Important disclosures and certifications are contained from page 8 of this report. www.danskeresearch.com

Investment Research — General Market Conditions

Denmark is a small open economy and the Danish business cycle tracks the euro

area. Denmark was hit hard by the financial crisis due to the combination of the global

recession and the Danish housing market bubble bursting. GDP fell by 5.1% from 2008 to

2009. The housing market bubble bursting is key to explaining why private consumption

has been more or less constant since 2009.

The Danish economy is currently recovering but the recovery is weak and fragile.

Denmark has now enjoyed positive GDP growth for six consecutive quarters. Last year

was the first full year of positive economic growth since 2011. Employment has picked

up and the number of employed persons in Q4 14 was 31,800 higher than the latest trough

in Q1 13. Also, the housing market is recovering but the recovery is concentrated mainly

in the Copenhagen area. We expect GDP to increase by 1.6% in 2015, rising to 2.0% in

2016, supported mainly by the low oil price.

Recently, Denmark has received substantial attention due to the appreciation

pressure on the Danish krone. Denmark has had a very tight fixed exchange rate

system since 1982 (first against the Deutschmark and since 1999 against the euro)

and the peg is a key element of economic policy in Denmark. The Danish central bank

has countered the recent appreciation pressure by multiple rate cuts and FX intervention.

Denmark will not leave the peg as the peg is a political decision that enjoys full

support across the political parties. See also Research Denmark: The Danish peg is

indisputable, 16 January. The Danish central bank will continue to use its conventional

measures (rate cuts and intervention purchases) in order to counter the appreciation

pressure going forward. The Danish central bank has expressed that it will do ‘whatever it

takes’, which includes introducing new unconventional measures if necessary.

Denmark has had a surplus on its current account balance every year but one since 1990

(except 1998), implying that it now has positive net foreign assets. In 2014, the current

account surplus was very large (6.2% of GDP), reflecting high domestic savings despite

the large gross debt of households. The Danish household debt situation attracts

attention from time to time but the significant gross debt is financed domestically, as

the debt accumulation is largely a consequence of significant gross pension savings

combined with a low cost and flexible mortgage system. See also Research Denmark:

Danish households are resilient, 14 November 2014.

Public finances are sound and both the government deficit and government debt meet

the criteria of the Stability and Growth Pact. Denmark is one of few that enjoys triple-A

ratings across the three major rating agencies. Government bond yield spreads to

Germany are negative. The next general election must be held no later than September

this year.

See the following pages for illustrative charts and tables.

9 March 2015

Analyst Mikael Olai Milhøj +45 45 12 76 07 milh@danskebank.dk

Key facts on Denmark

Population: 5.6m (2013).

GDP per capita: DKK336,100

(EUR 45,100).

Government type: constitutional

monarchy.

Fixed exchange rate regi: vis-a-vis

euro.

Queen: Margrethe II.

Minority coalition led by the Social

Democrats (S) and the Social

Liberal Party (R).

Prime Minister: Helle Thorning

Schmidt (Social Democrats).

Next elections: September 2015,

at the latest.

Central Bank Governor: Lars

Rohde.

Economic characteristics

Large public sector.

Low private consumption

High level of household debts.

Low unemployment.

Demographic challenges due to

dependency.

Economic Fact Book: Denmark

2 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Key macroeconomic indicators

Outlook for key economic variables

1. % y/y

2. % of labour force (Danske Bank Markets forecasts the gross unemployment rate)

3. % of GDP

Source: OECD (November), IMF (October) EU (February), Danske Bank (January)

Denmark vs the euro area (EMU)

1. % q/q

2. % of GDP

3. % of labour force (LFS definition

4. Based on nominal GDP

5. EUR per capita

6. %, 3M average

7. % y/y

8. 4Q average

Source: Eurostat, Statistics Denmark, ECB, Danmarks Nationalbank, Macrobond Financial, Danske Bank Markets

2015 2016 2015 2016 2015 2016 2015 2016 2015 2016

Danske Bank 1.6 2.0 0.6 1.5 4.9 4.7 -2.4 -2.4 42.5 43.0

IMF 1.8 1.9 1.6 1.8 6.6 6.2 -3.0 -2.3 46.6 47.3

OECD 1.4 1.8 0.7 1.2 6.3 6.1 -2.2 -2.3 48.7 50.7

EU (Commission) 1.7 2.1 0.4 1.6 6.5 6.4 -2.8 -2.7 42.7 43.6

1) % y/y. 2) % of labour force (Danske Bank is forecasting the gross unemployment rate). 3) % of GDP.

DenmarkGovt. Debt (3)

Denmark - Outlook for key economic variables

GDP (1) CPI (1) Unemployment (2) Govt. Budget (3)

When Denmark EMU When Denmark EMU

GDP(1) Q4-14 0.4 0.3 2013 45,100 29,500 S&P

Gov. consumption (2) 2014 26.4 21.0 2.5% - Moody's

Private cons (2) Q4-14 48.4 55.9 Jan-15 -0.3 -0.6 Fitch

Investments (2) Q4-14 18.9 19.5 2015 -2.8 -2.2

Exports (2) Q4-14 53.6 44.8 2015 42.7 94.4

Current account (2), (8) Q3-14 6.5 2.3 Jan-15 0.63 1.14 -0.15

Unemployment (3) Dec-14 6.4 11.3 0.48

Households' financial liabilities (2) 2013 140 67

1: % q/q, 2: Pct of GDP , 3: % of labour force (LFS definition), 4: based on nominal GDP, 5: EUR per capita, 6: %, 3M av, 7: % y/y , 8: 4Q average

Public debt (2) EC fcst Sovereign bond yields

Long-term interest rates 2Y yield (6)

10Y yield (6)

Aaa / stable

Inflation - HICP (7) AAA / stable

Public budget (2) EC fcst

Economic size relative to EMU (4)

Denmark versus the euro area (EMU)

Sovereign ratings

GDP per capita (5) AAA / stable

3 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Public finances

Government budget deficit within the 3% limit Government debt below the 60% limit

Source: European Economic Forecasts (EU forecasts) Source: European Economic Forecasts (EU forecasts)

Government bond yields close to or below zero Yield spreads to Germany close to or below zero

Source: Macrobond Financial Source: Macrobond Financial

Monetary policy

Record-low policy rates Danish policy rates shadow ECB’s policy rates

Source: Danmarks Nationalbank Source: Danmarks Nationalbank and ECB

Large increase in the FX reserves Danmarks Nationalbank intervened for DKK168.7bn in

February

Source: Statistics Denmark, Danmarks Nationalbank Source: Danmarks Nationalbank

4 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Official band +/- 2.25% around 7.46038 De facto trading range is narrower

Source: Danmarks Nationalbank Source: Danmarks Nationalbank

Large increase in the banks’ net position with Danmarks

Nationalbank in recent months

FX reserves account for most of the central bank’s assets

Source: Danmarks Nationalbank Source: Danmarks Nationalbank

National accounts

Denmark has not recovered from the crisis yet Large output gap

Source: Eurostat, Statistics Denmark, Danske Bank Markets Source: Danish Economic Council

Private consumption has begun to increase slightly Gross fixed capital formation still way below pre-crisis level

Source: Eurostat, Statistics Denmark and Danske Bank Source: Eurostat, Statistics Denmark and Danske Bank

5 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Denmark is a very open economy Danish business cycle tracks the euro area

Source: Eurostat, Statistics Denmark, Danske Bank Markets Source: Eurostat, Statistics Denmark, Danske Bank Markets

Foreign trade

Very large current account surplus – helps to explain the

upward pressure on the Danish krone

Denmark has positive net foreign assets

Source: Eurostat, Statistics Denmark, Danske Bank Markets Source: Statistics Denmark, Danmarks Nationalbank, Danske Bank Markets

Denmark is more export-oriented than most European

countries

Denmark exports mainly to neighbouring countries –

increasing exports to China

Source: Eurostat, Statistics Denmark, Danske Bank Markets Source: Statistics Denmark, Danske Bank Markets

Large fall in the effective exchange rate due to the ECB’s QE-

announcement

Industrial production remains sluggish

Source: Danmarks Nationalbank Source: Eurostat, Statistics Denmark, Danske Bank Markets

6 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Survey indicators

The economic outlook is better than suggested by the

business confidence indicator

Consumer confidence back at pre-crisis level

Source: EU Source: EU

Inflation and wages

Danish inflation follows euro inflation

Positive real wage growth despite moderate nominal wage

growth

Source: Eurostat, Statistics Denmark Source: Statistics Denmark, Danske Bank Markets

Labour market and demographics

Low unemployment rate compared with the euro area Increasing employment

Source: Eurostat Source: Eurostat

7 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Denmark lost competitiveness during the 2000s due to

increasing labour costs

Stable work force in the future

Source: Eurostat Source: Statistics Denmark, Danske Bank Markets

Housing market and construction

The Danish housing market is recovering slowly Large regional differences in the Danish housing market

Source: ECB, Statistics Denmark, Danske Bank Markets Source: Statistics Denmark, Danske Bank Markets

Danish households’ gross debt is one of the highest in the

world

Danish households’ have positive net assets

Source: Eurostat Source: Statistics Denmark, Danske Bank Markets

No growth in loans to households

Interest-only, variable-rate mortgage loans have become the

most popular loan type

Source: Danmarks Nationalbank Source: Danmarks Nationalbank

8 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske

Bank’). The author of this research report is Mikael Olai Milhøj, Analyst.

Analyst certification

Each research analyst responsible for the content of this research report certifies that the views expressed in this

research report accurately reflect the research analyst’s personal view about the financial instruments and issuers

covered by the research report. Each responsible research analyst further certifies that no part of the compensation

of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed

in the research report.

Regulation

Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject

to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske

Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority

(UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation

Authority are available from Danske Bank on request.

The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts’

rules of ethics and the recommendations of the Danish Securities Dealers Association.

Conflicts of interest

Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high-

quality research based on research objectivity and independence. These procedures are documented in Danske

Bank’s research policies. Employees within Danske Bank’s Research Departments have been instructed that any

request that might impair the objectivity and independence of research shall be referred to Research Management

and the Compliance Department. Danske Bank’s Research Departments are organised independently from and do

not report to other business areas within Danske Bank.

Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes

investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate

finance or debt capital transactions.

Financial models and/or methodology used in this research report

Calculations and presentations in this research report are based on standard econometric tools and methodology

as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be

obtained from the authors on request.

Risk warning

Major risks connected with recommendations or opinions in this research report, including a sensitivity analysis

of relevant assumptions, are stated throughout the text.

Date of first publication

See the front page of this research report for the date of first publication.

General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for

informational purposes only. It does not constitute or form part of, and shall under no circumstances be

considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments

(i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or

options, warrants, rights or other interests with respect to any such financial instruments) (‘Relevant Financial

Instruments’).

The research report has been prepared independently and solely on the basis of publicly available information that

Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not

untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates

and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation

any loss of profits, arising from reliance on this research report.

The opinions expressed herein are the opinions of the research analysts responsible for the research report and

reflect their judgement as of the date hereof. These opinions are subject to change and Danske Bank does not

undertake to notify any recipient of this research report of any such change nor of any other changes related to the

information provided in this research report.

9 | 9 March 2015 www.danskeresearch.com

Eco

no

mic Fa

ct Bo

ok: D

en

ma

rk

Economic Fact Book: Denmark

This research report is not intended for retail customers in the United Kingdom or the United States.

This research report is protected by copyright and is intended solely for the designated addressee. It may not be

reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank’s prior

written consent.

Disclaimer related to distribution in the United States This research report is distributed in the United States by Danske Markets Inc., a U.S. registered broker-dealer

and subsidiary of Danske Bank, pursuant to SEC Rule 15a-6 and related interpretations issued by the U.S.

Securities and Exchange Commission. The research report is intended for distribution in the United States solely

to ‘U.S. institutional investors’ as defined in SEC Rule 15a-6. Danske Markets Inc. accepts responsibility for this

research report in connection with distribution in the United States solely to ‘U.S. institutional investors’.

Danske Bank is not subject to U.S. rules with regard to the preparation of research reports and the independence

of research analysts. In addition, the research analysts of Danske Bank who have prepared this research report are

not registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements

of a non-U.S. jurisdiction.

Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial

Instrument may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-

U.S. financial instruments may entail certain risks. Financial instruments of non-U.S. issuers may not be

registered with the U.S. Securities and Exchange Commission and may not be subject to the reporting and

auditing standards of the U.S. Securities and Exchange Commission.