Investment case
Another quarter with sharply rising credit spreads has passed, and we have already seen a
number of blow-ups in the global banks. In a Nordic context, SHB, a bank normally regarded as
very conservative, has reported a negative value adjustment of DKK 1.4bn for Q1. Losses on
bond portfolios will be material in Q1, and we foresee losses in the magnitude of SEK 3.2bn for
SEB and NOK 1.2bn for DnB NOR. But these losses are far from a surprise. The exposure is
well known, and despite the large amounts, they are immaterial in an international context.
The liquidity squeeze is far from over, and could easily last into 2009. Higher funding costs are
here to stay. The Norwegian banks achieved a significant margin widening during H2 07, as rate
hikes from the central banks reached full effect, and the effect of the 6-week delay faded out.
The December rate hike will reach 2/3 effect in Q1, which will support a continued strong margin
trend in Q1, but without any rate hikes in the last four months, the margin will face more
challenges going into Q2. The delay effect was already sharply reduced in Q1, and the effect of
higher average interest rates will be zero in Q2 if no additional rate hikes take place.
Norwegian Central bank rate – effect of the 6-week delay
% Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08
Central Bank rate, avg 3.26 3.79 4.28 4.74 5.17 5.38 5.38
6-week delayed, avg 3.07 3.52 4.08 4.42 4.99 5.3 5.38
Delay effect 0.19 0.27 0.20 0.31 0.19 0.08 0.00
Chg. To central bank rate 0.34 0.53 0.49 0.46 0.44 0.21 0.00
Assumption: Unchanged interest rate for the rest of Q2
Source: Datastream and DME
The odds are in favour of the Danish banks becoming the next top-line story. The sector has
taken a rather clear stand: clients have to pay for the increase in funding costs. The first rate
hike took place during February, and the second round of rate hikes is under way with
announcements by Jyske, Danske and Nordea. It is our impression that the second round of
rate hikes will bring the Danish banks ahead of their funding costs, and widening margins are
likely in Q2. But hardly in Q1, where the first round of rate hikes materialised rather late.
The Swedish banking industry, despite an almost duopoly status in the mortgage segment,
seems to be worse hit by competition. Mortgage margins took a dip in Q4, and based on the
spread between the funding costs and the pricing of new mortgage loans, we should expect to
see additional margin pressure in Q1. In the graph below we show the development in public
available mortgages rates and the funding rate on the issued bonds. The graph provides an
indication on the margin development: in Q4 the development was worrying and in Q1 the
development is even worse.

Contents
Investment case...........................................................................................................................3
Forecast revision..........................................................................................................................8
Rating changes......................................................................................................................... 11
Valuation.................................................................................................................................... 11
Financial markets development................................................................................................ 13
Stock exchange activity............................................................................................................. 16
Mutual Funds ............................................................................................................................. 23
Companies: Reporting date Page
Ringkjøbing Landbobank ........................ 16 April.................................................................... 38
Sydbank ................................................... 22 April.................................................................... 40
Handelsbanken ........................................ 22 April.................................................................... 42
Amagerbanken......................................... 23 April.................................................................... 44
Forstædernes Bank.................................. 24 April....................................................................46
Roskilde Bank .......................................... 24 April.................................................................... 48
Swedbank ............................................... 24 April.................................................................... 50
Danske Bank ........................................... 29 April.................................................................... 52
DnB Nor .................................................. 29 April.................................................................... 54
Fionia ....................................................... 29 April.................................................................... 56
Jyske Bank............................................... 29 April.................................................................... 58
Nordea .................................................... 29 April.................................................................... 60
Spar Nord ................................................ 29 April.................................................................... 62
SEB.......................................................... 30 April.................................................................... 64
Vestjysk Bank........................................... 30 April.................................................................... 66