Banking. Nykredit Realkredit A/S Copenhagen, Denmark. Company Profile. Moody s Global. Company Overview. June Analyst Contacts:

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1 Company Profile Moody s Global Banking June 2008 Nykredit Realkredit A/S Copenhagen, Denmark Analyst Contacts: London Janne Thomsen Senior Vice President Kimmo Rama Vice President Senior Analyst 12 Reynold R. Leegerstee Managing Director Company Overview Nykredit Realkredit A/S, headquartered in Copenhagen (Denmark), was founded in 1985 by the merger of Forenede Kreditforeninger and Jyllands Kreditforening. It is the largest mortgage lending institution in Denmark and one of the largest private bond issuers in Europe. Apart from mortgage lending, it offers its clients a wide range of services that include banking, insurance, asset management and real estate services. The Nykredit Realkredit Group operates through Nykredit Realkredit A/S itself, as well as through its wholly owned subsidiaries Totalkredit A/S, Nykredit Bank A/S, Nykredit Forsikring A/S, Nykredit Mægler A/S and Nykredit Ejendomme A/S. The Group s business activities are organised along four business lines Retail Customers, Business Partners, Commercial Customers and Markets & Asset Management. As of December 2007, the total group lending (banking and mortgage banking) amounted to DKK863 billion and was up 11% from Further the group had total assets of DKK1,075 billion ( billion) and shareholder equity of DKK54.45 billion ( 7.30 billion) as of 31 December The average number of full-time staff employed by the group was 3,672 in In October 2006, Nykredit exercised its option to purchase the remaining shares of Totalkredit A/S, which it now wholly owns. This report, exclusively provided to you by Moody s, presents a convenient summary of as reported, publicly available information. The information is not adjusted for Moody s analytic purposes. For Moody s Ratings, Opinion and Analytics on this company, please [Click here]. To access the latest Moody's Credit Opinion on this company, please [Click here].

2 December 2007 Financial Highlights (as Reported) The financials presented below are based on the consolidated financial statement as reported by the entity and are not adjusted for Moody s analytic purposes. For Moody s generated ratios, please see Moody s Credit Opinion on Nykredit Realkredit A/S <Realkredit A/S - Credit Opinion>. Nykredit Realkredit A/S Amounts in DKK million 31-Dec Dec Dec-05 % change 2007/2006 % change 2006/2005 Total Assets 1,075, , , % 7.54% Total Capital % 3.35% Core Capital Ratio 9.70% 11.00% 11.30% (130bps) (30bps) Net Income 3,363 3,327 3, % 4.62% Note: Total Capital represents Subordinate loan Capital and Total Equity. Ownership and Structure Nykredit Realkredit A/S is wholly owned by Nykredit Holding A/S, which in turn is owned by four shareholders: (the Nykredit Association, 88.18%), Industriens Realkreditfond (Industrial Mortgage Fund of Denmark, 5.42%), Foreningen Østifterne (The Østifterne Association, 3.25%) and PRAS (at present consisting of 99 Danish regional and local banks, the previous owners of Totalkredit A/S) with 3.15%. The activities among the business areas (Retail Customers, Business Partners, Commercial Customers and Markets and Asset Management) are coordinated across the individual companies of the Group. The Group s consolidated subsidiaries include: Nykredit Realkredit A/S Ownership as a % at 31 December 2007 Nykredit Realkredit A/S, Copenhagen (a) Consolidated Subsidiaries Totalkredit A/S, Taastrup (a) 100 Nykredit Bank A/S, Copenhagen (b) 100 Nykredit Finance plc, Plymouth (i) 100 Pantebrevsselskabet af 8/ A/S, Copenhagen (i) 100 Nykredit Pantebrevsinvestering A/S, Copenhagen (e) 100 LeasIT A/S, Lyngby - Taarbaek (h) 100 Nykredit Portefølje Adm. A/S, Copenhagen (d) 100 Nykredit Leasing A/S, Copenhagen (h) 100 Nykredit Forsikring A/S, Copenhagen (c) 100 Nykredit Mægler A/S, Århus (f) 100 Nykredit Ejendomme A/S, Copenhagen (g) 100 Nykredit Adm. V A/S, Copenhagen (i) 100 Dene Finanse S.A., under liquidation, Warsaw (j) 100 Nykredit Fixed Income Opportunities Fund Ltd, Cayman Islands (d) 100 Note: (a) Mortgage bank (b) Bank (c) Insurance Company (d) Financial Enterprise (e)mortgage Trading Company (f) Estate agency business (g) Property Company (h) Leasing business (i) No activity (j) In Liquidation. 2 June 2008 Company Profile -

3 Organisation Structure: Ownership 88.18% Industriens Realkreditfond Ownership 5.42% Foreningen Østifterne Ownership 3.25% PRAS A/S * Ownership 3.15% Nykredit Holding A/S The Nykredit Realkredit Group Nykredit Realkredit A/S Totalkredit A/S Nykredit Portefølje Adm. A/S Nykredit Bank A/S Nykredit Leasing A/S Nykredit Forsikring A/S (Insurance company) LeasIT A/S Nykredit Mægler A/S (Estate agents) Nykredit Ejendomme A/S (Property company) * The former owners of Totalkredit A/S Business Activities Nykredit Realkredit A/S is a broad-based financial services group and its core activity is mortgage lending, which is the largest contributor to the group's income. Within mortgage lending, the majority of new lending is mortgages for owner-occupied dwellings and private rental properties, as well as for subsidised housing (this type of loan will typically carry either central government or local government guarantees). The rest of the portfolio focuses on lending for commercial and agricultural properties. Totalkredit operates as a subsidiary and all its mortgages carry the Totalkredit brand and are produced by the independent local and regional banks, while Nykredit Realkredit A/S mortgages are produced centrally in their organisation. In addition to mortgage lending, Nykredit Realkredit A/S offers regular banking services, insurance and estate agency services through its fully owned subsidiaries. 3 June 2008 Company Profile -

4 Nykredit Realkredit A/S has four main business segments: Retail customers: This segment offers banking, mortgage, insurance and pension products to retail customers through Nykredit s distribution channels, which include 48 retail centres, internet and a central sales centre. The core income from operations for this segment was DKK2.028 billion for the year ended 31 December The pre-tax income of the retail segment amounted to DKK800 million for the period ending on 31 December 2007, which corresponded to 18.20% of the group s total pre tax profit. The mortgage loans at fair value for the segment amounted to DKK166.8 million as of 31 December Business Partners: This segment is responsible for the sale of mortgage loans to retail customers under the Totalkredit brand arranged by Danish local and regional banks. The core income from operations for this segment was DKK1.079 billion for the year ended 31 December The pre-tax income of the business partners segment amounted to DKK328 million for the period ending on 31 December 2007, which corresponded to 7.46% of the group s total pre-tax profit. The mortgage loans at fair value for the segment amounted to DKK billion as of 31 December Commercial Customers: It serves agricultural, business and rental housing customers including housing society and subsidised housing customers. Products are distributed through 30 commercial centres offering the entire range of Group products within banking, mortgage banking, insurance, investment and debt management. The core income from operations of this segment was DKK2.228 billion for the year ended 31 December The pre-tax income of the commercial segment amounted to DKK1.626 billion for the period ending on 31 December 2007, which corresponded to 37% of the group s total pre tax profit. The mortgage loans at fair value for the segment amounted to DKK billion as of 31 December Markets and Asset Management: This segment handles Nykredit Realkredit Group s activities related to trading in securities and financial instruments, debt capital, asset management and pension services. The product offered includes interest rate and foreign exchange management, securities, operations and custodian services together with asset management and pensions. Nykredit Portefølje Bank was merged with Nykredit Bank A/S. Portfolio administration is done through Nykredit Portefølje Administration A/S. The core income from operations for this segment was DKK964 million for the year ended 31 December The pre-tax income of the markets and asset management segment amounted to DKK429 million for the period ending on 31 December 2007, which corresponded to 9.76% of the group s total pre-tax profit. Group Items: This relates to a number of business activities not attributable to the individual business areas. Group items include the Group s total return on the securities portfolios, i.e. the sum of Core income from securities and Investment portfolio income and part of the Group s international lending activities. In addition, the items include costs related to management support functions. Nykredit offers Danish mortgage loans secured on properties located abroad. Nykredit finances the properties located in Sweden, Germany, the UK, Poland and Norway of Danish and selected international corporate customers. In addition, Nykredit finances private residential property in Spain, France, Germany and Poland. Nykredit s total international lending portfolio amounted to DKK23.7 billion (i.e. around 3% of total lending) as of 31 December The total core income from operations for the group items segment was DKK284 million (excluding core income from securities) for the year ended 31 December The pre-tax income of the segment amounted to DKK1.212 billion for the period ending on 31 December 2007, which corresponded to 27.2% of the group s total pre-tax profit. 4 June 2008 Company Profile -

5 Segment Profit Before Tax as of 31 December 2007 Group Items and Eliminations 28% Retail Customers 18% Business Partners 7% Markets & Asset Management 10% Commercial Customers 37% Comparison of Segmental Profit Before Tax, Retail Customers Business Partners Commercial Customers Markets & Ass et Management Group Items and Eliminations Nykredit Realkredit A/S offers regular banking services, insurance and estate agency services apart from mortgage lending through its wholly owned subsidiaries. 1. Totalkredit A/S: provides mortgage loan through independent local and regional banks and the mortgage are offered under Totalkredit brand. It had share capital worth DKK799 billion and recorded a profit of DKK754 million for the period ended 31 December The Nykredit Bank A/S: provides Retail Banking, Corporate Banking and Markets & Asset Management services It had share capital worth DKK1.950 billion and recorded a profit of DKK758 million for the period ended 31 December Nykredit Forsikring A/S: offers diversified insurance portfolio to approximately 217,000 customers. However, its operations are concentrated within commercial buildings insurance and non-life insurance for retail and agricultural customers. The share capital was DKK500 million at year-end It recorded a profit of DKK149 million for the period ended 31 December Nykredit Mægler A/S: core business is to franchise the estate agency chain Nybolig and to cooperate with the estate agency chain Estate. It had share capital worth DKK11 million and recorded a profit of DKK35 million for the period ended 31 December Nykredit Ejendomme s A/S: Its main activity involves the leasing of commercial properties out of which the Nykredit Realkredit Group operates. It had share capital worth DKK50 million and recorded a profit of DKK54 million for the period ended 31 December June 2008 Company Profile -

6 Distribution Capacity and Market Share Nykredit Realkredit A/S uses a number of distribution channels comprising own centres, partnership banks, the Internet ( call centre, affiliated estate agencies and insurance agents. The products and services are offered under two brands: Nykredit and Totalkredit. Nykredit branded products are distributed through 48 retail centres and 30 commercial centres which offer all products provided by the Group. Totalkredit branded products are distributed by more than 100 partnership banks, which when combined have more than 1,200 branches and cover one third of the retail banking market. The partnership banks are also allowed to sell Nykredit branded products. The Nykredit Group's products are also sold through Nykredit's Customer Services, two insurance centres, two asset management centres and the affiliated estate agency chains, Nybolig and Estate, which combined have 340 agencies and a total market share of approximately 22%. Nykredit Realkredit A/S also has representative offices in Southern France and Spain and a subsidiary in Poland. Cross-border lending is primarily focused on the UK and Sweden, and thereafter on Poland, Norway and Germany. In 2005, Nykredit Realkredit A/S replaced Nykredit Bank Hipoteczny S.A. in Poland with a branch named Nykredit Realkredit A/S Spolka Akcyjna Oddzial w Polsce. This started operations in September 2005 by offering lending activities. It also has customers in Spain and France who are served through representative offices in Marbella and Cannes respectively, and which are focused on Danish and other customers from Scandinavia. Nykredit Realkredit A/S services around 1,200,000 customers. Of these, around 800,000 accounts for mortgage banking, 200,000 for banking and around 200,000 are insurance customers. The Group provided mortgage lending of DKK849 billion and held a market share of 40.4% of the total Danish mortgage lending market at year-end Total Group lending (banking and mortgage banking) amounted to DKK863 billion, with a market share of 25.8% at year end Company Management As of 31 December 2007 Executive Board Current Title Age Tenure Peter Engberg Jensen Group Chief Executive Managing Director of Nykredit Holding A/S Managing Director of Director of Nykredit Administration V A/S (Chairman) Nykredit Ejendomme A/S (Chairman) Dene Finanse S.A. under liquidation OMX Exchanges OY Stockholmsbörsen AB 6 June 2008 Company Profile -

7 Executive Board Current Title Age Tenure Søren Holm Group Managing Director 51 2 Managing Director of Nykredit Holding A/S Nykredit Administration V A/S Nykredit Bank A/S Dene Finanse S.A. under liquidation Nykredit Ejendomme A/S Nykredit Forsikring A/S Nykredit Mægler A/S Totalkredit A/S JN Data A/S Karsten Knudsen Group Managing Director 55 3 Managing Director of Nykredit Holding A/S Nykredit Bank A/S (Chairman) LeasIT A/S (Chairman) Dampskibsselskabet Norden A/S Nykredit Forsikring A/S Dansk Pantebrevsbørs A/S Nykredit Portefølje Bank A/S Per Ladegaard Group Managing Director Managing Director of Nykredit Holding A/S Nykredit Bank A/S Nykredit Mægler A/S (Chairman) Nykredit Forsikring A/S (Chairman) JN Data A/S (Deputy Chairman) e-nettet Holding A/S (Chairman) e-nettet A/S (Chairman) BEC (Bankernes EDB Central) Finanssektorens Uddannelsescenter IT-Universitetet Niels Tørslev Group Managing Director 58 4 Managing Director of Nykredit Holding A/S Totalkredit A/S (Chairman) Nykredit Mægler A/S Dene Finanse S.A. under liquidation Værdipapircentralen A/S 7 June 2008 Company Profile -

8 Board of Directors Affiliation Age Tenure Steen E. Christensen Chairman 61 8 Attorney Partner and Director of Plesner Advokatfirma (Chairman) A/S Motortramp (Chairman) Persolit Holding A/S (Chairman) Norgren A/S (Deputy Chairman) Skandinavisk Tobakskompagni A/S Danish Nitrogen Import A/S Ny-Nitrogen A/S Persolit Entreprenørfi rma A/S Margrethelund Gods A/S Rosendal Gods A/S Skov-Sam Holding ApS and Skov-Sam Holding II ApS and subsidiaries Hans Bang-Hansen 53 7 Horsens Folkeblad A/S Hunsballe Frø A/S K.E. Borup Managing Director Mekoprint A/S (Chairman) Nordjyske Holding A/S and two subsidiaries (Chairman) Sanistål A/S (Chairman) Aalborg Stiftstidende A/S (Chairman) AaSF Holding A/S (Chairman) Fertin Pharma A/S (Deputy Chairman) Gumlink A/S (Deputy Chairman) Bagger-Sørensen & Co A/S Skagerak Holding A/S and one subsidiary Skagerak 2000 A/S Vendsyssel Tidende A/S Kristian Bengaard Director of 50 9 Member of the Executive Council of the Danish Financial Services Union 8 June 2008 Company Profile -

9 Board of Directors Affiliation Age Tenure Michael Demsitz Managing Director 53 4 Managing Director of Boligkontoret Danmark Boligbutikken for Hovedstaden Boligselskabernens Landsforening Almen Bolignet John Finderup Attorney 67 3 Foreningen Østifterne (Chairman) Anette R. Fischer Secretary 44 4 Steffen Kragh Group Chief Executive 44 2 Managing Director of Egmont Fonden and Egmont International Holding A/S Allan Kristiansen Vice President 50 8 Director of Nykredit Bank A/S Henrik Laustsen Board Member 43 4 Director of Jens Thomsen Managing Director 53 1 Stensbygaard Aktieselskabet af 18. maj 1956 (Chairman) A/S Kobenshavns Plantageselskab (Chairman) James Meyers Mindefond Plantningsselskabet Steen Blicher A/S Vestjaellands Kunstmuseum Susanne Møller Nielsen Board Member 46 8 Director of Nina Smith Professor 52 3 Board Member (Deputy Chairman) Niras Gruppen A/S PFA Holding A/S PFA Pension Forsikringsaktieselskab 9 June 2008 Company Profile -

10 Board of Directors Affiliation Age Tenure Jens Erik Udsen Managing Director Managing Director of Nesdu A/S Grundejernes Ejendomsselskab af 1972 ApS (Chairman) Grundejernes Investeringsfond (Chairman) Jeudan A/S Nesdu A/S Renhold A/S Leif Vinther Chairman of Staff Association 49 8 Director of Company History From 1851 up until 1972 a number of mortgage associations merged to create Forenede Kreditforeninger and Jyllands Kreditforening, respectively. Nykredit, founded in 1985, was the product of the merger of Forenede Kreditforeninger and Jyllands Kreditforening, and up to 1989 operated on a wholesale basis, whereby mortgage loans were provided through external distribution channels. Nykredit has issued mortgage bonds since 1851 and had a total outstanding amount of mortgage bonds of at 31 December The deregulation of the mortgage sector in 1989, allowed banks to establish mortgage banks and mortgage associations were allowed to convert into limited companies. The deregulation meant that Nykredit Group expanded its business activities to include banking and insurance just as a nationwide multi-channel distribution network was developed. In November 2003, the then 106 regional banks owning Totalkredit (the third largest mortgage lender in Denmark) agreed to sell their shareholdings to Nykredit Realkredit A/S over a three-year period. In October 2006, Nykredit exercised its option to purchase the remaining 20.8% of the shares in Totalkredit, which is now wholly owned by Nykredit Realkredit A/S. The transaction created the largest Danish mortgage company and one of the largest financial institutions in Denmark. Subsidiaries Rated by Moody s Totalkredit A/S Related Websites and Information Sources For additional information, please see: the company's website: the regulator s website: MOODY S has provided links or references to third party World Wide Websites or URLs ("Links or References") solely for your convenience in locating related information and services. The websites reached through these Links or References have not necessarily been reviewed by MOODY S, and are maintained by a third party over which MOODY S exercises no control. Accordingly, MOODY S expressly disclaims any responsibility or liability for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on any third party web site accessed via a Link or Reference. Moreover, a Link or Reference does not imply an endorsement of any third party, any website, or the products or services provided by any third party. 10 June 2008 Company Profile -

11 Moody s Related Research Banking System Outlook: Denmark, November 2007 (105786) Banking Statistical Supplement: Denmark, March 2008 (107974) Country Statistics: Denmark, November 2007 Analysis: Nykredit Realkredit, November 2007 (105816) Credit Opinion: Nykredit Realkredit A/S, November, 2007 To access any of these reports, click on the entry above. Note that these references are current as of the date of publication of this report and that more recent reports may be available. All research may not be available to all clients. Report Number: Author Statistical Analyst Production Associate Janne Thomsen Tomas Kluge Martina Reptova Copyright 2008, Moody s Investors Service, Inc. and/or its licensors and affiliates (together, MOODY S ). All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided as is without warranty of any kind and MOODY S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of MOODY S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MOODY S have, prior to assignment of any rating, agreed to pay to MOODY S for appraisal and rating services rendered by it fees ranging from $1,500 to approximately $2,400,000. Moody s Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody s Investors Service (MIS), also maintain policies and procedures to address the independence of MIS s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody s website at under the heading Shareholder Relations Corporate Governance Director and Shareholder Affiliation Policy. 11 June 2008 Company Profile -