

Futures 3 1 -12 -15 -23 

Total 13 -6 14 99 120 

Interest-rate risk by product and duration 2005 

DKKm = 10 year Total 

Assets 

Balances with credit institutions and central banks 56 34 32 7 129 

Advances 4 9 20 22 55 

Bonds 39 25 67 70 201 

Liabilities 

Balance due to credit institutions and central banks -58 -28 -5 -38 -129 

Deposits 5 4 0 0 9 

Issued bonds 1 1 -1 -13 -12 

Subordinated debt 0 0 -2 -13 -15 


Interest-rate and currency swaps -31 -45 -83 48 -111 

Derivative financial instruments in general 2 2 -1 0 3 

Futures 2 5 -51 -34 -78 

Total 20 7 -24 49 52 



Note 

(DKKm) Jyske Bank 

43 Hedging of interest-rate risks for accounting purposes 

Jyske Bank hedges the interest-rate risk on fixed-rate assets and liabilities. Hedging efficiency is measured on a daily 

basis. 

There is a strong correlation between changes in the interest rate dependent value adjustment of the covered 

transactions and the fair value of the covering transactions. 

Any change in the value of hedged assets and liabilities is recognised under Other Assets and Other Liabilities and is 

included in the Profit and Loss Account under Revaluations. 

Products subject to hedge accounting 



Interest-rate risk Hedging amount Fair value 

Assets 

Advances 103 4,741 4,736 

Total 103 4,741 4,736 

Liabilities 

Balance due to credit institutions and central banks -6 568 578 

Issued bonds -13 162 166 

Subordinated debt -50 522 575 

Total -69 1,252 1,319 


Interest rate swaps -34 6,641 29 

Total -34 6,641 29 

Net 0 

2005 

Interest-rate risk Hedging amount Fair value 

Assets 

Advances 112 4,116 4,233 

Total 112 4,116 4,233 

Liabilities 

Balance due to credit institutions and central banks -11 570 603 

Issued bonds -15 149 164 

Subordinated debt -59 1,440 1,525 

Total -85 2,159 2,292 


Interest rate swaps -27 6,655 -17 

Total -27 6,655 -17 

Net 0 

For information on the fair value of all financial assets and liabilities, see note 48.


Currency risk 

Currency risk is calculated in accordance with the rule on capital adequacy set out by the Danish Financial Supervisory Authority. 

Currency indicator 1 is calculated as the sum of the numerically higher value of net long or short positions in each currency, translated 

into DKK. Exposures in respect of indicator 1 are reported to the authorities on a quarterly basis. 

Note 


(DKKm) 2006 2005 2006 2005 

44 Currency risk 

Total foreign-currency assets 47,960 47,943 49,852 47,795 

Total foreign-currency liabilities 54,168 44,283 56,113 44,091 

Currency-exposure indicator 1 2,616 2,118 2,610 2,089 

Currency-exposure indicator 1 as % of core capital less 

deductions 24.2 19.8 24.1 19.6 

Exposure by currency 

DKKm 

EUR -2,076 -1,582 -2,093 -1,594 

SEK 124 394 121 389 

CAD -173 -133 -173 -134 

GBP -91 -92 -73 -53 

JPY 422 185 422 183 

CHF 87 47 100 25 

NOK 462 177 462 176 

USD -69 -256 -74 -252 

Other, long 483 357 481 351 

Other, short -218 -58 -209 -56 

Total -1,049 -961 -1,036 -965 

45 Hedging accounting of currency risk on investments in subsidiaries 

Jyske Bank hedges the currency risk on net investments in international subsidiaries. 

The risk is hedged using forward exchange contracts. In 2006, the revaluation of said contracts amounted to DKK 0m (2005: DKK 40m) 

which is recognised in the shareholders’ funds. 




Stock-market risk is calculated as risk A and B. 

Stock-market risk A is calculated as 10% of net equity exposure; net exposure is calculated as positive exposure less negative 

exposure. Stock-market risk A is therefore an indication of the loss/gain given a 10% fall in global equity prices. 

Stock-market risk B is calculated as 10% of the numeric equity exposure. This risk measure is an indication of gross exposure, as it 

shows the loss given a 10% negative price change on all positive positions and a 10% positive price change on all negative positions. 

Note 


DKKm 2006 2005 2006 2005 

46 Stock-market risks 

Stock-market risk A 

Listed shares and instruments -1 1 -1 1 

Unlisted shares 87 75 82 71 

Total 86 76 81 72 

Stock-market risk B 

Listed shares and instruments 101 114 101 114 

Unlisted shares 87 75 82 71 

Total 188 189 183 185 


Notes to derivative financial instruments 

NOTES TO DERIVATIVE FINANCIAL INSTRUMENTS 

The use of derivative financial instruments plays an important role in market risk management, both for customers and the Bank itself. 

Market risks on financial instruments are included in the Bank’s calculation of market risks. The credit risk in connection with derivative 

financial instruments is calculated for each counterparty, and is included in the Bank’s overall credit risk management. Subject to 

specific bi-lateral agreement, netting of the credit risk associated with each financial instrument is undertaken for each counterparty. 

47 Derivative instruments 

DKKm Net market value Gross market value 

Total principal 

The Jyske Bank Group 2006 Up to 3 Over 3 months Over 1 year Over 5 years Positive Negative Net Face value 

months and up to 1 and up to 5 

year years 

Currency contracts 

Forwards/futures, bought -622 -162 -63 0 1,165 2,012 -847 217,421 

Forwards/futures, sold 549 118 62 0 1,829 1,100 729 194,508 

Swaps -1 4 60 150 354 141 213 18,482 

Options, acquired 28 8 0 0 36 0 36 6,736 

Options, issued -20 -4 0 0 0 24 -24 5,375 

Total -66 -36 59 150 3,384 3,277 107 442,522 

Interest-rate contracts 

Forwards/futures, bought -42 -11 0 0 1 54 -53 5,786 

Forwards/futures, sold 28 11 0 0 39 0 39 5,398 

Forward Rate Agreements, bought 0 27 4 0 31 0 31 18,328 

Forward Rate Agreements, sold 0 -28 -3 0 0 31 -31 18,964 

Swaps -10 18 -102 136 1,130 1,088 42 69,133 


Options, issued -1 0 -3 -38 0 42 -42 2,107 

Total -24 17 -103 153 1,258 1,215 43 121,512 

Share contracts 

Forwards/futures, bought 32 1 0 0 24 -9 33 792 

Forwards/futures, sold -18 -1 0 0 0 19 -19 1,102 


Options, issued -114 -95 -44 0 0 253 -253 2,449 

Total 4 -10 0 0 257 263 -6 6,662 

Commodity contracts 

Forwards/futures, bought 66 247 650 0 1,025 62 963 3,462 

Forwards/futures, sold -62 -246 -640 0 64 1,012 -948 3,462 


Options, issued 0 -157 -405 0 0 562 -562 2,565 

Total 4 1 10 0 1,651 1,636 15 12,054 

Other derivatives 0 0 0 0 0 0 0 186 

Total -82 -28 -34 303 6,550 6,391 159 582,936 

Total after counterparty netting 3,268 

Outstanding spot transactions 76 95 -19 80,086 



Jyske Bank 2006 Up to 3 Over 3 months Over 1 year Over 5 years Positive Negative Net Face value 


year years 

Currency contracts -73 -34 59 150 3,379 3,277 102 442,260 

Interest-rate contracts -24 17 -103 153 1,258 1,215 43 121,512 

Share contracts 4 -10 0 0 257 263 -6 6,662 

Commodity contracts 4 1 10 0 1,652 1,637 15 12,054 


Total -89 -26 -34 303 6,546 6,392 154 582,674 




NOTES TO DERIVATIVE FINANCIAL INSTRUMENTS 

47 Derivative instruments 



The Jyske Bank Group 2005 Up to 3 Over 3 months Over 1 year Over 5 years Positive Negative Net Face value 


year years 

Currency contracts 

Forwards/futures, bought 795 298 37 0 2,511 1,381 1,130 275,663 

Forwards/futures, sold -707 -177 -34 0 1,163 2,081 -918 227,631 

Swaps 0 2 579 16 617 20 597 12,847 


Options, issued -49 -33 0 0 0 82 -82 6,417 

Total 103 140 582 16 4,405 3,564 841 529,824 

Interest-rate contracts 

Forwards/futures, bought 8 31 0 0 39 0 39 5,579 

Forwards/futures, sold -15 -30 0 0 0 45 -45 5,709 

Forward Rate Agreements, bought 0 -40 13 0 37 64 -27 74,660 

Forward Rate Agreements, sold 0 39 -15 0 62 38 24 75,380 

Swaps -45 -69 -153 105 1,328 1,490 -162 131,594 


Options, issued 0 0 33 -41 0 8 -8 2,340 

Total -51 -69 -121 104 1,508 1,645 -137 297,481 

Share contracts 

Forwards/futures, bought 16 0 0 0 16 0 16 695 

Forwards/futures, sold -5 0 0 0 6 11 -5 1,090 


Options, issued -87 -99 -97 0 0 283 -283 4,201 

Total -6 -9 -10 0 269 294 -25 10,019 

Commodity contracts 

Forwards/futures, bought 28 55 159 0 269 27 242 1,165 

Forwards/futures, sold -27 -54 -156 0 28 265 -237 1,163 

Options, acquired 0 0 75 0 75 0 75 534 

Options, issued 0 0 -75 0 0 75 -75 534 

Total 1 1 3 0 372 367 5 3,396 


Total 47 63 454 120 6,554 5,870 684 840,953 





Jyske Bank 2005 Up to 3 Over 3 months Over 1 year Over 5 years Positive Negative Net Face value 


year years 

Currency contracts 95 139 583 16 4,400 3,567 833 529,613 

Interest-rate contracts -51 -70 -121 104 1,508 1,646 -138 297,481 

Share contracts -6 -9 -10 0 270 295 -25 10,019 

Commodity contracts 1 1 3 0 372 367 5 3,396 


Total 39 61 455 120 6,550 5,875 675 840,742 




note The Jyske Bank Group 


48 Fair value of financial assets and liabilities 

FINANCIAL ASSETS Recognised 

value 

Fair value Recognised 

value 

NOTES TO OTHERS 

Fair value 

Cash in hand and balances at call with central 

banks 974,510 974,510 914,341 914,341 


banks 15,720,403 15,730,946 12,913,498 12,947,135 

Advances 107,185,481 107,180,963 90,880,003 90,879,386 

Bonds 13,681,784 13,681,784 15,823,101 15,823,101 

Shares, etc. 1,103,388 1,103,388 1,298,843 1,298,843 

Assets in investment pools 11,894,216 11,894,216 9,597,598 9,597,598 

Derivative instruments 6,627,709 6,627,709 6,688,284 6,688,284 

Total 157,187,491 157,193,516 138,115,668 138,148,688 

FINANCIAL LIABILITIES 

Balance due to credit institutions and central 

banks 17,535,903 17,554,412 17,007,997 17,007,820 

Deposits 76,277,022 76,281,646 69,701,887 69,700,529 

Deposits in investment pools 12,564,028 12,564,028 10,145,986 10,145,986 

Issued bonds 25,393,117 25,393,117 15,966,610 15,966,610 

Subordinated debt 3,317,920 3,317,085 2,558,952 2,557,816 

Derivative instruments 6,486,951 6,486,951 6,140,135 6,140,135 

Total 141,574,941 141,597,239 121,521,567 121,518,896 

Financial assets and liabilities 

Recognised value and the fair value of assets classified as held-for-trading-purposes amounted to DKK 35.6bn as at 31 

December 2006 against DKK 37.0bn at year-end 2005. Recognised value and the fair value of assets classified as trading 

portfolio amounted to DKK 6.5bn as at 31 December 2006 against DKK 6.7bn at year-end 2005. The Group does not hold 

assets classified as available-for-sale or held-to-maturity. 

The table shows the fair value of financial assets and liabilities in relation to recognised values. 

Bonds, shares, etc., assets linked to investment pools and financial instruments have been measured at fair value to the effect 

that recognised values equal fair values. 

Cash in hand and deposits have a fairly short term to maturity, and recognised values at amortised cost are presumed to 

reflect the fair value. 

Advances are stated at amortised cost. The difference to fair value is assumed to be the interest-rate dependent value 

adjustment, calculated by comparing current market rates and markets rates at the time when the loan was established. 

Changes in credit quality are not taken into account, as said changes are presumed to be included in the write-down on 

advances as regards recognised and fair values. 

Issued bonds and subordinated debt are stated at amortised cost. The difference to fair value is assumed to be the interestrate 

dependent value adjustment, calculated by comparing current market rates and markets rates at the time when the issues 

were established. Change in fair values due to changes in the Bank’s own credit rating are not taken into account. 

Balances with credit institutions are stated at amortised cost. The difference to fair value is assumed to be the interest-rate 

dependent value adjustment, calculated by comparing current market rates and markets rates at the time when the transaction 

was established. Changes in the credit quality of balances with credit institutions are not taken into account as said changes 

are presumed to be included in the write-down on advances and other receivables. Change in the fair values of balances due 

to credit institutions due to changes in the Bank’s own credit rating are not taken into account. 

The re-statement at fair value of financial assets and liabilities shows a non-recognised unrealised loss of DKK 16.3bn as at 31 

December 2006 against a non-recognised unrealised gain of DKK 35.7m at year-end 2005. 

Unrealised gains and losses as a result of a change in fair value of shares in sector owned undertakings are recognised in the 

Profit and Loss Account in accordance with the fair value option. The value of said shares recognised in the Balance Sheet 

2006 amounts to DKK 691m (2005: DKK 784m), and the value recognised in the Profit and Loss Account amounts to DKK 

42m (2005: DKK 82m) 

For further information on the calculation of fair value, see the section on Accounting Policies. 



Note 

(DKK 1,000) 

49 INTEREST RATES OF FINANCIAL ASSETS AND LIABILTIES 

Note 

FINANCIAL ASSETS 


Recognised 

value 

Average 

effective 

interest rate 

Recognised 

value 

Average 

effective interest 

rate 

% % 

Cash in hand and balances at call with central banks 974,510 914,341 

Balances due from credit institutions and central banks 15,720,403 3.6 12,913,498 2.6 

Advances 107,185,481 4.8 90,880,003 4.2 

Bonds 13,681,784 3.6 15,823,101 3.6 

Shares, etc. 1,103,388 1,298,843 

Assets in investment pools 11,894,216 9,597,598 

Derivative instruments 6,627,709 6,688,284 

Total 157,187,491 138,115,668 

FINANCIAL LIABILITIES 

Balance due to credit institutions and central banks 17,535,903 2.8 17,007,997 1.4 

Deposits 76,277,022 2.4 69,701,887 1.7 

Deposits in investment pools 12,564,028 10,145,986 

Issued bonds 25,393,117 3.8 15,966,610 2.9 

Subordinated debt 3,317,920 4.5 2,558,952 5.1 

Derivative instruments 6,486,951 6,140,135 

Total 141,574,941 121,521,567 



2005 

Effective interest rates have been determined on the basis of interest taken as income and expenses compared with related average 

balance sheet items 



50 Acquisition of subsidiaries 

Deferred payments 20,148 12,804 

Cash acquisition cost 20,148 12,804

Note 




51 TRANSACTIONS INVOLVING CLOSELY RELATED PARTIES 

Related parties include group enterprises, associated 

undertakings and joint ventures. Please see the Group chart on 

page 89. 

Related parties include the Bank’s Management Board and 

Supervisory Board and any parties related to them. 

Transactions with group enterprises 

Interest income 611,210 

Interest expenses 286,904 

Fee income 2,664 

Fee expenses 16,835 

Other operating income 109,709 

Personnel and administrative expenses 182,015 

Credit institutions 19,180,697 

Advances 7,946,245 

Other assets 113,802 

Balance due to credit institutions 7,009,044 

Deposits 266,491 

Other liabilities 23,332 

Guarantees 16,559,445 

Transactions between Jyske Bank and group enterprises have 

been eliminated upon consolidation. 

Transactions with group enterprises are based on market 

terms. 

Transactions with joint ventures 

Interest expenses 1,479 

Other operating income 2,561 

Personnel and administrative expenses 35,798 


Other liabilities 41,601 

Transactions with joint ventures are based on market terms. 

Transactions with associated undertakings 

452,613 

219,272 

2,664 

20,460 

94,674 

214,694 

17,439,976 

7,183,945 

98,628 

6,501,962 

757,810 

29,085 

13,719,113 

Interest income 0 82 0 82 

Interest expenses 61 

18 61 

18 

Advances 0 3,654 0 3,654 


694 3,610 

694 

Transactions with associated undertakings are based on 

market terms. 


0 

0 

0 

0 

0


Note 



Emoluments to management bodies 

Management Board 

Short-term consideration 14,767 

Other long-term consideration 712 

Share-based payment 94 

Jyske Bank A/S’s Pensionstilskudsfond is a fund which offers 

supplementary pensions to current and former members of the 

Jyske Bank Management Board and their surviving relatives. 

The net present value of the liabilities to the Management 

Board and its surviving relatives increased by DKK 5.7m in 

2006. 

Supervisory Board 

Short-term consideration 1,030 

Other transactions involving the Management and closely 

related parties 


16,169 14,767 

330 712 

69 94 

1,030 1,030 

Management Board and related parties 

The Bank’s interest income 12 

The Bank’s interest expenses 601 

The Bank’s fee income 2 

16,169 

330 

69 

The Bank’s debt 11,137 

8,531 

The Bank’s receivables, amount drawn 230 

600 

The Bank’s receivables, credit facility 1,125 

1,725 

Guarantees 0 0 

Supervisory Board and related parties 

The Bank’s interest income 1,676 

The Bank’s interest expenses 839 

The Bank’s fee income 186 

The Bank’s debt 12,902 

The Bank’s receivables, amount drawn 38,210 

The Bank’s receivables, credit facility 51,408 

Guarantees 6,128 

All commitments are established on market conditions, including the rate of interest and commission charges. In 2006, the rate 

of interest charged on loans to the members of the Management Board and their next of kin was 2.90% - 4.25% and 2.30% - 

8.80% on loans to the members of the Supervisory Board and their next of kin. 

Members of the Management Board participate in the Employee Share Scheme and Employee Share Savings Scheme on the 

same terms as the employees. The members of the Management Board do not benefit from any other incentive programmes. 

No member of the Management Board or the Supervisory Board are specifically remunerated as members of the board in any 

associated undertaking or group enterprise. 

1,030 

6 

543 

3 

1,444 

1,298 

119 

21,602 

22,691 

25,669 

13,148 

Jyske Bank is obliged to compensate members of the Management Board if they resign or are dismissed for no valid reason or 

their position is discontinued as a result of a take-over bid. 

52 Number of employees 

Average number for employees for the financial year(full-time 

employees): 

Number of employees in undertakings included in the 

consolidated accounts 4,111 3,799 3,465 3,284 

Number of employees in subsidiaries not included in the 

consolidated group accounts 0 0 0 0 

Total 4,111 3,799 3,465 3,284

Note 




53 Operational leases 

The Group holds a number of operational leases. The leases are primarily on premises, equipment, tools and equipment and are not 

recognised in the Group balance sheet. 

Operational lease commitments 

0-1 yrs 23,428 21,752 15,848 15,440 

1-5 yrs 60,075 60,609 32,259 35,006 

> 5 year 37,664 44,481 37,198 41,224 

Total 121,167 126,842 85,305 91,670 

54 Segmental accounts - The Jyske Bank Group 

DKKm 

SEGMENTS 2006 Domestic 

Jyske 

Markets 

Jyske Asset 

Management 


Finans 

Group 

Treasury Other * 

The Jyske 

Bank Group 

Net interest income 1,891 455 385 212 25 68 3,036 

Net fee income 734 685 310 3 -7 -91 1,634 

Revaluations 53 515 46 3 279 246 1,142 

Other income 13 12 41 11 7 335 419 

Gross earnings 2,691 1,667 782 229 304 558 6,231 

Expenses 2,309 363 369 110 17 609 3,777 

Credit loss expenses -128 -15 -1 -22 -3 -179 -348 

Profit from equity investments 0 0 0 0 6 2 8 

In-house allocation 593 -836 94 0 0 149 0 

Pre-tax result 1,103 483 508 141 296 279 2,810 

Deposits 59,606 6,758 9,404 137 0 372 76,277 

Advances 64,485 11,973 26,312 8,777 10 -4,372 107,185 

Guarantees 22,784 803 1,313 127 29 -43 25,013 

Bonds and shares 0 2,768 210 117 12,142 -443 14,794 

Total assets 65,023 48,082 34,003 9,281 24,081 -19,814 160,656 

Total liabilities 75,189 45,553 29,095 8,542 23,219 -30,579 151,019 

SEGMENTS 2005 Domestic 


Markets 

Jyske Asset 

Management 


Finans 

Group 

Treasury Other * 



Net interest income 1,801 516 376 199 -29 -109 2,754 

Net fee income 621 526 427 10 -15 -96 1,473 

Revaluations 84 415 45 2 366 35 947 

Other income 0 1 32 4 3 366 406 

Gross earnings 2,506 1,458 880 215 325 196 5,580 

Expenses 2,009 278 374 110 16 547 3,334 

Credit loss expenses 65 -30 0 13 -3 24 69 

Profit from equity investments 0 0 0 0 2 -5 -3 

In-house allocation 450 -797 52 0 74 221 0 

Pre-tax result 882 413 558 92 388 -159 2,174 

Deposits 62,643 8,065 9,470 161 0 -10,637 69,702 

Advances 49,562 11,517 29,446 7,687 18 -7,350 90,880 

Guarantees 22,760 501 176 151 51 801 24,440 

Bonds and shares 0 3,042 323 40 13,363 362 17,130 

Total assets 50,794 55,613 37,455 8,060 13,000 -23,351 141,571 

Total liabilities 68,472 37,195 30,420 7,423 19,023 -30,439 132,094 

* In addition to elimination items, ”others” include group divisions, non-financial business units 

The Group’s customer-related activities are undertaken by the Bank’s units. The Domestic business unit is responsible for 

business with the Group’s domestic corporate and retail customers. Jyske Markets is responsible for activities relating to 

securities and currency transactions. Jyske Asset Management is responsible for asset management and investment 



services in relation to the Group’s international clients and domestic investment clients. Jyske Finans offers solutions within 

the areas of leasing and financing. Finally, there are a number of non-financial units. The Treasury Division is responsible for 

the Bank’s own securities portfolio and balance-sheet management. Please see the new organisation as at 1. January 2007 

as described on page 9. Given the business activities of each segment, it is not possible to calculate the value of intersegment 

activities without the use of arbitrary classification. 

55 Segmental accounts - geographical * 

DKKm 

GEOGRAPHICAL SEGMENTS 2006 


Denmark 

(zone A) ** 

Europe, 

etc. *** 



Net interest income 2,750 286 3,036 

Net fee income 1,338 296 1,634 

Revaluations 1,095 47 1,142 

Other income 418 1 419 

Gross earnings 5,601 630 6,231 

Expenses 3,568 209 3,777 

Credit loss expenses -348 0 -348 

Profit from equity investments 8 0 8 

In-house allocation 0 0 0 

Pre-tax result 2,389 421 2,810 

Deposits 69,641 6,636 76,277 

Advances 85,970 21,215 107,185 

Guarantees 23,701 1,312 25,013 

Bonds and shares 14,584 210 14,794 

Total assets 131,765 28,891 160,656 

Total liabilities 124,722 26,297 151,019 

GEOGRAPHICAL SEGMENTS 2005 

Denmark 

(zone A) ** 

Europe, 

etc. *** 



Net interest income 2,496 258 2,754 

Net fee income 1,189 284 1,473 

Revaluations 903 44 947 

Other income 405 1 406 

Gross earnings 4,993 587 5,580 

Expenses 3,159 175 3,334 

Credit loss expenses 70 -1 69 

Profit from equity investments -3 0 -3 

In-house allocation 0 0 0 

Pre-tax result 1,761 413 2,174 

Deposits 63,487 6,215 69,702 

Advances 71,388 19,492 90,880 

Guarantees 23,727 713 24,440 

Bonds and shares 16,830 300 17,130 

Total assets 114,872 26,699 141,571 

Total liabilities 107,819 24,275 132,094 

* Geographical segments are listed according to where transactions 

are booked. 

** Intra-group income statement items, assets and liabilities are eliminated 

under the respective segments. 

*** Balance with zone-A countries cover 99% of the Jyske Bank Group’s 

overall outstandings.

THE JYSKE BANK GROUP 

(DKK 1,000) Activity * Share capital Shareholders’ Ownership Voting share Result 

as at 31 December 2006 

funds end of 

period 

share (%) 

(%) 

(DKK 1,000) 

units '000 (DKK 1,000) 

Jyske Bank A/S DKK 620,000 9,581,854 2,106,558 

Consolidated subsidiaries 

Jyske Bank (Gibraltar) Ltd. a GBP 26,500 1,567,843 100 100 163,284 

Jyske Bank (Gibraltar) Nominees Ltd. d GBP 0 2 100 100 0 

Jyske Bank (Gibraltar) Management Ltd. d GBP 0 1 100 100 0 

Jyske Bank (Gibraltar) Secretaries Ltd. d GBP 0 1 100 100 0 

Trendsetter, S.L., Spain e EUR 1,312 17,037 100 100 0 

Jyske Bank Nominees Ltd., London d GBP 0 1 100 100 0 

Jyske Bank (Schweiz) a CHF 60,000 888,966 100 100 99,234 

Berben´s Effectenkantoor B.V, The Netherlands b EUR 45 137,813 60 60 67,180 

Jyske Finans A/S c DKK 70,000 665,671 100 100 101,591 

Bil & Sejlerfinans A/S c DKK 20,500 72,544 100 100 2,732 

Nordisk Factoring A/S, Søllerød c DKK 12,000 45,201 100 100 2,249 

Factoringselskabet af 27/10 1993 A/S, Søllerød c DKK 500 356 100 100 9 

Gl. Skovridergaard A/S e DKK 16,000 34,607 100 100 -1,443 

Sundbyvesterhus A/S e DKK 518 38,681 100 100 2,782 

Silkeborg Data A/S f DKK 20,000 194,795 100 100 10,150 

Investeringsselskabet af 20.12 2000 A/S g DKK 700 35,589 100 100 10,073 

* Activity: 

a: Bank 

b: Portfolio Management 

c: Leasing, financing and factoring 

d: Investment and financing 

e: Properties and course activities 

f: IT 

g: Other 

Pro-rata consolidated undertakings 

PRAS A/S, Copenhagen d DKK 577,500 1,492,375 20 9 150,489 

JN Data A/S f DKK 60,000 102,707 50 50 223 

letpension Holding A/S, Gladsaxe g DKK 200,000 - 25 25 - 

A total of DKK 515.7m under assets, DKK 231.8m under liabilities, DKK 173.7m under income and DKK 162.3m under expenses are recognised from pro rata consolidated 

undertakings. 

Associated undertakings 

Biovision A/S, Hørsholm DKK 600 6,511 33 33 3,159 

Østjysk Innovation A/S, Århus DKK 18,750 21,031 27 27 -341 

JSNFA Holding A/S, Aalborg DKK 2,000 4,490 25 25 1,917 

Investeringsselskabet af 06/10 1998 A/S DKK 750 2,745 27 27 819 

Semler Bilfinans A/S, Glostrup DKK 4,000 3,566 25 32 -584 

A total of DKK 0.0m under assets, DKK 3.6m under liabilities, DKK 0.0m under income and DKK 0.1m under expenses are recognised from associated undertakings. 

Other undertakings, in which the Group holds in 

excess of 10% of the share capital** 

Toyota Financial Services Danmark A/S, Gladsaxe DKK 190,000 215,733 20 20 12,644 

Skan-Roll Holding A/S, Kjellerup DKK 1,100 5,085 45 9 417 

The registered offices of the companies are in Silkeborg, unless otherwise stated. 

** Accounting figures according to recently published Annual Report. 


5 YEAR SUMMARY OF JYSKE BANK A/S 

SUMMARY OF PROFIT AND LOSS ACCOUNT (DKKm) 2006 2005 2004 2003 2002 


Dividends, etc. 24 20 42 84 64 

Net fee and commission income 1,309 1,150 889 810 699 


Revaluations 1,071 868 882 644 333 



Of which staff and administrative expenses 3,161 2,664 2,454 2,197 2,156 

Credit loss expenses -323 66 312 361 368 

Profit/loss on investments in associates and group 

enterprises 594 529 614 94 266 

Pre-tax result 2,774 2,129 1,952 1,809 1,083 

Tax 667 457 550 525 572 

Net profit/loss for the year 2,107 1,672 1,402 1,284 511 

BALANCE, END OF PERIOD (DKKm) 2006 2005 2004 2003 2002 

Advances 84,888 70,550 55,114 46,399 45,022 

Deposits including pool deposits 82,335 74,229 62,652 58,574 54,062 

Issued bonds 25,393 15,967 11,915 8,064 7,701 

Total assets 159,959 141,294 123,599 115,131 114,844 

Shareholders’ funds 9,582 9,397 7,772 7,843 6,658 

Subordinated debt 3,318 2,559 2,737 1,809 1,931 

KEY FIGURES 2006 2005 2004 2003 2002 


Face value: DKK 10 

Pre-tax result 46.11 33.99 29.88 24.61 14.66 

Net profit/loss for the year 35.02 26.70 21.45 17.47 6.92 

Net profit/loss (diluted) 35.02 26.70 21.45 17.47 6.92 

Core earnings 37.74 27.90 17.19 15.24 12.54 

Price at end of period 401 310 206 156 96 

Book value 169 152 123 109 89 

Price/book value 2.38 2.04 1.67 1.43 1.08 

Price/earnings 11.5 116 9.6 8.9 13.8 

Jyske Bank A/S 

Solvency ratio 11.3 11.7 11.8 12.4 11.7 

Core capital percentage incl. hybrid capital 9.7 10.7 9.9 10.2 9.0 

Core capital percentage excl. hybrid capital 8.2 9.1 8.8 10.2 9.0 

Pre-tax result as % of average shareholders’ funds 29.2 24.5 25.0 24.6 16.9 

Net result as % of average shareholders’ funds 22.2 19.2 18.0 17.4 8.0 

Income on every krone of expenditure 2.0 1.8 1.7 1.7 1.4 

Interest-rate risk 1.1 0.4 0.6 1.7 0.7 

Foreign currency position 24.1 19.6 16.3 13.4 17.7 

Currency risk 0.2 0.2 0.1 0.1 0.4 

Statutory liquidity surplus 31.8 33.3 103.1 93.9 66.0 

Total large commitments 43.3 98.6 77.6 65.7 118.7 

Accumulated impairment ratio 0.5 1.1 2.1 2.4 2.5 

Impairment ratio for the year -0.3 0.1 0.4 0.5 0.5 

Increase in advances for the year 20.3 27.2 18.8 3.1 8.9 

Ratio between advances and deposits 1.0 1.0 0.9 0.8 0.9 

Ratio between advances and shareholders’ funds 8.9 7.5 7.1 5.9 6.8 

Number of full-time staff at year-end 3,570 3,284 3,038 2,907 2,921 

Key figures are based on the definitions and guidelines of the Danish Financial 

Supervisory Authority. 

Comparative figures for 2005 have been adjusted, cf. Accounting Policies. 


DIRECTORSHIPS 

Directorships held by members of the Supervisory Board in Danish limited liability companies as at 


Svend Buhrkall, Managing Director, Rødding 

• Chairman of the Supervisory Board, Hytor A/S, Esbjerg 

• Chairman of the Supervisory Board, Kudsk & Dahl A/S, Vojens 

• Board member, Heldorf Holding A/S 

• Board member, H.P. Therkelsen A/S 

Niels Erik Carstens, Company Director, Vestbjerg 

• Board member and Company Director, Frejlev Byggeselskab A/S, Nørresundby 

• Board member, Henning Olsen Holding A/S, Nørresundby 

• Board member, H.O. Maskinudlejning A/S, Nørresundby 

• Board member, Henning Olsen Holding A/S, Nørresundby 

Philip Baruch, Attorney-at-law 

• Chairman of the Supervisory Board, Distributions Service A/S 

• Chairman of the Supervisory Board, Ottensten A/S 

• Chairman of the Supervisory Board, Ottensten Holding A/S 

• Chairman of the Supervisory Board, Zimmer Group A/S 

• Board member, Atlantis Denmark A/S 

• Board member, Dansk Lakering A/S 

• Board member, Futura København A/S 

• Board member, HK Tools A/S 

• Board member, NRG Scandinavia A/S 

• Board member, OutCom A/S Ledelses og kommunikationsrådgivning 

• Board member, OutCom Holding A/S 

• Board member, Pacco A/S 

• Board member, Peri A/S 

• Board member, Scanax Holding A/S 

• Board member, Scanax International A/S 

• Board member, TPP A/S 

Jens Aksel Borup, Skipper, Skagen 

• Board member and Company Director, Starholm A/S 

• Board member, Handels Kompagniet Fiskerne A/S 

• Board member, Nordjyllands Fiskeriudvikling A/S 

Kurt Brusgaard, Managing Director, Klampenborg 

• Board member and Company Director, DV 8 A/S, Copenhagen 

• Board member and Company Director, Ray & Berndtson A/S, Copenhagen 

Haggai Kunisch, Senior Programmer, Viborg 

• Board member, Kobæk Strand Konferencecenter A/S, Skælskør 

Directorships held by members of Group Management in operating and financial undertakings as at 


Anders Dam 

• Chairman of the Supervisory Board, Jyske Banks Almennyttige Fond 

• Chairman of the Supervisory Board, Jyske Banks Almennyttige Fonds Holdingselskab A/S 

• Board member (deputy chairman), PRAS A/S 

• Board member, DLR Kredit A/S 

Jørgen Christensen 

• Board member, Bil & SejlerFinans A/S 

• Board member, Factoringselskabet af 27/10 1993 A/S, Søllerød 

• Board member, JSNFA Holding A/S 

• Board member, Jyske Finans A/S 

• Board member, Nordisk Factoring A/S 


DIRECTORSHIPS 

Leif F. Larsen 

• Chairman of the Supervisory Board, JN Data A/S 

• Chairman of the Supervisory Board, Gl. Skovridergaard A/S 

• Chairman of the Supervisory Board, Silkeborg Data A/S 

• Chairman of the Supervisory Board, Sundbyvesterhus A/S 

• Chairman of the Supervisory Board, Jyske Banks Medarbejderfond 

• Chairman of the Supervisory Board, Jyske Banks Medarbejderfonds Holdingselskab A/S 

• Board member (deputy chairman), PBS A/S 

• Board member (deputy chairman), PBS Holding A/S 

Per Munkholm Poulsen 

• Chairman of the Supervisory of Bankpension 

• Board member, JN Data A/S 

• Board member, Berben’s Effectenkantoor B.V. 

• Board member, Jyske Bank (Gibraltar) Ltd. 

• Board member, Jyske Bank (Schweiz) 


Concepts, etc. 

Below, a number of the concepts and 

management tools applied in specific areas 

are clarified. 

Credit risk 

Credit risk 

The risk of loss due to a counter-party’s nonfulfilment, 

in part or in full, of his obligations 

towards the Bank. In addition to loans and 

committed credits and guarantees, credit risk 

includes the market value of financial 

instruments and individual capital holdings. 

Country risk 

The risk of loss which arises from the 

economic and political conditions in a given 

country. 

Settlement risk 

The risk of loss which arises from the payment 

by a counterparty not being settled as agreed 

with the Bank. 

Credit rating 

Customers are assigned a credit rating 

according to their creditworthiness. The creditrating 

methodology rates customers within one 

of 14 risk classes. For each risk class, there is 

a given customer default probability within the 

coming 12 month period. Risk class 1 includes 

commitments which statistically show the least 

probability of default, whereas risk class 14 

comprises commitments with the highest 

probability for default. Risk classes 1-5 equate 

roughly to an “investment grade” rating with 

the international rating agencies. 

The risk rating of corporate customers includes 

accounting information as well as a qualitative 

assessment of corporate strategy, 

management, outlook and industry conditions. 

The risk rating of retail customers is based on 

the objective measurement of customer 

characteristics as well as track records of 

previous approved loans and credit facilities. In 

addition, information on the income and assets 

of retail customers may be included. The 

methodology precludes retail customers from 

being assigned a credit rating of 1. 

Information on the breakdown of customers by 

rating class is used proactively in the on-going 

process of covering their needs. The system is 

an important tool both in the decentral and 

central credit management aimed at 

monitoring and assessing a possible negative 

trend in an individual customer and in the 

Bank’s overall credit portfolio. 

CONCEPTS, ETC. 

Risk classes 

Problem loans are broken down into three 

categories: Low-risk commitments, high-risk 

commitments and potentially loss making 

commitments. The two latter risk classes, 

which are not assigned a credit rating, 

represent customers who are no longer 

deemed capable of fully meeting their 

obligations towards the Bank. The credit 

ratings are included in the Bank’s impairment 

method. 

Total advances (EAD) 

This concept is material to the calculation of 

credit risk according to the principles of 

RAROC and the new capital requirements 

(CRD). The concept is also known as 

Exposure at Default ( EAD). The calculation 

includes the actual outstanding balances 

together with an assessment of the likelihood 

of risk of default. It is recognised that the risk 

can increase (in the event of draw-down of a 

non-utilised, bur confirmed facility), and reduce 

(in the event of loan repayment). The 

calculation also includes risk-weighted 

amounts for guarantees and financial 

instruments. 

The method of calculation is based on Jyske 

Bank’s own data and experience, and should 

not be mistaken for advances and guarantees 

as stated in the Group Balance Sheet. 

Market risk 

Value-at-Risk 

Jyske Bank applies the Value-at-Risk model 

(VaR) for the measurement and monitoring of 

market risks. Value-at-Risk expresses the 

anticipated maximum risk of loss over a period 

based on the historic development in price and 

correlation . VaR is included in the 

management of market risks, both in the 

definition and in the delegation of credit 

authority. The model is a parametric VaR and 

is based on an enhanced Risk Metrics model. 

The VaR approach is specially modified to 

reflect the embedded prepayment risk of 

Danish mortgage bonds. VaR is calculated 

with a time frame of one day, and with a 99% 

probability, and is defined as Daily Earnings at 

Risk (DEaR). A 99% DEaR indicates a 1% 

probability that VaR be exceeded over a oneday 

period in normal markets. Risk limits and 

capital allocation are based on 99% DEaR. 

Back-testing 

To assess the accuracy of the VaR model, 

daily back-testing is conducted of the model 

against actual daily revenue on market-risk 

related positions. Back-testing is conducted 

and reported for 99% DEaR. 


CONCEPTS, ETC. 

Scenario-based stress-testing 

Scenario-based stress testing of positions is 

conducted monthly as an integral part of the 

work done by Treasury. Said tests do not have 

any direct influence on the calculation of the 

required economic capital and are not applied 

directly with regard to the credit authorisation 

process. 


Interest-rate risk is measured on the basis of 

duration. Duration is the interest rate risk 

resulting from a general 1 percentage point 

increase in interest rates. Duration denotes a 

percentage gain or loss if all rates of interest 

(across all currencies and all interest rate 

curves) simultaneously increased by one 

percentage point. The calculation is based on 

the entire portfolio of interest-related 

instruments in the banking and trading book. 

Because of Jyske Bank’s exposure to Danish 

mortgage credit bonds, comprehensive risk 

management models have been developed to 

take into account the embedded prepayment 

option. As Danish mortgage bonds are to a 

large extent issued with an embedded right of 

prepayment at a price of 100, standard risk 

indicators such as duration cannot be applied 

unless they are adjusted for this abovementioned 

right. Jyske Bank makes such 

adjustments. Risk management includes the 

calculation of and limits on OAS positions 

(Option-Adjusted Spreads). 

Currency risk 

Currency risk is calculated in accordance with 

the rule on capital adequacy set out by the 

Danish Financial Supervisory Authority. 

Currency indicator 1 is calculated as the sum 

of the numerically higher value of long or short 

positions in each currency, translated into 

DKK. 

Exposures in respect of indicator 1 are 

reported to the authorities on a quarterly basis. 

VaR is applied in risk management and takes 

into account the correlation between currency 

positions and the volatility of each currency. 



Stock-market risk is calculated as risk A and B. 

Equity risk A is calculated as 10% of net equity 

exposure; net exposure is calculated as 

positive exposure less negative exposure. 

Equity risk A is therefore an indication of the 

loss/gain given a 10% fall in global equity 

prices. 

Equity risk B is calculated as 10% of the 

numeric equity exposure. This risk measure is 

an indication of gross exposure, as it shows 

the loss given a 10% negative price change on 

all positive positions and a 10% positive price 

change on all negative positions. 

Other risk measures 

In addition to product-specific risk calculations 

and authorisation, Jyske Bank calculates the 

risk associated with non-linear derivatives 

such as options, primarily interest-rate, 

currency and stock options. Risk calculations 

and risk limitation include delta, gamma and 

vega risks. The same risk measurements are 

applied for structured products which involve 

options, such as Danish mortgage credit 

bonds. 

Derivatives 

The use of derivative financial instruments 

plays an important role in market risk 

management, both for customers and the 

Bank itself. 

Market risks on derivative financial instruments 

are included in the Bank’s calculation of 

market risks. 

The credit risk in connection with derivative 

financial instruments is calculated for each 

counterparty, and is included in the Bank’s 

overall credit risk management. Subject to 

specific bi-lateral agreement, netting of the 

credit risk associated with each financial 

instrument is undertaken for each 

counterparty.

JB Markedsføring

Annual Report 2006 [PDF] - Jyske Bank

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