Danske Bank Q3 2025 Pre-Close Call Summary Company Overview - **Company**: Danske Bank (OTCPK:DNKE.Y) - **Date of Call**: October 01, 2025 Key Points Macroeconomic Environment - **Euro Area**: Optimism is rising with health growth higher than expected and inflation under control [2] - **Nordic Economies**: Overall improvement expected, except for Sweden which faces high inflation and weak growth [3] - **Danish Economy**: GDP growth forecast revised down from 3.2% to 1.8% for 2025, aligning Denmark with average European growth [3] - **Consumer Confidence**: Remains low, but housing market activity is improving with positive outlook for housing prices [3] Financial Performance - **Net Interest Income (NII)**: Interest rate sensitivity noted, with a DKK 650 million negative impact per 25 basis points cut and a DKK 450 million positive impact per 25 basis points hike [6] - **Funding Costs**: Decrease in CIBOR, STIBOR, and NIBOR rates during the quarter [5] - **Wholesale Funding**: On track with full-year funding plan of DKK 60 billion to DKK 80 billion, having issued DKK 65 billion year-to-date [6] Fee Income and Lending - **Fee Income**: Expected to be dampened by low consumer sentiment and summer period effects [8] - **Investment Fees**: Strong momentum in Assets Under Management (AUM) noted through August [8] - **Lending Demand**: Slight recovery in retail lending and solid corporate lending observed [9] Trading and Other Income - **Market Conditions**: Characterized by spread compression and lower volatility in the Danish mortgage market [10] - **Other Income**: Lower run rate confirmed due to reduced contributions from asset finance activities [10] Cost Outlook - **Full-Year Expenses**: Expected to be up to DKK 26 billion, with higher seasonal costs anticipated in Q4 [10][22] - **Insurance Reimbursement**: DKK 175 million recognized in Q3 2024, no similar items expected for Q3 2025 [11] Capital and Regulatory Considerations - **CET1 Ratio**: Expected reduction due to calling a €500 million Tier 2 instrument, impacting the ratio by approximately 50.5 basis points [11] - **Dividend Policy**: No interim dividends planned; annual dividend payments preferred in line with Danish regulatory expectations [17] Additional Insights - **GDP Downgrade Impact**: Downgrade attributed to statistical revisions and lower pharmaceutical export impacts, particularly from Novo Nordisk [14] - **Remortgaging Fees**: Anticipated slow activity in Q3 with a significant pickup expected in Q4 due to adjustable rate mortgages [16] Conclusion - Danske Bank's Q3 2025 pre-close call highlighted a mixed macroeconomic environment with specific challenges in Denmark. The bank is managing its financial performance with a focus on interest income, fee generation, and cost control while navigating regulatory expectations regarding capital and dividends.